Rakesh Wadhwa

Kathmandu:

Businessm.en want monopolies. They want to eliminate competition and would go to great lengths to achieve their purpose. However, in a free market it is not so easy. Merely wishing for something does not make it happen. Open markets and worldwide competition lessen the likelihood of any monopoly. Nepal may have no company manufacturing cars, but if it keeps its markets open, Toyota, Hyundai, Maruti and others will compete for the custom of the Nepali consumer and ensure that he gets a fair deal. Open markets ensure that no one airline has dominance over the skies. For every flight of RNAC there is a Cosmic, Jet, Buddha Air, or an IA flight. As businessmen in an open economy fail to establish monopolies in the marketplace they resort to lobbying the government to do the same for them. This may be done in a variety of ways. An existing company lobbies to block the issue of a licence to a newcomer or insists that stiff barriers be placed by way of regulations, capital requirements and taxes; all in the name of protecting national interest. Consider the opening of the skies in India. Jet was amongst the first private airlines to establish itself. Did it and others want competition? No.

The government was asked to prohibit big players from entering the airline market. After all ‘a level playing field’ demanded that the small be protected from the big. As a result the government, acting in the interest of its own airlines and other existing private ones including Jet, did not allow Singapore International Airline’s joint venture with the Tata’s. Businessmen couch their desire for protection in terms of national interest. Foreign airlines are disparaged as being not good for the country, while in reality what they are not good for is the existing domestic players. Jet and Sahara, operating under a protected environment, are both much bigger now than when they started. Having successfully blocked competition from foreign airlines, today they find that many other local business houses have started or are preparing to start low-cost airlines in direct competition with them. This is not a pleasant scenario. Competition rearing its head – who wants that? There is therefore, presently, another movement in India to block the entry of newcomers. A proposal is pending before the Ministry of Civil Aviation to set the equity capital requirements of a new airline at a minimum of Rs 400 crores Indian Currency (IC).

The irony here is not lost. Earlier the policy, in ‘national interest’, was to prohibit issue of licences to the big players. Now, since the small players have become big, government is being asked to frame a policy to prohibit the small players. The reason given to us again would be national interest. Would it be in national interest to protect consumers from the ‘ravages’ of cheap tickets offered by small but low cost airlines who are challenging the profits of the big ones? You decide. Businessmen will unashamedly use the government to further their own goals. That is why vigilance by the public is required. The interests of the businessmen must be distinguished from those of the consumers and the nation. In India, after liberalisation many companies did go out of business, but the increase in India’s growth rate from two per cent to more than six per cent meant that, on the whole, India gained. If India’s partial opening up achieved this growth escalation, imagine what would have happened with a full opening up. India’s growth could have exceeded China’s 10 per cent. Indians would be twice as rich even if this had been done only in the early 90’s.

For Nepal too, it is not rational to protect its domestic businessmen by eliminating competition from foreigners. Open up the markets, open the skies, let Nepali companies compete with international ones. The consumers will gain, and so will workers who will have a choice of working in a domestic or a foreign company. It is possible that some local companies fold up and go out of business, but so what, other companies will take their place and overall growth rates would accelerate. Nepal can only gain. (The writer can be contacted at: everest@mos.com.np)