After getting clearance from the Parliamentary Development and Technology Committee, the controversial Information Technology Bill is now in the House of Representatives for deliberation. It is an irony that a proposed legislation, which has provisions to curtail the fundamental rights of citizens, has made its way through the House of Representatives without sufficient discussions inside and outside parliament.

The different clauses of the Bill will adversely impact the fundamental rights guaranteed by the Federal Constitution including freedom of speech and expression, press freedom and privacy of individuals. It will impede development of the IT sector and the overall internet ecosystem in the country. For example, Section 115 of the proposed legislation has the most objectionable provision which is aimed at controlling freedom of expression. It gives the government absolute power to bypass the judiciary to form a semi-judicial tribunal to punish people with severe sentences if it finds their postings on social media and other online contents to be ‘crimes against the state’. It is unthinkable in any democracy that a government can act against citizens in such a draconian manner and makes freedom of expression a criminal offence. Similarly, the government ‘can direct’ operators of social media services to remove posted/uploaded content or ones that are in the process of getting posted/uploaded if the authorities view such content as being illegal.

Not only ordinary citizens, IT firms are also likely to get penalised for providing services to customers. As per Clause 92 of the Bill, ISPs will have to face criminal prosecutions if web links and other information, that are deemed illegal, are found in the services they provide to subscribers. Similarly, if the Bill is enacted as law, IT businesses in the country will be required to register at the Department of Information Technology and existing firms will get six months once the law is enacted to register. They will be barred from operating if they do not renew their company registration every two years. Bankers have already objected to clauses 68 and 81 of the Bill stating that the provisions restrict them in terms of international exchange of information about remittance and other financial transactions and also hamper the operations of foreign joint venture banks in Nepal.

It is undisputed that parliament reserves the right to pass any Bill. Nevertheless, it does not mean that getting parliamentary endorsement for laws with highly sensitive contents like the IT Bill only through a majority represents a democratic process. It is also important for the government to take opposition parties into confidence while endorsing a proposed legislation like the IT Bill which has far-reaching effects. Furthermore, a broader consensus is also necessary by bringing together the stakeholders including members of the civil society, IT entrepreneurs and independent experts to evaluate the negative and positive aspects of such legislations.

Madan Lamsal
[email protected]

--BY MADAN LAMSAL

The big political parties of Nepal are currently engaged in a serious debate on how to take the country forward on the path of prosperity. The Nepali Congress is busy preparing for the great battle of holding the party’s 14th general convention. The canes, spears and batons needed for that are all in the ready position! It seems holding the general convention is going to be akin to organising a great revolution due to the ongoing debate on whether or not to amend the party’s statute’s article related to active membership and to or not to increase the number of departments in the party.   

The NCP, the ruling party, too, is doing its bit to realise the country’s prosperity dream. Though the party faces temporary hurdles from time to time - such as who the executive chairman of the party will be, or whether the MCC grant can be accepted and deciding the capital and names of provinces, it seems the sickles and hammers required for taking the country on the path of socialism are being prepared. It can be openly said that these and other preparations by the parties that appear on the surface are in fact aimed at developing the country. These preparations are not disputes; rather they are intense theoretical discussions, debates and deliberations being undertaken for the sake of the country. 

In fact, the Nepali people have been listening to these intense theoretical discussions from the big political parties from 1990 onwards and have been seemingly enjoying them. Therefore, in every meeting of the parties or in every speech of the ministers, prime ministers etc, issues like prosperity, development, good governance, civil rights etc are never excluded. But those who do not understand such theoretical issues are terrified thinking that a bigger problem will come. 

Because the people have started taking seriously what the comedians say and lightly – as a form of entertainment - what the ministers and politicians say, as if they were said by comedians or jokers, things have seemingly turned upside down. What has happened to the people? Have they started seeing everything the wrong way? That’s why the people have started getting afraid whenever the ministers and politicians talk about development and prosperity. Because the results in every sector are just the opposite of what is anticipated. That’s why it seems we have to say – “Rather, give us poverty and bad governance. How long will you keep writing prosperity and good governance in our fate, God?! Have some mercy on us!” This pessimistic wish arises from the fact that the government talks about ideals, transparency and honesty but the bellies of politicians keep growing!  

They fall under the compulsion to live in mansions. They protest against feudal and capitalist systems but practice consumerism and ‘use and throw’ policy. They talk about sacrifice for and devotion to the country. But in practice, they even go to the extent of splitting their own parties for lucrative posts. They talk about alleviating poverty, but in practice they are alleviated from poverty but the poverty in the country increases. What is happening? Who is creating such a situation? The politicians – my sympathies are with them – are indeed working day and night for the country; it’s just that the results are just the opposite of what is intended! 

The politicians have been repeatedly asking foreigners to invest in Nepal. But the foreigners do everything but invest here. For the betterment of the people, the government has been introducing bill after bill. The government thinks it will do the people some good. But the people always get the wrong end of it or understand it the opposite way.

For example, thinking that the culture of abusing each other was growing in Nepali society, the government recently tabled the Information Technology Bill at parliament. But the journalists are protesting against it everywhere. It seems many journalists just don’t know how good the Bill is. Perhaps they haven’t read the bill properly. So, maybe they don’t know that the Bill has a provision that fines people more for using abusive language than for going out and beating up a person! The government is trying to say that if someone uses abusive language against you on social networking sites, you can go and bash up that person and you will have to pay less in fines!! What kind of journalist doesn’t understand this?

The fact is this Information Technology Act is a must. Because in the USA, Trump has been saying that the social networking sites must be tamed because of ‘fake news’. In Nepal too, the social media has become the mainstream media – at least, the two-thirds majority government thinks so. People say the two-thirds majority government is becoming dictatorial. Who will become dictatorial if not this government? Can a minority government afford to become dictatorial? Isn’t democracy all about the dictatorship of the majority? Everyone ought to understand this little thing. The prime minister has been saying repeatedly – “Republic and poverty cannot go together.” What it means is though poverty will stay in the country, the republic will keep advancing forward in a red carriage anyway! 

The ruling Nepal Communist Party is finding it tough to settle the MCC issue; so will newly elected Speaker Sapkota

--BY Vishwash Thapa

The internal feuds within the Nepal Communist Party show no signs of fading away. For months after the merger of then CPN-UML and UCPN (Maoist), the party had a tough time settling the portfolio management. Once the dispute was resolved, it took over a month for the leadership to find a unanimous candidate for Speaker. The House of Representatives was taken hostage for a month as Prime Minister KP Sharma Oli, who is also a co-chair of the party, and Pushpa Kamal Dahal, an executive chair of the party, wanted their own candidate for the position.

After weeks of negotiations, the party picked Agni Prasad Sapkota for the Speaker’s position. With the Speaker of the Lower House in place, finding a common position in the United States’ Millennium Challenge Corporation’s Nepal Compact is a huge upcoming challenge for the ruling party.

Though the controversy over the MCC compact has only surfaced recently, a section of the ruling party has been standing firmly against it ever since it was registered in parliament. Minister for Finance Yubaraj Khatiwada, in July last year, had registered the compact at the parliament secretariat for ratification. However, it was never tabled in the House of Representatives for approval. Leaders including former Speaker Krishna Bahadur Mahara were not positive towards the compact.

Dev Gurung, the NCP chief whip, among others had been pushing Mahara not to prioritise the compact in the House business. The government, which has strongly stood for the ratification of the compact now, too was not seen advocating for it. With no pressure from the government, Mahara backed the leaders mostly from the Maoist faction within the party who didn’t give space to the compact in the parliament. Now joining the dissenting group is Bhim Rawal, from then UML faction.

The party leaders have said the MCC is a part of the Indo Pacific Strategy (IPS), which has a military and security motive at its core. The dispute over the compact grew after David J Ranz, assistant secretary for South Asia at the US State Department, during his visit to Nepal in May last year, said the MCC was a part of the Indo-Pacific Strategy. Other officials of the US government including those from its Embassy in Kathmandu too, have reiterated that the MCC is a crucial part of the IPS. Alice Wells, assistant Secretary of State and Carl Rogers from the Embassy have said the MCC is an integral part of the strategy.

The leaders opposing the MCC have given reference to the statement by Wells and Ranz to support their argument that it would be against the interests of the country if parliament endorses the compact. Oli and his team in the cabinet, who said the MCC is not the part of the IPS, are finding it hard to prove their statements true after the US officials declared that it was part of the strategy. A report by the US State Department published in November says the MCC is a part of the IPS and some USD 2.3 billion has been granted to Indo-Pacific nations since 2004. Answering the concerns of the National Assembly members, Minister for Foreign Affairs Pradeep Gyawali on December 26 claimed that the compact was not a part of the IPS. The dissenting leaders say Gyawali has lied. “It is a shame that our ministers are still trying to create an illusion while the US officials have clearly said it is part of the IPS,” said Rawal.

The MCC was one of the crucial agendas during the NCP’s standing committee meeting held in the last week of December. Despite the heated discussion, the committee could not reach an agreement on whether to accept the compact in its present form. The Oli faction could push for an agreement as Madhav Kumar Nepal, former prime minister, along with Rawal, Gurung, Raghuji Pant, among others firmly stood against it.

They had reservations over a provision in the compact, which says it would prevail over domestic law in case they conflicted with each other. Section 7.1 of the compact states upon entry into force the compact would prevail over the domestic laws of Nepal. Though the compact nowhere says it needs to be ratified by parliament, the very provision makes it mandatory for the parliamentary endorsement, as it is the only authority that can decide on the laws.

Nepal’s government had approached the USD 500 million grant first. Nepal became the first country in the South Asian region to receive the grant after it met 16 out of the 20 indicators determined by the US government. Baikuntha Aryal, then join-secretary, and Jonathan Nash, acting chief executive officer of the MCC, had in September 2017 signed the agreement.

The main opposition Nepali Congress, under whose leadership the agreement was signed, has been saying the compact must not be dragged into the controversy and must be approved without delay. The party leaders including president Sher Bahadur Deuba has been blaming the NCP leaders for politicising the issue. “The MCC is the largest ever grant Nepal has received. We must support it to reap the maximum benefits from it,” said Nepali Congress leader Minendra Rijal.

The compact is worth USD 630 million including USD 130 million contributed by the Nepal government, which will be used in electric transmission lines and road improvement projects. The five-year project aims at setting up a 400KV transmission line running 400 kms on the Lapsiphedi-Galchhi-Damauli-Sunawal power corridor. Setting up three substations en route to infrastructures which will connect to the cross-border transmission line with India, too, is part of the project. Around 20 percent of the money under the compact will be for the maintenance of around 300 kms of roads on the East-West Highway.

With the escalating controversy and the demand to revise some of the provisions before the parliamentary endorsement, the government and US Embassy in Kathmandu have changed their tone. The government has now started saying that the MCC has nothing to do with the military component of the IPS. Trying to woo the lawmakers of the National Assembly, Gyawali on Jan 20 said, “The MCC is only an economic pact which has no military motive.” 

His statement comes three days after the US Embassy in Nepal tried clear the air on the ongoing dispute. “The MCC does not include any military components,” it said in the clarification. The incumbent government is making every effort to get the compact ratified from the ongoing winter session of parliament as the MCC Account Nepal has been pressurising the government for it. Now, with Sapkota becoming Speaker, he will have to prioritise the compact in the House as soon as he takes charge of the Lower House. However, the dissenting voices within the NCP haven’t been pacified. It is evident that the compact will ignite a heated discussion within the ruling party and in parliament, once the compact is tabled. While the party will have a tough time convincing its leaders, the job isn’t easier for Sapkota either. He is sure to face challenges not just from the opposition but from within the ruling party as well. 

Ending years of delay, Nepal Water and Energy Development Company (NWEDC) on November 1, 2019 secured a financing agreement amounting to USD 453.2 million with nine international banks and financial institutions including International Finance Corporation, Asian Development Bank , CDC Group, Asian Infrastructure Development Bank, Netherlands Development Finance Company, Export-Import Bank of Korea, PROPARCO Development Finance Institution and OPEC Fund for International Development for the construction of the Upper Trishuli-1 Hydropower Project. This sum is the largest amount of FDI pledged for any project in Nepal till date and the 216MW run-of-river (ROR) hydel project is now being regarded as a viable model for future foreign investment in the Nepali energy sector. 

Upon its commissioning in 2024, Upper Trishuli-1, will sell the electricity to Nepal Electricity Authority.  Min Young Kim has been the Managerial Director of NWEDC since July 2018 and under his leadership the Upper Trishuli -1 project has seen speedy progress. In an interview with New Business Age, he talks about the company’s plans to start the construction of the projects, major features of Upper Trishuli-1, prospects in Nepal’s energy trade with neighbouring countries, among other issues.  Excerpts: 

Financial closure has been reached for the 216MW Upper Trishuli-1 Hydropower Project after a long delay. Meanwhile, the Nepal Water and Energy Development Company (NWEDC) has just started its work on the project. How far are we into the project?
Our financing agreement with nine international banks for the Upper Trishuli-1 (UT-1) Hydropower Project on November 1, 2019 was really a big milestone in taking the project forward. This is a loan agreement and the project’s financial closure will only conclude after the central bank’s approval of the loan agreement. The real financial closure will come in the first drawdown of the lenders’ money. Getting through the financial closure of UT-1 will depend on the decision of the Nepal Rastra Bank (NRB). We are grateful to the Government of Nepal, Ministry of Energy, Water Resources and Irrigation (MoEWRI), Ministry of Finance, Nepal Electricity Authority and all the other stakeholders who directly and indirectly supported this project. Now, we are focusing on finalising the engineering, procurement and construction (EPC) contractor for UT-1.

What has been completed so far?
The construction of camp facilities and the 5.3 km access road were already completed before April 2015. But the infrastructures were destroyed by the devastating earthquake. The access road and Bailey bridge have been repaired and accommodation and site facilities have been completed.

The cost of the project is said to be higher per MW as compared to other similar projects. What are the reasons for this cost hike?
Hydropower projects are unique and specific in terms of cost characteristics. In my opinion, one hydropower project can’t be replicable and comparable to another one. Lower or higher costs cannot solely be based on the per megawatt cost factor. UT-1 is designed on Q50 discharge with installed capacity of 216MW having 39 percent dry season energy which is very important from NEA’s perspective. UT-1 is in favour of NEA’s concern about wet season energy spill after the Upper Tamakoshi Hydropower Project goes online. If the project goes beyond its completion time, the cost overrun would be obvious. In the case of UT-1, all the project components are underground which is costlier to complete on time by experienced professional international contractors and consultants as well. On the other hand, we are trying our best to reduce the cost of the project. We do not believe in cost inflation.

Promoters of hydropower projects repeatedly complain about problems related to land acquisition, forest clearance and the overall ground work. How have NWEDC’s experiences been like so far?
In the beginning, we had also heard about the time that was needed to get forest clearances and Environmental Impact Assessment (EIA) related matters done. However, we completed land acquisition, forest clearance and other environmental related clearances on time for UT-1. We are thankful to the government, MoEWRI and Ministry of Forest and Environment, national park and wildlife conservation authorities for providing us the timely clearances.

What measures or initiatives have you taken to maintain good relations with the local community?
We’ve found locals of the project area to be very positive towards UT-1. We are continuously in contact with the local government, local political parties and social workers. We have supported earthquake and flood victims, and infrastructural development at the project affected area through our CSR activities. We have supported the project affected rural municipality’s construction of a village road in Gosaikunda and one Bailey bridge at Hakubesi. Also, we are planning to implement more CSR activities jointly together with the Korea International Cooperation Agency (KOICA). We are planning to provide an ambulance to the rural municipal authority along with constructing a school building and a primary health post. We have already sponsored three Hakubesi based school teachers for more than a year.

Basically, our focus is on education, health, sanitation related CSR activities. Besides, we have separate E&S plans for the people of the affected area. We are fully committed towards implementing CSR plans jointly by working together with locals. UT-1 is the first project in this region which successfully acquired the Free Prior Informed Consent (FPIC) of the local residents in the project affected area. FPIC is the process of securing a social license to operate the project as per the guidelines of the International Finance Corporation (IFC) and Asian Development Bank (ADB). I don’t think we will encounter any disturbances in the future when moving ahead with the construction of the project.

One major attraction of the project is said to be high firm power. How much firm power is expected from this project?
The project will produce a total energy of 1456.4 GWh per year; 564.36 GWh in the dry season and 892.04 GWh in the wet season. Of the project’s total power production, it will be 39 percent in the dry season and 61 percent in the wet season. In the dry season, the installed capacity of UT-1 will be 104MW which is almost equivalent to Kulekhani I, II and III which are three storage-type hydel projects built in Nepal so far. So, UT-1 is very useful for NEA. It is also because the project is near the load centre in Kathmandu.

