Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

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Nepal’s bubble economy

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01229c7e80680e0a3614jpeg.jpg" alt="" width="1050" height="637"/><figcaption></figcaption></figure>Nepal Rashtra Bank’s (NRB) tightness on share collateral, signs of a lack of liquidity and the opening up of other investment avenues post-lockdown are some of the factors behind the share market’s sharp decline of late.On Sunday, <a href="http://www.nepalstock.com/" target="_blank" rel="noopener noreferrer">Nepal Stock Exchange (Nepse)</a> recorded the highest-ever fall in its history after the market dropped by 5.03% in just the first two hours of trading. A 40-minute long circuit break was imposed, as 60 companies saw their share values decline by 10%, and the Nepse index to 2782.52 points.A slight recovery was soon posted, but Nepse still fell by 3.7% from the previous day, losing 108.26 points from 2928.8 points to an end-of-day total of 2811.16 points. By day’s end, 31 companies lost up to 10% value on their shares.Despite the fall in the index, there were as many if not more people trading shares and the volume of transactions were unaffected, with 23 million 79 thousand shares of 223 companies clocking in Rs11.24 billion in turnover.The current dip in the share market is in sharp contrast to the <a href="https://www.nepalitimes.com/latest/despite-politics-nepals-stock-market-is-bullish/" target="_blank" rel="noopener noreferrer">boom during the lockdowns and prohibitory orders</a> when other investment sectors remained shut, allowing big and small investors to trade from home with the online trading system flourishing unabated.Bank interest rates also fell as the investment sector shrunk during the closures. As demand for credit in other sectors began to decline, banks also increased their investments in equity securities. As a result, the stock market traded at a record high with a turnover of Rs19.55 billion and Rs21.64 billion on 14 May and 15 July respectively.However, since then with the reopening of other sectors, the demand for bank loans has increased. There are indications that the lack of investment capital will be repeated. As such, banks are preparing to raise interest rates.The share market’s decline has been particularly concerning over the last week, falling from 3044 points to 2817 in five days. This has resulted in a loss of Rs1.5 trillion, down to Rs39.44 trillion on Sunday from last week’s Rs40.89 trillion.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01249c7e80680e0a3615jpeg.jpg" alt="" width="623" height="351"><figcaption></figcaption></figure>Sunday’s fallout also prompted the Capital Market Reform Struggle Committee, led by investor Ram Krishna Dhakal, to demand the resignation of NRB governor Maha Prasad Adhikari for activities that have negatively influenced the share market.The committee has put forward 15-point demands including the limit of Rs120 million on margin loans brought by the central bank through monitory policy to be scrapped, the cap on dividends distributed by microfinance companies to be removed and the provisioning be modified.As per the NRB’s new stricter monetary policy, banks and financial institutions are allowed to give a maximum loan of Rs40 million to an individual or institution on the security of shares. Similarly, an investor can take a loan of only Rs120 million by pledging shares.Read also: <a href="https://www.nepalitimes.com/latest/instability-to-cost-nepal-dear-in-2021/" target="_blank" rel="noopener noreferrer">Instability to cost Nepal dear in 2021</a>, Ramesh KumarThe NRB didn’t only tighten its monetary policy, but all subordinate banks were also placed under strict restrictions, effectively banning them from share trading.To be clear, the NRB’s austere policies have caused the market correction by dislodging the confidence of large and institutionalised share traders, says share market analyst Mukti Aryal.The <a href="https://www.nepalitimes.com/here-now/insider-trading-taints-nepal-capital-market/" target="_blank" rel="noopener noreferrer">Sarbottam Cement share scandal</a>, in which Nepal Securities Board Chairperson Bhishma Raj Dhungana and Nepse CEO Chandra Singh Saud engaged in insider trading on IPOs, had recently dented confidence in the fledgling stock market.But the only way forward is for the NRB to examine its restrictive policies, adds Aryal: “The tightening of stock pledges is the chief reason for the market’s decline. Pledging one’s own assets as securities for trading should not be restricted.”However, instead of agitating against the regulatory bodies, investors themselves must adopt careful share-trading practices, says a share broker, adding that it is natural for the market to fall after being propped up by companies that very recently had bad portfolios.“If investors had invested in companies with solid portfolios, none of this would be happening,” he says. “Instead of investing smartly in profitable companies, investors hedged their bets on hydropower projects, development banks and finance, following the market rumours rather than prudent investment.”Translated by Kaustubh Dhital from the <a href="https://www.himalkhabar.com/news/125732?fbclid=IwAR1n22ltLRWRA6Yi8Lg23aGzl8ZLzgKvIlBx_UTy1R_3m9GZlgogZ9Y4F80" target="_blank" rel="noopener noreferrer">Nepali language original</a> in Himal Khabar.

