Sujeev Shakya

Articles & Publications

02 Feb 2024
East Asia Forum Permalink

Power struggles and scandals in Nepal’s political sphere

February 2, 2024

Nepal experienced political instability in 2023. Macroeconomic indicators improved and independent politicians gained traction ahead of the 2027 elections. Despite a series of major scams and ongoing issues such as increasing natural disasters, soaring emigration for education and work and growing religious conflict, there were positive developments including the registration of the country’s first same-sex marriage and a rebound in both international and domestic travel.

In the aftermath of the November 2022 elections, Nepali Prime Minister Pushpa Kamal Dahal secured 268 out of 270 votes in the parliament, backed by the Communist Party of Nepal (Unified Marxist–Leninist) (CPN-UML) in January 2023. But cracks in the coalition soon emerged, compelling Dahal to seek another vote of confidence with the Nepali Congress’s support in March.  

By the end of 2023, Dahal seemed intent on protecting his position, making deals with everyone who mattered. The parliament passed only one piece of legislation in 2023, leaving the many pieces of law which have been waiting parliamentary discussions and approval since July 2019.

Despite Dahal’s Communist Party of Nepal (Maoist Centre) holding a mere 32 seats, he navigated political waters alongside coalition partners, including Nepali Congress President Sher Bahadur Deuba and fair-weather friend Khadga Prasad Sharma Oli of the CPN-UML. Dahal, Deuba and Oli make up the trio of septuagenarian leaders at the helm of a country in which 50 per cent of its population is under 25 and 70 per cent under 40.

This ‘big three’ handle all serious matters, sporadically divulging proceedings through ‘sources’. This practice has sparked criticism for protecting corrupt people, promoting nepotism, favouritism and ‘bhagbanda’ (distribution of power and perks amongst the group).

Political instability has been the only constant for Nepal and 2024 will not see anything different. Independent parties and candidates wait for the 2027 elections, as Nepalis recognise the impact of independent mayors like Balendra Shah of Kathmandu and Harka Sampang of Dharan. Internationally educated parliamentarians like Sumana Shrestha from the Rastriya Swatantra Party are developing a huge following by asking unprecedented questions in the parliament. These parliamentarians are contributing through initiatives like developing a parliamentary calendar, engaging the Nepali diaspora and hosting a ‘Bill Hackathon’ that solicited public participation in designing legislation.

Nepal witnessed large-scale scams in 2023, with their legal outcomes dependent on whether they were under the protection of the ‘Big 3’. In a fake Bhutanese refugee scam, former home minister and Deuba’s confidant, Bal Krishna Khand, was among many convicted for swindling millions from Nepalis under the false promise of settling them in the United States as Bhutanese refugees. The Lalita Niwas scam, which involved the sale of government-owned land resulted in two former prime ministers — Madhav Kumar Nepal and Baburam Bhattarai — being indicted.

Multiple gold smuggling scams were exposed when pre-arranged deals cracked. The Ncell scam involved 80 per cent of the shares of Ncell Axiata — the largest private telecom operator — being transferred to a Nepali owner based in the United Kingdom. Axiata, in its exit memo, had scathing remarks about Nepal’s business and political environment.

Compared to 2022, macroeconomic indicators continued to look positive in 2023. Real GDP grew by 1.86 per cent, inflation remained stable at 7.74 per cent, foreign exchange reserves increased by 27.4 per cent to 1345 billion Nepali rupees (NRs 1345 billion, or US$10.12 million). Balance of payments turned from a deficit to a surplus of NRs 290 billion (US$2.1 billion) and there was a large increase of 21.2 per cent in remittances to NRs 1220 billion (US$9.1 billion).

The Nepali rupee, starting at NRs 132.45 on 1 January 2023 ended at NRs 133.10 against the dollar due to a strong Indian rupee. The Nepali rupee has been pegged to the Indian rupee at NRs 1.60 for 1 Indian rupee since 1994.

Nepal also welcomed one million touristsin 2023, marking a post-COVID-19 record. International travel rose by 41 per cent, while domestic travel increased by 38 per cent.

Nepalis continued to migrate for education and jobs in 2023. During the fiscal year 2022–23, 110,217 students obtained No Objection Certificates from the Government of Nepal that allowed them to study abroad. Over 800,000 people secured labour permits in 2022, with an additional 300,000 permits issued in the first five months of the 2023–24 fiscal year. Remittances soared to US$9.33 billion according to the Nepal Rastra Bank with an equal amount of informal remittances.

On 29 November 2023, following an interim Supreme Court ruling, Nepal became the second Asian country to register its first same-sex marriage. Yet Nepal grappled with its secular identity after tensions escalated over issues associated with the slaughter of cows and the Muslim-Hindu conflict, in places like Dharan and Nepalgunj.

On 3 November 2023, an earthquake killed 153 people and destroyed hundreds of buildings. While landslides and other natural calamities continue to impact Nepal, the plight of the earthquake-affected locals in Bajura, who are struggling to face the cold in makeshift tents, raises concerns about the country’s preparedness.

Nepal attracted increased geopolitical attention with the Millenium Challenge Corporation compact work in full swing, along with increased support from the United States. Dahal visited India, the United States and China in 2023.

A pilot project to export 40 MW of power to Bangladesh through India will open up a corridor for energy exports to multiple countries. The Pokhara International Airport — built with Chinese financing — was opened on 1 January 2023 but has not seen its capacity utilised due to India not opening routes to the Pokhara and Bhairawa airports.

Nepal must adeptly navigate its geopolitical challenges — especially with China, India and the United States — in order to sell its hydropower to regional markets, welcome more tourists and ensure job creation to stem migration.

