Harnessing Migrant Money Flow for Economic Development

Transcription

1 Harnessing Migrant Money Flow for Economic Development 1 Presented By: Date: 7 November, 2010 Table of Contents 2 Economic Overview Foreign Employment and Remittance Nepali Financial System Collective Investment Funds Mutual Funds Recommendations and Way Forward 1

2 Economic Overview 3 FY 2010/11-GDP growth rate to be around 3.47% FY 2011/12-Estimated growth rate of 5% GDP Growth (NPR) FY 2000/01 FY 2010/ billion 1,219 billion Nepal s Key Macroeconomic Indicators 4 Key Indicators GDP growth (annual %) Agriculture, value added (% of GDP) Industry, value added (% of GDP) Services, etc., value added (% of GDP) Gross domestic savings (% of GDP)

3 Nepali s Access to Basic Facilities (within 30 minutes) / / /11 Primary school Health Center Cooperative Agricultural center Commercial Bank Haat bazar Market center Paved road Dirt road vehicle passable Bus stop Foreign Employment and Remittance 6 NRNs and Bipalis Non Resident Nepalis (NRNs) NRNs are Nepalis living in a foreign country with their immediate family. NRNs identify strongly with their roots in Nepal and are even looking for avenues to invest in Nepal. Bipalis Bipalis are Nepali who are employed outside Nepal and are sending money into the country to support their families. 3

4 Number of Workers Approved for Foreign Employment 7 Country Total Approval for Foreign Employment FY FY FY 2008/ / /11 FY 2009/10 % change Share FY 2010/11 Malaysia 35, , , Qatar 76,175 55, , Saudi Arabia 48,749 63,400 71, UAE 31,688 33,188 44, Kuwait 2,291 8,255 15, Others 25,992 19,329 15, Total 219, , , % Inflow of Remittance (figures in NPR million) 8 Fiscal Year Inward Remittance % Change FY 2000/01 47,216 FY 2001/02 47, FY 2002/03 54, FY 2003/04 58, FY 2004/05 65, FY 2005/06 97, FY 2006/07 100, FY 2007/08 142, FY 2008/09 209, FY 2009/10 231, FY 2010/11 253,550* 9.4 4

5 Top 10 Remittance Recipients in 2009 (% of GDP) Details of Remittance 10 Description 1995/ / /11 Percent of all households receiving remittances Total amount of remittance received (In billion nominal NPR) Per-capita remittance for all Nepal (NPR) ,100 9,248 5

6 Primary Usage of Remittance 11 Percentage Daily Consumption 78.9 Repay loans 7.1 Household Property 4.5 Education 3.5 Capital Formation 2.4 Investment Opportunities Securities called for Initial Public Offer (IPOs) Securities that are listed at NEPSE The secondary market currently has over 301 securities listed. 12 Fixed Income money market instruments guaranteed by Government of Nepal (GON) or NRB including money market instruments like T-Bills, Government debt securities and debentures from Government institutions Sector specific Funds or Funds floated for a specific investment objective Bank Deposit Schemes Corporate Debentures (Bonds) Collective Investment Funds (Mutual Funds) 6

7 Foreign Employment Savings Bond 13 FY 2009/10 FY 2010/11 Bond "FESB " "FESB 2073" Issue worth 1 billion 5 billion Subscription 4.6 million 3.38 million Collective Investment Funds Simply, a Collective Investment Vehicle is any entity that allows investors to pool their money and invest the pooled funds, rather than buying securities directly as individuals. 14 Collective Investment Vehicles Mutual Funds Index Funds Exchange Traded Funds Collective Investment Scheme Venture Capital Funds Hedge Funds 7

8 Mutual Funds 15 A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments Mutual funds can play a primary role in channeling migrant s remittance money into investments in equity and debt instruments. In times to come Mutual Funds could be a significant resource mobilizer in the Nepalese Financial market. Benefits to the unit holders of mutual fund Portfolio Diversification and reduction of the investment risk Professional Management Transaction cost Affordability Liquidity Accountability and Transparency Opportunity for additional capital appreciation 16 8

9 Ongoing Developments (Mutual Fund) 17 Operating License Granted Fiscal Policy 2011/12 Mutual Fund Legislation Way Forward 18 Easy Participation of NRN in the mutual fund Capital Gain tax exemption Waiver of SEBON and NEPSE charges Waiver of foreign investment by mutual fund Legal Existence Wi Waiver of cross holding for mutual lfund 9

10 THANK YOU 19 10