Can UT-1 be converted into a semi-reservoir hydel project so that it can help to manage peak hour energy demand?
UT-1 is the best in terms of dry energy as its ‘Q’ factor (Q50) is higher than other Q40 projects in Nepal. The energy it will produce will be as good as storage e-type projects as per the criteria announced in the MOE guidelines. However, as Upper Trishuli -2 Hydropower Project has also been planned just upstream of our project, UT-1 can’t be converted into peak-run-of-river (PRoR) and storage-type project.

Korea South-East Power Company (KOEN) is known for the speedy completion of the Gulpur Hydropower Project in Pakistan. Do you think you can have the same momentum when building the UT-1 project?
KOEN started the 102MW Gulpur Hydropower Project (102MW) in Pakistan and the 216MW UT-1 project in Nepal at the same time. The physical progress of Gulpur is about 98 percent as of now which is a very good achievement in itself. Gulpur is expected to be commissioned on January 2020. We will try to maintain the same momentum to construct the project in Nepal also.

What was it like working in Pakistan?
We received the full support of the government of Pakistan for the development of the project. There were no risks related to hedging. Besides, fixed revenue from the project was made certain; the government ensured 70 percent of the revenue.

Some observers are sceptical whether your company will actually put money in the proposed hedge fund.

What are you planning? Will your company contribute to it? And what will be the percent of the company's contribution?
The hedging mechanism was one of the concerns of the lenders of our project. In the case of UT-1, it has already been agreed with NEA that NEWDC will contribute one-third of the foreign exchange risk variation. However, to address the concerns of the lenders in terms of repayment and cash flow situation, the company will contribute by providing 17 percent free energy from the 14th to the 26th year of the project’s commercial operation date (COD). Actually, hedging is an additional burden to developers.

Nepal does not have a satisfactory experience in hydropower development undertaken by foreign developers. How can we be sure that there will be no such complaints with your team?
After the signing of the power purchase agreement (PPA), we felt this huge responsibility to demonstrate our performance. FDI is needed to develop Nepal’s abundant hydro resources. Development and economic prosperity of the country can be achieved through the mobilisation of internal and external capital. A number of examples of the world’s fast-growing economies show the importance of FDI in the economic development of any country. The Nepal government’s recent policies to encourage foreign developers to invest in hydropower and reformation of regulation in favour of FDI are also positive development in this area.

As the PPA has already been signed and the financial agreement too has been completed for this project, it is time for you to consider your next project. What new projects are you considering?
KOEN is looking to have more investment in overseas hydropower projects. After UT-1, we will look for a good project to start from the feasibility stage. Investment for the development of clean and green energy is now a global priority. KOEN will also focus on the same.

How do you view Nepal’s prospects in trading power with its neighbouring countries?
We are very optismistic about this. In fact, South Asia is a potent market for energy trade. Countries like India and Bangladesh need electricity. So, our future focus will not only be on the domestic demand in Nepal, but we will also explore the potential to export energy from here. 

Daraz, the largest online shopping platform in Nepal, has been focusing a lot on improving its overall customer experience. After its acquisition by Alibaba in May 2018, Daraz has been learning and benefitting from the proficiency of the Chinese e-commerce giant.With a long term vision to facilitate trade between different countries, the plan of the company is to enable the producers in one location of Nepal to sell their products to buyers in various other locations in the country. Managing Director of Daraz Nepal Lino Ahlering talked to Nikeeta Gautam of New Business Age about the company’s growth, its expansion plans, customer retention strategy and how it is working to bring more people into the fold of e-commerce. Excerpts: 

How have the past 20 months been for Daraz, following its acquisition by Alibaba, in terms of technological innovations in e-commerce and providing unique experiences to the users (both buyers and sellers)?
We have benefitted quite a lot after the takeover by Alibaba. The origins of Daraz are here in South Asia, not in China, but we have now the world’s most successful e-commerce company with us and we share their vision of fostering e-commerce in emerging markets of South and East Asia. We also have become more technologically advanced and our mobile app has been completely transformed - it is now very personalised for each customer. What appears on the screen of your device depends on what you are browsing. Beyond personalisation, our tech systems and processes have changed significantly.  As a part of Alibaba, we are benefitting and learning from their expertise while maintaining our local identity here in Nepal.

How has the user base of Daraz grown during this period?
Our growing number of users shows that we are on the right track. Around 100,000 users use our app every day and last year, our user base has grown by around 200 percent. If you look at the order growth of all our sellers combined the growth is even higher, with rates close to 300 percent in terms of annual volume from 2018 to 2019.

What is fuelling your growth?
Internet penetration is high and it's growing continuously. Mobile phone penetration is also growing very rapidly. As 90 percent of our customers use our platform through an app, we see that smartphone access is one of the biggest factors for the growth in the e-commerce market.

How was 2019 for Daraz? What major achievements would you like to highlight (successful campaigns and overall institutional growth)?
2019 was the first full year for us under the umbrella of Alibaba. Having been wholly integrated into the Alibaba ecosystem, we revised all our past activities. We also organised many campaigns like the 11/11 sale in November where nearly 350,000 visited our platform in a single day. Our sellers on the platform sold more than 150,000 products within just a few hours, which is massive for a country like Nepal. 2019 was also the year we introduced the service of prepayments through debit and credit cards.

Delivery is another important area we have worked on. It used to be one of the weaker parts of our service, considering the infrastructure challenges in Nepal. Therefore, we invested a lot of time and resources to make it faster. As a result, our end-to-end delivery from sellers to all our buyers has improved a lot and is now on average faster compared to our other Daraz markets in Pakistan, Bangladesh, Sri Lanka and Myanmar.

We also focused a lot on expanding our service area this year. We expanded our seller base and are now working with more than 3,000 sellers across the country. Moreover, we also developed partnerships with many logistics and courier companies and have included them into our operational process through our technology.

What plans have you set for 2020?
We will continue our expansion efforts as we want to enable more people to adopt online shopping and get access to products not usually available in the markets around their corner. We also plan to extend our network. We are currently delivering in 26 cities across the country but we are planning to reach customers in other, more remote, areas as well.

We will also continue to focus on empowering more sellers through our technology. Previously, we were only focused on sellers in Kathmandu valley. But now, we have been looking at areas outside the capital to enable sellers of other parts of the country to sell their products through our network, not only in Nepal but also to potential customers abroad. This way, the sellers will also have access to markets outside their immediate reach and our increasing customer base will also have access to more products from all across Nepal.

We will also be launching popular e-wallets to give our customers more convenience while making payments. We will continue to work on developing professionalism in our partners and enhancing the ecosystem here in Nepal. All in all, our focus is on improving the customer experience on our platform.

What is the Unique Selling Proposition of Daraz? How is it distinct from other similar platforms?
Daraz offers a wide assortment of products than any other platform in Nepal. Customers can get access to more than 300,000 products through one app and get it conveniently delivered to their doorstep through our extensive delivery network. This also means that we constantly focus on bringing the latest and most desired products and make them available to our customers. For example, once a new mobile phone is launched, you will very likely find it on Daraz at a very good price. We also offer a returns policy of 7 days on all products on Daraz, which allows customers to return their product if it is not as it was promised and get the full amount back into their bank account. This is something very unique and you would not find this with any other online platform or in the shops around your corner. If you bought something in our premium section called Daraz Mall you can even return your product within 14 days. So overall there is no risk once you shop on Daraz.

How do you view the Nepali e-commerce market?
The e-commerce market in Nepal is still small, but growing very fast. In India, there is stiff competition among e-commerce companies like Amazon and Flipkart. But that is not the case in Nepal. Here, we are leading this e-commerce transformation. However, other smaller players like SastoDeal are also growing which eventually is good for the overall industry. We want the market to be more competitive because competition brings improvement. Companies will try out various models to appeal to the customers and user adoption of e-commerce, as a whole, will improve. So the market needs to grow and it will.

How do you observe the behaviour of Nepali consumers?
If we compare it to other developing countries, the Nepali market is immature. However, people here are adopting quickly. Initially, only people belonging to the age group 18 to 35 used to buy products online. This is the generation that is adopting e-commerce before everyone else. But, in recent years, we have also found that people beyond that age group are also showing a lot more interest in buying online and finding e-commerce more convenient to their regular shopping.  For example, we see a lot of traction amongst corporates and also housewives who use Daraz now to order electronics, fashion groceries and other household items.

At what rate is the e-commerce market in Nepal growing at present?
There is no recent research study when it comes to the market size of the Nepali e-commerce industry. However, when you look at the overall economy, the prospects for Nepal for 2020 are very encouraging with forecasted GDP growth of 6.9 percent, which is higher than India. These forecasts combined with our recent strong growth makes me quite optimistic when it comes to the e-commerce market in Nepal.

An efficient logistics system is one of the most important factors for any online marketplace. How do you ensure that the logistics operations of Daraz are refined and are in line with the best international practices?
Nepal has a challenging topography and a lack of infrastructures. Many places don’t have proper road networks. We work with many partners from all over the country and try to develop a coherent environment with advanced structures and procedures supported by our technology. This supports us in ensuring a quick delivery to our customers. But it is still challenging. We have to keep investing in the network and work very closely with the courier companies on a daily basis.

What challenges do you see for the e-commerce business?
We still need to build more trust, especially among the more mature generation that are not as familiar with digital business models as the younger, more tech-savvy users. We focus on building trust particularly through two major focus areas, education and experience. Our mission has been to showcase the benefits of shopping online specifically the convenience and access to a much wider pool of products by connecting thousands of sellers with thousands of customers across the country on a daily basis through our technology.

Improving the experience, through better delivery and better quality of products is the other focus area. We emphasise greatly on making our more than 3,000 sellers more professional. We acknowledge that the customers in some rare cases receive a product that might have been delivered in a different colour or size than what they selected online. We have our return policy for such scenarios to help the customers and get their money back without any risk. But we still have to focus on making the sellers more mature and preventing such incorrect deliveries. And for this we rely a lot on the feedback we get from customers, which is very important for us to improve.

Another challenge is the bureaucracy of Nepal, which sometimes leads to long processes. When we started, there were hardly any policies for e-commerce. There was no clear system for things to move. But things are improving a lot. The government is very cooperative and has also finalised the national e-commerce strategy. So eventually all stakeholders in this sector are making a move for a better future, which will eventually benefit the customers after all.

What strategies is Daraz working on for customer retention?
Customer retention depends on the trust people have in businesses. When you trust the business model, buy something and have a good experience, then obviously you come back again.

We are always mindful of our customers’ feedback and regularly improve ourselves based on their comments. We are still a young company so we do make mistakes sometimes. But we are also learning as we go, and we rarely make a mistake twice. All the insights and feedback we obtain from customers, delivery riders and customer service teams and through product returns are significant for us and help us improve our processes. Besides that we can’t grow if we don’t improve internally too. So, we frequently conduct surveys among staff to make the work environment better as well. If employees are happy this will have a positive impact on our customers as well.

Our strategies seem to be yielding results because our customer base is comprised of around 50 percent of regular shoppers and do return to buy another product within a month.

The attraction of many Nepali youths has been towards working in tech companies. As the largest e-commerce firm in Nepal, how is Daraz maintaining a sound work environment in the company?
The average age of staff in Daraz is 26 which is very young for Nepali companies. We also have a lot of women in leadership positions. This is not because of the quota system, but because of their better performance in particular positions. No matter what background people have, they can achieve a lot in Daraz through hard work and creativity. Our approach is to keep the autonomy of the staff. We believe that innovative strategies and solutions not just come from the top. It does not matter whether people working with us are delivery riders, customer agents or marketing professionals, they can come up with plans and strategies and execute them as we provide a sense of ownership to people here. 

Many years ago, Sharada Rijal was asked whether she could perform better today if she was a “man”. She said ‘No’. She recalls how a group of media people had asked that question. She believes that gender doesn’t matter; what matters is the quality of the work. 

Rijal, who has over three decades of experience as a business owner and entrepreneur, is the proprietor of Milan Nepal and United Nepal Felt Industries Pvt. Ltd. Instead of being recognised as someone’s wife, or sister or daughter, Rijal chose to create her own self-identity. She has worked to achieve this dream of hers. Nevertheless, her journey was not easy. 

Born and brought up in the heart of Kathmandu, Teku, Rijal grew up in a joint family. Belonging to a middle-class family, she was fortunate enough to be able to get a good education; however, she was not allowed to get into business. When she told her father about her wish to start her own venture, he rejected her idea. Instead, he offered her a job at a reputed school, Siddhartha Banasthali. Her father told her that she could start a business after marriage. Her yearning to do something on her own and create her identity met a devastating end at that moment. Disappointed and helpless, Rijal started her career in teaching. “I will not blame him for that. It was a time when it was unusual for a woman to run a business,” she says. Instead, she wants to give him credit over the fact that he never compromised on her studies, even when her friends’ fathers decided to stop their daughters’ education. 

After eight long years of teaching, Rijal decided to start her venture. “I won’t say that I did not enjoy working as a teacher, but I did not have that inner satisfaction,” she expresses. Meanwhile, she was married and had kids. Even after so much time, her desire to create her own identity had not faded away. So she told her husband who was positive about it. Excited and vigorous, she started her own business in 1989 with Rs 10,000 from her provident fund. With three sewing machines, she started her venture from a single rented room. 

The political instability post-1990 movement affected the industries and markets in the country, and Rijal’s business as well. “We had just started, but due to the conflict our business was affected,” she adds. Despite this, she did not stop. Some of her near ones encouraged her to add some more infrastructure and work. She then added 10 more sewing machines and started working. In the meantime, she faced a financial crisis and she so asked her husband for help. Although she worked with dedication, the market was again affected by the Gulf War and this time she had to shut down. 

As the business was not running well, there were some arguments between Rijal and her husband. Despite the minor altercation between them, she did not stop her work. With her friend’s husband and another partner, she reopened the business with a total of 105 sewing machines. Till then she was still working at the school. She now feels that having her foot in two boats was a mistake. She says that a person should be focused on one thing at a time. Rijal also believes that market study, knowledge and training in the related field are equally important. 

Rijal managed her finances with the help of her mother, brother and friend. Her brother also helped her find customers from Switzerland. She was then exporting her products to international markets. She had exported ‘crazy hats’ to the FIFA World Cup in France in 1998. Her dedication towards her work resulted in her winning the Best Women Entrepreneur Award in 2003. After 2003, she started working in the felt industry. She says that the work that she had started from the dining table of her kitchen has today made her recognised around the world. “Word of mouth and recommendation were means of promotion at that time. There was no internet and means of marketing and means of communication were also limited”, she recalls. 

Today, Rijal has clients in countries like Switzerland, Israel, England, Germany, Australia, Austria, USA, Japan and Korea. 

Rijal takes her mother and grandmother as her source of inspiration. They have taught her to work hard, and utilise time properly. 

Strong and hardworking, she has been working for women empowerment for many years now. Today she directly employs 20 women and more than 50 men and women indirectly. However, she feels that while employing only women, there is a limitation in production, due to their household works and other responsibilities. “This also raises the question on why to employ as well as promote women in our company,” she says. Regarding this, she says that women themselves should be vigilant and seek out what they want. 

Women Entrepreneurs Association of Nepal (WEAN) approached her in 1992. 17 years ago, they established FWEAN to bring together women across the country in entrepreneurship and empower them financially. Involved in the organisation since its inception, she is the past president of FWEAN. “The problems are shared between women entrepreneurs and we can also gain encouragement from each other’s stories. It also helps in marketing,” she says. 

She believes that support from family members helps a woman to grow better. Apart from that, a person has to balance personal and professional lives. 

Along with this, she feels that women must be able to put forward their words in the right place at the right time. She says that today government policies support women entrepreneurs, however, they lack implementation. She also feels strongly about the fact that women still do not have rights when it comes to parental property. She also points out that though collateral free loans are there for women entrepreneurs, the system it is still not applied practically, due to various reasons, she says. 

Today, there is a greater opportunity for entrepreneurs. Rijal says that means there is increased competition as well. The unavailability of training institutes was a challenge for her. She learned how to sew clothes from her mother. “Today there are many training institutes. Everybody has access to marketing at their fingertips. Families have become more understanding and supportive,” she says. 

Positivity and dedication are Rijal’s greatest strengths. She believes that a person should not put problems and challenges first. “Every task would seem impossible if negative aspects are put prior to the positive ones,” she says. She believes that being positive is a mantra to success. 

She is also engaged in the South Asian Women Development Forum (SAWDF) and is a founder president of the Felt Industries Association of Nepal. 

