Over concentration of power on the PM does not bode well for the institutional development of the other ministries and agencies

Investment Board Nepal (IBN), headed by the Prime Minister, intends to concentrate decision-making powers related to foreign direct investment (FDI) and construction of mega structures. On the eve of the forthcoming second Investment Summit, scheduled for March 29 and 30, the council of ministers has approved the Private Public Partnership and Investment Bill (PPPIB), which is likely to be passed by the Federal Parliament before the summit. This bill is being brought to show potential foreign investors that Nepal is an investment-friendly country, which has adopted a one-window system to attract more FDI. The Cabinet has also forwarded another bill on Fast Track Construction and Development of National Priority Project (FTDNPP), which will set up a powerful mechanism under the Prime Minister’s Office (PMO) to oversee mega infrastructure projects. Both the bills aim at concentrating power in the PM and the PMO, leaving the other line ministries as mute spectators when it comes to handling mega projects. While the IBN, according to the PPPIB, will decide on FDI worth more than Rs 6 billion – earlier it was Rs 10 billion – the FTDNPP proposes a powerful mechanism under the PMO to handle and monitor any development project worth above Rs 25 billion.

Under the new provision, the steering committee, headed by the PM, will award any mega project worth more than Rs 25 billion to a builder through direct negotiation, bypassing the existing global bidding process as required by the Public Procurement Act. The role of the concerned line ministries will be almost non-existent if both the bills are passed by the House without any changes. Lawmakers from within the ruling and opposition parties have opposed both the bills, arguing the IBN and the mechanism will supersede the roles of the other line ministries and institutions. The PPPIB also aims to replace the existing Electricity Act by delegating it the power to issue generation licence for even hydel projects with a capacity of 200MW. Such provision will create conflict between the IBN and the Ministry of Energy.

The government is trying to justify that the new provision will help complete the mega projects on time if they are handled by the IBN and supervised by the PMO-led panel. But if the past eight years are any guide, IBN’s role in attracting FDI has been dismal since its inception in 2011. The progress report of some of the projects it has so far handled has also been similar to that of those overseen by the line ministries. What will the other ministries do if every major project is handled by IBN or the PMO? FDI has not come Nepal’s way not because we lack a one-window policy. There are other factors, such as rampant corruption, red-tape, extortion drives carried out by one or the other group or political outfit, undersupply of electricity, poor economic base, constraints in exports and lack of a clear policy on repatriation of profits. The government has identified two dozen projects for showcasing at the upcoming summit. All of them are related to physical infrastructure. The need of the hour is to attract FDI in those sectors that will help boost our export base and earn foreign currency to reduce the yawning trade gap.

Skill training

There is a big exodus of youths to the Gulf and other countries every year due to limited employment opportunities at home. But even when such opportunities are available in the country, the youths are unable to fill in for lack of required skills. Thus the government’s bid to produce a skilled workforce through training programmes at home as per the demands of the Nepali labour market is welcome. Accordingly, the government has formed a high-level committee to study the type of skills required for the domestic labour market and also their demand.

Given proper training, the Nepali workforce could very easily replace the tens of thousands of foreign workers working in the country and save the repatriation of billions of rupees by them. There is plenty of scope to engage our youths in modern agriculture, industry and construction. With the government seeking to rope in foreign investment in different sectors of the economy, it is all the more necessary that we start investing immediately in developing the skills of the young workforce. But retaining our youths in the country will depend largely on how well the employers are willing to pay for the time and money they have spent on honing their skills.