Sujeev Shakya

Articles & Publications

27 Aug 2019
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Forecast: Economic gloom

August 27, 2019 No Comments

Nepal needs to be prepared for a potential slowdown in the global and regional economies.

 

Within corporate circles in New Delhi, there has been an increased amount of stress among the high-level executives. The economy has slowed down. Jobs had to be cut, units had to be shut down and costs had to be slashed. The older markets of Delhi have come back to life, as footfalls and sales in malls reduce. Older roadside eateries are seeing more visitors, even as newer restaurants have been pushing through offers. Online discount platforms are being shunned by outlets as margins continue to fall. Hotels are seeing room rates and occupancy numbers drop. However, these are different times under a different political system where speaking out can be a challenge; therefore, many of the issues are discussed inside closed rooms. It took a while for the Indian government’s policy body, Niti Aayog, to come up with some bold statements acknowledging the reality. Finally, Finance Minister Nirmala Sitharaman announced some operating procedures to push the sluggish economic growth.

When India sneezes, Nepal catches a cold. Therefore, it is very important to understand what is happening in India. There are other emerging global challenges that have to be considered as well. The unprecedented trade war between China and the United States has been intensifying. The United Kingdom is pre-occupied with Brexit—a monster they created—and Europe is experiencing an economic slowdown. In Asia, Thailand has seen one of the worst years, economically speaking, in this decade and the spiralling effect is impacting other Southeast Asian countries. All is not well in the East Asian front either, with Japan and South Korea squabbling with each other.

Spillover effects

While the global economic crisis will not have a direct or immediate bearing on Nepal, apart from slowing down tourism, what is happening in India will impact us directly. There are four key potential impacts. First, with our currency pegged to the Indian currency, a weak Indian rupee is not good for Nepal. It will push our import bill and spur inflation. Those who argue that depreciation of the Nepali rupee will make Nepali exports competitive need to realise that increased import costs will negate all minor benefits. Second, at a time when an oversupply of rooms is already troubling bankers who financed hotel projects, an economic slowdown in India would affect tourist arrivals from the southern neighbour.

Third, there has been an increase in the number of Indian workers crossing into Nepal in search of jobs. Currently, the remittance sent from Nepal to India by Indian workers has crossed $3 billion. An increase in this will mean a fall in Nepal’s net remittances. Moreover, an increase in the labour supply would decrease wages. This can bring about a situation where there could be dissent from Nepali workers who are yet to understand the concept of productivity-based wages and have been pampered by the protection provided political forces (in the garb of unions).

Finally, the escalating crime in India due to increased unemployment could spillover into Nepal. Memories of Nepali night buses travelling in long convoys to ward off attacks from criminals from across the border are still fresh in the minds of. Bollywood has institutionalised Nepal as a getaway destination for criminals while political forces have encouraged the same. With surveillance and record-keeping of movement at the open border being poor, Nepal has to really think about how it leverages technology to track the movement of people across the frontier.

A new approach

Nepal, much like North Korea, has kept itself out of fully integrating with the global economy. This has nothing to do with strategy and more to do with dumb-founded nationalism. As such, the country needs to prepare itself for the effects of the economic slowdown elsewhere and to start examining areas that will be impacted.

Nepal’s economy, contrary to what figures the gross domestic product and per capita income state, is based on asset price increases. With corruption rampant and its replication into 753 local units after federalism, there may be close to $1 billion in corruption money entering the markets that will keep the real estate prices afloat. The fact that more clubs and watering holes are opening in every nook and corner of Nepal and expensive alcohol is available at dingy highway joints is an indication that there is no end to the flow of free money.

One of the biggest problems with economics is that the causes and effects of downturns can only be analysed after such events occur. However, those in the sector can spot certain markers. It is time for those involved in academia, business and think tanks to start thinking about preventative measures. It is also hoped that Nepali leaders across politics, governance and business will find time from their busy schedule—full of inaugurations and speeches—to think about what could be coming ahead.

https://kathmandupost.com/columns/2019/08/27/forecast-economic-gloom
13 Aug 2019
Kathmandu Post No Comments Permalink

Dismantling cartels and ‘cartelpreuners’

August 13, 2019 No Comments

Signs are emerging that will make cartels in Nepal lose their clout.

In Nepal, among the people who do business, there are only a few who are actual entrepreneurs. The bulk is what I call ‘cartelpreuners’—entrepreneurs and businesspersons who attempt to add to their share of wealth without adding value, by forming cartels. These cartels make sure that there is little regulation from the government side, zero self-regulation, and get away by selling substandard goods and services at a very high cost. I have written ad nauseam that there are cartels in every sphere of our life. A nexus between business and politics exists; politicians (many of whom are business people also) protect the cartels, as they are a major source of funding for political parties and are especially important during elections. Even the Maoists during the decade-long civil conflict did not go against the cartels, as these cartels helped streamline the extortion that was a key funding source for the insurgency. However, there are signs that, perhaps, the days of the cartels are numbered.

Banking on the youth

Recently, I had some interactions with the customer service department of Standard Chartered Bank and it was a refreshing experience in terms of how they handled my issue. The entire banking sector in Nepal, until a short while ago, had been relegated to being a business where the objective was to keep promoters and shareholders happy rather than focus on the needs of the consumer. Bankers have been able to influence the central bank to ensure they become glorified money lenders. Apart from a few banks, the others in the cartels continue to fight tooth and nail when it comes to banking reforms. They have been successful in pushing Nepal Rastra Bank to ensure that corporations, even joint venture companies, cannot borrow from their parent companies or investors outside Nepal. They have kept international payment companies at bay and have successfully checked the adoption of regulations that would penalise banks whose ATMs do not work or their online banking system is full of problems.