Rijal now plans to dedicate more time to her business. She says that she will not stop her voluntary work, though. She wants to do group business now because as women entrepreneurs are few in number, people do not easily trust them. Moreover, as a group, they can grow financially and work together to formulate interesting and exciting ideas, she says.

Located on the top floor of the X building in Pulchowk, The Village Café immediately dazzles its patrons with picturesque views of the valley. If one chooses to dine in the outdoor area, the ambience would be quite remarkable dining underneath the warm glow of the sun, with visible mountain ranges on either side. 

That being said, The Village Café is a lot more than a mere sightseeing spot. One of the things that set the restaurant apart is that it is operated by SABAH (SAARC Business Association of Home-Based Workers), a social business organisation that dedicated to strengthening the livelihoods of financially deprived and marginalized women home-based workers in Nepal. As such, all of the staff at the restaurant are women. It’s a great initiative. 

The atmosphere at The Village Café is distinctly rustic. The colours are bathed in a shade of beige – warm and inviting. The décor echoes Nepali tradition – everything from the seating arrangements to the curtain drapes has been carefully curated to evoke a sense of homely and unsophisticated familiarity. 

After taking in the ambience and enjoying a warm cup of coffee, our team was ready to begin our culinary journey at The Village Café. As a starter, we were served Buff Haako Choila and Chicken Choila. Both the dishes emanated the distinct aroma that comes from mustard oil; it provided an added bit of flavour to the dishes. 

The Chicken Choila was perfectly seasoned; just the right amount of that tangy sensation that is associated with the dish. The Buff Haako Choila was similarly delicious. Our team chomped both the dishes down in a manner of minutes. With our appetites whetted, we were prepared to take on a slightly larger culinary endeavour. 

And that endeavour arrived on our table in the form of the Veg Platter Kaula Set. Firstly, from a purely visual standpoint, the dish looked resplendent – it was an inviting mixture of vibrant colours and textures. 

It was a sizeable dish, comprising of beaten rice, spinach, potato and bamboo shoot curry, kidney beans, gundruk (fermented leafy greens), soybeans, hog plum pickle and an assortment of authentic Newari items such as Bara, Chatamari and Yomari. 

A sizeable dish, indeed. Every single item listed above brought something unique to the dish – the various flavours and textures worked seamlessly with each other to create an all-around excellent dish. The Yomari, which is a Newari dessert, was the perfect way to cap off the meal. It was utterly delicious. 

However, we were not done yet. Up next, we were served a diverse meat platter that included everything from fried chicken gizzards to fried mutton lungs. It was a unique delicacy that we greatly enjoyed.  

Suffice to say then, that our culinary journey at The Village Café was a greatly enjoyable one.

There is a palpable sense of warmth at The Village Café, which includes the gracious service and the comforting decor; it’s almost a homely feeling. It’s a wonderful place to have a meal, and given our experience at the restaurant, that meal itself is bound to be a delight for your taste buds. 

This treatment at KIST has completely changed the ways patients suffering from gallstones and obstructions in bile duct are treated.   

A few months ago, a 79-year-old woman was suffering from jaundice and severe abdominal pain. The patient’s family was clueless about the cause and anxiously and rushed her to KIST Hospital immediately after her health condition started to degrade. Upon arriving at the hospital, the medical team examined her abdomen and found out that she was infected with cholangitis (infection) due to the blockage of the bile duct by a large 16 mm stone.

Analysing the patient’s critical condition, doctors suggested that surgery was not an ideal option as the infection was spreading quickly, leading to the patient’s low blood pressure. The anxious family was hopeless for her recovery until the medical team led by Dr Kamal Raj Subedi, Consultant Gastroenterologist/ Hepatologist at KIST Medical College Teaching Hospital approached them with a safe solution - Endoscopic Retrograde Cholangiopancreatography (ERCP) treatment.

The team, under the coordination of Dr Subedi, successfully removed the stone and relieved the blockage of the bile duct from the patient's body through ERCP. The patient’s condition quickly improved after the procedure. Dr Subedi informs that the situation of the patient, in this case, was critical and if it had continued, the situation could have been more dangerous.

Amish Pathak, COO, informs that this was the first ERCP treatment performed at KIST Teaching Hospital and Dr Subedi and the medical team since then have been regularly performing ERCP.

ERCP is a minimally invasive procedure done using endoscopy technique without any surgery to remove bile duct stones and to bypass any bile duct obstruction. “This service is not readily available in many institutions in Kathmandu and if available, the patient has to pay a heavy sum for the service,” Pathak informed.

Dr Subedi informs that ERCP is used to treat pancreatic-biliary diseases. “It used to be a diagnostic tool a few decades back, but now it is used primarily for therapeutic purposes. The main aim of ERCP is to relieve obstruction and facilitate proper drainage of the bile duct and pancreatic duct into intestine,” he adds.

“ERCP can cure the obstruction caused by the benign strict by putting multiple stents in multiple sessions and for the obstruction of malignant structure (cancer), ERCP can cure jaundice by putting stents, the cancer part needs to be treated separately with surgery, chemotherapy or radiotherapy,” he opined.

ERCP is a complex procedure, which requires proper training and is followed by exposure to a high volume of cases done by the endoscopist to minimise procedure-related complications. Few endoscopists in Nepal are properly trained to perform ERCP with minimal complications.

“Here at KIST Dr Kamal Raj Subedi performs the specialized ERCP procedure with the team of Gastroenterologists headed by Prof Dr Sita Ram Chaudhary along with Dr Mukesh Prasad Shah, Dr Santosh Gautam, Gastroenterology Surgeons and Anesthesiologists,” Pathak informs. While performing ERCP, patients are sedated, after which an endoscope is passed via the mouth to the stomach and eventually to the Duodenum where the Ampulla (opening of bile duct & pancreatic duct) is located. The stones are removed from that opening and when needed, stents are placed through the same opening. For the identification of diseases, patients need to undergo imaging tests (Ultrasound, CT scan or MRCP/MRI) and blood test (Liver Function Test, PT/INR). Apart from that, the patient needs to have pre-anaesthetic checkup and tests. Patients are advised not to eat or drink anything for 6-8 hours for ERCP.

Dr Subedi says, “Doctors in many hospitals delivering ERCP in Nepal are still a little unaware of the professional practice of ERCP treatments. It is a sensitive procedure and carelessness can lead to casualties, but with a private hospital like KIST, the patient can rely on the service,” he adds.

At KIST Medical College Teaching Hospital, Dr Subedi and his team hopes and believes that even the most complex cases to remove bile duct stones and to bypass any bile duct obstruction are achievable in Nepal with the advancement of technology. 

The introduction of the new transhipment system was supposed tobring down the cost of Nepal’s third country trade. Instead, the reality is just the opposite.

--BY OM PRAKASH KHANAL

It has been a year since the ‘Transhipment Model’ was introduced for Nepal’s third country trade.  The new system was expected to streamline the procedures and reduce the costs associated with transit and transportation of container cargoes. However, while the procedures have been streamlined, the costs have unexpectedly gone up.

The Direct Transhipment Model (DTM) was meant to alleviate the hassles, clearance procedures and hidden costs that Nepali traders faced while bringing goods from Indian ports. Nepali importers had hoped that this mechanism would be more efficient than the previous Customs Transit Declaration (CTD) and would save time and resources when bringing goods from Kolkata Port to Birgunj. But instead, the mechanism, put into practice from February 3, 2019, has increased the cost of transporting a single cargo container by up to 50 percent.

According to Ashok Kumar Temani, coordinator of Transportation Committee of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), this increase in costs in the transit and transportation of goods is because of the vested interests of a few shipping companies and the business syndication by them. “The transportation costs cannot be lowered without creating an environment of competition between the shipping companies,” he says adding, “The government has not been able to bring the shipping companies under a regulatory purview. In fact, till date, no laws have been formulated to make it mandatory for registration of shipping companies in Nepal.”

However, the government stands by the benefits of DTM and is planning to implement it in the transit and transport of goods via roadways too. Ek Narayan Aryal, consul general of Nepal in Kolkata states, “The burdensome procedures for Nepali importers in the Kolkata Port have ended in the first phase.” But he acknowledges the need for more competition among the shipping service providers, “We need to move strategically to create competition between shipping companies.”

Currently, only five shipping companies – CMACGM, Maersk Line, APL, ZIM and MSC offer direct transhipment services from Kolkata Port to Nepal and importers point to this limited number as the reason for high prices.

Aryal states that the Office of the Consulate General in Kolkata is working with shipping companies to make fares cheaper and to push them to make their rates public. But, he says that the onus is on the importers as well. “They need to be aware about choosing the shipping company offering the best rates to make the transit and transport of goods cost-effective,” he suggests.

Under the DTM, the Electronic Cargo Tracking System (ECTS) was implemented as a pilot project by the government with support from the Asian Development Bank (ADB). It hoped to reduce the costs of transhipment of goods to Nepal by decreasing the clearance procedures at Kolkata port meaning that the importers would not have to assign separate agents for customs clearance purposes. But the system has failed to meet its objective because the shipping companies are now charging higher prices for transhipments than the customs clearance agents previously did.

How ECTS Works
Under ECTS, Nepal-bound containers arriving at Kolkata port from third countries are fitted with a Radio Frequency Identification Device (RFID). This device helps the port authority as well as custom officials of both Nepal and India track the movements of the containers. The customs clearance processes for such containers are carried out at the Nepal-India border.

As this is a web-based system, the importers can also theoretically track their shipments. But importers complain that they have not been given access to the tracking facility even after paying the required charges.

How transportation costs have increased
Ganesh Prasad Lath, executive member of FNCCI, says that ECTS, which reducing the clearance procedures, haven’t really benefitted Nepali importers. “We had expected that the new mechanism to make the transit and transport of goods cheaper. But instead, they have risen by up to Rs 50, 000,” he mentions.

Under the CTD system, importers were forced to pay detention charges as they were unable to bring the containers to Nepal due to lengthy clearance process. Also, an illegitimate collusion between customs clearance agents and other middlemen would develop at times and would increase the costs of the transit and transportation of goods. ECTS was meant to eliminate all of that to make the process smoother and cost-effective. So, it is an irony that the system introduced to bring down the costs has in fact pushed it higher.

With the implementation of DTM, the shipping companies become responsible for transhipping the goods from their origin point to the destination, making transit and transport smoother for importers. “However, the companies have now hiked their fares to include potential delays and fines at the port and on the way,” states importer Pradeep Kedia, “This has increased our overall costs.” Nepal receives around 100,000 containers from third countries every year, 50 percent of which passes through the Kolkata Port. “All of this combined will increase the overall transport and transit costs by billions of rupees,” Kedia says. In addition to the shipping costs, the companies have also increased their sea travel fares by USD 200, he informs.

The importers complain that the shipping companies charge exorbitant amounts for sea and railway transport, terminal holding charge, and ETCS. CONCOR has fixed the same raiway charge of all companies transporting containers to Nepal. But the cutom house agents at Kolkata claim that companies still charge amounts much higher than the fixed charge.

CONCOR has fixed a railway fare of Rs 63,575 per container for every 20 feet container carrying a cargo of 10 metric tons from Kolkata Port to Birgunj Dry Port. But Maersk Line charges Rs 93,752 for it. Similarly, for 40 feet containers carrying a cargo of 20 metric tonnes, the CONCOR rate is Rs 1,12,615 but Maersk charges Rs 1,58,658. Among all the companies, the agents inform that Good Rich charges the most.

But the companies claim that this extra amount is for the inland haulage charge.

Agents now claim that they were unfairly targeted under the CTD system. “People used to say that the agents were increasing the transit costs by making undue profits,” an agent says, “But now, the cost has increased even more than before.” Meanwhile, Consul General Aryal states that the government will bring the shipping companies under the legal purview soon enough.  “We eliminated the middlemen and the agents and now, we will also regulate the shipping companies,” he says.

The digital transformation of Nepal depends on the e-readiness, appropriate policies and most importantly sound IT infrastructure.     

--BY Sanjeev Sharma

Nepal Clearing House Limited (NCHL), in the month of Poush (December/January), reported that monthly transactions on its connectIPS, an electronic payment system, reached Rs 12.05 billion. The size of the transaction highlights two things. Digital payment is growing in acceptance among ordinary Nepalis and people are getting connected to the broader fintech (financial technology) disruptions taking place the world over. 

Aided by the monumental growth of smartphones and rising internet penetration, many Nepalis, particularly from the urban areas, are now able to order goods and services and make payments online, which was considered a dream a decade earlier. 

The Himalayan nation over the last few years has been gripped by the catchphrase, ‘Digitisation’. So much so that many areas from information and communication, banking services, payments, education, healthcare, shopping or entertainment are going digital one way or the other. 

Discourse related to digitisation of trade, commerce and industrial activities and governmental services have also gathered momentum to give new propulsion to the country’s economic growth engine, fostering in an environment conducive to innovations. Similarly, the flourishing startup scene has also been heavily influenced by the use of technology. 

The Fintech Disruption 
Though Nepal is still a distance away from joining the information technology (IT) race like its neighbours China and India, and other emerging and developing countries of the world, the recent developments in information communications and technology (ICT) sector suggest that there is big potential in the country.

For instance, though fiat money i.e. cash is still the most preferred, but digital payments in retail transactions are growing in popularity. 

Currently, over a dozen digital wallets and e-payment systems are operational and around 40 applications of new companies are said to be in the process of review at the Nepal Rastra Bank (NRB). 

Started in 2009, the digital wallet eSewa is the pioneering online payment gateway in Nepal with the largest subscriber base; it crossed the mark of two million subscribers and 25,000 merchants in November 2019. Khalti is another major digital wallet in the country with over 900,000 subscribers. According to its co-founder Amit Agrawal, around 100,000 are active users who use the mobile app at least once in 90 days. IME Pay and Prabhu Pay are the other major digital wallets. 

With the increasing competition, Nepali fintech firms are coming up with innovative ideas to making their services easier and convenient for consumers. Cellcom Pvt Ltd, an IMS Group Company, in September last year launched the CellPay digital payment system which is different than existing digital wallets. It gives its subscribers the freedom to make payments from their bank accounts directly without requiring them to load money into their CellPay accounts. 

“Nepal is transitioning into a cashless society. Many people no longer go out of home to pay their utility bills and instead use e-payment services. The use of scratch cards for mobile recharges has gone down. Nearly 18 percent of the total banking transactions has already moved from cash and cheques to online,” observes Allen Bailochan Tuladhar, founder and CEO of Unlimited Technology Pvt Ltd. 

The Nepali IT industry veteran, who has worked in different areas of the IT business in the last three decades, is now working in the area of Money over Internet Protocol (MoIP), a new concept in cashless transaction popularised by Ukrainian-born IT entrepreneur Alex Mashinsky, one of the inventors of voice over internet protocol (VoIP). 

Tuladhar’s company Unlimited Technology has joined the e-payment market race by launching a new system called e-dheba. “As the tech world becomes bigger and more vibrant, financial institutions can harness it to expand their capacities and offer a host of new services that they currently can’t,” he says. 

Realising its importance, Nepal Rastra Bank (NRB) has also become active in the area of digital payments. “To further facilitate digital payments, we are working on a national gateway/switch, which has also been announced in the Monetary Policy. We are really committed to this project and have also set up a dedicated team for this,” informs Bam Bahadur Mishra, executive director of NRB. “To operate such a switch on a national scale is no easy task as it requires us to make a record of all the payment systems operating nationwide. But, we still plan to complete this herculean task within a year,” he adds. 

The central bank in September 2019 launched the Real Time Gross Settlement (RTGS) to facilitate transfer of money by banks. “It is a big milestone for digital transactions. It is cheaper for banks and transfers of money can be made almost immediately. So, Nepal Rastra Bank (NRB) is pushing for more digitisation of the country’s financial system,” says Mishra. 

Despite the promising scenario, there are, however, problems. “While the scope of digital payment systems are much broader, these services are only taken as a means of utility payments such as mobile SIM recharge, balance top-up and paying electricity, water and phone bills and buying movie tickets,” says Amit Agrawal, co-founder and director of Khalti digital wallet. According to Agrawal, the slow pace of e-readiness in the country is holding back the potential of fintech.

Balkrishna Joshi, president of Machnet Technologies Inc points out the lack of necessary infrastructure. “In Nepal, the biggest gap I have seen is the lack of a consolidated digital banking platform,” he says, adding, “Private companies make different platforms for themselves. But we do not have an integrated industry-wide system. The services being provided by the Nepal Clearing House Limited (NHCL) is a good step forward in this respect but they need to be scaled up to have a greater impact. And a major hurdle still remains which is the know-your-customer (KYC).”   