03 Oct 2023
The Hindu Permalink

Building BRICS for the future

October 3, 2023

We need to look at BRICS from the perspective of how it has evolved rather than the results of one meeting

In August, six new members were inducted into the BRICS grouping, in South Africa. While many believe that this meeting did not have productive results, we need to look at BRICS from the perspective of how it has evolved rather than the results of one meeting.

Economic compulsion 

First, it is important to note that BRICS emerged out of an economic compulsion. It does not provide military or security support to various countries, is not involved in the policing of nations, and does not provide peacekeepers. Compare this to, say, NATO: European Allies and Canada have invested an extra $350 billion since 2014, with eight consecutive years of increased defence spending. The GDP of BRICS is now 36% of the global GDP and the population of its members will be 47% of the world population by 2050. Therefore, it is important to look at the long-term opportunities that this group presents. More members could be inducted, which means that BRICS could pose a serious challenge to the dominance of the G7 comprising Canada, France, Germany, Italy, Japan, the U.K., and the U.S. 

Second, two members of BRICS are China and India, which together contain one-third of the world’s population. The two countries are the fastest-growing economies and are expected to be among the top three economies of the world by 2030. Both countries understand that globally, bilateral ties have seen a transformation following the formation of economic blocs such as the European Union or ASEAN, as such blocs accelerate trade and investment. While India and China have bilateral challenges at the political and diplomatic levels since their stand-off at Doklam in 2017, trade between the two countries has continued to grow significantly. That Chinese President Xi Jinping skipped the G20 summit in New Delhi will not impact this economic cooperation. We should never forget that economics and business trumps politics.

Search for an alternative 

Third, there has been some polarisation between the U.S. and other parts of the world. This was especially becoming evident during the Trump administration. Many countries have issues with the U.S.’s stance against China: the U.S. seems keen to impose tariffs and create other barriers to restrict China’s expansion in trade and investment. China has made strides in certain areas like communication infrastructure and electric mobility, too, which the U.S. would like to contain. This is expected to get worse. Therefore, countries want to be part of a grouping that involves China too. In the BRICS grouping, China is not a dominant player; democratic countries such as India, South Africa and Brazil provide the counterweight.

Similarly, the way refugees are being treated in Europe do not give a positive perspective of a world that is getting increasingly globalised. Countries such as the U.S. have flouted World Trade Organization rules and have not penalised for the same. This means that countries have to look for other arrangements. 

The search for an alternative such as the Non-Aligned Movement to tackle Cold War challenges has given hope of a new order; thus, many countries are applying for membership to this group. Six new members were inducted in the last meet. As BRICS grows, there will be many trade business and investment protocols created, much like what we see in different free trade arrangements or economic blocs.

Fourth, the U.S. dollar has been the dominant global currency all this time. We have seen the demise of travellers’ checks, of people carrying authorised currency that was equivalent to dollar bills. With digital platforms making inroads into many countries, digital currency is clearly the future. Both India and China have made great progress in this field; they are far ahead of the U.S. and Europe. Both India and China are pushing for more trade, investment, and business in their currencies and together, through BRICS, they can push their own currencies as alternative currencies to the dollar. India and China’s interests in the long run converge; their short-term challenges will not deter this convergence. Freedom from the U.S. dollar is a big reason for convergence. 

Continent of the future 

Finally, the continent that promises economic growth this century is Africa. The way France has intervened in Niger or the manner in which migrants have been treated in Europe provide Africans with a negative image about Europe. The fact is that while Europe talks about connectivity, a Strait of Gibraltar crossing is still not in place, partly due to geopolitics and partly due to other concerns. Visa restrictions have pushed Africans to travel to travel to China and see its development more closely than to Europe or the U.S. This makes them believe in China’s potential. African countries continue to talk about the freedom they need in choosing partners for investment or trade. India proposed full membership for the African Union at the G20 summit in New Delhi. It is trying to push its own reach within Africa.

BRICS will again be out of the news until the next summit. However, each summit generates some spark that provides the building blocks for different networks of people for the future. This is a group for the long run. After all, way back in 2003, even Goldman Sachs saw the potential of this grouping and the opportunities it presents by stating that “If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in U.S. dollar terms”.

26 Jun 2023
Kathmandu Post Permalink

Seeking solace in personalities

June 26, 2023

It is unfortunate that our society worships personalities rather than collective effort.

Last week, I shared fellow columnist CK Lal’s column “Pathos of vulnerable narcissism” which discussed authoritarian behaviour. The point that I agree with him on is what is this confounded nationalism when 6,500 passports are being issued each day? I was trolled, and as I always receive after I write something about India-Nepal relationship—protest tweets! It is unfortunate to see that our society cherishes and focuses on personality worship more than building teams and institutions, as evidenced by the trolls and abuse on social media against Balen Shah’s criticism. 

For someone who created and worked in teams in different fields, the personality driven authoritarianism is complete opposite to what I believe in. There have to be healthy debates, and different view points should be accepted. Opinion pieces in newspapers exist not for people to shun their beliefs and believe in the writers, but to get an opportunity to get the other view (as my column is named). This also made me think about global developments and question whether autocratic figures across different fields are the flavour of the month.

Global trends

When we talk about Elon Musk, the owner of Twitter, we forget that it is a publicly traded company and there are other shareholders who own 21 percent of its stock. However, he has created a personality cult-driven environment where a company is identified with the individual, questioning the concept of corporation, corporate governance and corporate citizenry. When liberalisation boomed in the 1990s, companies were identified as a corporation rather than with an individual. IBM was never discussed in the context of owners. We even discuss Microsoft or Google with emphasis on the owners. I recall the business relationships I had in my earlier job with ITC in India, a faceless conglomerate. It is astonishing to see how Ratan Tata gets dragged into becoming the face of the Tata companies, many of which are corporate citizens. Twenty years ago, in the heyday of Ratan Tata’s silent crusade, he was not discussed so much as a person as the institution and legacy he continued to lead. 