However, the Nepali youth have shown a willingness to switch over to products and services that they deem better alternatives. The popularity of ride-sharing apps like Tootle or Pathao, payment platforms like e-Sewa, world-class entertainment facilities like LOD or the proliferation of Himalayan Java Coffee shops show that the youth want innovative products and services that actually work. As more young people begin to travel within Nepal, we will also see the dismantling of eatery cartels in the highways, with disruptive players bringing in world-class eateries. This push will ensure that the world of cartels will start to reduce in number and perhaps come to an end in the long run, much like the guilds of Europe.

Recalibrating strategy

In the past, when a foreign dignitary visited Nepal, interactions with the business community generally meant that the heads of different cartels were called in to represent the entire private sector. These cartel heads would use pictures of themselves meeting with such dignitaries to increase their brand power. This trend is reducing, with development partners and missions realising that they also had a role in nurturing the cartels. They came to understand that supporting the cartels could backfire on their own interests. The international community in Nepal was appalled to learn that, after a successful investment summit, the cartels could push the government to increase the threshold for foreign direct investments from Rs.5 million to Rs.50 million. Perhaps this was one of the precipitating events that made the international community realise that the cartels they were supporting at times with grants, junkets and photo-ops were the ones that actually pushed the government to come with such draconian provisions.

The sign of change is not only driven by the international perspective on development moving away from aid and toward investments (with technical support) but also because the people who are driving this globally have also changed. There are more private sector players who are being asked to lead bilateral efforts and work closely with multilateral agencies. In Nepal, the old guard in the development sector is giving way to younger people and people who want to make an impact. The practice of people finding and keeping jobs based on cronyism, instead of merit, is becoming history. While some multilateral agencies have slipped in this matter, most of the leadership have taken a bold decision to say goodbye to the people who had outlived their utility in the organisation.

We will see more recalibration of policies in international agencies in Nepal as the geopolitics continues to change and investments take priority over aid. The cartels and super-cartels are rightfully being seen as the biggest impediment in Nepal’s economic growth, above the challenges of governance and bureaucracy.

The youth demanding change from the bottom-up and the top-down push from international agencies wanting Nepal to perform will make the cartels irrelevant. The process has begun.

 

https://kathmandupost.com/columns/2019/08/13/dismantling-cartels-and-cartelpreuners

30 Jul 2019
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Mentorship is crucial to unleash youth potential

July 30, 2019 No Comments

While the new foreign direct investment laws are seen as a barrier, the lack of mentorship still remains a major problem.

In the span of a fortnight, I had the opportunity to speak to two diverse groups of people. At the Venture Talk, there were aspiring entrepreneurs and people with inspiring ideas who did not mind paying a registration fee to listen to the session. The other session comprised of folks from a premier, well-known fellowship programme. It is always fun to interact with the people who are to take responsibility for the future of Nepal.

At the Venture Talk, what drove me was interacting with young people who are hungry for change. Yes, the youth are frustrated with the government policies, the behaviour of cartels, and the attitude of omnipresent donors and grantpreneurs that have devalued the meaning of entrepreneurship. At the same time, they are keen to change the industry they are in and thereby bring change to Nepal. The motivated youth want to see Nepal on the global map. They want the products they are developing to have a global market and their services to be sold globally. With more women entering the world of entrepreneurship in Nepal, they are fighting societal norms and for their own rights within their own families, as they have to get the previous generation to change their outlook. It is heartening to know that this phenomenon is not only limited to the Kathmandu Valley, as we see more people from far-flung parts of the country engaging in the discourse of change. After meeting such people, one tends to think that they made the right choice of shunning opportunities outside Nepal to build businesses here.

Whenever my office gains new team members, they are generally given the task to attend such talks and report back on the three things they liked and disliked. In a country where giving feedback is not a natural phenomenon, having people tell me of areas that I can improve becomes tricky, but I have learnt and improved based on the feedback that I have received. In the other talk, the feedback was that a large part of the audience was arrogant. In a society where feudalism still prevails and people are always seeking entitlement, it is quite natural that when you belong to a cohort that is associated with a strong brand, arrogance starts to trickle in. Youth is about energy, but that energy can be also diverted towards a wrong purpose. It is important when attending such talks to be focused on learning. If it is perceived that the crowd is hell-bent on being judgemental, instead of being open to learning from the talk, the speaker can tend to switch off. This is especially true when the speaker is attending the event free of charge. The incentive for the speaker is to gain some knowledge back from the crowd, and this does not happen with disruptive attitudes present. This also creates an imbalance, as those who are really interested to learn and interact find it useless to raise their voice. This sense of arrogance prevails in people who think that they are a part of premier institutions, companies or organisations.

The Nepal Economic Forum recently conducted a study on the start-up ecosystem. One of the startling revelations was that while financing instruments and the new laws raising the minimum foreign direct investment to Rs.50 million seemed to be a major barrier to conducting business, the biggest constraint was cited as the lack of mentors. It seems that many people with an academic bent—who have not had their hands dirty—are the ones who are mentoring people. In smaller towns and villages, people who have risk-averse fixed jobs with INGOs/NGOs are teaching people how to take risks. Further, there are few role models that are available to look up to and data on performance is practically not available. Being able to pose for photographs with ministers and government folks and sharing them on social media are seen as the ultimate parameters of success.

Similarly, in organisations, when they poach people they forget that a person is only good when it comes with the right mentorship and team support. In many institutions, they hire a person and get frustrated when a person who was performing well in the previous organisation cannot perform as well in the new one. Since leaders across organisations are scared that acting as mentors may expose their weaknesses, they do not tend to believe in the fact that mentorship is of utmost importance.