The E-commerce Revolution in the Making
It was in 2001 when Bal Krishna Joshi started thamel.com as e-commerce portal to allow Nepalis living abroad to send gift items to their families and friends in Nepal. However, it took more than 15 years for the electronic retail business to gather momentum in the country. Particularly, the last half decade has seen a shift in the shopping habits of Nepalis, with educated urban consumers finding e-commerce platforms easier and cost effective, and hence more convenient to search and purchase goods and services. 

Currently, Daraz is the largest online marketplace for buyers and sellers of goods in the country. After its acquisition by the Chinese e-commerce giant Alibaba in May 2018, Daraz, which also operates in Pakistan, Bangladesh, Sri Lanka and Myanmar, has seen its Nepali market grow multifold. Platforms such as Sastodeal, Smartdoko, Nepbay and Muncha are the other major digital retail marketplaces operating in Nepal. 

Similarly, the classified online marketplace Hamrobazzar has also gained prominence in the past decade. Meanwhile, different types of online delivery services, supplying restaurant and homemade food, liquor, vegetables to medicine have come into existence over the last couple of years. Foodmandu Foodmario, Metrotarkari, Cheers and Online Ausadhi are some of these e-commerce sites. Along with this, Social media is also being used as online storefronts by small traders and providers of various types of services to boost their business. 

New doors of opportunities are being opened in e-commerce as shown by the growing popularity of ride-sharing services despite the various legal hassles in their way. The Nepali startup Tootle, which started its services in January 2017, has now 35,000 registered bikers who provide transportation service to the platform’s 300,000 users. 

“This is reflective of the overall ride-sharing market which is growing,” says Sixit Bhatta, co-founder and CEO of Tootle.  “We were not only a startup but we were also introducing an entirely new business in Nepal – a business of ride-sharing,” he adds. 

Around 4,000-5,000 users have been using Tootle services daily. Meanwhile, Tootle’s rival Pathao, a Bangladesh-based ride-sharing platform, is said to be providing services to around 15,000 users on a daily basis.  

The sky rocketing growth of smartphone users is propelling the growth of online marketplaces. “As 90 percent of our customers use our platform through an app, we see that smartphone access is one of the biggest factors for the growth in the e-commerce market,” shares Lino Ahlering, managing director of Daraz Nepal. According to a 2018 Ncell report, 52 percent of subscribers of Ncell use smarphones. It is estimated that 50 percent of mobile services subscribers are smartphone users, up 35 percent from 15 percent in 2013. 

Though it is difficult to determine the exact size of the Nepali e-commerce market due to the lack of authentic data, estimates put the size of the Nepali e-commerce market at USD 25-30 million. 

The Connectivity Boom
In today’s world where connectivity is the main driver of economic growth, telecommunications and internet services have transformed the lives of ordinary Nepali citizens to a high degree fueling the Himalayan nation’s digital economic ambitions.

Nepal is the only country in the entire South Asia region with over 100 percent mobile penetration rate. As per the latest MIS report published by the Nepal Telecommunications Authority (NTA), the mobile penetration stands at 141.48 percent as of October 18, 2019.

This unreasonably high penetration rate of mobile services is also due to the multiple subscriptions of mobile services by a single user and inclusion of inactive SIM cards in the report. However, the NTA data clearly indicates Nepal has made big strides in terms of increasing access to modern telecommunication services. 

Similarly, internet penetration rate in Nepal currently stands at 71.52 percent with the highest share of mobile data (55.39%) followed by fixed broadband services (15.33%). The internet penetration rate, which was 63 percent in 2018, has grown significantly in the past decade; the rate was just nine percent in 2011. 

Internet prices, however, have cast a dark shadow over this bright outlook of growing access to internet in Nepal. At present, Nepal has the highest internet prices among the South Asian nations. The Inclusive Internet Index 2019, published by the British magazine The Economist, ranks Nepal in 72nd spot. India, which has observed a sharp decline in internet prices over the last few years due to the hyper-aggressive strategy of Mukesh Ambani’s Jio Network, lies in 47th position in the index followed by Sri Lanka (58th) and Bangladesh (71st).

According to the report, Nepal’s position is due to the high cost of internet services; the country ranks 84th in the Affordability sub-index where India is at 10th spot which shows the country has the most affordable internet. Even Pakistan, which ranks 77th overall in The Inclusive Internet Index 2019, is the 47th most affordable country in the world in terms of cost of internet.

“Cellular data prices are still unaffordable to a huge chunk of our population and not everyone has access to Wi-Fi connectivity. So, internet still remains a luxury to many people,” says Suman Rayamajhi, chief financial officer (CFO) of Smart Telecom. “And this, in turn, is preventing the growth of many other related sectors like digital payments and e-commerce,” he adds. 

 Rayamajhi stresses on the need to have cheaper internet to expand digital markets. “This means that there will be a growth in demand and foreign companies will come and invest here. Businesses like Airbnb and OYO already operate in Nepal. An expanded market will also entice other companies to come in. We will have a company like BYZU’s enter our education system and a technology like Hospital Management System will come up in our healthcare industry,” he opines. 

Exploring IT Services Export Potentials 
In a bid to prioritise the export of IT Enabled Services (ITEs), the government in 2016 revised the Nepal Trade Integration Strategy (NTIS) to promote Business Process Outsourcing (BPO), IT engineering and other IT services as earmarked sectors with high export value for Nepal.

BPO has been one of Nepal’s major areas in the IT business. It began to grow during the early 1990s when the country embarked on its journey towards economic liberalisation. The lack of authentic data makes it difficult to determine the actual size of this business. Nonetheless, it is estimated that the total annual turnover of Nepali BPO industry is thought to be between Rs 6-10 billion. 

Offshore development centres like Deerwalk Inc, Cotiviti Nepal (formerly Verscend Technologies), Pioneer Solutions along with Leapfrog Technology, Yomari Inc, Brain Digit IT Solutions and Cloud Factory are the flag-bearers of the Nepali BPO industry. Similarly, there are some 500 call centres and over a dozen medical transcription companies are also active in Nepal.

BPO firms operate in different fields of IT such as commercial software development, big data, data analytics, e-commerce, web design, healthcare data solutions, management information system, database management and animation, among others. 

Past studies have suggested the government to focus on promoting BPO and ITEs for significant economic gains. A 2007 World Bank report titled ‘IT and IT-Enabled Services Industry in Nepal: An Assessment and Prioritized Recommendations’, states that Nepal can export up to USD 1.1 billion ITEs and create jobs for 40,000 Nepalis.

According to Sunaina Ghimire Pandey, managing director of General Technology Pvt Ltd, there are more than 400 companies active just in the field of software development in the country. “While many are registered and working in noticeable ways, some firms are hidden from the public eye. The software industry has flourished and big investments are coming into this sector,” she says. 

BPO is a major global industry which has significantly grown over the years. Yet Nepal has not been able to capaitalise on the opportunities. “The size of the global Business Process Outsourcing (BPO) market reached USD 1.034 trillion in 2019. If we could have been able to bring a small portion of BPO transactions in the country, then there would have been a huge employment generation. The Nepali private sector cannot do it alone,” says Pandey.

She adds, “We need to work collaboratively, such as forming IT firms in public-private-partnership (PPP) modality to harness the available opportunities in BPO business.” She feels that the government needs to form an official body like IT Board with authority in areas like investment facilitation, marketing and promotion of Nepali IT sector across the world, among others.

Encouraging the BPO sector is also important to create formal employment opportunities for IT graduates and other professionals who are well-versed in different kinds of IT related work. It is estimated that there are 4,000-5,000 people working as BPO freelancers in Nepal who mostly work from their homes.

“They are out of the tax net and their income is not counted as formal earnings as they mostly receive money as remittances. The government can offer them some incentives to bring their activities into the formal economy,” suggests Pandey. According to her, this can also be implemented for people who are engaged in creating content for social media sites such as Facebook and video sharing site YouTube. 

Machnet Inc President Joshi shares similar views. “Today’s generation is tech-savvy and we need to facilitate their life and work by implementing pragmatic policies,” he says adding that thousands of people in Nepal work in the cloud ecosystem and earn money and if there are no policies to govern their activities, such people won’t have documented sources of income.

The All-important Openness
Unlike in many developed, emerging and developing economies, Nepal’s digital transformation has not been an easy one. This is because the way forward for Nepali IT entrepreneurs or those who aspire to become entrepreneurs is fraught with challenges. 

It is hard for many companies to gain the confidence of consumers when they launch new products or services. There is a lack of openness among ordinary citizens as well as people in the government, and one of the reasons behind this is the low level of digital literacy in the country. 

The government’s initial response to the outcry of the transport syndicates last year to ban the ride-sharing services, serves as an example in this regard. “I believe that such debates largely stem from confusion over our operations which are only natural. All big innovations throughout history have faced such resistance,” mentions Tootle CEO Bhatta. “The world over, people are suspicious of new developments.” 

Though the authorities later softened their stance after Prime Minister KP Sharma Oli took a positive approach towards the new transport platforms, the issues regarding the legality of such services are yet to be resolved. The government has yet to even start the process of amending the Motor Vehicles and Transport Management Act, 1993 to formally allow ride-sharing platforms to operate. 

Highlighting on the need for policies to encourage, facilitate and foster innovation and the digital economy, Joshi says, “In terms of developing a digital ecosystem, technology is not the problem, policy is. Not allowing Nepalis to use PayPal is a policy limitation, not a technological one.”

Experts Views On DIGITISING Nepali Economy 

THE  PEOPLE ARE READY FOR DIGITAL BANKING,THE INDUSTRY

Technology is enabling an ecosystem where customers are acquired and served differently than traditional ways. While designing a digital strategy, it is important to understand how customers are acquired and how they are served. Let’s consider the process of opening a bank account. People used to have to personally go to the bank to open a bank account which is slowly changing now. The Know Your Customers (KYC) of banks and other set processes are still the same, but what is changing is the process.

It is becoming more user-friendly through the use of digital technologies and infrastructure. We can also consider the example of the Windows operating system; it used to come as a package in disks in the past, but today the most widely used computer OS has become a cloud-based service. So digitization is disrupting many traditional processes and changing them for the better. 

This disruption is also being seen in the financial sector. We can take pride in the fact that Nepal is one of the few countries which is working towards creating a digital ecosystem for remittance transfer. Our company Machnet Inc may not directly be engaged in remittance services. However, we are active in the sector of digital banking and remittance is a significant part of it. What we are trying to do is create a type of digital banking service where Nepalis residing outside Nepal can also open a bank account, make deposits and withdrawals and also get a loan. And we plan to do this within the next two months. 

In Nepal, the biggest gap I have seen is the lack of a consolidated digital banking platform. Private companies make different platforms for themselves. But we do not have an integrated industry-wide system. The services being provided by the Nepal Clearing House Limited (NHCL) is a good step forward in this respect but they need to be scaled up to have a greater impact. And a major hurdle still remains which is the KYC. 

The issues of digital identity, digital signature and digital anti-money laundering (AML) compliance also need to be properly acknowledged when talking about digital banking. There are various tools available to address these issues but they are fragmented. They need to be integrated into a larger infrastructure system which we do not have at the moment. And this is the irony with Nepal. The customers are prepared to adopt digital banking services but the industry is not.

The government is very cooperative and the central bank does try to support digital entrepreneurs. But the problem is that they lack the technical know-how and thus, cannot make the right decisions at the right time. They approach new technologies with an old mindset and that is what is preventing this sector from progressing.

In terms of developing a digital ecosystem, technology is not the problem, policy is. Not allowing Nepalis to use PayPal is a policy limitation, not a technological one. Nepal is able to host big multinational companies but the policy is what keeps them away. The cost of compliance is so high here that any company willing to come and work in Nepal faces a risk higher than the potential profits.

My company thamel.com was not only the first e-commerce company of its kind in Nepal but it was the first of its kind in the world. But, I could not scale up. Even when I tried scaling up, I could not make a profit.

It was not the finances that were holding me back, it was the logistics. A company cannot scale up its activities until it is able to automate its logistical system. The environment is a bit different today. Companies like Daraz and SastoDeal are doing well. But there is still a long way to go.

The digital sector in Nepal also lacks a reliable source of funding. Investors have little knowledge about the technologies and I also think that the Nepali IT sector is small. So, they hesitate, thinking that they can’t make a profit.

Our company Machnet is the only company in the world to have an entirely new system in money transfer business. We operate an engine which allows people to transfer money worldwide without any sort of a license. Today, 15 percent of the remittance coming from The United States to Nepal comes through our platform of Thamel Remit.

Today’s generation is tech-savvy and we need to facilitate their life and work by implementing pragmatic policies. At present, thousands of people in Nepal work in the cloud ecosystem and earn money. If there are no policies to govern their activities, such people won’t have documented sources of income. 

We are now at the age of sharing our resources, but the problem is our mentality. Today, cloud services have become a big thing. Now software is taken as services rather than products; it is why software-as-a-service (SAAS) modality has gained prominence in the software development industry. 

Today, innovation is in connectivity. In digital banking, thinking that we will do everything by ourselves will lead to failure. Rather we should connect the Application Programming Interfaces (APIs).

If we are able to connect all the small components, then there will be a huge advantage. But here in the country, people feel that everything should be done by them only. We don’t have a proper ecosystem, clear policy, critical components. So, I think due to this, we are lagging behind.

E-READINESS WILL ONLY DEVELOP WHEN THE ENTIRE ECONOMY IS FORMALISED

The growth of digital payment system in Nepal is good. However, we still have a long way to go compared to the global growth. While the scope of digital payment systems are much broader, these services are only taken as means of utility payments such as mobile SIM recharge, balance top-up and paying electricity, water and phone bills and buying movie tickets. Nevertheless, growing use of digital wallets has been an achievement for service providers like us. 

We lag behind in terms of e-readiness because an ecosystem is yet to be created. People are habituated in using cash because only banknotes are accepted in most of the places. They aren’t fully assured about payment of their bills through online platforms. There is a need to formalise the informal economic activities.  E-readiness will only develop when the entire economy is formalised.  

However, we are positive because Nepal is relatively smaller country and it is easy to implement things here. Currently, the highest cashless groups in the society are the students. 48 percent of the college students use digital wallets for payments. Though the number of subscribers of e-payment systems can go around 2 million, there are only 400,000 - 500,000 active wallet users in Nepal.  

We will observe noticeable growth of e-payment systems in the next few years. By 2022, many more people in the urban areas of the country will use digital payment. This will take more time in rural areas. 

Currently, just 3 percent of the total transactions in the country take place digitally. A holistic approach is necessary to help propel the growth of digital payment system in the country. There have been some steps taken that can broaden the horizon for electronic transactions.  For instance, the Financial Comptroller General Office (FCGO) is working to facilitate the proposed online payment of taxes. 

Our goal is to create an environment where people can do 90 percent of their banking transactions through e-wallets. This will enable people to do banking transactions 24 hours a day. This will ease the lives of the people in the rural areas as they don’t need to travel long distances to go to banks or cooperatives. This kind of behavioral change will aid to a faster economic growth. Infrastructures in banking, telecommunications and internet are essential in creating an environment conducive to digital payment systems. These infrastructures have been improving gradually in our country. Mobile penetration rate, for example, has reached 100 percent. Similarly, smartphone penetration is also growing every year. Telecommunications services providers have also shifted from 3G to 4G networks and the internet infrastructure too is improving. 

Going forward, creating digital identity of citizens will be an important step. These will form essential parts of national ID card which will have all information of individual citizens stored digitally.  

Robust digital banking and payment infrastructure are essential elements of digital economy. As there is no unified payment system in Nepal, many international digital wallets such as Google Pay and Amazon Pay do not want to come here. This is because they have to integrate their systems separately with every bank. These global payment platforms entered India after the Unified Payment System was launched there. Nonetheless, there have been some good initiations lately such as the implementation of the Real Time Gross Settlement (RTGS) by Nepal Rastra Bank (NRB) for bigger transactions. 

The government has announced a rebate of 10 percent of VAT to consumers who pay digitally on purchase of goods and services under VAT. This will be a good start. However, it will be difficult to implement because the government took the decision without taking suggestions from stakeholders. The merchants have to completely change their billing systems adding to their costs. There is also a question whether or not this refund of small percentage of VAT encourages consumers to adopt digital modes of payment. Again, there will be hassles if the consumers return the goods they purchase. It will be more difficult for bank card payments because the settlements of card payments are carried out by the Visa Inc. However, if we bring SCT card into use again, VAT refund to consumers can be implemented. If this system is implemented on the use of e-wallets, there will be hassles due to problems merchant billings and changes in software.  We want to do this because we want to experiment and see. 