In politics, it seems it was the rise of the Trump phenomenon that pushed towards the importance of individual identity in politics. Be it President Xi Jinping, Prime Minister Narendra Modi, President Recep Tayyip Erdogan or President Vladimir Putin, it is always about individuals rather than the institution they belong to. When Modi decided to inaugurate the new Parliament building without even inviting the President of India Droupadi Murmu, it was seen as a normal day because that had become the norm. We should not forget that even Hitler was allowed to do all the things he did as a majority of his people believed he was right. 

In Nepal, the last local elections brought about the rise of two individuals—the mayor of Kathmandu Balen Shah and the mayor of Dharan Harka Sampang—who could question the status quo and bring about transformation that we rarely see in Nepali local governments. However, Kathmandu’s mayor continued to draw attention to his authoritarian style of operation and trust in a team that would not question him. Many have silently distanced themselves from him over time. I start recalling the days of the October 2002 takeover by King Gyanendra when hoarding boards sponsored by business people popped up welcoming the move. In February 2005, the king decided to go for direct rule and we all know what happened. His government fell in 14 months! I was working at the Soaltee Group at that time, and I recall the ways in which critics were silenced and only people who would not criticise would be allowed to hover around. However, our love for personality worship and autocrats continues. Be it KP Sharma Oli in the CPN-UML, Pushpa Kamal Dahal Prachanda in the Maoist party and Sher Bahadur Deuba in the Congress. They survive by keeping people who are not critical close to them. They believe that what they do is successful as no one close to them criticises them. If they do so, they lose proximity. Therefore, a cadre of sycophants exist who in turn do not want critics. If Girija Prasad Koirala had lived in the times of social media, we would have learnt a lot about his autocratic traits. 

Hero worship

In South Asia, where idol worship, worship of cult leaders and hero worship exist, it’s fertile ground for authoritarianism. When a self-proclaimed guru who golfs during his leisure time can sell high-priced front row seats to see him dance, we know how gullible we are! Rather than read the simple teachings of the Buddha, we worship SUV-hungry personalities as gurus who have made great fortunes after renouncing “material life”. We like to associate public institutions with individuals, be they publicly listed institutions or institutions with state or public money. In a country where the Buddha’s concept of commune and the social structure of guthis developed, it is interesting to see how we do the opposite of these concepts and constantly search for larger than life figures. 

Of course, there is some silver lining in the dark clouds. The Rastriya Swatantra Party celebrated a year of existence last week. It is one of the institutions that began as something synonymous with an individual, and in a year, it has developed a team where more than one person is important, and it is an institution in the making. Decisions are becoming more team-oriented than the verbose rant of an individual. This will perhaps make people think whether it is important to have autocrats who have no accountability or have teams that will provide checks and balances. History has enough stories to tell about the instances of destruction, including self-destruction, inflicted by autocratic megalomaniacs. It’s always important to get the other view.

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/06/26/seeking-solace-in-personalities

12 Jun 2023
Kathmandu Post Permalink

Proliferating impunity

June 12, 2023

Local ward leaders are lectured on how federalism has destroyed Nepal.

Nepalis are watching how the Bhutanese refugee scam will unfold as so many people have been taken into custody. Will some or all of them be indicted? This is the question that people keep asking. Of course, the top three leaders are allegedly tainted, but they have been able to cover each other very well. However, the way people were bowing down to alleged criminals and celebrating the release of someone convicted of murder and how corruption scams or severe crimes have just disappeared from the public eye is always fascinating. Does society ape the top leaders, or does having refined skills in corruption and crime make you a top leader? To understand this, I look back at my last weekend. 

We have been having some issues relating to drainage in the neighbourhood, perhaps the biggest problem in every urban centre in Nepal. Maps are just being marked, and then, with a dozen agencies involved, dig-fill-dig-fill becomes our contemporary landscape architecture. When problems arise, it is a show of connection. It is about getting people, including ministers, to call up local-level contractors or officials to toe the line. So if you have a tenant that is a media agency, then it’s a super bonus. Then you can have random reporters call up the local ward chair and harass that person. It is about how you can drop names until you can silence your opponents. And if your opponents are older adults, it’s even better to go for it—threaten. Local ward leaders are lectured on how federalism has destroyed Nepal. If you have family members connected to politics, that is a bonus.

Muscle power

Then it is about muscle power—carrying scores of people with you and getting into a shouting match. It is having those young people—your children, grandchildren and their friends—who can punch you. It can get into threats of physical assault that make you retreat to your home and wonder what happens when you travel next. And every aggrieved Nepali party knows that there is nobody to go against the mighty when push comes to shove. I have personally faced this, including a former editor telling me how running my columns in this paper is becoming difficult. Then you think maybe it’s fine to let it go. But your rational self wants to fight it out, go and get a lawyer, go to the authorities, do what the law says, and abide by it. Despite the fact that the judiciary has become less inspiring in the country, perhaps for law-abiding folks, that is the only hope. 

Is this a story of a neighbourhood or many neighbourhoods or the country? Does not the above story apply to national scams as well? We see finance ministers get away with having outsiders work on the final version of the budget at the last minute. We have people whose names are listed in money laundering cases, and the governor taking action gets fired and has to be reinstated by the Supreme Court. From the Rana and Panchayat eras, there have been cases that have been hushed away; it could be people getting under your vehicle and dying or artefacts being stolen from temples that do not even get reported. We live in a country where a clown can be a star reporter, flouting all decency, rules and etiquette, but every leader wants to be in his show! When a leader is arrested, enough people are willing to rally around him, knowing very well that he has committed a crime. 