Nepal needs more work around mentorship and in helping youth to find the right path. Leadership development is a continuous journey and only ends when one dies. We have to ensure that the people who have the energy do not get frustrated and leave Nepal. We have to also ensure that we develop a habit of perpetually listening to feedback and moving ahead. There is no room for blaming the government on this; lots can be done outside the sphere of government control.

https://kathmandupost.com/columns/2019/07/30/mentorship-is-crucial-to-unleash-youth-potential

19 Jul 2019
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Nepal’s place in a changing world order

July 19, 2019 No Comments

It is important to look at how Nepal will plan its engagement with the world.

More than 350 speakers from over 40 countries had gathered in the beautiful city of Aix En Provence in Southeast France to share their views at the Les Recontres Economiques, a meeting of economists organised by the Circle of Economists (Le Cercle des économistes). Started in 2001 by a 30-member think tank of France’s leading economists, this 19th edition—with its theme being Renewing Trust—had more than 5,000 people attend events spread over seven venues in a university. It was a great opportunity to participate in a panel and listen to thought leaders from France and beyond looking at building trust—something that is in short supply given the growing pessimism. The topics of discussion ranged from the ensuing trust deficit in world politics to why the economists had failed to foresee the financial crisis of 2008. Some of them even indulged in predicting when a similar crisis would occur again. From migration to technology to questioning multilateralism, the discussions were free and honest. In times when global events have become more formal and people more careful about what they speak (owing to the fear of not getting visas or being persecuted by their own government) this platform dubbed as ‘mini-Davos’ provided a breath of fresh air. However, for me at a personal level, I continue to ponder upon what these discussions mean for Nepal. Here are three clear takeaways.

Shun complacency

In a country where one cannot buy a data pack for beyond 28 days and the bank deposit rates are lower for long-term instruments than short-term instruments, it is very difficult to have visionary thinking. But that does not mean we have to remain complacent. By 2040, China and India will be the two largest economies in the world and Nepal is land-linked to these two countries. Just as when this geographical proximity helped in making Nepal prosperous, back when our neighbours were wealthy until the 17th century, we can design our thoughts now on better managing these linkages. What happens between these two countries will also chart Nepal’s destiny. And going by what is happening with the recent changes in geopolitics, the likelihood of more cooperation between China and India is the natural and the obvious route. Many people I interacted with who understand the world of developing economies had a single message for Nepal: if you cannot ride the tide of the growth of your neighbours, you will never be able to graduate to an equitable and prosperous position.

They say that history repeats itself, and those who have a deep understanding of Europe compare the current desire for identity and politics shaped around nation-states. This is perhaps different than a hundred years ago. Collective leadership exists only if it has the support of the people. But at the same time, when collective leadership and democracy existed, dictators existed, too. This is because there were some people who believed in supreme authority; for them, political idealism did not really matter. Closer to home, and in recent times, in India, the defection of legislators in the states of Karnataka and Goa from the opposition to the ruling party offers pointers to the fact that ideology has always remained secondary; leaders come first.

A closed-off world

A hundred years ago, when it came to checking another country’s desire and hunger for economic power, there were no mechanisms in place except for adopting a protectionist policy in trade. And it seems as if we are reverting back to those times. The ongoing trade tension between China and the United States serves as an example. Regrettably, we are back to square one where winning trust has become more vital than using multilateral tools such as opting to use the World Trade Organisation as a gateway to dispute settlements. The question also emerges as to what will happen to the Brenton Wood institutions like the World Bank and International Monetary Fund—the key funding agencies for these institutions. Questions remain as to whether the new US Development Finance Corporation, that combines the Overseas Private Investment Corporation (OPIC) and USAID, will work in silo—cut off from other systems—or whether it will complement the existing institutions. China has already indicated its intention of using the Asian Infrastructure Investment Bank as a tool to further its own Belt and Road Initiative. Similarly, what will be the role and functioning of the United Nations and its agencies, as more money will be channelled by countries on a bilateral basis rather than through such multilateral institutions?

What the next decade is going to look like will more or less be determined once the elections in most of Europe and America take place by 2020. Nepal cannot shape the global agenda as of now, so it will have to see how its own strategies dovetail into the changing world order. There have been more instances of challenges to speaking up against human rights abuses, with rampant corruption, with the erosion of governance practices, and with the attacks on freedom of speech. The new laws and policies proposed that curtail media freedom, promote the policing of social media and the resultant polarisation between sycophants and activists provide no comfort to an ordinary citizen. For Nepal, it will be important to keep the discourse going as we get more engaged in protectionism. It will be imperative for Nepal to engage bilaterally with countries that matter. Therefore, what the Foreign Minister proposed—of having Kathmandu Dialogues—becomes even more important, as it is not about who is right or who is wrong. This time, we need to rise above petty politics and try to be on the right side of history.

https://kathmandupost.com/columns/2019/07/15/nepals-place-in-a-changing-world-order

18 Jun 2019
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Reimagining the future

June 18, 2019 No Comments

In the beautiful city of Tangier, Morocco more than 150 people from 65 countries gathered to discuss the future of technology, innovation and society. A brainchild of the Observer Research Foundation, New Delhi, this is a medium extended to Africa to catalyse discussions around the great pace of innovation, and, at the same time, the necessity to regulate and manage these transformations that are impacting society.

