Who would have thought that China would dominate the world consumer market within 50 years of the Red revolution? Who would have thought that Japan would grow at a double-digit rate for 20 years and become the world’s second largest economy? It is all part of ambition and determination of those visionaries who lead the nation. Nepal has not yet seen visionary leaders who can bring together people with different ideas and build consensus among political parties for nation building. It is natural to have differences in opinions, but we need leaders who can forgo these differences and join hands when it comes to national interest. No doubt, Nepal, sooner or later, will find such leaders who will find a way to introduce ambitious plans and policies for the nation. Let us hope we see that soon. What could be such ambitious undertakings?
One of them would be privatization of all the government-owned corporations, including Royal Nepal Airlines Corporation (RNAC), Nepal Electricity Authority, and Nepal Oil Corporation. Privatization should not be done in haste. Privatization without necessary regulations creates chaos. In an extremely mature capital market, such as that in the United States, privatized industries have been regulated and regulations are fine-tuned on a regular basis. For example, telecommunication regulations in the United States have gone through a series of big overhauls over the past 50 years. Massive regulatory preparations are required prior to launching any privatization initiatives. The post-1990 Nepali government ignored or overlooked important preliminary steps such as valuation and necessary regulations needed for privatization.
Let us talk about the state-owned RNAC. Why is this national flag carrier doing so poorly? What is holding this high growth industry in Nepal from making profits or even making itself sustainable? Is this a typical Nepali problem – not knowing when enough is enough? RNAC is owned and run by one of the most inefficient, corrupt and unstable governments in the world. Our government does not seem to have a basic understanding of dealing with minor problems. Independent institutions, specializing in government institutions’ valuation, should undertake the task of RNAC’s hard and soft assets valuation. Based on such valuations, the government should move ahead with privatization with required control and regulations so that the future owners will be barred from constructing shopping malls in some of RNAC’s properties. Another major undertaking in Nepal would be to start a massive east-west four-lane highway running through the mid-hill region, instead of the Terai. A project of this scope and size needs ambition, determination, patience and vision. This type of project certainly may seem unrealistic to those leaders who use every means to cling to power and who do not have an in-depth understanding of spillover effects and long-term social benefits arising from such projects. Highways built on rocky mountains cause less environmental damages and are less likely to be swept by minor flooding. Rivers are narrower and smaller in the hills; costs of building bridges over such rivers are generally low. Such a highway running through the mid-hill region will be a major breakthrough in development of a remote and village dominated country like ours. Such a project will not only create substantial employment for Nepalis but will also boost our tourism industry.
However, such projects require thorough study and business plan backed by determination and discipline. We need to undertake projects like this one without worrying about short-term return on investment. Construction of highways in our country is one of the basic needs for development and we must be willing to forgo short-term loss while building these infrastructures.
The world today is a single market place with zillions of opportunities. Opportunities are still uneven across different nations. Many smart nations are creating business- and investment-friendly environment and attracting significant amount of investment from people beyond their borders. Nepal is a tiny state where a huge difference can be made in days, not years.
Legislation in Nepal does not change or changes at a snail’s pace. We should be able to change our legislation at a click. Let’s take the example of our neighbor, India. Although India is no better than Nepal in changing legislation, it still has done a lot better in the past 10 years in making their country investment-friendly while Nepal did nothing significant rather than observing the success of India on this front. We need to be more aggressive in making our legislation simple and transparent to the extent that no other competing nation can match us. We need to be more aggressive in creating business opportunities to both domestic and foreign investors. It will not hurt us. We currently do not provide any protection to investors. Nepalis have a lot of money to invest but what is seriously lacking is a place to invest. Our government needs to take extreme measures to protect investors and make Nepal a safe haven for those who want to invest. This is not very difficult to achieve. The government just needs to thoroughly study policies of other competing investment-friendly nations and with a little tweak, we should be able to launch a policy that may very well appease all. This will serve the following purposes: provide opportunities for Nepalis living in Nepal to invest in areas where there are higher returns, attract foreign capital, and allow non-resident Nepalis with ideas to serve their country.
Someone has to start. The major problem among us is our unwillingness to try. Everyone wants to follow what others have done. This kind of behavior is not entrepreneurial and brings us back to square one. We have already gone through the worst. Our nation is ready to explode with an unemployment rate, which is as high as 40 percent. It is time to wake up.
(This article was published in The Kathmandu Post.)