New Nepali ‘Laissez Faire’ How Strong? How Long?

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Cover Story December 2013
 
The nation after its recently concluded historic polls for the next Constituent Assembly and Parliament registering 71% turnout, now expects liberal economy, business freedom, large-scale FDI and power generation, and employment promoting measures from the new Constitution and the government that comes ahead, as found by Prof Ujjwal K Chowdhury, after talking to several people from various walks of life.
 
There is hope in the air. Seven out of every ten Nepalis on the voters’ list of Nepal have exercised their franchise. And, six out of every ten Nepalis who have voted have gone for centrist and liberal left political forces (Nepali Congress & CPN UML), while virtually rejecting the far left polls-boycotting so-called 33-party alliance, the radical left Maoists led by Prachanda, and the rightist regional forces of Madheshis and far right RPP forces.
 
The message is clear. Enough of politicking, now make the polity firm and economy firmer. Create a business environment that is conducive to entrepreneurs, to foreign direct investment and to rapid employment generation.
 
New Business Age interacted with several experts and noted people from various walks of life to ascertain the mood of the nation with regards to the economy of tomorrow.
 
There is surely a high hope that the newly elected CA-Parliament will draft the new constitution that would introduce new economic policies that would propel the country toward the positive direction and we could witness the inevitable growth and development of the country coming with a stable economy. 
 
Eminent economist Rameshore  Khanal, the former Finance Secretary sums up the spirit rightly, “The Constituent Assembly election results show parties contesting on conservative economic ideologies have been rejected by voters. Nepali Congress (NC), which is considered as a party having the most liberal economic policies, dominated the polls especially in urban areas across the nation. People expressed their aspirations and exercised their power during this election so as to set the progressive course for issues that matter them the most.”
 
The defeat of the Maoists and the regional forces is also seen as the defeat of the federalist agenda. Khanal further notes, “In fact, business community was terrorized due to ethnicity-based federal agenda put forth by UCPN Maoist,” he said, adding that the recent poll results might have relieved the entire business community. More than 90 per cent businessmen do not want federalism based on ethnicity because they cannot do good business amid ethnic tensions. The entire business environment would be more volatile if political parties that favour regional and ethnic agenda had won the election”.
 
Rightly does Kamlesh Kumar Agrawal, the General Secretary of Nepal Chamber of Commerce, observe, “Clear mandate for the centrist parties is a good sign indeed, and a major difference from the last CA election result. Now is the time for them to fulfill their promises of economic revolution or rapid development”.
 
Shekhar Golchha, the President of Nepal Automobile Dealers’ Association, is visibly happy with the turnout, the peaceful polls and the results emerging out of the process. He is satisfied that while issues of federalism, sub-national identity etc found limited mention in election manifestos of most parties, the focus has rightly been on economic aspects and stability of the polity. 
 
Bhaskar Raj Rajkarnikar, the Senior Vice President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), is confident that the new Constitution shall finally be put in place in Nepal now. And the government shall now work firmly towards creating investment-friendly environment in the country. However, he also strongly espouses the need to have local governance bodies as well.
 
CA Election
 
Common Minimum Economic Agenda
It would be pertinent to mention here that the five recent former Prime Ministers of Nepal (Madhav Nepal and Jhalanath Khanal of CPN UML, Sher Bahadur Deuba of Nepali Congress, and Pushpa Kamal Dahal and Dr Baburam Bhattarai of UCPN Maoist) came on the same platform of Nepal Leadership Summit created in Birgunj by the Birgunj Chamber of Commerce and Industry and New Business Age group, and at the end of their deliberations on Economic Growth Roadmap of Nepal for the next one decade, they had signed a 12-point Common Minimum Economic Agenda, which included several fundamental issues.
 
The Declaration noted that the ratifying five leaders commit to give priority to the national economic agenda rather than their respective party agenda in national interests, and also to end the current uneasy industrial relations in favour of productivity, and bring in a new labour and industrial policy conducive to overall economic development. The leaders firmly were committed to individual property rights, the important role of the private sector in the economy, and to an environment to attract rapid FDI in Nepali industries.
 
A sampling of the core issues taken up in the talks by these leaders: “Unhindered power supply is the pre-condition for economic development, in which the government should not run businesses, but just be the regulator,” Sher Bahadur Deuba; “Green economy the focus of economic development,” Madhav Nepal; “Agriculture, regional market and infrastructure development for economic prosperity,” Jhala Nath Khanal; “Foreign investment urgently required, and economic revolution with justifiable distribution must,” Dr Baburam Bhattarai; “Time for economic revolution, in which agriculture is the base, and production, construction and development going hand in hand,” Pushpa Kamal Dahal.
 