Technology driving change

A decade ago, the vision of personal gadgets using artificial intelligence (AI)–playing one of the latest songs or picking a cosy place for dinner across a country–would have been far fetched. The idea that a person could approve large transactions by flipping a switch or tapping a button too would have been unimaginable ten years ago when people had to wait in line at a bank to do so. Moreover, the way we can watch movies at our own pace and time, at a place of our choosing, would have seemed like a fairy-tale. These visions were utopian some time ago; but today, technological progress has advanced technical capabilities and gifted us a lifestyle affluent in opportunity and quality. Technology has been a driver to provide an enormous set of information and tools that facilitate the utilisation of economic resources. There has been a significant increase in the consumption of goods and services, which has changed every facet of life. Undeniably, the way people consume has, thus, changed drastically and visibly.

One of the biggest issues that came up during discussions is that between Africa, China and India–with a combined population of 4 billion, or more than half of the world–a new class of people have arisen. If the 20th century was about money billionaires, the 21st century is about data billionaires. Data can change the way people eat, live, move and even vote. The innovation around how people buy goods or make payments is changing the definition of stores, banks and what really comprises a telecom company. Data plays a key role in determining everything. From designing hotels to innovating on wellness products to delivering entertainment, the mammoth chunks of data are providing the foundation for all major decision-making. I kept wondering about the amount of data that is generated out of Nepal that is not captured within the country, as the people here still attempt to keep the country isolated.

Regulation challenges

In India, there are more than 400 million people who use WhatsApp; this was a key tool that determined the outcome of the last elections held there in April-May. However, the government of India has no control over this medium. It is only recently that there are real humans that can be contacted in India relating to this platform. The same applies to many other countries, where the content does not reside in the country itself and there may be no one representing the platforms within the state. The proliferation of many online platforms in Nepal without any sense of accountability and their dishing out fake news has prompted the government to think of draconian media laws. This is not a solution. Governments also need to continuously reinvent their strategy on managing what comes online. For instance, in the case of online content viewed through over-the-top (OTT) platforms like Netflix, it will be important to work on strategy with these platforms to determine what content is harmful and what is not. We cannot expect the Nepal government to employ people to start censoring Korean language content that is so popular in Nepal. This requires a complete shift in the mindset–by working with the industry rather than outside the industry.

Blurring the lines

The big question is: where do online end and offline begin (and vice versa)? For instance, food delivery is yet another aspect of life where technology has changed for the better. The number of restaurants to choose from and the amount of food options available over the internet is massive, which has expanded the horizon of consuming food beyond what could have been imagined before. But it is important to remember that no matter how ‘online’ food delivery systems are, the delivery is still offline and done by humans who are subject to making mistakes. It is the same for the online ride-sharing apps. At the end of the day, no matter how fast the online system, the service delivery is only as good as the human component of the service chain. So, we have to realise that the human dimension is still critical.

There are multiple fronts of ideation and discussion. There is no way humans will have to scramble for jobs, but there is no doubt that the number of new jobs created will be fewer than in the last decade. The discussions over 5G will take centre stage as part of a geopolitical war between technologies. There will be civilian movements on climate change, open spaces and ethical practices as the younger generation will take on the social media and platforms to start new forms of the ‘Arab Spring’. For Nepali leadership across the government, the bureaucracy, the development community and the private sector who are used to the status quo, it will be a challenge to really wake up to the reality that change is inevitable. Time for a lot of reimagining.

http://bit.ly/2WJqwyV

13 Jun 2019
Kantipur No Comments Permalink

उच्च व्यावसायिक नेतृत्व

June 13, 2019 No Comments

नम्र स्वभावका, जहिले पनि चिटिक्क देखिने, सबैलाई आदर गर्ने उद्योगपति थिए– प्रभावकर शमशेर राणा । उनीसंँग मेरो करिब ३० वर्षको यात्रा विविध संस्मरण र सम्झनाले भरिएका छन् । ग्लोबल नेपाली : मेरो उनीसँगको प्रथम भेट म सोल्टी होटलमा तालिम लिन जाँदा भएको थियो । उनीसँगको मेरो गहकिलो भेटचाहिँ चार्टर्ड एकाउन्टेन्ट बनेर बधाई लिँदाको थियो ।

उनले प्रोत्साहनसाथै नेपालमा केही गर्न आह्वान पनि गरेका थिए । त्यसबेलासम्म नेपालमा काम गर्ने कि अन्य देशबाट प्राप्त अवसर अँगाल्ने भन्ने दोधारमा थिएँ म । उनीसित जति नजिकिंँदै गएँ, त्यति ग्लोबल नेपालीका रूपमा यहीं बसेर गर्न सक्छु भन्ने विश्वास बलियो हुँदै गयो ।

सायद उनको समयमा नेपालमा धेरै कम व्यक्ति थिए, जसले दिल्ली, लन्डन र वासिङगटन डिसीमा काठमाडौंमा झैं आफ्नो नेटवर्क बनाएर बसे । बेस्मेन्टमा रहेका अफिसका कोठाहरूलाई उनले विश्वको महत्त्वपूर्ण कोठा बनाइसकेका थिए । जहाँ संसारका बिभिन्न ठाउँबाट नाम चलेका व्यक्तिहरू आउँथे र भलाकुसरी गरिन्थ्यो । सत्ता दाउपेचका कुरासम्म हुन्थे । नेपालमै बसेर ग्लोबल हुन सकिन्छ भनी प्रभाकरले सिकाए ।