Inside Nepal’s biggest stock market tumble

<img width="1508" height="900" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbb39c7e80680e0a0b49jpeg.jpg" alt=""/>The heads of the Nepal Stock Exchange (Nepse) and Securities Board of Nepal (SEBON) as well brokers and industrialists have been found to have profited from insider training and conflict of interest, eroding the <a href="https://www.nepalitimes.com/latest/despite-politics-nepals-stock-market-is-bullish/" target="_blank" rel="noopener noreferrer">public’s trust in the country’s stock market</a>.   Documents show that they were engaged in ‘front running’ in contravention of existing rules governing the role of regulators and brokers in stock valuation and transactions. An investigation by <a href="https://www.himalkhabar.com/news/125318">Himal Khabar</a> this week found Nepse CEO Chandra Singh Saud and SEBON Chair Bhishma Raj Dhungana bought shares for family members in Sarbottam Cement at far lower prices just before its Initial Public offering (IPO). The board of directors of Sarbottam Cement decided to sell 6 million shares in the company through a book building process. The shares were valued at Rs750 per unit to raise Rs4.65 billion, of which only 12.9% were included in the initial public offering.  However, many of the shares were sold pre-IPO for less than Rs250 per unit even before the public offering, and others are believed to have been given for free as ‘presents’ to important people. Benefiting were close family members of SEBON’s Chair Dhungana, Nepse CEO Saud, as well as Global IME Capital which was handling Sarbottam’s IPO. <img width="2284" height="1512" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbb69c7e80680e0a0b4ajpeg.jpg" alt="">Says share market expert Rabindra Bhattarai: “This is a clear case of an attempt by insiders to unethically influence the market price of a company offering premium shares.”Global IME Capital’s parent company Global IME Bank is headed by Chandra Dhakal, who is vice-chair of FNCCI and is also a member of SEBON. Dhakal’s brother has 30% share in an investment company that bought some of the shares. Chandra Dhakal therefore had a conflict of interest in being in a position to be the regulator in the sale of investment vehicles in a company that his family had invested in. Documents show that Saud and Dhungana also used their positions to leverage cheap purchases of the shares in the cement company, while Sarbottam benefited by getting permission to enter the share market, illegally influencing the regulators’ decision-making. In the eyes of the law, this is equivalent to corruption and considered a crime.  <img width="1028" height="718" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbba9c7e80680e0a0b4bjpeg.jpg" alt="">“For a CEO of the Stock Exchange or its employees to use information about an IPO to personally buy shares is a direct and serious conflict of interest,” explains capital market expert Mukti Aryal. “Buying shares in a company that is going to be traded on its own platform opens up the possibility of share price manipulation. In a case like this the SEBON official has to declare a conflict of interest and step down.”Front running is a form of insider trading where those with knowledge of a company’s share value use it to make a personal profit at the expense of the public. For example, it is ‘front running’ when a stockbroker receives customer orders to purchase a large stock in a company, but instead speculates the value of the shares and buys or sells off shares for themselves accordingly. Such actions are not just unethical, but can even be considered a financial crime. Nepal’s Securities Act 2007 Clause 91 codifies into law measures against front running, prohibiting SEBON staff from divulging and profiting off any inside information received by their position. Regulatory authorities are also not allowed to be in contact with company executives, founders and managers or exchange any benefits with them.  <img width="2288" height="482" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbbd9c7e80680e0a0b4cjpeg.jpg" alt=""><a href="https://www.himalkhabar.com/news/125244">Nepse CEO Saud told Himal Khabar</a> he did nothing wrong, and admitted that he bought shares in Sarbottam at Rs250 per unit in the name of his wife, Sushila Kumari Bohara, but only after the cement company’s book building process had started. “It is only prohibited to buy and sell in the secondary market, there are no restrictions on buying shares in a company’s initial public offering,” Aryal told the magazine.However, Saud has been accused of purchasing the shares at a price lower than the company’s book-building, or share price evaluation.  <figure><img width="2000" height="1026" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbbf9c7e80680e0a0b4djpeg.jpg" alt=""><figcaption>Nepse CEO Chandra Singh Saud.</figcaption></figure>Companies that are going public must disclose all operations to regulators to ensure market transparency, but in no way are regulator officials, investment executives, brokers, company employees and others with an inside track allowed to enrich themselves using the company’s open books. Similarly, the investigation showed that SEBON chair Bhisma Raj Dhungana had also bought 11,992 shares in the name of his US-based daughter, Rebika Dhungana, in Sarbottam Cement before its book building process had started. SEBON’s Code of Ethics bars the board’s members and chair and their families from engaging in any transaction from which they can financially benefit.“Yes, my daughter sent me money from the United States to buy the shares, and yes, they are her shares,” Dhungana admitted. “Just because I am the chair of SEBON does not mean the law bars my married daughter from buying shares from any company she wants.”Dhungana was formerly with Nepal Rastra Bank, and is believed to have been nominated for the four-year term in SEBON at the recommendation of President Bidya Devi Bhandari. <figure><img width="1604" height="860" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbc39c7e80680e0a0b4ejpeg.jpg" alt=""><figcaption>SEBON Chair Bhishma Raj Dhungana.</figcaption></figure><a href="https://www.himalkhabar.com/news/125258">An expert in share market regulations told Himal Khabar</a>: “This is a straightforward case of insider trading. There is no question about it.”Sarbottam Cement had signed an agreement with Global IME Capital to handle the IPO in March in the presence of SEBON officials, but the process has been delayed till later this month. Nepal’s manufacturing companies, especially in the construction and hydropower sector are currently riding a wave of market confidence. Another compnay, Shivam Cement, recently went public clocking a similarly strong stock market performance. The revelation of insider trading has been greeted by outrage on Nepal’s social media, and is likely to erode people’s growing trust in the stock exchange, with many commentators and financial analysts equating the secondary market with skulduggery, insider trading and outright theft.‘Are board members allowing suspicious companies to release shares under the temptation of illicit rewards?’ asked one social media post. Another went: ‘Is the share distribution process transparent?’ Yet another said: ‘Have finance bosses, chiefs and sales executives rigged the process to earn favourable shares for themselves?’ The share market had been anticipating a surge, riding a wave of investment interest of the Nepali public in the manufacturing and construction sectors. But the reports of insider trading confirm the public’s suspicions of hanky-panky, and are expected to dampen the stock market.  Moreover, moving forward, companies wishing to list their IPOs via book building will be cautious of possible behind-the-scenes dealings.The irregularity in Sarbottam Cement share offering is not the first of its kind, with the Securities Act 2007 violated previously.  In 2014, investors at Citizens Investment and Employees Provident Funds were caught exchanging investment with the Upper Tama Kosi Hydropower with shares for themselves in return. The regulations were subsequently overhauled and loopholes plugged.The Upper Tama Kosi and Sarbottam Cement cases are similar in the sense that they were both examples of graft, wherein two parties are believed to have exchanged confidential information for personal profit. Given the impunity that is rife in Nepal’s political and business spheres, the Sarbottam issue will further damage the reputation, trust and transparency of the share market, hurting an already moribund economy.Stock exchange legal expert Amrit Kharel is clear about the rules: “Three generations of the family members of a person with inside information about an initial public offering are barred from benefiting from any transaction, It is not just unethical, it is considered insider trading. And if any member of staff of SEBON is found to be violating this, they are liable to prosecution.”Links to Himal Khabar series on this subject:<a href="https://www.himalkhabar.com/news/125318">https://www.himalkhabar.com/news/125318</a><a href="https://www.himalkhabar.com/news/125244">https://www.himalkhabar.com/news/125244</a><a href="https://www.himalkhabar.com/news/125258">https://www.himalkhabar.com/news/125258</a>Translated by Kaustubh Dhital