Living on hope

Like many times before, an incident like this shakes you and asks why you still live in this country. However, we have to live on hope. We have people like Swarnim Wagle in Parliament who will change how parliamentarians should speak. To question corruption, you have to have no skeletons in the cupboard. That is a tough one in Nepal and in many other countries. Swarnim brings a rare breed of articulate leader who can be questioned in front of a public court. In an orderly manner, he can lambast somebody in chaste Nepali. Hopefully, more parliamentarians will learn this and more young people will become parliamentarians. We hope the old guard will be routed in the next elections, so it is only a matter of a few years. 

We see more corruption cases being brought to Parliament and more people questioning the leaders in public. The hope is about ensuring an end to the culture of impunity where leaders, business people, civil society leaders, NGO leaders and cooperative leaders are brought to justice. And more voices need to come out and talk about it. More people write and tell their own stories of suffering. Despite the many things being said against the media, a small group still allows voices like this to come out. I am always grateful for the space I get, even if, at times, it is just a rant born out of frustration. I also continue to see the silver lining. 

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/06/12/proliferating-impunity

31 May 2023
The Hindu Permalink

Using Buddhism as a tool of soft power

May 31, 2023

The geopolitical wrangling over the future of Buddhism between India and China is making the Nepal Buddhists uneasy

I am a Shakya from Nepal, a supposed descendant of Siddhartha Shakya, who went on to be known as the Buddha. Every Shakya is engaged in a different path today, yet is bound by one phenomenon. But it is rare for individuals, or the tribe, or even Nepal to feature in a congregation of Buddhists such as the Global Buddhist Summit, which took place in New Delhi in April. Realisations like these prompt a closer look at why growing superpowers, India and China, are defining their own versions of the future of Buddhism and using it as a tool of soft power.

The Shakyas who ruled Kapilavastu after Buddha’s Parinirvana did not have an army, and many were massacred in Sagarahawa. Eventually, the remaining Shakyas fled to different parts of Greater Magadha and to far-flung places like Gandhara (modern-day Afghanistan) and Burma (Myanmar). Many also went to the Kathmandu valley and were granted a status comparable to that of the Vajracharya priests, but they were not permitted to practice priesthood outside of their families. Therefore, in Hiranyavarna Mahavihara (Golden Temple) Shakyas alternate as temple caretakers and conduct all the rituals. Aside from the Kumari temples, this is one of the few temples in the Kathmandu valley where a 1,000-year-old tradition continues. When Nepal accepted a grant from the Government of India to renovate portions of the Golden Temple complex, it created a controversy. Many locals believe that India was only interested in this project because, after Lumbini, the birthplace of Buddha, this is the temple complex most frequently visited by Chinese tourists, indicating vested interests and strategies.

India’s Buddhism

For India, Buddhism provided an identity of peace and tranquility during the formation of the Republic, which was a time of intense violence and division between the country’s two key religions, Hinduism and Islam. Professor Naman Ahuja, curator of the Lumbini Museum, discusses the usage of Buddhist symbolism as a means of escape difficult times, whether it be the Ashoka Pillar or the wheel in the flag. In addition, the inscriptions on the edifice erected by King Ashoka provided evidence of the life and teachings of the Buddha.

Due to such usage and evidence, India likes to claim Buddhism as its own. It convened the Global Buddhist Summit in April primarily to provoke China by promoting Tibetan Buddhism and the Dalai Lama. There were no Nepal representatives present. The summit was hosted by the International Buddhist Confederation, a Buddhist organisation based in India, which has neither a patron nor a member of the Supreme Dhamma Council from Nepal. Nobody from Bhutan, a Buddhist nation, was present either. Therefore, the geopolitical tool for India seems to be the promotion of Tibetan Buddhism, which has greater Western appeal.

The India International Centre for Buddhist Culture and Heritage is coming up in Lumbini, Nepal. Prime Minister Narendra Modi laid the foundation stone in May 2022. A year later, little progress has been made on the construction of this centre. This could be seen as an attempt to counter the opening of the Gautam Buddha International Airport in Bhairahawa, Nepal, which, in India’s eyes, is a Chinese project. It was constructed as part of a project financed by the Asian Development Bank and carried out by a Chinese contractor.

India’s overtures of Buddhism in Nepal began only after ‘Buddha is Born in Nepal’ became a populist slogan of sovereignty in Nepal, which Mr. Modi had to accept in a speech he delivered to the Constituent Assembly in Nepal in 2014. India’s claim over Buddhism by excluding discussions with the pallbearers of tradition and the larger Buddhist community will only serve the purpose of irritating China.

China’s Buddhism

China is home to around 245 million Buddhists, 28,000 Buddhist monasteries, 16,000 temples, and 2,40,000 Buddhist monks and nuns. This makes Buddhism an important soft power for China. By adding religious overtones to China’s existing portfolio of cultural and linguistic diplomacy, the state religious system has become increasingly involved in Xi Jinping’s efforts to support the growing political and economic power of China abroad. Beijing pursues a multifaceted and flexible approach to promote Chinese Buddhism abroad, with its specific modalities varying depending on whether the target country is Buddhist-majority, Western, or one of China’s Asian competitors. As a source of Buddhism, the Chinese look to Nepal rather than India, as the popular temples in Beijing have a connection with Nepal, whether through the use of Newa Ranjana scripts on the pillars or the association of these temples with Nepali artist Arniko, who is revered in China. China utilised Buddhist narratives alongside infrastructure investments in Sri Lanka, just as Cambodia, Laos, and other Buddhist countries in Southeast Asia do. With large crowds thronging to Buddhist temples, China cannot ignore the undercurrents and, therefore, would prefer to use its own version of Buddhism not only for national integration but also as a tool of soft power.

