The private sector, which is regarded as the driving force behind the country’s
development, lately seems to be annoyed with the government on issues related to the implementation of Permanent Account Number, Vehicle and Consignment Tracking System and other issues. Sujan Dhungana of The Himalayan Times spoke to Confederation of Nepalese Industries President Satish Kumar More to discuss the private sector-related issues and know the details of Nepal Infrastructure Summit 2019 that the confederation is hosting in September. Excerpts:
What is your evaluation of the present business environment in Nepal?
There are enormous opportunities in Nepal — in terms of investment, production and substitution of imports, among others. The ballooning trade deficit of the country also gives an opportunity for domestic businesses to expand their production base and raise exports accordingly. It is only through enhancing the production base, raising exports and promoting tourism that Nepal will achieve its economic development goals. However, all these three aspects are challenging. To raise exports and draw in foreign tourists, we need to make our products competitive among global consumers. Similarly, a development-friendly regulatory framework and huge degree of willpower in the government is necessary to boost exports. The government should prioritise industries that help in import substitution and promote them among both domestic and foreign investors.
Why has the country failed to substitute imports and promote tourism properly?
The primary thing for business and economy to grow is ‘trust’ — the trust and confidence that the business community has towards the government and its policies. What I see is that the business community still lacks faith and confidence in the government. For instance, the government has tightened punishments for traders and businesses through a number of recently amended policies. Such approach of the government towards the private sector hints that it does not trust the private sector. This will hit the confidence of investors in doing business in the country. Similarly, the government has not addressed some specific bottlenecks for doing business in Nepal, like the problem in land acquisition. Along with this,
bureaucratic hurdles have remained a setback for business growth in the country since many years, and the government is yet to simplify them. If the government simplifies bureaucratic hurdles for doing business and addresses other doing business obstacles, Nepal has the immense potential to attract investors. Among others, Nepal has high potential in cement production due to ample availability of limestone. If the government facilitates the cement industry and encourages investors, cement can become one of our top export products. Along with this,
the government should also facilitate investors in different environmental issues while operating or planning to operate a business in the country.
Though the private sector initially seemed overwhelmed with fiscal budget for 2019-20, traders and industrialists are against the implementation of a few provisions announced through the budget like mandatory PAN and the VCTS. Why?
It is true that the private sector, including CNI, had largely welcomed the budget for 2019-20 fiscal year. CNI believes that this budget is good, as for the first time it is not just revenue-oriented but also focused on business development and export promotion. The budget is impressive also because the government has given due priority to reducing bureaucratic hurdles in the export sector. Regarding implementation of mandatory PAN and VCTS, it is a good initiative for trade and the entire economy in the long run. However, such systems need to be implemented gradually. As the government tried to implement the mandatory PAN and VCTS abruptly, this caused problems for businesses and traders. The government should implement such policies based on the context of the domestic market and country’s topography. As implementation of both PAN and VCTS require proper awareness and understanding among traders and businesses, the government should have implemented them in a phase-wise basis. As the government tried implementing a number of new legal provisions from the first day of the ongoing fiscal, it confused, troubled and irritated traders.
Does this mean the private sector is a bit disappointed with the government lately?
It is not that we are disappointed with the government. But we probably had high
expectations from the current government, which is comparatively stable and powerful. CNI always promotes positive and optimistic thoughts. Nepal
has high potential to grow and develop. Few sectors like hydropower, tourism, mines, medicines and education have comparatively higher prospects. For all these sectors, we have ample raw materials and resources within the country
itself. We are just not being able to tap all these potentials and grab available opportunities. On the infrastructure front, Nepal lags a bit and the government should fill the infrastructure deficit gap as soon as possible. Moreover, CNI is also hosting Nepal Infrastructure Summit 2019 on September 11 and 12 to promote investment in the country’s infrastructure. In a nutshell, Nepal has immense development opportunities, but the development pace depends upon the mindset of the government and other stakeholders.
CNI has been hosting Nepal Infrastructure Summit every two years. What is the essence of such a summit in the development process?
Infrastructure bottlenecks have remained one of the major hurdles for the country’s development. Our roadways, airways, bridges and railways are weak and lack of effective infrastructure connectivity affects the entire development process of the country. When we raised the issue to promote railway services in the first Nepal Infrastructure Summit in 2014, people had laughed at us. However, the
government today is giving due priority to enhancing railway connectivity. CNI has been hosting the Nepal Infrastructure Summit to discuss problems in infrastructure development and probable solutions among domestic and foreign stakeholders. At every summit, we are bringing high-level dignitaries of various countries and development partners to share the development experience of their nations. The Nepal Infrastructure Summit also gives insight on necessary policies that the government should formulate for development. The third edition of Nepal Infrastructure Summit will have keynote speakers like former prime ministers of a few countries and some high-level dignitaries from the Indian government, World Bank, Asian Development Bank and other major development partners of Nepal. Meanwhile, we have been collecting the list of feasible infrastructure projects from each province through the provincial governments, which we plan to showcase at the upcoming summit. The provincial governments will also present development opportunities and challenges in their respective provinces at the summit, which will help the federal government to shape its development plans and activities.
So, what were the outcomes of the past two Nepal Infrastructure Summits?
We should understand that development, especially infrastructure development, is not an overnight process. Nepal hosted a huge investment summit in March and it does not mean that investors will immediately start injecting their investment in Nepal following the summit. Such summits are important to create a buzz for development. Any investor looks at multiple factors in a country before investing there. Investors analyse opportunities showcased at summits and invest if they find it feasible. The Nepal Infrastructure Summit intends to promote Nepal’s core needs and strengths and encourage investors to bring in large-scale investments.
A version of this article appears in print on August 27, 2019 of The Himalayan Times.