व्यापारिक शैली ः उनी व्यापारी बनेर जन्मेका पनि होइनन्, तर व्यापारसँंग जोडिँदै गएपछि लगानीकर्ता बनेका हुन् । उनी आफ्नो ‘करिअर’ परराष्ट्र मन्त्रालयबाट सुरु गरेको सुनाउँथे । तर त्यसलाई छाडेर पछि सोल्टी होटलमा म्यानेजर भए । जागिरे भएको २० वर्षपछि लगानीको अवसर आउन थाल्यो र उनी त्यसैका लगानीकर्ता बने । व्यस्थापनमा रहँदा उनले व्यवस्थापकको भूमिका निर्वाह गरे भने लगानीकर्ता बनेपछि लगानीकर्ताको रूपमा बोर्डको भूमिकामा आफूलाई सीमित राखे ।

व्यवसाय प्रोफेसनलहरूलाई चलाउन दिए । व्यवस्थापनमा अब्बल सहयात्रीहरू चाहिने कुरामा जोड दिए । होटल व्यवसायमा उनले ओबराय र पछि इन्टरकन्टिनेन्टलसँंग साँठगाँठ गरे । जलविद्युतमा अमेरिकी कम्पनीसंँग साझेदारी गरे । स्वमित्व र व्यवस्थापनलाई छुट्टै रूपमा हेरे । व्यवस्थापकहरूलाई उनी निकै छुट दिन्थे ।

सायद नेपालमा व्यापारी घरानाहरूले प्रोफेसनल व्यवस्थापकहरूलाई जिम्मा दिएर उद्योग, व्यापार चलाउने देखासिखी भएको भए सिन्डिकेटको आडमा विदेशी लगानीको विरोधमा उत्रेर व्यवसाय गर्नुपर्ने अवस्था आउने थिएन । उनी मसँग सोधिरहन्थे, ‘हाम्रो कर्पोरेट कल्चर देखासिखी गरेर होटल, हाइड्रो, गाडी डिलर गर्नेहरू किन अघि नबढेका होलान् ?’ त्यो प्रश्नको जवाफम खोजिरहेछु ।

नेतृत्व र मार्गदर्शक : नेतृत्वको कुरा गर्दा हामीले गुरु–चेलाको रूपमा हेर्ने गरेका छौं न कि मेन्टर र मेन्टी । सायद यो अवधारणामा विश्वास नगर्ने भएर होला, हामीले यसको नेपाली शब्दहरू पनि बनाएनौं ।

मेरा निम्ति प्रभाकर राणा जागिर दिने व्यक्तिमात्र थिएनन्, मार्गदर्शक थिए । सोल्टीमा पदका भर्‍याङ चढ्दै जाँदा जीवनका अनेक खुड्किलामा उनले प्रभाव पारे । समयको महत्त्व बुझाए । भेटघाट ठिक समयमा सुरु हुने प्रथा बसाले । ९ बजेको बैठक हो भने ८ः५७ सम्ममा बसिसक्नुपर्ने सिकाए । डायरीमा ६ महिना, ९ महिनापछिका कार्यक्रमको समय नोट गर्न सिकेँ । यात्रा गर्दा लबीमा ठ्याक्क समयमा भेटेर बैठकमा जान सिकेँ । आफूले गरेका कामको प्रतिक्रियामा उनी विश्वास राख्थे ।

त्याग्न सक्ने क्षमता : भनिन्छ, मानिसलाई त्याग्न सक्ने क्षमता आउन धेरै गाह्रो पर्छ । तर उनीबाट सबैले सिक्नपर्ने भनेकै त्याग्ने कसरी भन्ने हो । धेरै व्यापारिक घराना, राजनीतिक र अन्य संस्थामा एक पिढीकाले अर्को पिढीलाई नेतृत्व हस्तान्तरण नगर्दा समस्या धेरै आएका छन् । उनी भने कार्यभार त्यागेपछि कहिलै दख्खल दिन फर्कंदैनथे । पेसा, व्यवसाय छोरा सिद्धार्थलाई सुम्पेपछि उनले आफूलाई लागेका विषयमा समय बिताए । छोरालाई भार थाम्न सक्ने भएपछि मात्र नेतृत्व हस्तान्तरण गरे ।

सुशासन र पारदर्शिता ः सुशासन र पारदर्शिताको कुरा आउने बित्तिकै हामीलाई दातृ संस्थाका कुनै प्रतिवेदनको सम्झना हुन्छ । किनकि हामीले यी दुई शब्दलाई धर्ममा मोक्षजस्तो कुरा गर्न सकिने, तर प्राप्त गर्न नसकिने कुराको रूपमा सोचेका छौं । तर उनले नेपालमै बसेर यी दुई शब्दलाई अँगाले ।

उनी भन्थे, ‘कर बढी छ, लगाएको तरिका गलत छ । सरकारले त्यो पैसाको दुरुपयोग गर्न सक्छ भनेर कर तिर्दिन भन्न मिल्दैन ।’ कानुनी रूपमा गलत छ भने कानुनी रूपमै लड्नुपर्ने उनको सोच थियो । तर कर तिर्दिन भन्न मिल्दैन भन्थे । त्यही सिद्धान्त अनुरुप उनले स्थापना गरेका कम्पनीहरू अहिले पनि वर्षेनि कर विभागबाट पुरस्कृत हुन्छन् ।

प्रभाकरसंँगै एउटा युगको अन्त्य भयो । उनका बारे कसैले पुस्तक लेख्लान् । उनको जीवनबाट हामीले सिक्ने कुरा धेरै छन् ।
https://bit.ly/2WDSrFi
12 Jun 2019
East Asia Forum No Comments Permalink

Nepal still awaits economic reform

June 12, 2019 No Comments

Nepal is struggling to implement much-needed reforms for rapid economic growth. When Khadga Prasad Sharma Oli was sworn in as Prime Minister in March 2018, he was expected to go about delivering ‘Prosperous Nepal, Happy Nepali’ — a slogan that helped secure his landslide election victory.