Insider trading taints Nepal capital market

<figure><img width="620" height="366" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bc9c7e80680e092dfdjpeg.jpg" alt=""/><figcaption></figcaption></figure>Aside from second-guessing what will happen in the restored Parliament on Sunday, the major past-time of urban Nepalis these days is to speculate about the country’s violatile stock market.Dring the past six months, the <a href="http://www.nepalstock.com/" target="_blank" rel="noopener noreferrer">Nepali Stock Market (NEPSE)</a> has soared, which immediately begs the question: is a fall imminent?The NEPSE Index is at a record high market capitalisation, which is the total value of shares listed in the stock market. Daily turnovers have started crossing the Rs10 billion mark, invetors seem to be raking it in.All this has happened at a time when the <a href="https://www.nepalitimes.com/latest/instability-to-cost-nepal-dear-in-2021/" target="_blank" rel="noopener noreferrer">economy is being battered by the impact of the pandemic</a>, which has led to heated debates over whether the market is in a bubble and likely to crash, bringing ordinate ionvestors down with it.  Current highs are the combination of several factors:<ul><li>Low interest rate (see figure 1)</li><li>High liquidity in the banking system</li><li>Dematerialisation (conversion of physical certificates to electronic units) of shares</li><li>Restrictionof ‘kitta-kaat’ in real estate</li><li>Fear of missing out (FOMO)</li></ul>Low share prices between 2017-2019 have been attributed to the appointment of <a href="https://www.nepalitimes.com/banner/calendar-of-economic-change/" target="_blank" rel="noopener noreferrer">Yubraj Khatiwada as finance minister</a>. He famously (or infamously for investors) once remarked that investing in stocks was “not productive”. <figure><img width="953" height="560" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bd9c7e80680e092dfejpeg.jpg" alt=""><figcaption> </figcaption></figure>One factor that has gone relatively unnoticed but has been a game-changer is the advent of ‘online trading’. The possibility to make transactions through the online banking system has ushered in a new breed of investors. Online trading has made the Nepali stock market easily accessible to the public, who can now trade from their living room instead of going to a broker office or bank to make a payment.This trend was starting to be reflected in the data before Covid-19 gripped the country (figure 2). From October 2019 to February 2020, the number of monthly share transactions doubled from an average of 200,000 to 400,000, which pushed the NEPSE Index to the 1,600s, despite relatively higher interest rate hovering above 11%. <figure><img width="961" height="541" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bf9c7e80680e092dffjpeg.jpg" alt=""><figcaption> </figcaption></figure>Following Covid-19 restrictions, the number of transactions further increased and reached a whopping 1.1 million per month in recent months. This reflects the unprecedented entry of retail investors who, with a click of a mouse, can invest money that otherwise would be sitting idle, earning savings account interest rates. This increased participation and diversification of the investor base is also reflected by the data on stock market penetration. DEMAT accounts have increased from 800,000 in mid-July 2017 to 1.4 million in mid-July 2019, and is currently estimated at 2.5 million -- about 8% of Nepal’s total population. More than 1.5 million Nepalis applied for the recent IPO of an infrastructure finance company. Compare this number with India, where around 2% of the country’s population invest in the stock market, while in China this number is estimated to be around 7%. But, online trading also brings a host of new challenges. Asymmetric information, poor advisory services and buying shares based on rumours are big concerns. Investors can lose money in the share market if they overpaid for stock or if their investment horizon is not long enough. However, by not investing they can also ‘lose’ potential gains. So, investors need to understand and be aware of cognitive biases that limit investing success. It is as much about human psychology as it is about finance and economics. The importance of diversifying across different companies and sectors, having a long-term investment horizon and personal finance management are even more important these days, but these are severely lacking in Nepal. An investor’s main motto always has to be: buy a diversified set of companies, invest regularly, keep track of the company’s financials and hold for a long period of time. Crucial reforms now await Nepal’s stock market, these can include: <ul><li>Increased participation of companies in manufacturing, agribusiness, etc</li> <li>Strong regulation on insider trading</li> <li>Better trade settlement systems</li> <li>Increasing the limitation of 50 brokers</li> <li>Creation of index funds and exchange traded funds (ETFs)</li> </ul>The NEPSE Index jumped more than 100% in the past year. You could argue that its current level is a bit high, but just because it has gone up by 100% it does not mean that it is overvalued, and vice versa. The cumulative annual growth rate of the NEPSE between 2001 and 2021 is around 12%, which is in line with the 10% return of the S&amp;P 500 (which tracks 500 of the largest US companies) in the same period. During these 20 years, there have also been periods where the NEPSE fell as much as 75% (between August 2008 and June 2011) and soared over 500% (between June 2011 to July 2016). Stock markets are cyclical by nature. Corrections, and subsequent rises, are bound to happen. In this apparently chaotic environment of ups and downs, one thing is here to stay: a fundamental shift and dynamism thanks to a new breed of investors trading online. This will have short-term disruptions, but it is likely to stabilise the Nepali capital market for years to come. Santosh Pokharel, CFA works in development sector. Sudyumna Dahal is Doctoral candidate at CAMA, <a href="https://cama.crawford.anu.edu.au/">Australian National University.</a>