In Nepal, one of the popular rumours is that China will send five million Buddhist pilgrims and establish hotels and other businesses through its investment arms as a big soft power push. It is also rumored that India will invest more money in Lumbini. My hope is that the geopolitical wrangling over my ancestors will not turn Nepal into a Buddhist Disneyland.

30 May 2023
Kathmandu Post Permalink
Photo courtesy: Press Information Bureau/Files
Photo courtesy: Press Information Bureau/Files

Dealing with a new India

May 30, 2023

Nepali leaders cannot even list five things, let alone know how to communicate them.

Last week in Delhi, my cabbie sought my opinion about the prime minister of Papua New Guinea falling at Indian Prime Minister Narendra Modi’s feet. I did not have an answer. I also could not answer when he asked me if Prime Minister Pushpa Kamal Dahal would do the same when he visits New Delhi this week. The taxi driver went on a rant about how Modiji had now put India on the global map and how the world was bowing down to India.

Many of my friends who were educated in liberal institutions around the world have WhatsApped me the video of the incident that has gone viral. On Sunday, when India inaugurated its new Parliament building, it was very clear how it has redefined its democracy. A prime minister inaugurates the building with a Hindu ritual, clearly sending a message: “This is how we are and how we will be in the future; adjust with our thoughts or just perish.” Famous marketing strategy guru Rama Bijapurkar in her book uses the common phrase in an anglicised way, “We Are Like That Only”, explaining how Indians think and behave. 

Optics is key

India, especially its political leaders, have always relied on optics and changed it to adapt with the times. Former prime minister Indira Gandhi projected herself as a messiah of the poor and addressed huge rallies. She once told her private secretary to get her a bowl of almonds as it was so tiring to be a goddess. She projected herself as a leader of a secular India, but relied heavily on godmen and astrologers to maintain her leadership. In the current day of social media, the Indian prime minister has learnt to play to the gallery and his public relations team has done a stellar job. Large business houses, who have always been the key funding source for political parties in India, have flourished across all regimes. A few perish on the way, but by and large, Indian businesses are very adaptive. 

However, the current administration has been able to send the right signals to the global investment community through good optics, and investments have come into India in a large wave. The global order disrupted by Trump’s four years in the White House, the emergence of a powerful Xi Jinping in China, the Russian invasion of Ukraine, and the United Kingdom figuring out how to re-strategise post-Brexit has also given India an opportunity to establish a significant presence in the global space. The “brain drain” of India is also paying off as global corporations in the United States are getting Indian leaders, and now even the World Bank has a president of Indian origin. 

Indians were able to use Rabindranath Tagore who won a Nobel Prize a century ago, and it is no surprise that they can now leverage a lot of soft power. Bollywood has been growing immensely in the global market, Indian cricket has become a colossal sporting industry and Indian cuisine is getting popular around the world by the day. It is a new India, and it is a country of people who know how to sell! If a celebrity in Hollywood eats Thai or Chinese takeaway for dinner, it is no big deal. But if they get Indian takeaway food, this can immediately become headline news in Indian broadsheet dailies within hours, and it will be followed by thousands of tweets devoted to that one action. 

Modalities of engagement

The current Indian administration deals with governments in its own way. For the current foreign minister, the priority is not the neighbourhood but setting big relationships straight. So he does not meet the Nepali ambassador in Delhi for 14 months as their neighbour is an irritant rather than a relationship to proactively nurture. They still want to just engage reactively. So the Bhutan king will only be given importance in New Delhi if China is reaching out and trying to settle border issues. Former interlocutors do not matter. They do not want to listen to retirees, as they are in search of fresh young people who can provide the narrative that the prime minister’s office would like to hear. There are new institutions that are emerging and new structures that are taking prominence. The focus is on making G20 successful in its optics and that is key. If you are part of that team, your voice is heard, otherwise not. 

The structured working of the Indian government with people under regular surveillance has also made it difficult for leaders in countries like Nepal as they do not know how to handle issues formally. These Nepali leaders cannot write five things, let alone know how to communicate them. 

As the Nepali prime minister prepares for a visit to India this week, it will be another event with the right optics, and any breakthroughs would be an added bonus. The pending issues are no different than those I pointed out in an op-ed a year ago. India realises that the Nepal prime minister leads a fragile coalition and does not reflect the change in the people’s mood during the November 2022 elections. They know the prime minister has been shaken by the Bhutanese refugee scam and is wary of potential scams that may emerge to haunt him. He also wants the optics of a good meeting. For emerging Nepali political leaders, it is now crucial to build a strategy to engage with India and deal with its new mood and institutions, all the while getting their own optics right.  

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/05/30/dealing-with-a-new-india

15 May 2023
Kathmandu Post Permalink

Changing mindset, thinking big

May 15, 2023

Private sector groups need to proactively pursue global benchmarks, norms and practices.

Last year, the flavour of May was low foreign exchange reserves. This paper had alarm bells ringing. This year, it is monetary policy and recession. It’s fashionable in Nepal to talk about big things without knowing what they mean. During the 2015 earthquake, Nepalis could predict the shake on the Richter scale, and during Covid-19, Nepalis could tell the antigens of people looking at someone’s face! 