Technology and innovation always run ahead than rules and regulations; laws should facilitate innovation not impede it. NRB started providing licenses to digital payment service providers just three years ago, but eSewa began its services 11 years ago. Foodmario sells homemade foods, but no rules have been set for this type of business. Selling food through a platform like Foodmario is economically beneficial for many women in our country who have good cooking skills. Risks are always associated with new things and mitigation of risks is the duty of the government.  There should not be much gap between innovation and regulations. The authorities need to view the use of new technology proactively, not reactively.

INTERNET PRICES MUST COME DOWN FOR OUR ECONOMIC DEVELOPMENT

We hold a reputable place in the world when it comes to access to the internet and penetration of the service. Our internet penetration rate stands at 63 percent, according to the Nepal Telecommunications Authority, which is respectable by any standard. However, our internet prices are very high which is a major hindrance to our growth.

Cellular data prices are still unaffordable to a huge chunk of our population and not everyone has access to Wi-Fi connectivity. So, internet still remains a luxury to many people. And this, in turn, is preventing the growth of many other related sectors like digital payments and e-commerce.

The government has been encouraging online payment platforms and relaxing many of the restrictions it had previously placed on e-payment companies. Similarly, the market of e-commerce companies like Daraz, SastoDeal, Foodmandu and City Cargo is expanding continuously and new companies are entering the online business arena regularly. But their growth will stagnate if the accessibility of the internet does not increase – both financially and technologically. The government is very positive about enhancing and expanding digital connectivity in the country. Even when the government has played an antagonistic role like in the cases of Tootle and Pathao, the level of public outcry forced it to back down. So clearly there is public demand for internet and internet-based services. We also have a very young, tech-savvy population; many Nepalis are under the age of 30 and own a phone. Domestic and foreign investments in the telecom sector are growing too. So it is only the high prices that are holding us back which is really a shame because Nepal’s digital sector holds so much potential.

We need only look at India to see what we are missing out on and what we can achieve. The entry of Jio revolutionised cellular data in India and forced the overall industry to lower their prices and today, internet has become a vital part of Indian livelihoods. Everything from buying groceries to ordering medicines and booking tickets is now done online – not just in urban India but in rural parts too. India’s connectivity greatly increased after Jio and Nepal’s can too if we make our internet cheaper. A cheap internet is the only way to realise our ambitions of a ‘Digital Nepal’.

With a cheaper internet, growth of online businesses will increase which will not only be convenient for the buyers and sellers but will also serve to wipe out the syndicate and middlemen currently operating in our society. Internet is inherently open and democratic and cannot be controlled by one individual or entity. This will change our entire way of life. A cheaper internet will expand our digital market. This means that there will be a growth in demand and foreign companies will come and invest here. Businesses like Airbnb and OYO already operate in Nepal. An expanded market will also entice other companies to come in. We will have a company like BYZU’s enter our education system and a technology like Hospital Management System will come up in our healthcare industry. Services like classroom teaching and doctor consultations can be done through video chats and virtual presence. This will especially be beneficial for the people living in the rural and remote areas of our country. People will have easy access to fast and reliable information so our media sector will get transformed. Almost all aspects of our society will undergo digitization. Of course, as the internet penetration grows and Nepalis gain access to more and more online services, certain policy and legal issues will need to be addressed. The government has proposed a new IT Bill which will require online companies operating in Nepal to register in the country. This needs to be taken positively as it will help bring these companies under the legal domain and will also regulate their payments. This law would also enable the government to collect taxes from these companies, thus benefitting our economy. 

There are always a lot of things to be done by the government. But it is good that it has at least become aware of the working model of IT-based companies and the problems they face on a day-to-day basis. For instance, they are gradually understanding how Tootle and Pathao operate and the hurdles they are facing in the absence of a proper legal framework. The problem here is that digital entrepreneurs move faster than the government. Thus, there is a lag between government policy and the actual business environment. But the government is slowly trying to catch up. The issue of fintech was included for the first time in the last budget. It is promoting a transition to a cashless society, and it did provide some flexibility with Tootle and Pathao. All this shows that the government is trying to be supportive of the tech-sector. And we also have to understand that drafting and passing regulations take time. The tech-sector has to be patient and respectful of the bureaucratic and legislative process.

We at City Cargo are willing to support the government where possible. For instance, with respect to taxation, we collected VAT on all our 20,000 trips in the last fiscal year and paid it to the Inland Revenue Office. Before us, no one used to collect VAT on transportation. We have continued the practice this year as well. The current technology records each and every transaction made so there is no possibility of any misappropriation. So, supporting digital technology would also help widen the state’s tax net and increase its revenue.

So, internet has a huge potential to transform Nepal economically.

THE FUTURE OF BANKING IS DIGITAL MONEY 

Let’s start off with an example of WeChat. It is primarily a social network, but it also a wallet service called WeBank. Now, WeBank is the second largest bank in the world with the one of the highest number of bank accounts and transactions – all of this just on the app. This alone shows the global trend of e-payment; or in a larger sense, the Money over Internet Protocol (MoIP).

MoIP is comparable to an email or SMS. We send money from one point and it reaches another point electronically. It is a convenient service and holds special relevance in the context of Nepal. The Nepali diaspora sends a huge amount of remittance into the country, as evidenced by the immense wealth of remittance-based companies. MoIP would make the flow of money from foreign countries into Nepal and into Nepali bank accounts a lot easier and faster – all with the help of the internet.

And internet too is becoming cheaper. India’s Jio brought about a revolution in cheap and reliable internet and others are also catching up. So the future of money is on the internet.

And encouragingly, the internet is becoming more open. People don’t keep their technologies to themselves. Even companies like Microsoft have adopted an open source software development model. So, as the tech world becomes bigger and more vibrant, financial institutions can harness it to expand their capacities and offer a host of new services that they currently can’t. But for this, they need to come out of their conservative shell and look beyond short-term profits. Something Nepali banks aren’t doing at the moment.

Of course, the banks are also held back by various security concerns. One has to acknowledge that in e-banking, the bigger the transactions, the bigger the risks and security problems and lapses can have severe financial consequences. But no problem is without a solution. Nepal can adopt various cyber security policies. The recent hackings involving criminals from different countries is a wake-up call as well as an opportunity. We need to identify our vulnerabilities and repair them. Shutting ATMs down is not the solution.

Nevertheless, Nepal is transitioning into a cashless society. People no longer go out to pay their utility bills and instead use e-payment services. The use of scratch cards for mobile recharges has gone down. Nearly 18 percent of the total banking transactions has already moved from cash and cheques to online. In the budget speech for the fiscal year 2019/20, the finance minister also talked about a 10 percent VAT rebate on transactions done with cards. This is a beautiful policy to encourage digital payments. But a more concrete mechanism needs to be put in place for a speedier and smoother transition.

To facilitate this transition, we at Unlimited Technology recently launched E-Dheba. For this, we merged with iPay, an old player in the field of digital payments in Nepal. iPay already had 127,000 customers and a certain level of infrastructure. So we didn’t need to focus ourselves in starting from scratch. We currently have 150,000 customers on E-Dheba and now, plan to aggressively expand our market presence and focus on advertising as well. Our goal is to reach 2.5 million customers in the next two years. We also plan to add around 50 various financial services on our app.

We at E-Dheba looked at the market trend and went above and beyond it. We are much more than the average utility payment app. We offer so many additional services like payment of bus fares. Currently, commuters can use the E-Dheba card to pay their fares in 29 buses of two different companies. By February, this number will have increased to 300 buses. We are using the Near Field Communication (NFC) technology in our cards which can also be used on smartphones or smartwatches. We are also working with Visa and Union Pay to have our cards work at ATMs and retail outlets as well. And all of this, without any link to a bank account!

In the next two months, we will also have come up with a service to pay government taxes electronically.  We are also developing a Central KYC Repository where the customers will receive a token. Then that token will serve as all the physical documents that an individual would normally have to carry for KYCs at banks; thus making the process much less tedious for everyone involved. 

We are also looking beyond banks and are with cooperatives as well. According to the Nepal Rastra Bank, they hold a huge amount of money and are often the first line of credit for many people. So, we plan to integrate them into our platform.

E-Dheba is just one of the many fintech platforms that are coming up. Many young graduates are entering the field with new and exciting ideas of their own. But there are policy constraints keeping this field from exciting. There are strict criteria that platforms have to meet with regards to money laundering and cross-border transactions. Also, there are various processes where the customer is required to be physically present at the bank or financial institutions. These are some policy-level hurdles that discourage this sector from taking off and these hurdles are, unfortunately, getting tighter.

Having said this, the government’s Digital Nepal Initiative is a very positive step. However, the challenge is to get all the stakeholders on the same page and to monitor the progress made on achieving the targets. If the government truly wants to promote Digital Nepal then it should focus on developing the IT infrastructure. We also need a more open and progressive attitude. We need to welcome platforms like Amazon and Facebook because they have the expertise and the technology to handle e-payments on a global scale. So, the government should be taking more of an initiative.

DIGITISATION OF DOCUMENTS TO USHER NEPAL IN A NEW ERA OF DIGITAL DEVELOPMENT 

The IT sector in Nepal made noticeable growth in the mid to late 1990s with the likes of Mercantile Communications setting up business. Today there are more than 400 companies active just in the field of software development in the country. While many are registered and working in noticeable ways, some firms are hidden from the public eye. The software industry has flourished and big investments are coming into this sector. 

The government policies as such are not much of a hindrance for software development companies. But if the government makes them easier, this sector can grow even larger. The company registration process, getting approval from Nepal Rastra Bank and Department of IT, and getting approval for foreign investment, are all far too lengthy,

In last year’s Nepal Investment Summit, there were some Foreign Direct Investment (FDI) pledges made in the Nepali IT sector. But the commitments are yet to be realised. I think incentives like ‘tax holiday’ will encourage foreign investors to invest here. Besides, Nepali IT entrepreneurs should also be active in terms of lobbying and pressing the issue in order to bring in the investment committed by foreign investors. Nevertheless, it is encouraging that a domestic company like WorldLink has secured investment of Rs 1.35 billion from CDC Group of the United Kingdom. 

In the IT sector, any innovation that will become a great business idea comes first and then policies are formulated to regulate the business. So policies can never bind this sector. There are many innovations that cannot wait for a specific policy to come. 

The size of the global Business Process Outsourcing (BPO) market reached USD 1.034 trillion in 2019. If we could have been able to bring a small portion of BPO transactions in the country, then there would have been a huge employment generation. The Nepali private sector cannot do it alone. We need to work collaboratively, such as forming IT firms in public-private-partnership (PPP) modality to harness the available opportunities in BPO business. We need to have an official body like IT Board with authority in areas like investment facilitation, marketing and promotion of Nepali IT sector across the world, among others.

Similarly, a large number of people are also active as BPO freelancers who are working from their home and making money. It is estimated that there are around 5,000 freelancers who are out of the tax net. Their income is not counted as formal earnings as they mostly receive money as remittances. The government can offer them some incentives to bring their activities into the formal economy. This can be implemented for people who are involved in creating content for social media sites such as Facebook and video sharing site YouTube. Doing this is not only important for maintaining a proper record of such activities but also to formalise their earnings. 

It is difficult to have IT hardware industry in Nepal because we don’t have a manufacturing base to produce such types of products. But there are big potentials for us in the service sector of IT as we have the technological know-how and there are constant opportunities to upgrade ourselves. Currently, there are many Nepalis working in Silicon Valley companies and IT firms in different countries. If we can bring them back and retain the existing workforce in the country, there won’t be a deficit of human capital in the Nepali IT sector. It is not that brain drain is necessarily a bad thing. India in the 1990s also faced an outflow of IT workers. Later, people came back to their home country with the experience and investment which became a crucial element in the growth of the Indian IT industry. We have been observing, in recent years, that in Nepal, too, people are coming back. Now we need to encourage them and create an environment where they can stay in the country and fulfill their aspirations. 

Talking about creating opportunities, I think the digitization of all the documents of the institutions in Nepal, both government and private, can prove to be very important. Not only will it help to preserve data in scientific ways, but it will also be very beneficial economically. It will usher in a new era of digital development in Nepal. I think if the government decides to digitise all the documents, it will create some 500,000 jobs. Even those who are only high school graduates can be employed for basic tasks such as data entry. 

The inclusion of more women in tech should be another area of focus for the stakeholders of Nepal’s IT sector. People need to realise that it becomes a challenge for women IT professionals to keep themselves constantly updated maintaining a good level of work-life balance. They have the responsibility of raising kids, doing household work and giving time to their profession. Nepali women in tech are equally intelligent and hardworking as men and they need support for their professional development.

RIDE SHARING IS THE FUTURE OF URBAN TRANSPORT

We at Tootle started differently than others. We were not only a startup but we were also introducing an entirely new business in Nepal – a business of ride-sharing. It is good that new players are now gradually entering the market but people appreciate the fact that we started it all.

Creating a new business, in any sector, is challenging because you are challenging the status quo. You are changing the existing norms, platforms and mobility. There is also a lack of understanding among the public and the stakeholders as to what we really are how we operate and that also creates some problems. But, as the leaders of this nascent industry, we feel that the responsibility to mitigate these problems falls on us. So, we do not only think about growth but about leadership and activism. We take it upon ourselves to take this industry forward and to ensure its development. Challenges do appear but that only encourages us to take bigger leadership roles for the service of the people. And I would like to emphasise that our focus is on serving the people. We want to create and encourage others to create a good public transportation system in our urban spaces. 

The introduction of Tootle has changed two things; it has enabled people to share their resources and make additional income and by promoting the sharing of vehicles, it has helped in reducing carbon emissions. If we are able to develop this system well and take it forward, we will be able to reduce the number of vehicles on the streets. This will free up the congestions that our cities usually face and contribute to their sustainability and livability.

But, even with such long-term benefits, the authorities still aren’t convinced about our existence. There are still debates about how we should be allowed to operate and how we should be regulated. There were even attempts to ban us, although the move was later repealed and such calls to ban us seem to have subsided for now. I believe that such debates largely stem from confusion over our operations which are only natural. All big innovations throughout history have faced such resistance. The world over, people are suspicious of new developments. 

When we started Tootle in 2016, it was hard to convince our customers. People did not believe that fact that bikers could use technology and drop people from one place to another. But the customers are convinced now and are comfortable with using our services. So, we are now working on convincing the government. We are continuously holding discussions with them and hope that they come up with the right policy to allow ride-sharing.

The governmental resistance is also natural because innovation always precedes regulation. Nepal Rastra Bank was established after Nepal Bank Limited. Self-driving cars are now slowly starting to pop-up and nations around the world are looking to draft regulations for it. Existing regulations do not imagine future possibilities. But that doesn’t mean that regulations should stifle advancements. The government should be proactive in drafting proper regulatory frameworks that allow innovations that benefit the larger society to flourish.

In the context of Nepal, the Motor Vehicles and Transport Management Act, 1993 states that a private vehicle cannot carry passengers and goods. This means that all e-commerce operations should stop because most of the online stores deliver through private vehicles. Clearly, this is problematic and limits our usage of modern technology. Also, without proper laws, it also becomes difficult to ensure data security. It is unclear as to what types of data companies are allowed to collect and how they should store them. Especially with international companies, there is the risk of our personal data going out of the country. 

Also, without a legal parameter, we also cannot properly manage accidents. At the moment, the best measure we have is the third-part insurance of bikes. We do try to facilitate if there are any accidents but absence of regulations really tie our hands. So, an updated tech-friendly law should be formulated.

Yet, even with the legal hurdles, we are growing steadily. We have 35,000 registered bikers on our platform and more than 300,000 users.  This is reflective of the overall ride-sharing market which is growing. But there is still so much potential for growth. The government should have a comprehensive vision to allow the sharing of seats; be it on bikes, cars, vans or any other vehicle. Ride-sharing is the future of sustainable public transport and the government should embrace it.

Aside from  laws, we also face behavioral impediments. People are aware of e-commerce, ride-sharing, fintech etc but do not fully adopt them because of certain cultural biases. Getting our market to expand is also about changing people’s behaviors which will take time.

The Washington Post claimed in 2015, “No one likes malls anymore” based on its analysis of foot traffic at major American malls and the rise of online retail. The Business Insider magazine published a list in 2017 titled “Why you don’t see malls anymore”. The Forbes magazine came out with an article in 2019 effectively claiming that malls were dead and suggesting alternative uses for the grand and [now] empty buildings. But even as malls in major global cities are fading into memory, they are still alive and well in Nepal. In fact, over the past decade, they have thrived and are now an integral part of the Nepali urban life. So what do our malls have that is keeping them relevant even as their international counterparts fall victim to online commerce and public apathy?