Despite politics, Nepal’s stock market is bullish

Nepal’s Gurkha soldiers have a well-deserved reputation worldwide for uncommon valour and loyalty. However, what happened in Hawaii in 1986 and the long struggle for fair pay and pension shows that the formidable fighters from Nepal also do not tolerate injustice. The Hong Kong-based 1st Battalion of the 7th Duke of Edinburgh’s Own Gurkha Rifles was in Hawaii for jungle warfare training exercises at the Joint Pacific Multinational Readiness Center when they beat up their commanding officer, Major Corin Pearce. &nbsp;&nbsp; The Gurkhas said Pearce had insulted them, and 111 soldiers were dismissed. Pearce suffered broken ribs and a head injury, and was himself also discharged. The incident got worldwide publicity and enforced the belief that the Nepalis were not treated fairly in the British Army. It also led some retired soldiers to begin a decades-long struggle for compensation at par with their British peers.&nbsp; Retired British Gurkha soldier Shankar Rai in his book Triumph and Tears revisits the Hawaii incident which he witnessed, and also his experience in the Falkland Islands/Malvinas war in 1982.&nbsp; He has lots of grievances: unequal treatment and injustice from the British Army towards himself and his comrades. This is an indignant and disillusioned account of the good, the bad and the ugly of being a British Gurkha, which he says let him down despite his service and belief in it.&nbsp; The book could also be a cautionary tale of how one person on a power-trip can tarnish two centuries of the shared history of Nepal and the UK, as well as ruin the lives of those involved. It also is proof that loyalty should never be taken for granted. Four years after defeating the Argentinians in the Falklands, several companies and platoons of Gurkha rifles were stationed in Hawaii in 1986 for joint US-UK ‘Exercise Union Pacific’ military exercises. The goal was to ‘perfect the art of marine warfare in collaboration with the US Marine Force’. The rules were that a British Gurkha company commander needed to have the rank of major and pass a Nepali language test. Captain Pearce was the son-in-law of a British Brigadier on extra-regiment employment, and this rule was waived. He was appointed Acting Major. Pearce didn’t bother to learn Nepali language or culture, and from Rai’s account took every chance to belittle and embarrass the Gurkhas as poor, stupid, rude, backward, and lucky to be there. He writes: ‘After Captain Pearce reached Hawaii, he began to project himself as a master and the Gurkhas as servants, to show off to the Americans.’ The author also recounts other slights, such as only receiving a fourth of the rations they were due during hard training, being forced to train even when some of the soldiers had high fever, and claims to have ‘civilised’ the Nepalis.&nbsp; Pearce had been to eastern Nepal before the training and seen the grinding poverty. He kept telling the Gurkhas how lucky they were to be in the job, and that they were making ‘more money than Nepal’s prime minister’. During the final farewell party in Hawaii, Pearce set up tables to form a saluting platform, and asked the Gurkha pipe and drum band to march around him while playing. The enraged soldiers could not take it anymore, and after the party an inebriated group ran Captains Pearce and Chandra Kumar Pradhan out of their tents and beat them up. Both officers broke ribs, and the major needed 15 stitches on his head. ‘This sorry and unseemly episode is considered to have been entirely at odds with the Brigade of Gurkhas’ tradition of loyalty and gallant service in the British Army. It is regarded as an isolated and untypical event, which will not be permitted to detract from the high esteem in which the Brigade is held,’ reads the report of an investigation. Most of the 1/7 company soldiers were dismissed whether they had been involved in the assault or not. The author describes the shame that followed, with dismissed soldiers returning to Nepal with lost face.&nbsp; ‘I burned with humiliation, and life scared me,’ writes the author, whose father told him that he was ashamed to call him his son. ‘Many of my friends’ girlfriends left them and married other people. Rifleman Khem Gurung (21162015) of Itahari committed suicide,’ writes Rai, adding that those dismissed were blacklisted, and could not get other jobs.&nbsp; They tried to pursue legal action against the British Government, but backed down when they could not afford expensive hotshot lawyers, and would not have the money to cover the British government’s legal fees in the likely case of a loss in court. Gurkhas who had served for four years in the UK were allowed to move there, an option that many of those dismissed in the Hawaii incident took, including the author, who now lives in Oxford. Rai pours out his hurt and emotion in the book. Towards the end, he writes: ‘I depend on small jobs for livelihood. In the remaining time, I actively raise the issue of the victims of the Hawaii incident. We are burdened with insults, hatred, and contempt for a lifetime. It was harsher than a court martial, too heavy to bear.’ The is a slim book, and is a quick, engaging read of an incident 30 years ago, and Rai writes with a soldier’s precision. Even though the anger shows even after all these years, there is no over-dramatisation in the narrative.&nbsp; The first part of the book is about sailing across the South Atlantic in the QEII, which had been converted into a troop ship to take the Gurkhas to war. The soldiers from landlocked Nepal were mostly sea-sick, but were happy to get two cans of beer a day. Barclays Bank even had a branch on board. Rai’s descriptions of the friendships he developed in the Company and on the battlefield are poignant. They braved Argentinian bombs, dug trenches and fought through the rain in the Southern Hemisphere winter. There are vignettes of sharing tea with fellow Nepalis, seeing comrades fall, and finding pictures of wives and children in the pockets of dead young Argentine soldiers. Behind the prestige, honour and myths of being a Gurkha soldier, it seems this is just another job with nepotism, horrible bosses and bad pay. But such is the desperation that up to 20,000 young Nepalis still apply for 300 openings in the British Army every year. &nbsp;&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251227041256_694a253e782c83b0bf89fc1b9840b0ade3f7beca2d0b01dbc4fcd3e63c207f50.jpg" data-media-id="editor_0" data-image-id="20251227041256_694a253e782c83b0bf89fc1b9840b0ade3f7beca2d0b01dbc4fcd3e63c207f50" data-rendition-name="original" width="1136" height="702" loading="lazy" alt="Triumph and tears book details NT"> </figure>

