TAKING STOCK: Dance with the elephants

Rakesh Wadhwa


For the people of Nepal there are two options: They can view their landlocked status with despondency and consider it as an excuse for their lack of economic progress, or, they can regard that being linked to the two largest and now also the two fastest growing countries in the world provides them with an incredible opportunity. To me, China and India, with their elephant size economies offer a gargantuan opportunity for this blessed nation. Whenever I think of Nepal’s neighbouring elephants, I ask myself, “When will Nepal learn to dance with them?”

When will Nepal realise that by providing the people in these two countries with what they seek, Nepal will get what it wants - wealth beyond imagination for its people? If you want people to give you what you want, you must first provide them with what they desire.

Let us look at what the Indians and Chinese want. Even though both India and China have incrementally reduced trade barriers, they are still far from acquiring a duty free status. China’s average tariffs are in region of 14 per cent while India’s are still over 20 per cent. What can Nepal do? Abolish all import licensing requirements, quotas, and duties on imports. What will be the result?

Nepal will be flooded with goods from all over the world. Who will buy these goods? Who else but the Indians and Chinese. They will come in hordes. Why should they go to duty-free Hong Kong, Singapore, or Dubai. Nepal will provide goods which are cheaper. Real estate in Nepal costs much less, labour costs are a fraction of what they are in the other duty free havens — these advantages will translate into lower retail prices making Nepal the destination of choice for shoppers. Can you imagine the tourist boom? A million Chinese and another million Indians shopping in Nepal! Imagine what it would mean for Nepal’s economy. Of course, if the government takes certain ancillary steps to facilitate this boom, it would help greatly. Allow foreign investment in shopping malls, and not only Kathmandu but all villages and towns bordering India and China would be covered with glittering shopping centres. Privatise Tribhuvan International Airport and create facilitating regulations for more private international airports. Let this happen and see Pokhara get more tourist arrivals than Kathmandu. Abolish visa fees, open the skies, stop protecting RNAC, let any airline from anywhere in the world come to Nepal and watch how quickly the people of this nation of traders become wealthier than Indians and Chinese.

What else do the people of China and India want? They want a place where they can park their money. Both the Chinese and Indians are accumulating riches at an accelerating pace since liberalisation. Give them the banks which will allow them to protect their wealth from the eyes of their government’s tax collectors and nosy neighbours. Neither India nor China guarantee confidentiality of bank accounts. Nepal, through enabling laws, should provide for anonymity of account holders in its banks much in the same way as Switzerland does.

Further, to build credibility amongst its foreign account holders, Nepal needs international bankers including the Swiss to open operations here in Nepal. How can it get them? It doesn’t have to, banks will come to Nepal if their customers come.

They will not come for Nepal’s benefit but for their own gain. In pursuing their self-interest they would automatically benefit Nepal. Nepal merely has to allow them to come. All it has to do is to change its laws and instead of prohibiting and tying up foreign banks in knots with its regulations, it has to support them with friendly laws. Right now Standard Chartered Bank, too afraid of local laws, does not even issue dollar denominated credit cards to its customers holding dollar balances with it. Such terrible laws can have no place in a market friendly country. These are but a few steps Nepal can take to start dancing with the elephants, instead of blaming them for its woes. The time to start the dance is not next year, next month, or next week. The time is now. Let the music begin.(The writer can be contacted at: everest@mos.com.np)