“Multiplexes,” answers Roshan Adiga, chief executive officer (CEO) of Team Quest, parent company of QFX cinemas. “Multiplexes are a hook that attracts people to the mall, and this contributes to the other businesses operating there as well.”

“Multiplexes bring people to the malls and once they are there, they look around, shop, and play games. Even the parking helps the malls make money,” states Ram Hari Koirala, administration head of FCube Cinemas.

“Cinema halls are indispensable to malls,” shares Mohan Saraf, chairman of Biswojyoti Cinema Hall.

The data with the Film Development Board (FDB) paints a similar picture. Of the 14 multiplexes opened in the fiscal year 2018/19, eight were in malls.

These ‘malls with halls’ are especially visible in Kathmandu Valley where three new cinema halls were opened and all of them are in malls – the three-screen Regal Cinemas at Bhatbhateni Supermarket in Bhaktapur, two-screen One Cinemas at Eyeplex Mall in Baneshwor and Chhaya Cinemas at Chhaya Centre in Thamel.

Revisiting the Evolution of Multiplexes in Nepal
Till the 1990s, Nepali cinema goers could only choose between an array of single screen theatres to satiate their movie appetite. Jai Nepal, Kumari, Gopi Krishna, Vishwojyoti and Manakamana were the major cinema halls in operation. These halls were celluloid-based exhibitors and widely popular among movie audiences of the day.

But everything changed in 2002, when Team Quest acquired and digitized Jai Nepal Hall. The move proved a hit and in 2004, the team bought Kumari Hall and relaunched the erstwhile single screen cinema as a multiplex with two screens.

At the same time, the Reliance Group of India opened its three-screen Big Cinemas at the City Centre. This was later renamed as Big Movies. With Team Quest and Reliance proving that multiplexes could operate profitably in the country, various other companies entered the field and there has been no looking back since.

Multiplex Brands
Team Quest has by far been the most successful in branding its chain of multiplexes. Its QFX Cinemas is an iconic brand among Nepali cinema halls – single screen or multiplex.

And according to CEO Adiga, this brand, too, is related to malls. “We developed the brand QFX only after we started the Central Cinemas at Civil Mall in 2008,” he said. Today, QFX is a recognizable franchise all over Nepal. It operates 12 multiplexes all over the country stretching from Jhapa to Nepalgunj, many of them located in malls. In fact, of its five multiplexes in Kathmandu, three are located in malls, namely Civil Mall, LABIM and Chhaya Centre.

Reviving Old Halls in New Malls
The 64 years old single-screen Viswojyoti Hall is now being revived as multiplex Viswojyoti Cinema with its home at the Biswojyoti Mall, Jamal. “We invested nearly Rs 74 million in establishing the mall and are now housing our revamped Viswojyoti Hall in it,” informs Riwaz Singh Saraf, managing director of the cinema. The whole process of revamping and reintroducing Vishwojyoti Cinema will be handled by Saraf’s sons Roshan and Riwaz Saraf.
“Having our relaunced cinema in our mall will enable us to deliver a complete package of entertainment and services,” says Riwaz.

Advancing the Movie-Going Experience
Going to a cinema hall today is not only limited to watching movies. It is about experiencing the whole atmosphere. That is why multiplex brands are bringing technologies like Dolby Atoms sound system, recliner seats, RGV lighting, 2K and 4K projection. It is about raising the standards and giving the audience much more than simply the movie they came to watch. That is why amenities like food courts, gaming stations, lobby etc are as much part of the modern cinema hall as the screening room.

Food Business in Malls
Cine De Chef (CDC) is the first multiplex to operate an institutional food business alongside its theatre. It has its own kitchen, a spacious Cine Dine Bar and Lounge and offers Nepali and international cuisine.

“Our food business alone generates around Rs 3.2 million a year,” informs Pawan Shakya, manager of CDC, “Couple that with ticket sales and our annual turnover reaches Rs 6 million to Rs 8 million depending on the film.”

According to Shakya, CDC prides itself on a quality fine dining experience to rival that of any five-star restaurant.  “Our customers can even order from inside the hall while watching the movie,” Shakya says, “Our cine-hostesses bring the orders to the customers inside the theatre so they can enjoy their meal while watching the movie.” CDC’s clientele, past and present, include Himani Shah, the former princess, and many other ministers and ambassadors, as informed by Shakya.

Challenges
Multiplex operators cite tax as the biggest hurdle to their business. A total of 33 percent tax, including 13 percent VAT, 15 percent FTT and 5 percent entertainment tax, is levied on multiplexes.

“Out of the remaining 67 percent, 15 percent goes to the film producer or distributor and a separate tax of 25 percent is collected by the local government,” exclaims Rakesh Shrestha, theatre manager of Q’s Cinema. “So, we cannot operate at an occupancy rate of lower than 30 percent.”

Likewise, Sharaf also shares, “We have to pay an exorbitant 30 percent custom on importing equipments for our halls. This is in addition to taxes for land and property which is almost double what it used to be.” He argues that all of this weighs heavily on the finances if multiplex operators and makes it difficult to sustain operational and maintenance costs and salaries.

The Future
The future holds potential for the cinema hall business because of a growth of middle-class customers who prefer watching movies at multiplexes and are able to pay the ticket prices. Services like online booking, discounts, and special shows are also helping bring people to theatres. Furthermore, multiplexes are moving out of the capital so their market is also expanding. So multiplex operators agree that the future looks promising. 

The oldest bank in Nepal is moving ahead with a modern vibe in its journey to provide banking services. 

The history Nepal Bank Limited, which spans over eight decades, tells a story about the rise, fall and rise again of the state-owned bank. The story is not only about revisiting the see-sawing past of the country’s first bank, but it is also about its modern outlook towards creating a smooth and sustainable future in its steady march towards a century of banking services. 

NBL’s Financial Position
With deposits totaling Rs 118 billion and extension of loans amounting to Rs 103 billion along with a customer base of 1.7 million deposit clients and 0.13 million credit customers, Nepal Bank is one of the most financially sound banks in Nepal. Similarly, it stands third in terms of low base rate among commercial banks in the banking industry. Nepal Bank’s current base rate is 7.82 percent. It currently operates 177 branches in 63 districts of the country.

The bank has projected a 25 percent business growth for a period of four years starting from the current fiscal year 2019/20. “We have increased our capital adequacy rate to 18 percent from 10 percent. Business volume will be increased according to our projection,” says Krishna Bahadur Adhikari, CEO of Nepal Bank Limited. Adhikari, who joined Nepal Bank in 2004 and worked in different managerial capacities, was appointed to the post in September 2019. Prior to his appointment as the CEO, he was Deputy CEO at the bank. 

According to him, the growth in business has enabled Nepal Bank to distribute dividend to its shareholders after many years. After a gap of 22 years, the bank announced distribution of 25 percent dividend (15 percent bonus shares and 10 percent cash dividend worth Rs 981.1 million) to its shareholders as approved in its 60th AGM held on January 10.

A Glorious History
Nepal Bank is perhaps the first institution established in Nepal which incorporated the public-private-partnership modality; the bank started with a paid-up capital of Rs 842,000 with 60 percent share of the general public and 40 percent of the government. It fulfilled some important roles of the central bank until Nepal Rastra Bank (NRB) came into existence in 1957. The bank pioneered some major areas of monetary arrangements such as starting the use of Nepali currency, exchange of foreign currency besides the usual banking functions of deposit collection and lending.  

A Rana regime official named Gunja Man Singh is credited with establishing Nepal Bank. It was during the late 1930s when Singh, who served as the First Secretary in Nepal’s Laision Office in London and was later involved in the formulation of company law and establishment of the Biratnagar Jute Mill, advised Rana Prime Minister Juddha Sumsher about the importance of having a bank to carry out monetary transactions and for the country’s economic development. Juddha Sumsher issued the Nepal Bank Law, 1937 and King Tribhuvan Shah inaugurated the office of the Nepal Bank Limited on the day of the Laxmi Puja festival in 1937.

As the country’s first bank, Nepal Bank has played a vital role in developing the banking habits of Nepalis, industrialisation and capital formation. “Whichever big industrial and trading houses there are in the country, they all started their business with us and regard Nepal Bank as a mother bank,” says Adhikari.

Going Through Troubled Times
In the 1990s Nepal Bank faced a very difficult time. In the mid-1980s, the Nepali banking sector was opened for private domestic and foreign investments. In the late 80s and early 90s, a number of foreign and domestic joint venture banks started their operation in the country ending the monopoly of state-owned banking entities. 

“Nepal Bank that time wasn’t able to come up with sound strategies to stay in the growing competition. It lost its reputation when it reached its journey of four decades,” mentions Adhikari, adding, “There were several weaknesses on the management front because of political interferences and weak decision-making process in the bank. This led to a situation where the bank faced big financial losses year after year for many years.”

Particularly, the bank had a rough journey from 1994 to 2003. It was during that time when Nepal Bank recorded a negative net worth of Rs 10 billion and cumulative losses of up to around Rs 9 billion and struggled with the piling up of non-performing loans (NPLs).By 2002, its bad loan had reached up to 60 percent while the bank’s capital was Rs 380 million. “We had to manage all managerial expenses from deposits at that time,” says Adhikari. 

The Revival
1990s was a miserable decade for the two state-owned banks - Nepal Bank Limited and Rastriya Banijya Bank (RBB). In a bid to improve the situation, the government introduced the Financial Sector Reform Programme (FSRP) in 2002 with support from The World Bank. Under this, the bank’s management responsibility was entrusted to a foreign management institution. “The World Bank’s report had clearly signaled that Nepal Bank was on the verge of collapsing and rigorous measures were needed to revitalize the bank. FSRP then came to our rescue,” says Adhikari. 

In the first two years of the handover, the foreign management focused on minimising the bank’s losses. The bank’s negative net worth gradually turned positive and profit began to increase consistently from 2005.  NPL was also reduced to 10 percent within the three years of commencing institutional reformation. Today, Nepal Bank’s NPL stands at 2.66 percent, well below the statutory limit of 5 percent normal standard. “During this period, the major focus of the bank was to improve its management system rather than on growth. Before the start of the reform process, there were more than 6,000 staff working in the bank. So, three types of voluntary retirement system (VRS) were implemented from 2003 to 2005,” recalls Adhikari. The aim was to reduce the number of staff by providing them additional compensation packages.

NRB took over the bank’s management and initiated the second phase of reforms after the exit of the foreign management a few years later. Declaring the institutional reform of Nepal Bank successful, NRB handed over the bank’s management to its shareholders in 2014. The troubled bank, which was considered technically insolvent before the start of the reform drive in 2002, logged a positive reserve fund ratio of 5.265 percent and NPL of 4.74 percent when the central bank exited. The number of staff was also reduced dramatically to 1,989 in 2014. 

Human Resources and Technology
Today, Nepal Bank is moving ahead smoothly with a major focus on customer-oriented services. For this, the bank has been hiring young, educated and motivated people who understand banking in the modern context. It currently has around 2,300 employees. “We will recruit 570 new staff. Probably, the hiring process will be completed within mid-April,” informs Adhikari.

Furthermore, the bank will replace the existing Pumori IV system software with the latest international standard software. “The recent cyber heists and intrusions have alerted us. We identified that there are several gaps in the existing software,” shares Adhikari. In a bid to ensure higher level of IT security, the bank has also formed a team to regularly monitor and supervise on the possibility of threats. Additionally, Nepal Bank recently started using the anti-money laundering system goAML as instructed by the central bank. The software can detect suspicious transactions and monitors the details of bank customers.

Products and Services
Some of the unique loan products of Nepal Bank include Sewagrahi Karja, Sulav Aawas Karja and Sambriddha Byawasaya Karja. Sulav Aawas Karja is one of the loan products in Nepali banking with lowest interest rate. “We have added 1 percent premium in the existing 7.82 percent of the base rate. So, this home loan product has low interest rate of 8.82 percent,” informs Adhikari.

Nepal Bank also is in the forefront to support the government’s eco-friendly progammes. To mark its 83rd anniversary, the bank launched the Green Saving Deposit scheme. Under this, the amount collected will be invested in green projects like hydropower, wind energy, solar energy, electric vehicles etc. The deposit scheme has 6.5 percent interest rate.

CSR
Not only earning profit, Nepal Bank has also been following the corporate social responsibility (CSR) norm of ‘giving back to society’. The bank has been investing one percent of its profit, particularly in the areas of education, health, heritage preservation. Last year, it handed over Rs 5.2 million to an earthquake-damaged school in Sindhupalchwok. This year also, it donated Rs 5 million to a storm-destroyed school in Terai. Besides, the bank also provides financial support to sport and culture preservation campaigns.

''Our focus is on implementing result-oriented policies''

As the bank’s CEO who was appointed to the post a few months ago, what are your plans and focus in terms of maintaining the bank’s sound financial health and corporate governance?
Our focus is to develop Nepal Bank as a model banking institution in the country. We want to make a full utilisation of our capacity. Out attempt in this respect has been towards developing a better work culture, which will be more focused on customer-oriented banking services. Today’s banks are dependent on technology. Therefore, we are ready to invest in adopting new technologies. Strengthening our internal mechanism and adopting a customer-oriented philosophy for business growth is our focus. 

Business growth is also needed to fulfill the expectations of our shareholders. After 22 years, the bank has been able to distribute dividend to its shareholders. However, maintaining it in the future is a challenge for us.

The narrowing of interest rate spread has pressurised us to increase business volume. The rate, which was 5 percent earlier, came down to 4.5 percent in the last fiscal year. It will decrease to 4.4 percent by the end of the current fiscal year. So, there is a challenge for us increase business volume with the squeezing interest spread.

Our focus is on implementing result-oriented policies. We have set criteria for enhancing the quality of our services. We are working with a zero-tolerance policy in case of any misappropriation or misuse of even a rupee.

The last few years have seen a major transformation in NBL in terms of human resource management with a new generation of staff taking over from the older generation. How difficult or smooth has it been for the bank in this regard? 
Every year, we recruit new staff through the Public Service Commission (PSC). It has its own schedule and criteria to select the best, so there are no difficulties in terms of recruitment. We provide trainings related to basic banking and socialisation to new staff during their induction.

We also provide different types of trainings according to the need to enhance the capacity of our employees. We have our own training division. Annually, around 200 staff participate in international forums for training. 

Training is a part of human resource management. Periodic visits to different branch offices are organised where the staff are reminded about our bank’s position, their responsibilities and targets etc. The bank’s management also takes feedback from staff.

The current fiscal year’s Monetary Policy has emphasised on the ‘big merger’ of banks. How has NBL taken this approach of the central bank? Is the bank currently in talks with other BFIs for merger and acquisition (M&A)?
The emphasis of the Monetary Policy is to reduce the number of banks. Even The World Bank has suggested limiting the number of commercial banks to up to 15. Banks have been playing an essential role to increase access to finance across the country. Until a few years ago, only 40 percent of the country’s population was banked; it has reached around 61 percent now.  However, the number of banks and financial institutions is too high at the moment. With mergers, the banks can grow stronger in terms of capital, deposits, lending and human resource, among other aspects. 

As Nepal Bank is a joint-venture bank of the government and private investors, it cannot decide independently regarding merger with another institution. While we have the autonomy for day-to-day activities, the government holds the majority (51 percent) share in the bank. So, we need direction from the government for any major strategic moves like mergers. 

Nepal Bank has stayed in a relatively comfortable position in terms of liquidity management compared to other banks. How has the bank managed this problem?
Unlike previous years, the shortage of loanable funds in the banking sector is not acute this year. Nepal Bank remained unaffected from the crisis in the previous years because we never followed the path to aggressive growth. We have been moving ahead in planned ways and sustainable manners utilising our internal capacity and available means and resources. Our policy has helped us to maintain the credit-to-capital-and-deposit (CCD) ratio at 75 percent. This year, we are trying to maintain the ratioat 77 percent. We even rescued some banks from possible regulatory penalties by purchasing their loans. We do not have problems regarding deposit collection. Currently, our deposit totals Rs 118 billion. We practice daily monitoring and we provide credits/loans according to our capacity.

In a short span of three years, Red Tail Studio and founders of Sroth Code Games has made a dent in Nepal’s budding gaming industry, and greater things are waiting on the horizon.

The last few decades have seen video games globally becoming the most sought after products in interactive entertainment. With the growing video gaming culture also in Nepal, some domestic startups are trying to make their mark in game development. Red Tail Studio is one such company working to create home grown products in interactive entertainment. 