Not taking loyalty for granted

After a week of to-and-fro that culminated in all-night bargaining, two populist young figures in Nepali politics agreed at 4AM on Sunday to join forces ahead of elections in March. Rabi Lamichhane of the RSP, who came out of jail a week ago, has forged an alliance with Kathmandu mayor Balen Shah. Both are keen to ride on the GenZ wave that radically changed the direction of Nepal’s politics that has been dominated by three mainstream parties for the past three decades. Under the 7-point deal, Lamichhane will still head the RSP, while Shah has been promised prime ministership if the party wins a majority in the federal elections. Shah will also be the parliamentary party leader. The RSP will keep its name and election symbol. “Agreements must be made not on the basis of what leaders want, but on what the country needs,” Lamichhane wrote on social media announcing the alliance. The RSP chair is said to have put his own prime ministerial aspirations on hold to ensure the Kathmandu Mayor's support for the March polls. This is an alliance of convenience. Lamichhane requires the backing from Shah’s youth voters to face the legacy parties, while the mayor needs a political platform. Ultimately the prospect of leading not just Kathmandu but Nepal itself appears to have been the deciding factor for Balen Shah. The Kathmandu mayor is reportedly keen to contest the election from Jhapa against former prime minister K P Oli in his constituency.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251228041212_1b26fd7f14e418a9bdb827a7b733914c08183c36b4a93694fc1aefda9f45d85a.jpg" data-media-id="editor_0" data-image-id="20251228041212_1b26fd7f14e418a9bdb827a7b733914c08183c36b4a93694fc1aefda9f45d85a" data-rendition-name="original" width="900" height="900" loading="lazy" alt="Balen-Rabi alliance"> <figcaption>Photo: BALEN SHAH, RABI LAMICHHANE / FACEBOOK</figcaption> </figure>  The two have much in common. Lamichhane, a former tv anchor, returned from the United States and launched the RSP as an alternative party four months before elections in 2022. He served as Home Minister twice in Pushpa Kamal Dahal's coalition government before being jailed for defrauding cooperatives depositers. He made a jail break during the September protests, returned to prison voluntarily, and was released on bail last week. Balen Shah stood as an independent candidate for mayor of Kathmandu in local elections in 2022, and was catapulted to victory because of anti-incumbent protest votes among urban youth.&nbsp; Both campaigned on social media, pushing a populist anti-corruption agenda and against the governance failure of the three establishment parties — the same logic that drove the GenZ protests in September that escalated into violence and brought down the UML-NC coalition. Even as government buildings smouldered on 10 September, GenZ members were strongly urging Balen Shah to be the interim prime minister, but when he declined they voted on Discord for former chief justice Sushila Karki.&nbsp; With just over two months to go for elections on 5 March, Prime Minister Karki has been trying desperately to get the mainstream parties on board. She has met twice with the top leaders of the UML, NC and the NCP. All three parties have been dealing with internal power struggles, and the UML appears to be the most reluctant to face elections.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251228051212_d42944e014b278d6864270b74f924ac842d6f7a68d5bd6817148d120522ba60b.jpg" data-media-id="editor_1" data-image-id="20251228051212_d42944e014b278d6864270b74f924ac842d6f7a68d5bd6817148d120522ba60b" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Sushila Karki with political leaders"> <figcaption>Prime Minister Sushila Karki has been meeting with leaders of the mainstream parties to get them on board for the election. Photo: PMO</figcaption> </figure>  The UML’s former prime minister K P Oli has refused summons by the Judicial Inquiry Commission charged with investigating the massacre of protesters on 8 September and the arson and vandalism the next day. Then home minister Ramesh Lekhak is scheduled to give his deposition to the Commission this week. The legacy parties appear to be taking the threat from the Rabi-Balen partnership strongly, and have been trying to forge an electoral alliance so they do not compete against each other.&nbsp; They are relying on traditional vote banks among the rural electorate, and calculate that alternative forces will cancel themselves out. They could also be hoping that Balen Shah’s erratic behaviour and Rabi Lamichhane’s prison conviction will put voters off. A total of 837,094 first-time voters have been registered in Nepal ahead of the elections.&nbsp; The Kathmandu mayor is an engineer and rap artist, and had till now been reclusive, preferring to post on social media rather than face the press. His late-night online posts have been impulsive: like the one urging that Singha Darbar be burnt down, or another one recently in which he used the f-word against the US, China, India and the mainstream parties. He later deleted both posts.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251228041212_a2f87881e36fb40b82bf77e1b07003aaf36b91e2a9eb5da096f1e562654c31e3.jpg" data-media-id="editor_2" data-image-id="20251228041212_a2f87881e36fb40b82bf77e1b07003aaf36b91e2a9eb5da096f1e562654c31e3" data-rendition-name="original" width="1112" height="1440" loading="lazy" alt="Balen Rabi agreement NT"> <figcaption>The seven-point agreement between Shah and Lamichhane. </figcaption> </figure>  Lamichane and Shah had also been negotiating with Energy Minister Kulman Ghising’s newly-forced Ujyalo Nepal Party, but the bargaining did not go well because Ghising refused to fight elections under the RSP banner. If the three had been successful in coming together, it would have been a formidable alliance. There are misgivings about the RSP-Balen Shah deal, even among some GenZ who see the two prominent men dividing up the power structure as just the kind of political culture they wanted to reform. Many are already predicting exactly the kind of clash of egos between the two alpha males that characterised Nepali politics since the restoration of democracy in 1990. In the coming days, as with most political change in Nepal, there will be much speculation about the geopolitics behind the Rabi-Balen deal. Balen Shah’s angry post against India-US-China as well as his past nationalistic pronouncements on Nepal’s territorial dispute with India over Kalapani will be recalled, while Beijing has misgivings about the antecedents of some GenZ figures. Dharan-mayor Harka Sampang, who has also formed his own political party, has already pronounced the Rabi-Balen deal as being “foreign backed”.

