October 19, 2016 Sujeev Shakya

Transport Woe

Came Dashain and we got to read about the problems that people face while buying bus tickets, air tickets or just travelling. There  were stories of traffic jams and clogged roads. Many columns and pictures were devoted to the transport cartels. Dashain ends and the discussions also end—only to be revived the following year. We have never been bothered to delve deeper into the automobile sector even though it is one of the most lucrative sources of revenue for the government and the private sector.

Cartels Galore

During my first trip to California two decades ago, I was amazed that, despite the terrain, there was no extensive railway system like in Europe, only to learn about how automobile companies lobbied to keep mass transit systems away as they would impact the sale of vehicles. In British India, railway and road links were only developed if they made business sense for the East India Company. For example, the railways and roads in Darjeeling were developed for transporting precious stones and forest products, not for the ease of the populace.

Later in independent India, the automobile production was dominated by two of the largest business houses—the Tatas, that produced busses and trucks, and Birlas, that produced the Ambassador cars which are now out of production. Long-term public transport systems in India were against their interests. Therefore, they were never interested in getting the contract to manage the Indian Railways and run it efficiently or to develop inland waterway systems to transport goods cheaply. The country relied on inefficient ferrying of goods in trucks that carried heavier loads than permitted and polluted the air with streams of smoke.

Similarly in Nepal, automobile dealership was taken up by leading business houses. The more vehicles they sell, the more money they make. But after the sale, they do not care whether the owners of the vehicles maintain it or even follow the traffic rules. Like the companies that sell packaged food without having to think about the pollution the wrappers of their products creates, vehicle sellers are not obliged to think beyond selling their products. With increased competition, the only way one could achieve volumes was to sell vehicles to members of a transport syndicate, thereby creating an incentive structure that is mutually beneficial for both parties. The dealers are all-powerful business houses that have great lobbying potential. They lobby only if it makes business sense for them. They even managed to prevent the imports of pre-owned vehicles, which were against their business interest.

The issue of secondhand vehicles was resolved very well in Nepal, which has not been done in many other countries. The era of hippie tourists driving overland in old Mercedes to Nepal and selling it to finance their holiday came to an abrupt end. Similarly, the ropeway was allowed to die a natural death instead of letting businesses take over on the basis of long-term lease to run it more efficiently. Currently, for the vehicle sellers in Nepal, there is no incentive to change the status quo. Liquidity in the financial system, an aspiring middle class and an abysmal public transportation system provide a heady combination for increased sale of two- and four-wheelers.

For the government, revenues from the import of vehicles have been a great source of income as well; therefore, it does not want to rock the boat. It is easy for the government to keep this scenario going rather than spending time and money on planning efficient mass transit systems that are both difficult to sell politically and to deliver given the difficult procurement system.

Finding Economic Sense

If the state does not believe in building infrastructure, then the people have to rely on the private sector. But unfortunately for us, neither will our business folks disrupt the current scheme of things as it does not make business sense for them, nor is the government interested in doing so. The Manakamana cable car changed the way people went on a pilgrimage. Night bus service in Nepal started nearly four decades ago and it changed the way people and goods were transported in the country. Private airlines and helicopter services provided new ways for tourists and Nepalis to travel.

Now we are awaiting the next disruption like a railway project with backward linkages to electricity grids and power plants to bring about a novelty in the transport facilities. With the New Development Bank and the Asian Infrastructure Investment Bank flushed with funds to lend along with older institutions like the Asian Development Bank, there is no dearth of money for efficient, large-scale mass transit systems. With India, the inland waterways systems can be revisited as the Bangladesh, Bhutan, India, Nepal (BBIN) Initiative keeps exploring newer options. Perhaps public transportation companies like Sajha can crowdsource funds to buy more vehicles and provide better services. They can experiment with mobile pay platforms and provide value-add services like air conditioned luxury buses with differential pricing and cross-subsidy.

Talking about traffic jams is the hallmark of an emerging nation. This is a problem faced by all developing countries that consider vehicle ownership a status symbol and use of public transportation something for the financially downtrodden. Each country innovates to resolve its problems. Some states like Singapore or Rwanda are strong enough to push regulations and manage the situation. Countries with a weak and myopic government become a fertile ground for entrepreneurs who can risk their money on disruption. Nepal is surely one of those in dire need of some regulation and management of the transportation sector.

Leave a Reply