The story of Red Tail Studio began with a video games development company Sroth Code Games in 2016, which started as a winter code camp. But as people became interested in their work, Uttam Adhikari and Uday Gurung decided to start Sroth Code as a company. Both of them used to be interested in games from an early age but did not have a concrete idea from which to begin. With the code camp, they discovered the Unity 3D game development engine whereby they found game development feasible. 

The team later grew to five after Bishal Manandhar, Rizma Joshi and Nischal Amatya joined them. Today they employ around 10 people in their company. Registered in 2017, the company was started with an initial investment of Rs 1.2 Million. Now, in their third year, they expect to grow by 200 to 300 percent. 

Three years later, Sroth Code morphed into a new company called Red Tail Studio.

The journey from ‘Haku Run’
Sroth Code released its first game, Haku Run, in 2017. It was well-received. “Within three days, there were over 10,000 downloads,” they recall. It was trending on social media, after which they felt that there were some possibilities. “That’s how the whole idea of game development started,” says Gurung.

In its journey of three years, the company has already developed more than 30 small games, and one major project ‘Chronicles of the Himalayas’ that is still ongoing. They have developed games such as Goat Ventures, Flip It, Fire Work, Pong Havoc, Tap Tap Turn, and Stack Rush, among many others.

Adhikari shares they have recently realised that working in only one vertical of a venture makes it difficult to keep going. So they are venturing into the physical side of the gaming business. “We are coming up with a gaming store; not just online but a physical gaming store where developers in the market can upload their games and the customers can purchase the game,” he adds. 

Once the online store is live, their games can be purchased from a minimum of Rs 1. “At this point in time, the maximum is Rs 300 for Chronicles of the Himalayas which is still under development,” they reveal. Within 2020, everyone will be able to access the store and purchase the game.

Encouragingly, Chronicles of the Himalaya even reached the finale of the 2019 edition of the Games Development World Championship, an annual competition for games developers and anyone interested in games development. 

Idea versus Execution
Gurung says that developing games is as difficult as it is easy to play. “It is easy to bring out ideas but more difficult when it comes to implementation. That’s so clear and it is not only for us but all other entrepreneurs as well,” he says. 

Generic difficulties such as issues of funding, investors, place, partners are always there. Besides, for a company like theirs, they say that there is no platform where they can sell their products. As a business, they cannot sustain themselves only by developing free-to-play games, so they have to sell games, but there is no platform. Nevertheless, they are positive that, along with the problems, there is also a space for opportunities. “There is no marketplace where we can sell our products. However, we are working to create it,” says Adhikari.

Although there are other software companies and a few other companies that work in the area of interactive entertainment, they claim to be the only company to have been developing their original products. Likewise, the possibility of scalability is global which differentiates them from other similar companies.

Games as a Medium to Tell Stories
Initially, they started with the motive of reflecting Nepali culture, but with time and experience, they have broadened their thinking. They now aspire to tell stories of the Indian Sub-Continent through games. Currently, they are working on the Chronicles of the Himalayas which tells the story of a young Sherpa boy.

“Nepal and the countries of the Indian Sub-Continent have a culture of oral story transformation. We have lots of stories to tell and contents to present. So our choice of medium is games,” they explain. It is a product that can be distributed globally through the internet. They state that if the product is original and people like the product, they will buy it regardless of the language or other perceived barriers.

Clientele and Feedback
When they opened subscriptions for their underdevelopment game Chronicles of the Himalayas, they had over 18,000 downloads and got more than 40,000 subscribers. “Among them around 60-70 percent are foreigners,” they clarify.

Adhikari says that their products are more appreciated by foreigners. In Nepal, some compare them with high profile games such as Far Cry whose budget is more than USD 60 million. They inform that their whole budget for Chronicles of the Himalayas is USD 60,000. However, there are also others who believe in their vision of bundling digital products and reaching a global audience through the internet, but in small numbers.

The positive feedback has encouraged them to grow more. They consider customer feedback and satisfaction a priority. “Even though we feel bad when our work is criticised, these are the things which help us develop better games in the future”, they assert.

Setting Target Audience
Adhikari clarifies the misconception that games are only for youths. Games are played by children, youths, including adult men as well as women. Chronicles of the Himalayas has around 50,000 subscribers today among which 10 percent of audiences are above 40 years.

While developing a game, the target audience is set based on the content rather than age. “We do not develop games by targeting a certain age group. Rather only after the game is developed, will we know if the game is for a particular age group,” says Gurung. According to him, the majority of players of Red Tail games are aged 13 to 35.

The Scenario in Nepal: Challenges and Opportunities
Game development in Nepal is in its initial phase. Along with this, the community is also rigid. “If any problem arises in any other areas, their solution can be easily found on the internet. But in this field, engines, tools are not enough and the contents are also insufficient. In simple terms, finding a solution is difficult in this field,” explains Gurung.

Unlike other areas, the field is also expensive. Hiring an expert for training will cost USD 400 an hour.

“Understanding has not matured. Even some investors have a lack of proper understanding in this field,” they say. However, the perspective of people is changing. People now believe that a career can be made through game development, even in Nepal. “Our internet penetration is 60 percent now, but we have an audience of around 100,000 in the Nepali market,” states Gurung. They believe that there are lots of opportunities today and are hopeful for the country.

“Many developers are getting outsourced work and a certain amount of jobs is being created. So the scope is growing,” says Adhikari. Sroth Code Games founders believe that one of the possible items in the digital realm that can be exported from Nepal are video games.

To Budding Entrepreneurs
“If you have an idea, the capability of executing the idea and helping to solve any problem, then you should give it a try. If someone is not afraid to fail, but learn something, it’s a great thing to do. Also, a person should be able to take criticism,” says Adhikari.

“Along with this, the scalability factor and if that idea can bring positive impact, it’s worth trying,” adds Gurung.

Although TBC’s recently inaugurated Business Incubation Center is in its nascent stage, the programme is a haven for innovative ideators.

Continuous innovations in information technology (IT) have been changing the daily lives of the people in this era of digitisation. In order for entrepreneurship to flourish in such a dynamic world, budding startups need to keep abreast of such innovations besides honing their business skills and ideas. Entrepreneurship today is not just about doing business but also sustaining it. Therefore, to incubate aspiring entrepreneurs for tomorrow, The British College (TBC) is preparing to embed IT skills and products beside mentorship, training, different supports and facilities in its incubation programme.

The college started its incubation programme, known as the TBC Business Incubation Center (TBC BIC), recently in 2019. Though the programme was initially limited to MBA students, TBC now is preparing to offer this platform to students of other streams.

TBC emphasises on the combination of innovation, business and IT in the programme to convert students’ ideas into feasible businesses in a more innovative way.

As the college offers IT courses including MSc IT and BSc Computing beside management courses, it embeds IT in the programme. Moreover, IT students are also allowed to develop IT products from business ideas. The centre combines both business ideas and IT to incubate students on the concept of the Internet of Things (IoT) in the programme.

“We find that the majority of youths are seeking jobs in the market after graduation. Instead of seeking jobs, they have the option to start their business using today’s technologies. So, we started the incubation programme to help those potential students with technology,” shares Arun Lal Joshi, Associate Dean at TBC.

Incubation in Nascent Stage
In the beginning, the college provided the platform to pitch ideas to its MBA students only. TBC BIC mentored its students studying MBA in entrepreneurship module. “While studying MBA during the third semester, we linked the entrepreneurship module with the incubation programme. We had to submit a business proposal in that module,” shares Rajat Shrestha, winning team member of the Business Idea Competition held by the centre.

“We are just beginning the incubation programme. Therefore, we have run the programme at a micro level only. We will be grooming it up in the coming days,” clarifies Joshi. He further shares that the centre is looking forward to allowing the platform to anyone regardless of any discipline even beyond the college, as there will be limited ideas to pitch if the programme is limited to management students only. The centre encourages participation from students from different faculties, especially students studying management and information technology (IT).

IoT Lab for Incubation
TBC envisions a better innovative outcome from the synergetic effort of students from management and IT background. So, to create entrepreneurship with the combined idea of IT and management, the college is launching the Internet of Things (IoT) lab from this January, according to Joshi. He says that the basic focus of the lab is to bring five projects every year. The lab allows Management and IT students to work together for three months. Based on the business concept, incubatees will pitch their ideas with products related to disaster alert/risk management, road accident management, industry, etc. “Management students will come up with business concepts and develop a business model while IT students will materialise those business concepts and models in the IoT lab. So from the next session of the competition, students will be able to show even tangible business products while pitching their entrepreneurial ideas,” says Joshi.

He says that both management and IT students will work together to develop their business products. Around 30 students can work in the lab to develop the products by merging business ideas and IT. Joshi believes such visible products would help the ideators to convince their potential customers about their business.

The students at the lab will learn the importance and utility of IoT that connects different physical things besides communication devices to the internet and controls them through a wireless network. Students will go through an intensive theory class, practical sessions and product development. The lab allows them to have access to new and exciting developments in the area of digitisation.

Idea Pitching Programme
The college organised its first edition of the idea pitching competition as “Startup Series I” in November 2019. Joshi remembers that altogether seven teams of four members from the management stream participated in the one-day pitching programme, out of which the top three teams pitching the best ideas were selected as winners of cash prizes. He says that all the teams had pitched ideas with a business proposal, business structure, model, management etc. in front of different judges.

Joshi says that the students had pitched ideas like customising gifts and interior designing in the last competition. The students also carried out a survey before pitching the ideas to test whether their ideas would work or not. Joshi says that the students are taught about preparing business proposals, business models, strategies to sustain, conducting case studies etc., before participating in the event.

Mentorship
Since many professors of the college themselves are engaged in different corporate institutions, they mentor the students in the incubation programme at TBC. Guest lecturers from different business houses also guide the students. “Only those who are involved in business themselves can mentor the students in the incubation programme. We have professors who have experience of running incubation centres in India and USA. We took advice from them regarding the incubation centre.” The students are taught about creating an effective business plan, marketing strategies, financial projection, risk management, the inclusion of sustainability and inclusive management in business model in the session.

Collaboration for Seed Investment 
According to Joshi, TBC BIC is ready to support potential entrepreneurs with a small amount of seed money to start their business. However, the college realised that the amount would not be sufficient to establish a business. Because of this, the college is tying up with different investors for investment. Joshi explains, “We have a link with top-level management companies and international organisations too. We are tying up with them. With this tie-up, they can be the business partners or shareholders too, while supporting ideators with investment.” He further says that the interested companies will be providing seed investment for the top three business ideas from the next edition.

Plans for the Programme
TBC believes that through the incubation centre, students gain hands-on experience in innovation and entrepreneurship while being nurtured and encouraged by faculty, management and industry experts. Therefore, the college plans to run the programme in a structured way from its second edition with the necessary guidance, technical support, marketing support, legal advisories and space to work. It is planning to provide space with cubicles to establish offices for at least the top five teams in the college. “Though we had already planned to set cubicles from the first session, we could not do so because of lack of space,” said Joshi. The college also provides space for the incubatees to work with their ideas until they establish their own office. It also provides seed funds to aspiring students to establish a company.

Eligibility
In order to participate in the programme, interested students with an entrepreneurial idea from any faculty should submit their idea proposal. The ideas will be shortlisted based on different parameters set by the centre. Then, the selected ideas will be incubated.

Mahesh Shrestha serves as a Managing Director of G4S Security Services Nepal (P.) Ltd. He joined the company in 2008. Due to his utmost professionalism and dedication, he received the Best CEO Award within a year of joining the company. In a captivating conversation with Manisha Balami of New Business Age, Shrestha talks about his professional journey and his peaks and valleys over the years. 

Early Life
Born in Gorkha, Shrestha’s father was a government officer. Due to his father’s frequent transfers to different districts, as a child, he was enrolled in different schools. Due to this, Shrestha believes that he can adjust to different environments. “This was a kind of big exposure to me, to adapt to different situations and make friends. I find it very interesting and joyous recalling those moments,” he says. 

The shift from Engineering to Social Science
Shrestha is an engineer in terms of his educational qualification. He did his proficiency certificate level in Civil Engineering. As soon as he joined the Pulchowk Engineering College in 1992, he was working with Nepal Telecommunication Corporation. The organisation used to be fully government-owned then. Working for almost two years, he decided not to continue with government services as there had been so many issues in terms of favouritism, nepotism and so on. Rather, he chose one of the leading private consulting firms in Nepal called East Concern. He worked there as an engineer, designing a water system for Kobe City, Japan after a massive earthquake hit the country. 

After working for 8-9 months, he thought about his area of work and what kind of organisation he is suitable for. He recalls that he always had an internal feeling that he was made for some international organisation. “Although I was not familiar with the working environment of the international organisations, I had a kind of imagination in my head,” he shares with laughter. Following his instincts, he was looking for vacancies in such organisations. Having found a vacancy for an engineer in Care International in Nepal, he applied for the post. Despite having only two years of experience, he was shortlisted for an interview. He had more experience in building, construction, and designing and had no experience of working with a humanitarian organisation.

He recalls that the interview was very challenging for him. Other people had more than a decade of experience while he had only two years of experience. So he was not hopeful about being selected for the position. However, he was selected. 

“I was asked “You don’t have prior experience, how can you do it?”, then I said, “I grew up in this society and what you are asking me is from their roofs. I know the people, their culture and system. What I simply need to do is to facilitate them. I do not need to go to college to study these things.” Maybe this made them interesting and they selected me,” he explains. 

Working with Care made Shrestha interested in social development, hence he decided to pursue his further degree in Sociology and Anthropology. So he did his master’s degree from Tribhuvan University.

Joining G4S
Shrestha’s wife discovered that G4S, the British multinational security services company, was in search of a country manager and forwarded the vacancy to him. He applied for the position and now he has been working in the company for 12 years.

Joining G4S was primarily important for him because he could be closer to his family since before that, he was out of the country for significant periods. Besides, contributing something to Nepal was another reason. “Finding this job was very much aligned to my two of these objectives,” he affirms. Shrestha always had the feeling that if he had done all the hard work in the country instead of abroad, it would be better. “So if I had found any opportunities, working in Nepal would definitely be my priority,” he says. 

Always Looking for Challenges
An adventurous person by nature, Shrestha feels that he is most suitable for the worst environment. Rather than having a fixed set of objectives and goals, he always looks for professional challenges. That was the motivation behind seeking international placements and assignments. “It was more of an adventure. To learn the critical way of managing things and prove that we are equally competent in the international market,” he says. 

While joining the company in 2008, he recalls that there were various challenges. So from that position, within five years, he was able to turn the company around. He credits the teamwork, support and effort of the whole team for this. “With this, not only me but the whole team was recognised,” he states. 

Turning Point
Belonging from an engineering background, joining Care International was Shrestha’s turning point. Care turned him to the development field which he believes has made him broader in terms of scope. “I was never limited only to engineering and designing after I joined Care International. I was involved in so many aspects such as rural community development, women development, etc.,” he says. The organisation was a non-profit organisation, while G4S is a for-profit organisation. So, he considers joining G4S as another turning point in his career. He says that these turning points have made him realise that nothing is limited and anyone can join from one study background to another area of work. 

An Avid Reader and Wayfarer
The Seat of the Soul, Be Here Now, and The Power of Now are some of his current reads. Shrestha loves reading books and he feels that there are a number of books that motivate him. Besides, whenever he is free, he loves to trek. He says that he frequently goes trekking to different places of Nepal. 

Family Support
Shrestha believes that if a person does not have peace of mind, cooperation and support they cannot do anything. He says that he is a workaholic and sometimes he even doesn’t even remember to take leave days. He stresses the importance of family support and says, “If my wife had argued with my international career and my long work hours, I would never have been able to pursue that. I would obviously choose my family over work and I would not have been the person I am today without them.” 

The French manufacturer’s latest vehicle in Nepal is an attractive and feature-packed proposition.

If one harbours dreams of owning an SUV in Nepal, one needs to be prepared to shell out a significant amount. Renault’s Triber, the new 5-seater SUV, has officially been launched in Nepal, and is looking to upend that narrative. 

The Renault Triber is certainly attractively designed, it is sleek sharp and refined. The sizeable grille up front, coupled with the muscular body, bestow the vehicle with an air of authority and prestige. It is a sight to behold– a stunning, striking and well-sculptured vehicle that commands your attention. Fans of Renault will appreciate the French manufacturer’s familiar design language. 

On the interior, the Triber is above all things, functional. Renault’s marketing tag line for the Triber has been ‘Space for Everything,’ and that reflects not only in the sizeable boot space but also the spacious interior. The interior is roomy, comfortable and comes with a plethora of features. Some of them being – EasyFix seats, SUV Skid plates, LED instrument cluster, Twin AC vents, an 8-inch touch screen Media Nav Evolution System.