The Nepali economy has bounced back after the shocks of Covid-19, with an increase in remittances by 24.2 percent to Rs903.30 billion, which means the informal increment is equal. So we should end the year with $18-20 billion of formal and informal remittances. The forex reserves are up to 11 months of imports, from a low of six months last year. The balance of payments surplus was Rs180.17 billion in the first nine months of FY 2022-23, compared to a deficit of Rs268.26 billion in the same period last year. However, negative narratives are what Nepalis love. 

The folks in deep financial distress owing to their mismanagement and investment in speculative assets want the state to bail them out of their mess. Now they want a flexible monetary policy, and their dream is to have a banking system that is never regulated. Business cartels even convinced former finance minister Janardan Sharma to sack governor Maha Prasad Adhikari, who was propagating restriction and regulation, only to have him reinstated by the Supreme Court. However, it is important to understand that Nepal has its own limitations on monetary policy as the currency has a fixed peg with the Indian rupee, which is more of a political exchange rate than an economic one. Indian monetary policy is as important, if not more important, to understand how the Nepali macro-economy prevails. 

FDI and mindset change

Global studies of countries with accelerated growth show that they have always been able to do so through foreign direct investment (FDI), be it China, India, or Vietnam. In Africa, Rwanda, a $12 billion economy in 2022, attracted more than $2 billion FDI in 2022 and expects $3 billion in 2023. This is 25 percent of GDP. By this parameter, Nepal should aim for $10 billion FDI in a year, which will help create hundreds of thousands of additional jobs each year and make the tax less dependent on taxing imports. The government, bureaucracy and politicians are blamed for making FDI difficult, if not impossible, but I have been writing ad nauseam that the private sector cartels are to be blamed for that. 

The private sector groups—the biggest funders of political parties—do not want FDI, as it will bring global benchmarks, norms and practices. As a nationalist hydropower developer told me at a recent event, allowing FDI and international firms means stringent environmental regulations, safety measures during construction and rigorous equipment testing. “Why should we do that?” he told me. Nepali firms have benefited from their own definition and utilisation of loans. Nothing is wrong if business loans get invested in speculative investments in real estate and the stock market if everybody is doing this. Bringing international norms of correct utilisation of loans and prudent financial practices is against Nepali culture and value system. Maybe there is nothing wrong with having roulette machines in the stock exchanges that are being planned. Why bother about technical or financial analysis? Pay it straight! 

The FDI companies that have been operating successfully in Nepal have also done little to talk about global norms and competitive standards. Similarly, the types of FDI companies that come in do not want to explore Nepal as they do in other countries. They are happy to meet powerbrokers and political party sycophants rather than listen to professional advisory firms. They then run into trouble and then start telling the world how Nepal is not FDI-ready. If you prefer to go to quacks to get your toothache treated rather than visit a doctor, it is your problem, not the system’s. 

Investing abroad

I remember being consulted by the Nepal Rastra Bank folks two decades ago on allowing Nepalis to invest abroad. When the Finance Ministry committee I was part of drafted the Mutual Fund Regulations, it was about allowing Nepali funds to invest in Indian mutual funds. But this demand from Nepali firms to invest abroad seems to be dying; either they have found ways to circumvent the laws, or it is also limited to information and communication technology companies. Nepali businesses seem to understand that doing business outside Nepal means following global rules and professionalising one’s management. Both are things that most Nepali businesses are not comfortable with. However, as someone operating across different countries, I can only say that working beyond Nepal can only provide you with growth. But the processes have to improve, be it by having more avoidance of double taxation treaties, an easier but better regulated foreign exchange regime, or allowing global minds to work for Nepali companies. 

There is no alternative to reforms to push economic growth in Nepal. There is money, but the big change required is in our mindset. Yes, negativity sells, but never in the long run. A positive mindset can yield returns in the long term. It’s not that Nepali businesses are not making good money, but for a change, return expectations need to transform. Start playing by the rules and think big! 

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/05/15/changing-mindset-thinking-big

01 May 2023
Kathmandu Post Permalink

Towards digital transformation

May 1, 2023

There are positive changes, but acceleration is required through better coordination.

Last week, there were two events that I got to anchor. The first was a panel discussion on making digital services happen at the base of the pyramid, and the second was the launch of the much-awaited Nepal Financial Inclusion Report. These two events provided some insights from the speakers on how Nepal is transforming in the digital space, but a lot needs to be done to accelerate the process. 

With the work we are doing through the Centre for Digital Transformation at the Nepal Economic Forum, we can continuously emphasise two key issues. First, understanding the rapid positive transformation and adoption of technology or platforms; and second, the need for coordinated efforts. We need to understand how the landscape is transforming at a rapid pace. Aanchal Kunwar of Daraz revealed that 40 percent of their sales and 35 percent of the vendors were outside Kathmandu Valley. This shows that e-commerce platforms are connecting customers and vendors outside the capital. This reminds me of Prakash Iyer, former CEO of Kimberly Clark, India, telling me in Kathmandu that they were surprised that two thirds of the orders came from outside the big cities when they went online. While last mile logistics is a big challenge in Nepal, there are innovators trying to fix this, and perhaps the revival of the postal system would help in a big way. 

VAT refunds

The digital payment ecosystem has pushed e-commerce platforms. You can buy from far-flung vendors like those selling the basket of Himalayan berries they have picked via an Instagram reel account. Amit Agrawal pointed out that they could get about Rs4 million in VAT refunds by paying their internet service provider vendor online. The government came up with a 10 percent VAT refund policy on online payments, but people are unaware of it. Challenges remain in terms of operating accounts for companies where two signatories are required. There are also many examples of challenges in coordination because any online payment you make puts you “on line” somewhere, be it at the passport office or the transport management office. 