Oli leads the Nepal Communist Party, a coalition of communist parties that united in May 2018. His choice of technocrat — former governor of the Central Bank Yubaraj Khatiwada — as Finance Minister sent good signals to people in Nepal and those watching from outside. In April 2018, Khatiwada released a White Paper discussing what was not working in Nepal and gave the impression that he intended to set the course right. But the new government’s first budget, presented in May 2018, did not suggest that he was pursuing substantial reforms and the second one presented in May 2019 was even worse. It propagated distributive economics and protectionist measures.

As Khatiwada prepares to submit his next budget, he is saddled with the same problems as his predecessors — growth has not been as expected, the fiscal deficit grows and capital expenditure spending is dismally low at less than 40 per cent. Promises of job creation remain unfulfilled as more Nepalis leave Nepal in search of work. Nepalis send US$8 billion home in remittances, while Indian workers in Nepal are sending back US$3 billion — making Nepal the eighth largest source of remittances to India.

As Nepal looks to graduate to a middle-income country by 2030, it faces three major problems.

Not enough foreign investment is coming into Nepal. Nepal needs over US$100 billion in investment over the next decade in order to graduate to a middle-income country. With low domestic capital formation, only foreign investments can bring about the much-needed impetus to economic growth. But while there have been many attempts to attract investment, on the ground realities pose a huge challenge. The country’s mindset cannot deal with foreign investment and still prioritise protecting domestic businesses. Nepal is yet to realise that it must compete for foreign investors with hundreds of countries — there is no queue of people wanting to come to Nepal.

The market in Nepal is dominated by ‘cartelpreneur’. Through cartels and super-cartels, the private sector acts as the biggest impediment to reforms by resisting legislative changes. For instance, construction companies have cooperated as a cartel (registered as an association) to ensure that a government law requiring the following of international standards not be promulgated. Similarly, sugar producers were able to push the government to impose bans on the import of sugar. Dairy companies pushed the government to put agriculture on the negative list for foreign investors, stopping large international companies from entering Nepal.

Many of these cartels in the garb of associations are structured to be part of a political party apparatus, allowing them to drive the parties. In the absence of legitimate funding, political parties are dependent on donations from these private sector companies with many cartels acting as fund-collecting bodies. The big dilemma for politicians and political parties is that if the number of foreign investors were to grow, they would not be able to provide funding to parties due to stringent anti-corruption laws. So, Nepal tends to attract foreign investments from companies and countries where such issues are overlooked.

Any country that is pushing a reform agenda needs a champion — and there is no such champion in Nepal. No bureaucrat or politician has come forward to push the reform agenda. With a communist regime that believes in distributive economics and promotes rent-seeking behaviour, there are also not many entrepreneurs outside the cartel circus who are advocating for reforms.

This leaves a few think tanks, organisations and individuals to push the reform agenda in whatever way they can, but they have not been able to gain the clout required to put pressure on the proceedings. Development partners also do not want to confront the government on this issue. They are happy to operate their private sector development programs with cartels and super-cartels despite knowing the plan is destined to fail.

Nepal needs a big transformation in attitudes towards reform in order to achieve ‘Prosperous Nepal, Happy Nepali’.

https://bit.ly/2F76CIh

04 Jun 2019
Kathmandu Post No Comments Permalink

End of an era

June 4, 2019 No Comments

In the basement of a building at the Soaltee Hotel, at the end of a long corridor, a room exists where many major decisions have been taken that have changed the fate of the business, the country and its people. A room occupied by Mr Prabhakar Rana for four decades since the building was added at Soaltee in the late 70s, this room saw luminaires from around the world for breakfast, lunch or tea, and of course, lots of conversations. I walked this corridor in 1989 when I joined as a trainee as part of the Chartered Accountancy course. I got to meet Prabhakar Rana when he was the chairman of the Soaltee Hotel. He was one of the most influential people in Nepal and contrary to what I had heard, he was such a warm person;  his messages of inspiration are still fresh in my heart. Later, the walks along the corridors to his offices continued–and became more frequent–as I took on more responsibilities and moved up the ladder. The board meetings, the pow wows, and getting introduced to amazing people from around the world–all became a part of my life. The business expanded, the diversification of business and partnerships grew, but he remained the same astute business person.

After I left the group in 2008 as Group President, my relationship with Rana became a different one. We did not have the baggage of the association of being of an employer and employee, and the relationship grew into one of a mentor and mentee. As I started Beed, the firm I still lead, he introduced me to people who became our clients and continued to help expand my network. He continued to be the brand ambassador one could dream for. He joined the Nepal Economic Forum, the think tank I chair, as an Advisory Board member and provided the much-needed boost to push it to the next level. When in Kathmandu, he attended every event we hosted, and never did they end without quick feedback on what he liked and what could be done better. The big lesson I learnt from him, which I will always cherish, was to take feedback consistently and act on them. Many things will be written about him, but for me, three key things stood out.

I got to meet many people from around the world in my career, both at home and abroad. The character that distinguished Rana from any other Nepali was that he was truly global. He can be regarded as one of the few Nepalis who traversed the world, provided opinion on global affairs, had a fantastic network, yet resided mainly in Kathmandu. I learnt from him that you can be global at the same time be grounded in Nepal. His rolodex comprised of the who’s who in the world and he ensured he kept in touch with people. He planned his itineraries meticulously and never forgot to call people that he could not meet. Rana was magnanimous in hosting people but was never opulent. He had a class of his own that reflected the breakfasts and meals he hosted–or even just the simple conversations over tea. An avid reader, he kept in touch with world affairs and many of us agreed on the fact that even till the last meetings we had with him, we emerged out of meetings learning two new things. His mind traversed the globe in seconds and he was futuristic in his thoughts. When Rana told me in 2006 after the second Jana Andolan to be ready for a decade of transition in Nepal, we did not believe him. But it turned out to be true. When he talked about the rise of China a decade ago after the Beijing Olympics, we could not really understand the extent to which he saw the world polarising between the US and China. When he talked about the rising world of authoritarianism we did not understand, but in one of my last meetings with him, he did emphasise, ‘did not I tell you?’