Today, since three of these former PMs are the top leaders of the top two parties, Nepali Congress and CPN UML, getting support of above 50% of the voters who exercised their franchise, this itself can be the first corner-stone of economic policy-making of Nepal next.
 
CA Election Nepal
 
Securing Private Property
 
Narottam Aryal, Educationist
Narottam Aryal
Educationist
The first and the biggest concern is of security of private property and business.
 
“The new constitution MUST acknowledge the role of private sector in the national development and ensure the property rights and should guarantee its security,” notes Narottam Aryal, an educationist leading the forum of Nepali colleges affiliated to foreign universities. 
 
Similar voice is echoed by the Manager (Business Development), Chaudhary Group, Roshee Lamichhane, “There is an urgent need to espouse and introduce economic reforms in Nepal with their principal focus on Private Property holding, freedom for entrepreneurial innovation, and abolishing cartel systems.”
 
Employment Generation
Property rights apart, the next big concern is naturally of employment. 
 
According to Central Bureau of Statistics, the unemployment rate stands at an alarming 46 percent. The only ambition that most young people have is to leave Nepal and a couple of thousands of young people get on planes every day and fly to the Middle East, South East Asia, Europe and beyond to find jobs. However, there is a huge potential of jobs within the country itself. “To address this issue to a larger extent I believe private sectors should be promoted to play a vital role in the growth of national economy and in creating new employment opportunities as it is the only sector that remains the single largest employer,” notes Amit Giri, CEO of International Centre of Academics focused on the task of taking higher education through distance and online learning mode to working people of Nepal.
 
Limiting Government Role in Business
A well-known axiom states that the business of government is not to do business. The government has to define in a very clear and precise terms the roles and responsibilities and limit of the state and roles of the private sector. 
 
Educationist Narottam Aryal of King’s College notes in this context, “I think that there is still a huge confusion on this front in Nepal. I think that the Government should limit itself to building infrastructure, creating maintaining legal institutions, maintain law and order and peace, and education and health. For the rest of the things the Government must create an enabling environment for the private sector. The new government must bring the programs to promote youth entrepreneurship with a special focus on agriculture and tourism.”
 
Agriculture: the Mainstay of the Economy
Nepal is among the poorest and least developed countries in the world, with about one-quarter of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for a little over one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain. Amit Giri calls for policies that allow agrarian credit, market forces to help develop agri-business and conducive environment ensured by the government for the same.
 
Infra-structure Leap: Backbone for Industrialization to follow
 
Bijay Rajbhandary, Managing Director CE Construction Pvt Ltd
Bijay Rajbhandary
Managing Director
CE Construction Pvt Ltd
“Infrastructure development is a basic tool to upgrade the country’s economic activities, hence there has to be special policies to accelerate the development activities. Real Estate sector, despite its significant contribution in country’s economy is highly fragmented and disorganized. Hence, in order to strengthen this sector, it should be treated as an industry and proper norms and policies should be formulated protecting the interest of this industry, Policies need to be introduced for allowing the foreigners to buy apartments in Nepal with $ 100,000 ceiling but through foreign currency to help boost foreign currency reserves in Nepal,” notes Bijay Rajbhandary, the Managing Director of CE Constructions, a leading realtor of Nepal. 
 
It is worthwhile to note that though more than 10,000 kms of roads have been blacktopped, at least another 10,000 kms need to be done so out of the 40,000 kms of graveled roads to help push business through ground transport.
 
Power Surplus Nepal
Former Finance Secretary, Rameshore Khanal, is bang on, when he says, “New government should focus on power generation to boost the production since the overall productivity of the country has been affected due to the condition of power deficit.  Also, new government should immediately forward some laws related to economy including banking, electricity, industries among others and it should bring special measures to attract more foreign direct investment.”
 
Bijay Rajbhandary echoes the same spirit when he says, “Needless to mention, our country is reeling under the acute energy crisis, and in the light of the fact that Nepal has the capacity to generate hydropower sufficient to export, apart from internal consumption, there has to be some special arrangement from the government side to ensure that such projects are protected from any kind of hindrances, be that political or social.”
 
A nation with more than 80,000 MW of hydel power producing capacity, and with immense solar and biomass power resources, has less than 1000 MW of installed capacity. Nothing can be a larger wastage of resources than this, indeed.
 
“Power Surplus Nepal movement, engulfing enabling policy-making by the government, active domestic and foreign direct investment in this sector, a pro-active media influencing public opinion towards it and a dynamic bureaucracy, has to be the primary national mission today,” notes journalist Janardan Baral.
 