What Dipesh Bista, CEO of the National E-Governance Commission, a high-level government apparatus formed and chaired by the prime minister, said was like music to our ears. He spoke about this unit that will coordinate all efforts across different government agencies. He had this vision about being able to make the next census happen within a week and being able to count the cows on a farmer’s farm in real time. The emphasis has also been on making the National ID the base for the delivery of digital services. He had an important point: If people can pay extra for food or goods delivered to their house, why don’t we also deliver government documents to their homes for the same cost? 

Estonia is considered to be one of the world’s first movers in digital transformation, especially when it comes to delivering government services. They have even made voting go digital. The key lessons to learn from Estonia are that you make data move, not people; use technology to provide services to citizens, not create impediments; focus on people, not sophisticated technology only as they are the ones who will drive technology; and finally make giant leaps. 

In the National Financial Inclusion Report for 2023, we pointed out the big transformation in access to finance in Nepal since we worked on the last report for the United Nations Capital Development Fund (UNCDF) in 2015. Access to finance, payment platforms and insurance have grown in the last eight years. There was a tweet from a bureaucrat, Gopi K Khanal, questioning the financial inclusion at double-digit interest rates. However, we forget that we were a country where bonded labour and a landlord-driven mindset existed just a few decades ago. Instead of taking loans from loan sharks at 48-60 percent per annum, is it not better if people can get access to formal credit at 15 percent?

Corruption money

If digital P2P platforms for lending are launched, where people can get money at slightly higher interest rates than banks, and most of it without collateral, will they not be better than the village loan sharks? We also tend to forget that the money that is peddled by the loan sharks mostly comes from the pot of corruption money of politicians and bureaucrats that cannot come to the formal system. If digitally transparent platforms proliferate and anti-money laundering regulations are strengthened, this graft money will not reach informal money markets. We also saw that despite the challenges of coordination with the Finance Ministry, Nepal Rastra Bank has to be given due credit for pushing the financial inclusion agenda, especially with the governor himself taking a keen interest in leading from the front. If our bank owners were not local business people who want everything in the finance space to become their domain but international players who just worked on banking, we could have accelerated the pace of financial inclusion by using non-banking platforms. 

I sometimes imagine if the top leaders of the political parties were put into a room to listen to these conversations, how much they would understand or how many would make an effort to understand. The shift must now be towards educating parliamentarians and making them aware. Since we now have many parliamentarians who understand that the pursuit of knowledge is important, they can accelerate the pace of legislative reforms. These efforts can be part of the Digital Nepal framework of the government, and institutions like the World Bank that are supporting the government can provide resources from countries like Estonia where they have made it happen. 

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/05/01/towards-digital-transformation

17 Apr 2023
Kathmandu Post Permalink

From PowerPoints to power lines

April 17, 2023

There are enough Nepalis around the world whom we can pick and bring home to rethink and strategise.

While writing about any issue in Nepal, it is always helpful to go back to what you wrote 10 or 20 years ago. As the Power Summit begins today, I looked back at my column in this paper in 2014 on calling for action and another piece 23 years ago in the Nepali Times. It seems as if we are repeating the same messages every decade. In the power sector, however, some unprecedented transformations have taken place in terms of access and generation both. But we have a long way to go. 

Looking back

It is always worthwhile to look back at successes. While there were critics from professional and business cartels against the two first Independent Power Producers projects, Bhote Koshi and Khimti, these two projects opened hydropower development in Nepal. Lenders got to understand the country better, the agreements made at the time still serve as templates for other projects, and there were many lessons for people in the government, private sector and international community. While the twin projects are often attacked by nationalists who prefer the Nepali way of getting things done, their economic benefits have been huge as one can imagine the state of supply if these projects did not exist. 

We would hardly have learnt how to go about project finance, financial closure, insurance and a whole list of things that global companies and financial institutions demand. The projects opened doors for many bigger projects to follow. The projects went through multiple governments, but committed bureaucrats and the unrelenting support of the international investment community and financial institutions saw them through. 

Both projects are now owned and managed by Nepalis, a huge leap forward in capacity and capability. Having been involved with the Bhote Koshi project since its inception to seeing its acquisition by Nepalis and ultimately leading the company, I have learnt that it is important to look back at how institutions can carve the path like the first trekker or climber that makes the route for others to follow. It is important to develop case studies and learn from them. 

Recalibration in thinking

Last year, another 500 megawatts of electricity was added to the national grid, which is nearly the total production in 2005. From an energy hungry country, we have now become an energy surplus country. This means that we have to think like that farmer who has graduated from sustenance to commercial farming. We have to start thinking how we can use the additional generation to happen in the upcoming years. Malaysia, a country with similar popular size, has a production capacity of 34,000 megawatts; we need to learn how they are selling it. We need to now focus on transmission and distribution, which means that there can be increased uptake if there is easy access to electricity like we get smartphones and telephone connections. The national electricity utility has to change from being a monopolistic supplier with huge allegations of corruption to grant connections to providing easy access to both commercial and domestic users. In the early nineties, the telecom utility behaved in a monopolistic manner by curtailing supply of connections that led to a big gray market for telephone connections. Later, the change in technology and conversion of the utility into a company competing with other private players changed everything. In India, the privatisation of the distribution network has paid off. Nepal can learn from countries like Rwanda, where prepaid purchases and loading into machines have provided advance cash to the utility, and at the same time, people could buy electricity based on their needs even on a daily basis. 

