Nepal firms face closure after rebel threats

KATHMANDU, May 21: Extortion by Maoist rebels in Nepal is threatening hundreds of businesses still struggling to cope with months of political unrest, officials said today.

They said about two dozen industries had been forced to close in the southern town of Birgunj and many others would follow suit if rebels did not stop making threats.

''The Maoists are demanding huge sums of money and intimidate the management to close plants,'' Bijay Sarawagi, chief of the local unit of the Federation of the Nepalese Chambers of Commerce and Industries told Reuters from Birgunj.

Birgunj is a major business town 150 km south of the capital Kathmandu. It is home to about 500 industries producing iron goods, hydrogenated vegetable oil and clothes and employing about 50,000 workers.

Sarawagi said groups of Maoists come into the factories, demand work or higher wages for their cadres or force the factory to close.

''If this continues all 500 factories will be forced to shut down,'' he said.

A trade union affiliated to the rebels has denied issuing threats or collecting money by force from industries, but business groups say extortion continues despite a truce that is in force.

Last month, the Maoists declared a ceasefire after King Gyanendra gave in to weeks of street protests and handed power back to political parties.

The new multi-party government also matched the truce and both sides have agreed to talks. No date has been fixed for the meeting.

The Kathmandu Post daily said Prime Minister Girija Prasad Koirala spoke to rebel leader Prachanda on telephone Yesterday about the threats and urged him to halt extortion and intimidation of firms.

Yesterday, the Nepali Congress party, the nation's biggest political group, urged the Maoists to stop extortion.

Maoists have been extorting money to fund their war against monarchy since they began the fighting in 1996.

More than 13,000 people have died in the conflict that has shattered the aid and tourism dependent economy, one of the world's 10 poorest.

REUTERS