Rakesh Wadhwa

Kathmandu:

Up until the 1980’s, people in the west did not pay any heed to India or China. Now they cannot stop talking of these two neighbours of Nepal. Earlier even when, on those rare occasions, the west did notice these two countries, it was with a touch of sympathy for its destitute billions. Thomas L Friedmen, author of, ‘The World is Flat’ says that when he was growing up, his parents used to say to him, “Tom, finish your dinner — people in China are starving”. The world now recognises that the situation has changed. India and China have become the two fastest growing economies in the world. Companies are increasingly targeting China and India as the most significant part of their expansion plans. No company dares to ignore either of these two giants.

The tale of these two nations is an amazing testimony to the power of people to enrich themselves when policies allow freedom and opportunity instead of tying them with restrictions and prohibitions. India liberalised in the 1990’s, China a couple of decades earlier. Today, the world witnesses a phenomenal transformation which seems to accelerate with each passing day. China and India which consumed nothing, and, which counted for nothing, are now fuelling a tremendous boom in demand for raw materials the world over. People in these countries are hungry for everything the world has to offer. The price of oil has doubled to $50 a barrel largely on the back of the fast increasing demand in China. Astonishingly, India which had no foreign exchange reserves in 1990 today sits on a mountain of $140 billion. Oil prices as high as we are seeing now would have crushed India. There would be no money to pay for oil imports. Now, India’s reserves continue to swell, the economy grows, and the high price of oil is shrugged off as hardly a rubber ball in front of its economic locomotive.

China leads India in infrastructure. It is a couple of decades ahead as far as development of roads and electricity generation is concerned. China has also left India behind in manufacturing. Goods from China dominate the shelves of supermarket and department stores around the world. In everything hard China is No 1, India is playing catch up. In everything soft, India is ahead. Its companies like Wipro, Infosys, and Tata consultancy are ranked amongst the most respected in the IT world. China is yet to come anywhere near matching them. India dominates the services sector, half of India’s GDP comes from it. China gets 30 per cent from services. China is far ahead in manufacturing – over 50 per cent of its GDP can be attributed to it. India gets a mere 25 per cent from its industry.

In both countries, people are getting rich. Chinese are earning billions of dollars by exporting manufactured goods to the world. Indians are earning their billions just as fast by becoming the world’s back office. Indian companies provide software and services to the developed world. Now, Friedman whom I had quoted earlier, tells his daughters, “Girls, finish your homework — people in China and India are starving for your jobs”. What can Nepal do, to take advantage of this Chindia story? Amend its laws. There is money in Chindia. Allow it to flow into Nepal. Let Nepal make itself duty free and abolish restrictions on foreign investment in the retail sector. This would make Nepal a shopper’s paradise. Chinese and Indians will flock in to buy goods. Both still have high taxes on imports of consumer products, India more so. Tourists shopping in Nepal can lead us to prosperity. Money coming into Nepal could be turned into a flood if Indians and Chinese are allowed to open confidential bank accounts in the currency of their choice. Let banking laws be amended to allow leading global banks to start operations in Kathmandu. These two measures could make the people of Nepal richer than those of its neighbouring giants. Switzerland did exactly this. All Nepal has to do is to replicate what the Swiss did with their trade and banking laws.

The writer can be contacted at: everest@mos.com.np