As for performance, the Renault Triber doesn’t lag behind. Outfitted with a 1.0-litre petrol engine, the SUV is capable of generating a max power of 721BHP at 6250RPM and a max torque of 96Nm at 3500RPM. 

Moreover, the Renault Triber has been carefully designed to meet modern safety standards, including a class-leading offering of 4 airbags. The vehicle will be available in four variants – RXE, RXL, RXT and RXZ. The Renault Triber was officially launched on January 22 at the Hyatt Regency Kathmandu. There was a palpable sense of excitement in the air because Renault’s latest offering is a truly noteworthy price proposition.

The entry-level variant – RXE, is priced at Rs 2.82 million. Given Nepal’s vehicle market, that is a very reasonable entry point for a 5-seater SUV. 

“We are very happy to launch our newest game changes, Renault Triber in Nepal today. As in other markets, we are hopeful that this super spacious, ultra-modular car will appeal to a wide set of customers, across segments. With its attractive pricing, Renault Triber is the perfect fit for customers who place a high premium on value proposition in a car purchase decision,” said Venkatram Mamillapalle, country CEO and managing director, Renault India Operations. 

Nikunj Agrawal, managing director of Advanced Automobiles Pvt Ltd, Renault’s authorised distributor in Nepal, was fairly enthusiastic about the Triber’s prospects in Nepal, “We have a clear objective and strategy to accelerate the expansion of the Renault brand in Nepal by increasing the sales volume every year. Renault Triber will play an important role in our expansion plans and will set new benchmarks in terms of space and modularity,” he said.

The excitement surrounding the Renault Triber is palpable, and with good reason too. The Renault Triber is a tempting option that calls for consideration. 

On the exterior, the SUV exudes power. The design language marries that power with a shade of grace to produce a product that impresses with its visual flair while communicating the functionality of the vehicle. 

The performance aspect is commendable. The engine packs enough punch for most conditions.

The decked-out interiors and the addition of a sizeable infotainment console, along with a plethora of bells and whistles, will ensure that every ride on the Triber is a pleasant one.

Perhaps most tellingly, it’s the Triber’s price that grabs attention. It’s priced fairly reasonably for a SUV and combined with its features; it makes the Renault Triber worthy of serious consideration of potential buyers.

Bishal Humagain, CEO of Progressive Finance Ltd is a joyous traveller and enjoys exploring new destinations. Fond of going on long road drives during the night, he defines himself as a nocturnal traveller. Tamish Giri of New Business Age magazine caught up with Humagain to note down his remarkable trip to Sri Lanka.

Zeal for Travel
Whilegrowing up, I did not have many opportunities to travel due to my father's hectic work schedule. However, my friends travelled often with their families and shared their travelling experiences, making me desperate about travelling. My father kept postponing the trip. It left me sad and frustrated, so when I was in the 9th Grade, I decided to travel on my own and left for Pokhara. With only Rs 500 in my pocket, I took a night bus to the Lake City without informing my parents.

Back then, the Maoist insurgency was at its peak and travelling alone as a child was dangerous. The bus left me at Prithivi Chowk and I took another bus to Lakeside. Upon my arrival at Lakeside, I took a boat and paddled around. It was my first trip, adventurous yet memorable, I enjoyed the trip very much.

Preference
I travel without any plans or itineraries. I don't make plans for any trips, I prefer staying in the moment, and it's my way of making memories. Long road trips, mainly during the nights, satisfy my soul. Travelling and exploring destinations is my way of learning, they also help me to make useful decisions and create creative ideas.         

The Pearl of the Orient
I have enjoyed all of my trips equally but my tour of Sri Lanka, in particular, is one of the best memories. I made the trip 10 years ago, while I was a director of a cooperative institution, on an invitation to attend a conference. Since I hadn't been abroad before, I accepted the invitation without any hesitation. During the trip, we visited Colombo, Kandy and Hikkaduwa. The cities were well developed and were full of glorious natural landscape - pristine beaches, culture, historical monuments, temples and friendly citizens. Sri Lanka is a marvellous location and its topography is quite similar to Nepal, the only difference is that Sri Lanka doesn't have a sizeable Himalayan range.

Incredible Hospitality
During our trip, we were mostly hosted by a local host Udaya Prabath, manager of Sri Lanka Consumer Co-operative Societies' Federation Ltd. He offered us the hospitality of the best kind. Overwhelmed with the hospitality and welcome, we invited him and his family to visit Nepal. Besides, the country is full of world-class hotel chains. All hospitality employees were well trained and even the locals were warm and friendly in taking care of the guests.

Special Cuisine
In Kandy, we were served a traditional Tamil dish - Tamil Sappadu. Like, Samayabaji of the Newari community - Tamil Sappadu is made of several dishes. It is a sizeable dish comprising of twenty-four items served in a big banana leaf. It was hard to finish all on our own; I was unable to finish it too. I had not tried any Tamil dish before, but I greatly enjoyed Sappudu. 

Most Memorable Moment
While I was crossing a road in Colombo, I saw a VIP vehicle scouted by jeeps approaching the road. Noticing the VIP vehicle crossing I moved back to let the vehicle go like we do here in Nepal. But instead of going ahead, the vehicles stopped and the driver waved his hand requesting me to cross the road first. Hesitant about the kind gesture, I waved back requesting the vehicle to go first but it didn't move until I finally crossed the road. Further, during the duration of my stay in Sri Lanka, I didn't see any of the locals smiling which left me curious to know why. Later, while interacting with a local man I came to learn that the people in Sri Lanka were traumatised by a 25 year-long civil war which just ended a year ago. These experiences have stayed with me.

Regrets
Even though, my overall stay in Sri Lanka was memory in itself but there were some activities which I regret for missing. In Kandy people talked a lot about a porch lavish hotel. Even though I can remember the name, I best recall it as a USD 1,000 hotel which I had a deep desire to take an accommodation at. Since the hotel was extremely heavy in cost to stay, I was unable to enjoy the luxury of it. Besides, I also missed out to climb to the top tower of the temple at the Adam’s peak at Kandy due to windy situation as well as Adam's Bridge (Rama Setu) and Ravana's Golden Lanka. 

The Airbnb platform, which has emerged as a new disruptor for the hospitality business has also raised some vexed questions regarding its use. 

--BY Tamish Giri

Dima Segal and Gadi Rotenberg, a doctor and a young tech entrepreneur, respectively, from Israel, travelled to Nepal in September 2019 and returned to Tel Aviv in mid-November after completing the Lantang Valley and Annapurna Circuit Trek. During their stay in Nepal, they chose to stay in homestays and rooms listed in Airbnb. Like Dima and Gadi, Edith from Bavaria, Germany, and Jessica from Hong Kong also chose to stay in rooms listed in Airbnb during their visits to Nepal, cutting some potential revenue of the hotels and the country’s tax revenue.

Tourist arrival in Nepal is at its peak during the months of September, October, November and December. Like other destinations, Pokhara receives a heavy influx of foreign and domestic tourists during these months. But the reservation of hotel rooms was contrary to tourist arrivals as the reservation of hotel rooms declined.

Bhuwan Sharma, general manager of the Last Resort observed a similar situation during his visit to Pokhara in October last year. He informs that the hotel rooms at a Lake Side hotel where he stayed were mostly vacant. “I was there during October, the tourism season, yet the hotels were mostly empty, the manager of the hotel where I stayed said that hotels in Pokhara are observing footfall in tourist arrivals,” he says.

The manager informed Sharma that they are rarely fully booked and their business has been in a decline as compared to a year ago. According to the hotel manager, the situation was not exceptional to his hotel only. “I was informed that online listing services of the Airbnb platform have been providing accommodation services at minimum charges which has took away their visitors affecting the hotels in the Lake Side area,” Sharma adds.   

Of late, travellers all around the world are adopting to use Airbnb to book their rooms rather than hotels and Nepal has not been an exception. Mainly due to the advancement of technology and availability of rooms and breakfast at reasonable charges, travellers find it appealing. The inexpensive plans have made Airbnb attract a game-changing number of tourists, growing rapidly to more than 500 million guests globally since its inception in August 2008. Nepal is a major tourist attraction for backpackers and hosts with their rooms listed in Airbnb have made the most of it creating a buzz in the hospitality business.   

Airbnb is one of the world’s largest marketplaces in listing unique places to stay. At present, it offers over 7 million accommodations and 40,000 handcrafted activities powered and owned by local hosts. As an economic empowerment engine, it has helped millions of hospitality entrepreneurs to monetise their spaces keeping the financial benefits of tourism in their own communities. It is accessible in 62 languages across 220 plus countries hosting more than half a billion guest arrivals so far.

In the context of Nepal, more than 300 homestays and apartments are listed on Airbnb. Hosts here charge a minimum of USD 9 for a day per room to as much as USD 1,750 for a day’s stay in their apartment and cottage. On reservations made through Airbnb, it only charges as much as 5 percent to a host as a commission on every reservation. Currently, rooms and apartments mostly from Kathmandu, Bhaktapur, Lalitpur, Pokhara, and Chitwan are widely visible on the Airbnb site and app. 

Mason De Kathmandu, situated in Lazimpat is one such property listed on Airbnb operational for the last three years, with 100 percent occupancy all around the year.

“We have three cosy rooms in terms of accommodation to offer – two with a shared bathroom and one with an attached bathroom. The rooms are mostly packed with Chinese visitors all around the year and westerners during the tourism season,” informs Eupen Dahal, manager of Mason De Kathmandu.

A room with a shared bathroom is available at USD 22 per person and a non-shared basis at USD 32 per person with breakfast included. “We do not have to do anything to attract the customers, Airbnb’s website and the app does everything for us by charging a small commission on booking, it is economical and has made our job easier”, he adds. 

He says guests tend to book rooms on Airbnb for longer stays. Similarly, Sid Shahi, who has listed his property Bungmati Retreat on Airbnb, informs that the online platform of Airbnb has made it easier to host a guest. It has also helped foreigners to get comfortable accommodation at reasonable charges, he informs.

During peak season, Bungmati Retreat with its four cosy rooms makes as much as Rs 1.5 million in revenue where foreigners from all over the world book the rooms at an average USD 40 per night. At Bungmati Retreat, rooms are completely occupied during March-April and September-December periods while the occupancy is only 40 percent during other times of the year.   

“We are not here to distort the hotel business, hotels have their own segments and we cannot compete with them in terms of marketing and service. We are solely run by word of mouth in an open market platform,” Sid informs.

Recent research on Airbnb in the US concluded that the increase in the quality of the Airbnb service has a direct adverse impact on hotel performance. The report stated that the higher the average satisfaction scores of an Airbnb property, the lower the revenue per available room (RevPAR) for the hotels in the sample. More specifically, every increase in the review score of an Airbnb property had a negative impact of USD 25.54 on hotel RevPAR for hotels in the sample. 

Similarly, Airbnb rental prices had an effect on hotels’ RevPAR in the luxury segment, with an increase in RevPAR of USD 0.651 for every dollar increase in the average rental price of the Airbnb units.

According to the research, the more Airbnb users are satisfied with their experience, the more likely it is that the demand for hotel rooms will decrease. Hotel managers, therefore, need to be aware of the level of service and price offered by Airbnb and other sharing platforms. It seems like Airbnb hosts, offering service in their locality can no longer be ignored and should be considered while developing revenue management strategies.

Despite Airbnb’s growth in Nepal, government officials do not seem to be aware of the operation of Airbnb and its impact on tax revenue. Hoteliers, however, have expressed concerns over the increasing use of Airbnb by tourists in Nepal. 

“I am not aware of the actual market size of Airbnb in Nepal but I think it is illegal to host guests via Airbnb because they are not registered in Nepal and they don’t pay any taxes to the country. In the context of a hotel, registration is mandatory before operation and hotels are a major source of tax revenue for the country,” opines Upaul Majumdar, general manager of Soaltee Hotel. 

He informs that in today’s digital era, Airbnb has emerged as a new disruptor of the hospitality business. “In the context of Nepal, the main concern is its impact on the country’s revenue. At a time when we are already affected by a platform like WeChat, Airbnb can also result in a loss of income to the country if not brought into regulatory purview,” he adds.

“However, I don’t think services like Airbnb has created an impact on the business of 5-star hotels in Nepal because the services and facilities of Airbnb do not come close to the standard of five-star hotels. It has a marginal impact on our business,” he informs. 

Analysing the scenario of Airbnb mushrooming, hoteliers have been appealing to the government to bring services like Airbnb into the tax bracket. Shreejana Rana, president of Hotel Association of Nepal says that Airbnb has been disrupting the hotel sector because they are not registered with any governing body and there is no organised office to monitor such a business model. 

“Airbnb owners are free to charge any price per night, not keeping in mind the services and facilities offered to the guests. With no proper monitoring body the taxes they pay are not scrutinised,” she says. She additionally informs that hoteliers and hotel owners, members of HAN are using their clout to push the government to streamline services like Airbnb. “They have to be registered with the governing body and be monitored by the tax office to make sure they pay all their taxes as per the law of the land,” she adds.

HAN is gravely concerned about the detrimental effect Airbnb’s have on the development of established hotels in Nepal. The umbrella organisation of Nepali hoteliers had proposed that the issue of this unregulated sector and regulatory measures be incorporated in the Tourism Act, 2076. “HAN is also in communication with organisers of such initiatives in several other countries to create a healthy, secure and better-organised business and hospitality sector,” says Rana. 

Upon receiving such appeals from hoteliers, Kedhar Bahadur Adhikari, secretary for Ministry of Culture, Tourism and Civil Aviation told New Business Age that his ministry is concerned about the issue. “Discussion is going on; we will soon draft a new set of regulations to bring services like Airbnb in the tax bracket. They will definitely be brought to regulatory purview.”

Airbnb is slowly disrupting the accommodation industry globally, going beyond the supplemental role claimed by its founders. The impact of the sharing economy is not related so much to the volume of the offers on online platforms but rather to the pricing and price-to-value proposition as perceived by guests.

There must be government oversight

What impact has services like Airbnb created in the hotel sector of Nepal?
So far, Airbnb is present in major tourist destinations such as Kathmandu, Pokhara, Bandipur etc. It offers tourists a cheaper option for accommodation. While this can increases the inflow of tourist in the country, there are issues such as reliability, poor services, trust and complaints related to such services.

How is it disrupting or distorting the hotel sector?
This has definitely been a disrupting influence in the hotel sector. Airbnb rooms and properties in Nepal are not registered with any governing body and there is no official body to monitor this kind of business. The property owners using the Airbnb platform are free to charge any price per night to their guests, not keeping in mind the quality of the services and facilities they offer guests. With no proper monitoring body the taxes they pay are not scrutinised and their guests have no guarantee of getting quality services. The presence of Airbnb rooms of any quality also impacts the quality and development of the hotel sector.

What are hoteliers doing to face the competition created by such services?
Hoteliers and hotel owners who are members of HAN must use their influence to drive the government to regulate services like Airbnb. We are showing by doing that those who provide lodging services using platforms like Airbnb cannot compete with the quality and value of our services and product. 

What needs to be done to bring such services into regulatory purview?
Airbnb properties can destabilise not only the hospitality industry but also the neighbourhood in which they operate. Many countries and cities around the world, from the United States, Europe, Asia to Australia, have passed stringent laws to control this segment. Regulations range from rigorous laws governing short-term rentals (i.e. not allowing short-term rentals in apartment buildings) to requiring all those providing lodging services using Airbnb platform to be licensed. While all hotels in Nepal must register before opening for business there is no such requirement for properties that use Airbnb. Rules that were enacted to encourage homestays to develop areas off the beaten track are being used by commercial operations such as apartments and guesthouses to circumvent the law of the land.

There must be government oversight over Airbnb properties. They must be brought under the umbrella of standards and regulations that apply to the hospitality industry. They must be officially registered and monitored by the tax office to make sure they are paying all their taxes as per the law of the land. All of us in the industry can be counted on to support the government on this. But it is the government that must have the will to regulate and take necessary actions. The current situation is not one that just damages the hospitality industry. The loss of revenue to the government from unpaid taxes is incalculable.

What steps is HAN taking in this regard?
HAN is gravely concerned of the detrimental effect Airbnbs have on the development of established hotels in Nepal. It proposed that the issue of this unregulated sector and regulatory measures be incorporated in the Tourism Act, 2076. HAN is also in communication with organisers of such initiatives in a number of other countries to create a healthy, secure and better-organised business and hospitality sector.