I learnt many personal lessons from him too. Like how to detach and move on. In a country where family feuds are omnipresent and succession in families messy, we learnt from him what a handover meant. When he passed on the mantle of the group to his son Siddhartha, whom I got to work very closely with, he really did let go of the business. He intervened at shareholder meetings and advised us only if we went to him to seek advice. In the Nepali business world, Rana became synonymous with transparency and professionalism. He partnered with the best companies in the world and hired the best people. He learnt how to keep ownership and management separate. He ensured that his people were empowered, but also that they were accountable. Rana believed in fair competition and pushed for global standards and delivery. His values are a stark contrast to the current Nepali business world of cartels, blurred ownership and management structures, myriad of conflicts of interest and nexuses between business and politics. In the later years of his life he lamented on the way Nepali businesses had evolved and how the different chambers and associations he had founded and he was associated with had ‘fallen from grace’.

When I saw him in September in New York battling in a hospital room, I thought as a fighter he will fight and that we will again meet as he had promised for lunch in either New York or Kathmandu. That lunch never happened, but we are hopeful that a book will come out in the future that will help us learn more about a man who redefined Nepali identity and business.

https://bit.ly/2MpkMdS

21 May 2019
Kathmandu Post No Comments Permalink

We need to promote high-end tourism

May 21, 2019 No Comments

Last week, a major piece of news from this paper went quite noticed. The average spending of tourists coming to Nepal had hit a seven-year low at $44 per day, which means that there are a good number of tourists probably living on less than $10 a day–therefore bringing down the average spending. The country is obsessed with volumes, like how many people were invited to a wedding reception rather than how the quality of food served was. It is never about quality, and always about quantity here. When students grow up getting more marks for the number of pages they write rather than what they write, it is natural that the country becomes obsessed with numbers. The one million-foreign-tourists-a-year goal, which was set twenty years ago, has finally been met but at the cost of pushing down average spends. However, this is little understood as Nepal positions itself as a low-end destination despite having the best places to visit in the world. Recently, the Nepal Tourism Board came up with an advertisement for students to submit project reports, for which they will be paid Rs. 25,000 ($220). When you hire students to write plans, paying peanuts at that, the end result becomes quite predictable.

Handling high-end tourists

Nepal’s tourism history began with people who were high-spenders; the few who could afford expensive air travel and hotels. It is not uncommon to hear stories of Everest expeditions in the 1970s, where people spent nearly a million dollars in just over three months. Tiger Tops in Chitwan was an iconic destination, one of the most expensive ones in Asia during its heydays. Even when I started working at the Soaltee (which was then the Oberoi), rooms used to sell close to $200, and we used to cater expensive dinners at the Bhaktapur Durbar Square–and even as far as in Lukla. I still remember people who were taken in helicopters to Lukla for breakfast, who then had lunch in Nagarkot and then went to Tiger Tops to spend the night. It is not that this segment of high-spenders has vanished from the earth. Rather, this segment has increased dramatically. But Nepal has not been able to attract them. It neither has the understanding of this segment of tourists nor the infrastructure required to cater to their needs.  It is not only the government to be blamed here: people in the private sector need to share the blame, too. No hotel in Nepal now has an understanding of handling high-end sit-down dinners, as they are often bereft of staffs and managers who understand the level of service required to create luxurious, comfortable experiences.

A week ago, for instance, a high-profile group of multi-millionaires visited Nepal for two days as part of the China, Bhutan and Nepal circuit. I was trying to draw from them their feelings on Nepal. The issues they shared with me were basic. Members of the group shared that Nepal does not understand them–Nepalis do not know how to deal with tourists who seek quality. For example, they were talking about how the telecom roaming charges in Nepal were very high and that Nepal is not part of the global telecom plans that they buy that are valid in over 170 countries. The group said that they never think of changing SIM cards for every country they visit. They also complained about high charges of parking fees for private jets without giving any additional facilities to the people who are visiting. Insurance plays a big role for these multi-millionaires; the fact that Nepal legitimately–with full knowledge of the government–engages in insurance scams for situations such as rescues does not give them any sense of comfort. Also, they were expressing dissatisfaction about how they cannot come in large groups as the number of luxury vehicles available on hire is limited and over-priced. One strong comment they made was that perhaps Nepal did host VIPs like ministers and other high-profile dignitaries, but that has little to no correlation to actual tourists. In ministerial visits, the person travelling does not pay and they actually do not know what the costs are. Therefore, the service providers just need to take care of the ‘fixers’ without delivering much quality. The visitors said that even if they are multi-millionaires, they are business people; that is, they want value for money. They will not throw money on services they do not get.

Learning from others

Nepalis involved in the tourism sector do not have to go on free junkets to Switzerland to learn about tourism. They can very well learn so from countries like Bhutan, or another landlocked country–Rwanda,  Africa. Bhutan has been able to maintain its high-end brand and can command high prices. By managing the tourism sector well, they have been able to build luxurious lodging facilities and thereby attract tourists who do not mind spending. This, even with the slight distortion of having Indian tourists who do not need a visa to visit jostle in the same space as people who pay $250 per person per day.

