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Dr. Yubaraj Khatiwada, Governor of Nepal Rastra Bank (NRB) asserts of increasing

2015-02-17 07:06:26  来源: 【返回列表】

 

Dr. Yubaraj Khatiwada, Governor of Nepal Rastra Bank (NRB) asserts of increasing trade facilities with neighboring countries to attract Foreign Direct Investment. A veteran economist and former Vice Chairman of National Planning Commission, Dr. Khatiwada shares his optimism to create investment-friendly environment in Nepal with APD in January. Excerpts:

Chinese banks to open offices in Nepal

 

Nepal Rastra Bank (NRB) and People’s Bank of China (PBC) agreed on currency swap during your recent trip to China. Could you elaborate on this?

The agreement is basically related to payment and currency settlement considering Nepal’s increasing trade with China as well as the growing number of Chinese tourists visiting Nepal. This requires lot of payment facilities. So far, we didn’t have much of payment facilities. Nepalese banks would only open bank accounts in only one bank in China. Chinese tourists would carry Yuan to Nepal. Therefore, with an aim to financially integrate both countries, to facilitate trade payment and to encourage Foreign Direct Investment (FDI) in Nepal, we signed the deal. This agreement will pave the way for Nepalese Banks to open accounts in the banks of China and vice-versa, which is a major breakthrough in the financial relations. Now, banks can resort to trade through letter of credit in whichever point they want. They are free to go to Kunming, Guangzhou, Chengdu, Shanghai or elsewhere for trading.

 

 

What was the objective of signing MoU on Sharing Financial Information with PBC?

We signed a Memorandum of Understanding (MoU) on Sharing Financial Information with the People’s Bank of China and other financial units. As a party to anti-money laundering, Nepal has to comply with the global financial governance. Since Nepal’s financial relation with Chinese banks is increasing swiftly, signing MoU on Sharing Financial Information system would be an important step.

 

 

Do you plan to sign other agreements with People’s Bank of China in future?

Yes, we discussed during our visit about the future prospect of cooperation by establishing Chinese banks in Nepal and vice-versa. However, cross-border presence of banks will also require a MoU, which will be signed probably in the first quarter of this year on cross-border supervision. Some Chinese banks have shown interest to come here. So we will be having cross border supervision soon. Both sides have tentatively agreed on the template and timing for signing the MoU. This will facilitate Chinese state and commercial banks to come here and supervise the banks.

 

 

Nepal is one of the founding members of Asian Infrastructure Investment Bank (AIIB). How will Nepal benefit?

It depends on the terms and conditions. We have seen multilateral organizations like Asian Development Bank (ADB) and World Bank, their strength and limitations. Firstly, AIIB should not compete with those banks. Nepal requires huge investments for long-term infrastructure projects like hydropower, roads and tourism. Those projects need long-term capital and AIIB should be tuned to that direction. We should also consider the kind of equity requirement we have in our long-term investment. AIIB should go on equity participation on credible projects. The share of AIIB would be based on the Gross Domestic Product (GDP) of the member countries. This equity is not the only the thing to discuss about the equity because poor countries need more resources and their equity cannot be taken as a basis to get the opportunity to borrow money.

 

 

What are the ways to improve Nepal’s financial sector?

Firstly, financial system must support the country’s economic growth. It cannot grow on its own. There is a need to outreach financial services, including microfinance which is expanding very fast. But it has a limit. It can put people above the threshold of poverty, but it cannot make people prosperous. Banks should target the middle-class people and work towards finding new locations, targets and clients. Banks must diversify their products on trading activities by bringing packages to new clients.

 

 

How do you analyze Nepal’s current economic growth rate?

Nepal’s economic growth rate has been surpassing over the years. Our economy can grow at a 5 percent rate with the existing capacity. We don’t need additional efforts. If we need to attract more investment then the economic growth rate must be more than 6 percent. This is not happening now. We have not been able to utilize potential in agriculture sector, which is cyclical. Similarly, we have failed to make use of existing manufacturing capacity. Our capacity mobilization is to be more than 60 percent. The focus should be on agriculture and generating power. If people say infrastructure has become a major bottleneck in our growth, I would say that people have more opportunity to invest in the infrastructure sector like roads, railways, airports and hydropower. However, since these sectors need huge investment, we need foreign investment, which is currently shy. I am optimistic that doors will open for foreign investment once the constitution is promulgated. Foreign countries are looking for peaceful environment here.

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