Investments: Domestic and Foreign
“There are lots of investments currently held up with the hope of much anticipated stability. The election result clearly embraces free market economy and has rejected federalism based on ethnic provinces (showing inclination towards economic development). Militant workers’ union affiliation is assumed weakened that gives hope for local industries that have suffered over a decade. I have reasons to hope these foundations will be addressed in the Constitution. I hope the government will vigorously implement promises, focus on stability, invest in infrastructure and recoup the lost decade of dark era. All this will boost investor confidence that will take the country to a much awaited, rather needed, growth trajectory,” notes Managing Partner of Mathema + Partners, an architectural firm Ajaya Mathema.
 
Taking the discourse to the policy level, Bijay Rajbhandary says, “ We need clear-cut policy for Foreign Direct Investment in Nepal that would allow a good influx of foreign capital along with their expertise that would create a good development as well as job opportunities within Nepal. Likewise, we also need a policy allowing Nepali investment in foreign land in order to explore and exploit the growth opportunities present in those countries.”
 
Educated, Trained Nepal
“A major focus in the new Nepal should be on providing free and quality primary and secondary public education to all as the research shows that access to secondary education (grades 9-12) remains a major challenge, as evidenced by the disturbingly low net enrollment rate of 24 percent at this level. More than half of primary students do not enter secondary schools, and only one-half of them complete secondary schooling. In addition, fewer girls than boys join secondary schools and, among those who do join, fewer complete the 10th grade. Girls should be encouraged more to study as I believe that when a girl gets educated a family gets educated and when a family gets educated the society gets educated. Hence, the country gets educated. Alongside, to make higher education accessible at every Nepali, liberalization of the education sector leading to more and private Universities and even Distance and Open Learning Universities need to be allowed by the government changing the current policy regime in this context,” notes Amit Giri.
 
Focusing on systemic changes within the sphere of public education in Nepal, Bijay Rajbhandary notes, “Education sector must be secluded from any kind of political interference at all levels. Besides, teaching methodologies also need to be amended giving more emphasize on general and practical knowledge and skill development rather than making it exam focused”.
 
Media & Entertainment Sector
Narayan Puri, noted film-maker and the CEO of Himalaya TV, speaking on expectations of the entertainment sector, says, “We’ve been waiting for development in our industry as well. There must be given soft loan for this industry in low interest, which can happen if this sector is recognized formally as an industry by the government. We need electricity facilities as other normal industries. Further, the owners of entertainment enterprises are often been made hostage by the workers on minor issues and no security is provided for the investors. There has to be strict policy in this regard. This is largely a non-profit business as well as social awareness and information providing business. And, hence, the government should provide subsidy for this business. Different new technical equipments are required in this business so government must tax rebates in this sector. Any kind of media which gives awareness and information to the public about education, public health, etc must be encouraged by the government.”
 
Tourism Promises
“With Nepal having abundant scenic beauty is already attracting many tourists from across the world but there could be an added milestone in this line with some development in tourism sector by adding Health tourism and Religious Tourism in the existing portfolio,’ Bijay Rajbhandary notes.
 
With airborne tourists still less than a million in Nepal, and per capita spending of tourists coming below USD 40 a day, there is a long way to go indeed. Power supply, better infra-structure, better hygiene, new destinations, integrated promotion of Nepal tourism in select markets with focus on digital communication, along with enabling policy encouraging FDI in tourism as well from the government end will help make Nepal move higher from the current 112th position in world tourism revenues of nations.
 
Rightly does Ashok Pokharel, the President of Nepal Association of Tour Operators, say, “Peace, security and physical infra-structure are the hall-marks of rapid tourism growth.” Buddhist centre of Lumbini and leading Himalayan destination Pokhara surely need international air connectivity, while Kathmandu needs faster upgradation of road infrastructure. 
 
The Last Word
Roshee Lamichhane, Manager, CG
Roshee Lamichhane
Manager, CG
“I favour national consensus government should be formed for stability in the political arena”, says Rameshore Khanal. And the national consensus government can be created only by bringing the top two largely centrist parties closer, rather together, in their mission, Nepali Congress and CPN UML, he adds.
 
CG Manager Roshee Lamichhane, a representative young voice, notes, “New government should therefore ensure that the benefits of economic growth and development are not going to be cornered away by few influential people and businessmen or politicians but are going to be conferred among the masses and the new political regime operates the economy to make it become and remain vibrant with employment opportunities and marketable surplus. I can only envision an ever growing economy wherein the government can satisfy the Nepal’s appetite for good food, well served, at a price that even common man can afford.”
 
Taking the discussion to another level, Ajaya Ghimire, Chairman, Ace Institute of Management, says, “I do hope however that a constitution will be written within two years. It will embrace periodic elections allowing people to choose who will govern the state. It will also embrace freedom of expressions and freedom of economic activity and constitutional right of the individual against state oppressions.  But for people to truly experience those rights and freedom, we will have to wait for our society to evolve from its present feudal mindset.” Prophetic, quintessential aspiration of the moment.

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