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Year of Publication: 18 July 2013 | The Himalayan Times
Publication Type: NEWS
Published by: CESLAM
The subscription rate of the latest issue of foreign employment bonds soared by almost five times in comparison to last year’s issue, though it amounts to less than five per cent of the size of the offering.
The designated agents of Foreign Employment Bond 2075 have been able to sell bond units worth Rs 42.8 million in one week. This is the highest subscription rate of the bond that is meant for migrant workers, Non Resident Nepalis (NRNs) and returnee workers.
Last year, NRB had offered bonds worth Rs one billion but migrant Nepalis including NRNs had applied for bonds worth only Rs 8.6 million.
“Though the whole lot did not get subscribed, the current number of applications for the bonds is much more heartening than those in previous years,” pointed out deputy director of Nepal Rastra Bank (NRB)’s Public Debt Management Department — that looks after the government’s internal debt management — Dr Gopal Bhatta.
Despite offering attractive returns, foreign employment bonds had bombed miserably in the past as well. The first foreign employment bonds, issued in fiscal 2009-10, had seen subscription worth Rs 4.6 million of the total issue of Rs one billion at 9.5 per cent interest. Likewise, in fiscal year 2010-11 too, only bonds worth Rs four million of the total issue worth Rs five billion were sold.
This year’s bond offered a coupon rate of 10.5 per cent for five years, while previous issues also offered rates higher than 9.5 per cent — higher than the prevalent fixed deposit interest rates. Agents attribute the absence of proper marketing of the bond and limited time for subscription as the major reasons for the bonds fizzling out every year.
“There is minimal awareness among the targeted population regarding the benefits of foreign employment bonds so it is difficult for agents to sell the instrument in a week,” pointed out CEO of International Money Express — one of the agents — Suman Pokharel.
NRB had designated six agents — four remitters and two financial institutions — targeting NRNs and migrant workers in Malaysia, Saudi Arabia, Qatar, Kuwait, Bahrain, UAE, US, UK, Australia, Japan and Israel.
“If the preparation to sell the bonds starts from the beginning of the last quarter, agents will have enough time to create awareness about the advantage of the bond,” said Pokharel, adding, “Nepali embassies in destination countries need to be involved to sensitise target population.”
This time, NRB had offered the bonds from July 2 to 10. Foreign employment bonds can be an excellent investment instrument for Nepalis working abroad. It provides assured and almost risk-free returns at a relatively high interest rate. Moreover, bond buyers can safely send money home to be kept in banks without paying remittance commission. Along with encouraging formal channels to send money, these bonds were supposed to direct remittance money to the productive sector instead of consumption.
Published on: 18 July 2013 | The Himalayan Times
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