The authorities should have the Chinese mobile payment systems register in Nepal so as to regulate them, just like the credit card providers

Tourism is Nepal’s third largest source of foreign exchange after remittances by the Nepalis toiling mostly in the Gulf countries and merchandise exports. Nepal generated Rs 47.6 billion from foreign tourists in the first eight months of the current fiscal year. But the question is, could the earnings have been more? Or did a good sum of tourist spending leave the country without even entering Nepal? It has come to light that Chinese businesses, namely restaurants, hotels and travel agencies, operating in the country encourage their fellow customers to pay through the Chinese mobile payment applications, Alipay and WeChat, to settle dues. In doing so, payment for a service purchased in Nepal is actually done in China, home to the two Chinese mobile payment giants. Since China is already the second largest source of tourists to Nepal, the widespread use of the Chinese mobile payment systems deprives Nepal of many economic benefits, not the least being taxes on the earnings repatriated, as the money technically never entered the country. It also does not allow the actual spending by a Chinese tourist to be recorded as foreign income.

Alipay and WeChat Pay are highly popular mobile payment applications in China. Even beggars in the streets of China seek charity through these applications. Alipay has about 700 active monthly users in China while WeChat has a billion plus, which means most Chinese, or at least those who will be travelling, will have an account. The mobile applications allow Chinese users to transfer payments from one account to another within the platform. Given the sheer number of Chinese business establishments, such as hotels, restaurants and travel agencies, at Jyatha, next to the tourist hub of Thamel, one can surmise that Alipay and WeChat Pay are in wide use here even though they have not taken permission from the authorities to operate in Nepal.

The problem associated with the Chinese mobile applications is not confined to Nepal. Thailand and Malaysia, which see Chinese tourists by the millions, are also grappling with the problem. What the authorities should do is have the mobile payment systems register in Nepal so that their modus operandi can be regulated, just like the financial services organisations VISA and Master Card were required to do to process transactions carried out on credit cards. We must appreciate the creative disruption caused by the mobile payment applications in business. This is how transactions will take place in the near future as plastic cards become obsolete. With the launch of Visit Nepal 2020, with particular focus on the two neighbours, the number of Chinese tourists could see a quantum jump next year and beyond. Hence the central bank must act in earnest so as to have all spendings by a Chinese tourist made through the formal channel. This will generate extra resources – in the form of taxes – to pay for, say, maintaining a road used by a tourist or the damage done to the environment. It will also help, in whatever manner, address the widening current account and balance of payments deficits, which are lowering the country’s foreign exchange reserves.

Ahead of schedule

Prime Minister KP Sharma Oli on Tuesday made  the breakthrough of the 12.2-km-long tunnel of the Bheri-Babai multipurpose diversion project in Surkhet. The breakthrough was made one year ahead of the schedule, thanks to the use of a Tunnel Boring Machine (TBM) for the first time in the country. Apart from irrigating around 51,000 hectares of farmland in Banke and Bardiya districts, the project will also generate 46.8-MW of electricity. This has shown that even a mega project can be completed on time provided suitable technology is used.

Once the project comes into full operation by fiscal 2022/23, it is expected to earn around Rs 4 billion from electricity generation and Rs 3 billion from agricultural production annually. It will also create indirect jobs in the two districts as more people will be involved in farming, especially in growing cash crops. The PM rightly stressed the need to use TBM in other hydropower and irrigation projects, where long tunnels need to be built to divert river water. The federal and provincial governments must jointly work out a long-term plan to best ustilise the irrigation project to modernise the agriculture sector in the districts.