Old vs New in Nepal in 2026

Everyone in the world is running some kind of race. Some chase recognition. Some chase money. Others run simply to stay ahead of others. But there are some who run for others. They are not trying to overtake anyone, they do not do it for fame, they are not getting paid to do it. But they run to pay for the upliftment of those less privileged. Bal Joshi, 41, is originally from Surkhet. His father was involved in the democratic movement during the days of absolute monarchy and he remembers frequent police searches of the house. And with his father in hiding, the young Joshi had to take care of the family. When the family’s small shop failed, his mother took the young Bal and his brother back to the village, and that is where he completed his education, walking four hours roundtrip every day between home and school. He ran most of the way, and without realising it he has been running ever since. Life was hard. Rent, food, education. His mother struggled constantly. There were days when there was no money even to buy kerosene for the stove. At one point, he sold his calculator, worth Rs 300, for just Rs 80 to get by.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251229031252_edb16b64a3d362a8dc86870bfa5deaad03a84e67d47f37cfd0bb5a8e584691fe.jpg" data-media-id="editor_0" data-image-id="20251229031252_edb16b64a3d362a8dc86870bfa5deaad03a84e67d47f37cfd0bb5a8e584691fe" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Running for dear life NT"> </figure>  At 15, Joshi moved to Nepalganj to continue his education. He initially stayed with his uncles, but eventually began living on his own. The transition to city life was difficult, and he experienced significant economic hardship while trying to pursue his studies. There were times when he struggled to meet basic needs, and at one point he sold his calculator just to get by. When he was 17, after hearing that his father was seriously ill, Joshi travelled to Gujarat to bring him back home. His father died soon after, and Joshi took on responsibility for supporting his family. It was his mother who taught him that despite scarcity, life had to be lived with dignity. Joshi started working at a newspaper at the age of 16 as a proofreader, and later became a journalist. During the Maoist war when children were being orphaned as a result of violence by both sides, he became active in the Sahara Group, and at 19, he began managing an orphanage that took in conflict-affected children. In Bajhang, after the army killed a man on suspicion of being a Maoist, his wife jumped into the Seti River and ended her life. Their two children were taken into army custody. During the rescue process, Joshi met Sunaina Adhikari of the ICRC and back in Nepalganj they decided to get married. The conflict was still raging in western Nepal in 2005, when Joshi went to the United States. In Maryland, he initially worked at a Bengali-owned Subway outlet, spending long hours on his feet behind the counter. He changed jobs frequently, financing his education along the way, and ultimately graduated with a degree in finance in 2008. He joined Hancock Whitney Bank in Texas, and has risen up the ranks to be Senior Vice President. A colleague inspired him to run as a way to stay healthy. But it soon turned into something more meaningful — running more than a dozen 50km marathons for charity.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251229031252_165a6d935860cf6707178aa2ac7395733883158f425bbe0ebed125529d601f61.jpg" data-media-id="editor_1" data-image-id="20251229031252_165a6d935860cf6707178aa2ac7395733883158f425bbe0ebed125529d601f61" data-rendition-name="original" width="999" height="1500" loading="lazy" alt="Running for dear life NT"> </figure>  Last year, Joshi returned to Nepal to run the Everest Marathon, and raised $42,000 which he donated to <a href="https://onestepfoundation.org/" target="_blank">One Step Foundation</a> which works on health care, child welfare and cultural preservation in Nepal and around the world. In June this year, Joshi and his family climbed Kilimanjaro, raising $19,000 for 80 HIV-affected orphaned children in Tanzania. During the Diwali festival he ran 220km in Nevada’s Red Canyon and raised $25,000 for cataract surgeries through the the <a href="https://www.theruitfoundation.org/" target="_blank">Ruit Foundation</a> in Nepal for cataract surgeries.&nbsp; Joshi does not run competitions, and is not trying to break any records. His motto is: “My race, my pace.”&nbsp; Turning his childhood scarcity into helping others, he says: “We all share sunlight, rain, air, and soil, nothing is truly just your own. I grew up without shoes, and I am fortunate to be able to distribute shoes to those who walk barefoot.” We ask Bal Joshi what (and where) next? His answer: the <a href="https://www.worldmarathonchallenge.com/" target="_blank">World Marathon Challenge</a> that will go around the world to run seven marathons in seven continents in seven days beginning in Antarctica at end-January.&nbsp; Joshi aims to run wearing the daura suruwal and Nepal’s flag as to show where he comes from, and how far in life he has come.