Faster and smarter solutions

Governments, at times, are in parenting roles; like parents who treat teenagers like toddlers, they need to reflect on what they need to do better at a faster speed. I was looking at one of my tweets from a programme in 2017 that stated that “To complete a hydropower project in Nepal, one needs to go through seven Ministries, 23 Departments under 36 laws. Reforms necessary”. The situation in the past six years has apparently gone worse. For international investors, Nepal has become a meditation centre to try their patience; you may get nirvana faster than your approvals. There are constant complaints of safety of workers at sites, and locals tend to treat these projects like ATM cards where they can withdraw money anytime by creating problems. We have moved from a near-bankrupt utility to a cash surplus utility but the assumptions have not changed. The financial world has moved to sophisticated structures to hedge risks, but our books do not contain anything beyond the plain vanilla. 

The biggest issue is that of a lack of champions. Some investors say they drop the idea of investment in Nepal after they meet the concerned minister. Our argument remains that it is important to hire good advisory firms. You do not have to go and see the minister. You never do that when you are investing in the United States. No minister in Nepal in the past couple of years in any sector has really instilled confidence in investors. They are there for different reasons. We need to move to a business-like attitude. We have the Investment Board that can be outsourced to an international firm on success-based fees. We can have champions who can work in teams to recalibrate and provide solutions. There are enough Nepalis around the world whom we can pick and bring home to rethink and strategise. It is not the lack of money but the lack of will to change the status quo!

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/04/17/from-powerpoint-to-power-lines

03 Apr 2023
Kathmandu Post Permalink
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Investment and management

April 3, 2023

It has become harder to find good management leaders who inspire younger talents.

After my last column entitled “There is no economic crisis”, I started getting calls and messages on what to do next for long-term economic growth. Yes, the perception of a crisis aggravated by people whose businesses are in disarray will go away, but we need to focus on the long term. I went back to read Unleashing Nepal, my first book that I wrote just after leaving a two-decade corporate career with the Soaltee/Tara Group. There are three key messages in the book. First, we need to move from a “rent seeking mindset” to an entrepreneurial mindset, which we have seen half happening in the last decade and needs acceleration. The second is to look at Nepal as a land of opportunity. Yes, Nepal is a $40 billion economy in real terms and is worth $140 billion in terms of purchasing power parity (PPP). We are land-linked to China and India with an internal market of 30 million people and half a billion people living within an hour’s flying distance. Third, the emphasis should be on investment and management to unleash Nepal’s potential. Perhaps, we have to revisit this. 

Nepal needs $6-$8 billion in investments per year and our capital formation is low, which means we have to reach out to get more foreign direct investment (FDI). The scale of projects that need to come up has to be larger, which will also accelerate legislative and institutional reforms. I go back to the time when Bhote Koshi and Khimti power companies had sought foreign investments. The two companies combined had a project size worth 5 percent of the gross domestic product (GDP). This means we need projects that are on the scale of $2-3 billion that will bring in global companies and push for reforms. We must get out of enjoying inaugurating projects worth a few million dollars, which is about the cost of a piece of land in Lazimpat or Surkhet or Bardibas. For this, we need to be able to think big!

Mindset of management 

Last week, a friend from a business group called me to say they were looking for a chief finance officer. I asked him how much he would pay. He said 150,000. I asked him if it was dollars per year; and he said no, it was rupees per month. I told him that if you pay peanuts, you will get monkeys. I told him that given your business’s size, you should be paying much more to attract the right talent. I also recall conversations with majority shareholders of banks, being very jealous about the money and perks their CEOs earn. Till we do not learn to value management talent and invest in it, as a firm, we will keep plunging into one crisis or another.

Nepal has a history of having some great talent working here. Managing director of Surya Nepal Sanjiv Puri is now chairman of global transnational ITC. Piyush Mathur, who began his career at Nielsen Nepal, became a global vice-president and now works in a c-suite (executive) position at Johnson and Johnson. There are many such examples. It has become harder to find good management leaders that inspire younger talents. The benchmark of evaluating a manager has to be performance and upward mobility, not the price tag of the vehicle or single malt brand. I continue to write that today’s Nepali firms are big. If we take banking, many have a market cap worth half a billion dollars or more. Multiple firms are the size of $250 million and above. However, investment in management prudence has been poor. I keep joking when negotiating assignments that you want to pay for peanuts, but you want to eat cashew nuts. 

Corporate culture

The other area that I have been writing about ad nauseam is corporate culture. Having spent two decades in Nepal’s most professionally managed business group and groomed accordingly, I value a corporate culture that separates ownership from management and is systems driven. When I attend functions of even large corporates, I find them no different than an event of a cooperative or a political business cartel. One pays from one’s own company money to felicitate oneself. I just find this so bizarre. Some sycophants make the owner believe that this is the trendiest thing to do. Sadly, even international institutions now feel that this is Nepali corporate culture. Everyone is very quick to give lectures on poor governance in the Nepal government and political parties, and I keep asking them: What is the governance structure of your organisation? How is the board constituted? How are the powers delegated to management? How do audits take place? Is there a performance evaluation system? More questions than answers. 

Economic growth cannot be driven by the government. As Biswas Gauchan correctly pointed out in his column in Kantipur last week, we cannot wait for political stability, and we need to push for the next wave of reforms. Yes, political uncertainty has been the only constant in Nepal in the past 73 years, we need to assume this as given. There is room for private sector thinkers and players to lead transformation, especially legislative, institutional and structural reforms, to attract FDI. We are doing as much as possible to spread this message despite the strong influence of business cartels on these issues to maintain the status quo or even be regressive. Hope we will have more parliamentarians talking about these issues in Parliament and helping people to think big! 

Read the full article on The Kathmandu Post: https://kathmandupost.com/columns/2023/04/03/investment-and-management