In Rwanda, when I first travelled there seven years ago, a visit to the gorillas was priced at $600, which was later increased to $750. Now, it costs  $1,500 to spend an hour with the gorillas–and only 80 permits are issued per day. They have also built a world-class convention hall estimated to cost $400 million to boost tourism and promote Rwanda as a conference destination. In Nepal, we have a reputation for hosting the cheapest international conferences and trainings for the development sector. It is not that we do not need low-end services and attractions, but having high-end revenue streams at the same time would push the average spend upwards. However, the recalibration in thinking can only occur when the individuals and groups in the private sector will voluntarily break the cartels and super-cartels that they have formed, in order to pursue real entrepreneurship. They will have to go for global certification or accreditation. Keeping Everest climbing cheap, and trekking controlled by cartels cannot bring about transformation. The government can do its bit, but major rethinking has to come from those involved in the private sector.

 

http://bit.ly/2HF3sMn

08 May 2019
Kathmandu Post No Comments Permalink

Reimagining diplomacy

May 8, 2019 No Comments

Twenty-first century foreign policy and diplomacy revolves around economics.

In the first quarter of 2019, there were three key indications of a wave of change within the current government centred around the foreign minister. First, Nepal took part in the World Economic Forum in Davos for the first time. Second, the finance minister along with the foreign minister talked about Nepal on the Global Stage at the Kantipur Conclave. Third, the Investment Summit held in March saw Nepali ambassadors being active in getting delegations and becoming ambassadors for investment for the first time. While this is a good recalibration, there is a long way to go as a complete revamp is required in the way we look at foreign policy and diplomacy, and how we leverage them for Nepal’s economic growth.

 

Reimagining foreign missions

During the Shah regime, Nepali embassies abroad were meant to be an extended arm of the palace to facilitate travel, accommodation and provide guardianship to students from the royal family and courtiers. Generally, members related to the royal family or people loyal to them would be leading these embassies and get appointed to the positions. Post 1990, this has not undergone significant change, and sending relatives of politicians—including the mother-in-law of one prime minister—and party loyalists became the norm. The purpose of embassies and ambassadors never got relieved from the roles they played during the royal days of chaperoning people from the airport, providing food and lodging, providing logistical support for tourism or healthcare, and overseeing students.

In the past decade and a half, after non-resident Nepali politics started to rage along party lines, they now have an additional role of promoting candidates for elections to the multiple Nepali associations that exist abroad. The embassies were never seen as an arm of foreign policy. This was demonstrated by the fact that Nepal did not have an ambassador in New Delhi for years. While governments changed, they were consistent in their attitude towards dealing with appointments or non-appointments.

A big change has also been the revenue stream they can potentially garner by providing services to the Nepali diaspora, especially in countries like the United States, United Kingdom and Australia. Service fees and visa fees have tremendous potential, and they can fund many activities of the embassy, and also ensure that the physical space and aesthetics make a Nepali proud so that he or she does not have to hang his or her head in shame.

However, the way people commented upon the new residence of the ambassador in Washington,  DC makes it seem that a good section of the people want Nepali missions to be housed in dilapidated structures—probably in the hope of getting more aid. The embassies will have to be transformed physically and, of course, we will need people who can give the impression that Nepal can deliver. Therefore, it will become very important to appoint the right set of people as ambassadors and staff in the embassies. They are no longer there to receive guests and show them around, they are there as agents of investments in Nepal.

 

Discourse on visas

If Nepal is to become an investment destination, it is not only about easing the way foreigners get visas to Nepal, but it is about how Nepalis also get visas to other countries. For Nepalis, getting a visa has become the most difficult thing psychologically. The government has done little to ensure that this becomes easier. We have to look and evaluate the role of the honorary consuls based in Kathmandu. Some of them do facilitate the process, but some of them have not done much. While many governments are opening up to e-visas and making all processes redundant, it is still a slow process.

Countries like Cambodia and Rwanda have made travel easy with e-visas. Indonesia’s  simplifying visas and arrivals has led to thousands of Nepalis traveling to this country. Nepalis are doing business in countries like Kenya where they get visas on arrival. Our government must seek out and see how we can ease bilateral movement. With more Nepalis working in the knowledge industry, tourism and medicine, they should be able to move about with ease and bring income back. Nepalis are now invited to global forums around the world, and speaking at a conference should not become a headache due to the bother of obtaining visas.

With tourism arrivals crossing the 1 million mark, more than half of them paid visa fees last year; and half a million Nepalis travelling out of Nepal pay hefty airport fees and taxes. We need to use them to create world class e-visa portals and ensure that we can upgrade our global identity to a country where people’s movement from the security perspective is taken up seriously. These should be contracted out to the best global companies. If we can create a reputation for ourselves of being the custodians of safe and secure movement, other countries will be more than happy to open up their borders with easy access, like visas on arrival. A Singaporean passport commands global respect not because Singapore is an economic superpower, but because it takes movement in and out of the country seriously. They give visas on arrival to Nepalis as well, because they know they can monitor people closely. This is the 21st century paradigm, and we need to understand this well and act accordingly.

In the 20th century, free movement across countries got curtailed as a visa regime was instituted due to the advent of air travel and the world wars. The embassies, therefore, were an extension of the security and intelligence apparatus. But later, part of the 20th century saw embassies converting themselves into extensions of the business and investment arms of the government. The 21st century is seeing this recalibration rapidly in many countries as embassies get converted into investment bureaus, tourism bureaus and educational consultancies. It is time for Nepal to change with the times.

https://kathmandupost.ekantipur.com/news/2019-05-07/reimagining-diplomacy.html