Workers to get 72 per cent of the 10 per cent service charge

Kathmandu, June 7

The long-standing dispute regarding service charge between hoteliers and trade unions of hotel and restaurant workers has finally been sorted out with a revision in ‘sharing structure’ of 10 per cent service charge being levied on customers.

Three trade unions affiliated to the major political parties namely, Nepal Tourism and Hotel Labourers Association, Nepal Independent Hotel, Casino & Restaurant Workers’ Union and All Nepal Hotel, Casino and Restaurant Workers’ Union recently inked an agreement with the Hotel Association Nepal (HAN) — the umbrella body of tourist standard hotels in the country — to increase the share of service charge for workers by four percentage points to 72 per cent.

Hoteliers and trade unions will be jointly making the agreement public through a press conference on Friday.

Meanwhile, the new sharing structure of the 10 per cent service charge has not only increased workers’ share but has also made the three trade unions its shareholders. As per the new service charge sharing structure, workers will get 72 per cent of the 10 per cent service charge and the three trade unions will get one per cent each. Of the remaining 25 per cent, hoteliers will get 23 per cent of the service charge while HAN will get two per cent.

The 10 per cent service charge on top of the listed price had been introduced in January 2007 following a bilateral agreement between HAN and the trade unions of hotel and restaurant workers, based on which workers had been getting 68 per cent share in the service charge while hoteliers and HAN had 30 per cent and two per cent shares, respectively.

However, workers of hotels and restaurants and the trade unions had been protesting since long as the 2007 agreement, which was supposed to be reviewed every three years, had not been revised until recently. In the last few years, workers had been demanding that they should get the entire service fee.

Meanwhile, the new agreement has restricted workers at hotels from activities like ‘collective bargaining’ and protests for hike in wages in such a way that adds to the financial burden of the hotel.

Similarly, the new agreement also envisions forming a task force led by the general secretary of HAN and including members of trade unions to sort out worker-employer disputes in any star hotels.

“The new agreement creates a win-win situation for both workers and hoteliers. We expect the growth of hospitality industry and enhanced relationship between hoteliers and workers following the agreement,” said Amar Man Shrestha, president of HAN.

Meanwhile, it has to be noted that the new agreement means nothing for customers as they are still obliged to pay the 10 per cent service charge. HAN and consumer rights activists had been in favour of ending such compulsory charge.

Kathmandu, June 7

Criticising the rampant import ‘that is responsible for excessive consumerism’, Finance Minister Yubaraj Khatiwada has said that the country’s import should promote production, lead to value addition and develop the value chain in the  country’s economy.

Speaking during a post-budget discussion here today, Finance Minister Khatiwada said that the strategy of big industries relying on import-based raw materials instead of creating favourable ground for ancillary industries and backward linkages could be risky if the country faces external shocks that could result in decline in remittances, among other factors. “This is why the budget for fiscal 2018-19 has laid emphasis on resilient, self-reliant and interdependent economy,” said the finance minister, adding, “We are aiming to increase the gross capital formation as the requirement of capital investment is huge to achieve economic prosperity.”

To encourage the private sector to utilise their savings (profits) in reinvestment and develop the capital market by bringing in real sector companies in the stock market, the government has offered tax incentives. The federal budget 2018-19 has waived the tax on dividend for the productive sector industries and tourism industries if they reinvest in their own industries. Similarly, private limited companies with paid-up capital of Rs 500 million will get 10 per cent income tax exemption for next three years, as per the provision of budget unveiled by Finance Minister Khatiwada on May 29.

Similarly, the government has encouraged foreign direct investment (FDI) only in those sectors that can create maximum value addition in the economy and discouraged FDI in non-tradable sector, according to finance minister.

On a positive note, Finance Minister Khatiwada said that the government is in favour of protecting consumers and creating a competitive environment among the service providers and industries. “The government has taken the issues related to cartels by traders and service providers to generate maximum profit very seriously,” the finance minister said.

He also said that the government will not protect the industries that cannot improve its efficiency within a certain period of time. “The provisions introduced for protection of some industries are sunset clause and we are aware that the economy cannot be efficient by protecting the industries than can never be competitive,” Khatiwada asserted.

Finance Minister Khatiwada further said that the government will put its entire efforts to execute the budget and the required guidelines to implement the budget will be prepared within this fiscal and the government will also table the Amendment Bill and fresh bills related to industry, commerce, investment, energy and finance in the budget session of the Parliament.

Finance minister also underpinned that the government is willing to join hands with the private sector for execution of budget and to promote investment, create jobs and boost productivity in the country. “The government is also flexible towards the concerns raised by the private sector for the promotion of transparent, fair, objective and ethical business practice in the country.”

In the programme, Revenue Secretary Shishir Kumar Dhungana said that the government has tightened the customs tariff only in the ‘grey area’ where there is an ongoing debate on categorisation of certain products as ‘finished goods’ or ‘raw materials’. “We have to lower the customs tariff of intermediate goods compared to the finished products and the government is open to hold talks with the private sector to promote production sector,” Dhungana said.

Confederation of Nepalese Industries (CNI) President Hari Bhakta Sharma opined that the government should expand the tax net instead of increasing tax rates and also urged the government to collaborate with the private sector to bring down the cost of doing business in the country.

The discussion today was jointly organised by the Society of Economic Journalists-Nepal and CNI.

Kathmandu, June 7

The foreign joint venture banks operating in the country have been asked to bring in capital from their partner banks for smooth flow of credit in the economy.

Even after Nepal Rastra Bank (NRB) has allowed the banks to bring loans from foreign banks to invest in infrastructure and productive sectors, the banks are not making an effort to bring capital from foreign banks.

Banks, on the other hand, have been saying that ‘sovereign rating’ is a prerequisite to borrow from foreign banks.

Against this backdrop, Finance Minister Yubaraj Khatiwada has urged joint venture banks, namely Everest Bank, Nepal SBI Bank, Himalayan Bank and Nepal Bangladesh Bank to borrow from their partner banks. “As we have opened up the borrowing facility from foreign banks to meet the requirement of financing in our economy, we should not delay utilising this facility,” said Finance Minister Khatiwada.

However, the joint venture banks have pointed at the risks of fluctuation of the US dollar vis-à-vis Nepali currency and talked about possibility of borrowing in Indian currency.

Nepal SBI Bank has put forward a proposal to borrow in Indian currency and cater to all the banks. However, the central bank has not responded to the proposal.

Ashoke Shumsher Rana, CEO of Himalayan Bank — a joint venture with Habib Bank Pakistan — said that the hedging cost of the greenback is high. However, the central bank has asked banks to borrow to lend to specified sectors by adding three per cent to the London Interbank Offered Rate (LIBOR). “Banks cannot take risks of loss from the fluctuation of the dollar as such loans are long-term and if banks have to hedge, then another six per cent rate will have to be added, due to which lending in the productive sector will not be efficient.”