Running for dear life

A day after Rabi Lamichhane and Balen Shah <a href="https://nepalitimes.com/news/old-vs-new-in-nepal-in-2026-z6l4fgrd">came together to form an electoral alliance</a>, Kulman Ghising has also joined forces with the two leaders, merging his Ujyalo Nepal Party with the RSP.&nbsp; Following last-minute negotiations before Monday’s midnight deadline for parties to file their list of candidates for the Proportional Representation (PR) seats, Lamichhane and Ujyalo Nepal chair Anup Kumar Upadhyay signed a seven-point agreement to unify the two parties, with Balen Shah as witness.&nbsp; Per the deal, Ghising will be the vice-chair of the RSP, joining DP Aryal and Swarnim Wagle as the party’s seconds-in-command. The earlier agreement between Lamichhane and Shah retained Lamichhane as RSP chief, and promised Shah prime ministership if the party wins a majority in Parliament in March.&nbsp; Ghising’s team reportedly has a 17% share on the list of PR candidates filed by the RSP at the Election Commission. Balen has also fielded his own picks, and together the party has the likes of cricketer Gyandenra Malla, actress Reema Biswokarma, rights activist Mohna Ansari, climate activist Tashi Lhazom, and singer Prakash Saput as PR candidates. Ghising had held multiple rounds of talks with the RSP chair and the Kathmandu Mayor to discuss possible collaborations, but had failed to reach a power-sharing agreement. On Monday, Ghising had met with Lamichhane heeding a last-ditch effort from GenZ leaders, in particular Sudan Gurung, as they tried for the final time to get the interim Minister on board with Lamichhane and Shah before the PR list submission deadline.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025123004128_99e23ae7b6a042e71d271e3e74f7527086a7bb55779e6781bc9e7b711c8303e7.jpg" data-media-id="editor_1" data-image-id="2025123004128_99e23ae7b6a042e71d271e3e74f7527086a7bb55779e6781bc9e7b711c8303e7" data-rendition-name="original" width="1595" height="1087" loading="lazy" alt="Sudan Kulman Balen"> <figcaption>Photo: SUDAN GURUNG / FACEBOOK</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025123004128_d9f530704ab4c6e27eebf51f8e9fb55fed1d4281c99d089d06455cc7448bfda7.jpg" data-media-id="editor_2" data-image-id="2025123004128_d9f530704ab4c6e27eebf51f8e9fb55fed1d4281c99d089d06455cc7448bfda7" data-rendition-name="original" width="1026" height="1084" loading="lazy" alt="Balen and Sudan NT"> <figcaption>Photo: BALEN SHAH / FACEBOOK</figcaption> </figure>  The three are now set to make a formidable team to challenge mainstream parties at the polls. News of this alliance has been welcome to Nepalis who are looking for any alternatives to break the stronghold of the Oli-Deuba-Dahal trio over Nepali politics in recent history.&nbsp; But they will also carry each other’s baggage.&nbsp; Lamichhane, who was jailed for defrauding cooperatives depositors last year, was welcomed back as RSP party chair with open arms after he was released on bail last week. And while he has maintained his base of loyal supporters, he was subject to widespread criticism after he walked out of detention amid the jailbreak during the September protests, prompting his eventual voluntary return to prison.&nbsp; His party’s silencing and expulsion of critics within the RSP has also drawn direct comparison with the leadership structure of Nepal’s mainstream parties. Prominent leaders like Sumana Shrestha have left the party over disagreements with leadership.&nbsp; Meanwhile, Balen’s impassioned campaign resonated with Nepalis disillusioned with establishment leaders during the 2022 election and made him mayor of Kathmandu. The mayor’s direct, no-holds-barred style of communication and commentary has attained him much support beyond his constituency.&nbsp; But his unyielding, often unempathetic leadership style and policies— like his dismissal of street vendors and informal businesses during his drive to free up Kathmandu’s footpaths— have also earned him detractors. His recent outburst on social media in November that included expletives against both of Nepal’s neighbours and the US, as well as Nepal’s three main parties and the RSP was also widely criticised.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251230041212_fc2088daf32bac93541ebf25ca07725d75a721ae83440749ac8fa09d8fe308f2.jpg" data-media-id="editor_3" data-image-id="20251230041212_fc2088daf32bac93541ebf25ca07725d75a721ae83440749ac8fa09d8fe308f2" data-rendition-name="original" width="890" height="1255" loading="lazy" alt="Agreement NT"> <figcaption>The seven-point agreement between RSP and Ujyalo Nepal Party.</figcaption> </figure>  Ghising, credited with ending Nepal’s prolonged load-shedding during his tenure as the chief of Nepal Electricity Authority, has a reputation of getting the job done. His public goodwill earned him a seat on Prime Minister Sushila Karki’s interim Cabinet following the youth protest.&nbsp; But he has also been under scrutiny for funds misappropriation as well as controversial power purchase agreements during his tenure as NEA chief. Ghising had foregone the leadership position at his Ujyalo party, preferring to play the role of patron until closer to the election date, but was nonetheless criticised for his political and electoral aspirations while being a member of the transitional government. It now remains to be seen if and when Ghising will step away from his position in the interim Cabinet and begin campaigning with his new partners.&nbsp; As it stands, the involvement of prominent GenZ figures in bringing together Ghising, Shah, and Lamichhane has established youth leaders as major players in Nepal’s post-September political landscape. These leaders will have significant pull with young and first-time voters. But not all young leaders are impressed with this new triumvirate. Some have pointed out that the unity between these three leaders is no different from the political opportunism and quid-pro-quo power-sharing culture established and followed by Nepal’s mainstream leadership for the last three decades which culminated into the GenZ movement of September.

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