Prabhakar Rana is corporate chairman of the Soaltee Group which has invested in hydropower, tourism, agri-business and even shipping. After 40 years dealing with successive governments in Nepal, he understands the inner mechanism of doing business in Nepal very well. He spoke on a wide range of issues in an interview with Nepali Times. Exceprts:
On Nepali business culture
A corporate culture is not taking root in Nepal as fast as I had expected. But it is inevitable, it is the future. We talk about joining the WTO-but we need to run our businesses professionally first. That is what makes Sri Lanka different from all other countries in South Asia. It adopted the corporate culture long ago in the 70s, and if JR Jayawardene had had his way he would have joined ASEAN and not SAARC. Here in Nepal, the foundations lie in better education and more say for women. Without that there will be very little change.
Whatever progress we have made in investment legislation and a general improvement in the business climate was achieved during that first half of the 1990s when the Nepali Congress was in power. After that, it has been downhill. I don't understand why leaders have not been able to convince people, because that is what leadership is all about. If you cannot take firm decisions for the fear of losing votes, then you are led, not a leader. We have not had a real statesman after 1990. If only we had one statesman, things may have been different.
Soaltee's hydro investments
It was Girija Babu's goading that led us to take up Bhote Kosi. Our generators are already working and we're confident that we'll come online soon. On the price issue, I remember it took us two hours and forty-five minutes-for the US ambassador and the then water resources minister Pashupati Sumsher Rana-to go through the five-volume document. Now Dr Ram Sharan Mahat says (the agreement) was wrong. But he was finance minister then and his finance secretary was witness to the agreement. How can you change (the tariffs) after you have agreed to it? I represent my shareholders and not the government of Nepal, and securing the best deal for my shareholders is paramount. Bhote Kosi should teach us a lesson. They had a watertight agreement and shareholders interests were protected.
Future of hydroelectricity
Hydro-investment opportunities have been lost because we don't have a clear policy. For example, after the Bhote Kosi they had given us a survey licence for middle Bhote Kosi, which could have been much quicker to build. All we needed to do was reuse water from the upper turbine and generate electricity. But the government told us that NEA now has sufficient power, and asked us to sell power to India. We have tried to do that. But NEA is also building its own projects. So my partners feel that we are unwanted. We need a clear policy to attract private investment. Investors ask why distribution and transmission is not privatised. We are ready to establish our own company for that and we will sell our own power. But NEA fears we'll take their best customers away. Obviously, since customers will choose better services.
Taxes on dividends, interests
Recent changes in policy are sending out wrong signals to investors. Investors will come to Nepal only if they see an opportunity to make profits they would not elsewhere. They will not come here to invest just because they like our mountains.
Political will, leadership
There are problems with political leadership but the private sector too has to change and become more professional. At the FNCCI [Federeation of Nepalese Chambers of Commerce and Industry] I am sometimes amazed by the discussions-most of the time they are concerned about protection to compete with India. Now they realise how things will change after WTO, and they are clueless. For example, the law says you can have a joint venture in courier businesses. We have applied for a joint venture with a large multinational forwarding company, but we've not been granted a licence. Why are we being denied something that is clearly stated in the law? Some FNCCI members are even opposing it because they feel their little businesses will be hurt.
Trade relations with India
Our trade agreement comes up for renewal every five years. I think there could be difficulties this time when it comes up (because of) the Bombay Club. You may have noticed the articles coming out in the Indian newspapers, even though Indian diplomats have told me they are a little embarrassed by these reports. The agreement is favourable to us since it has automatic renewal, unless abrogated by one side. I don't think India will go to that extent [of abrogating it]. It all depends on how we handle the grievances of the Indian business community, some of which are of course unfair. We should ask what is wrong if Nepal supplies cheaper and better goods that come under the 4-digit harmonised codes? The CII [Confederation of Indian Industry] is not supporting Indian business on ghee because they [those who are complaining] did not come to our joint meeting even though they were invited. The media reports against Nepal is more a reflection of the Indian worries on how they will compete after 2004 when the WTO regime comes into effect, because the initial surge for investing in India which we saw at the last World Economic Froum meeting is no more.
Nepal needs to focus on three things: agri-business, tourism and hydropower. And we need to set and meet firm targets. Why can't we make Nepal self-sufficient in food in the next five or ten years? Now that prices of agri-products have fallen (as is bound to happen in a free market), farmers are demanding protection. There was a bumper crop in India and also in Nepal. If only the government had silos, it could have bought the surplus. Without that, it alternates between plenty one year and scarcity the next. India has food reserves for three years and with another bumper crop they may be thinking of a fourth year.
We need to concentrate with real targets for tourism too. Stop talking about it, and start building the roads, airports and other basic infrastructure for tourism. Growth in tourism has happened on its own, not because of the result of any government policy.
The third area of promise is water, and hydropower. But we need to be clear on what will be done by the private sector and what by the NEA. Should transmission and distribution be privatised? They tell us to sell to India, but the power sale agreement they signed has not been ratified for three years. That agreement is crucial.
There is a worrying trend today-some of the best and brightest Nepalis are going abroad and not coming back. Some eventually return and bring back their experience, but they are the exceptions.
Having workers abroad is important because they send money and Nepal's overseas reputation is growing. But with a continuous drain of trained workers, it takes time and money to prepare the next batch.
Nepal's silver lining
In the last ten years we've had an open press. It has often been negative, but we have not had another revolution because people can now talk freely and let off steam. A free media has served as a safety valve. The charges about too much freedom are hollow. Maybe we just don't know how to use our freedom.
I never studied business, which is why I am quite confident that the next generation in my company would do much better because they have been trained in business management. We need better and more education centres here. Kathmandu University is doing a good job. What I found at a class there was every encouraging-there was an equal number of girls and boys, and I found the girls were smarter. There were also many in the class who had studied abroad as children and had come back. Their parents could have afforded to send them abroad for college. If there are good schools, Nepalis will remain here.
I was planning to quit as chief executive this year, and the job as chairman of Soaltee Group when it ends next year. At the last board meeting, my colleagues said that I should stay because there are changes in the ownership structure of the hotel. My stay here could help facilitate the process. Although they would prefer to have me here, I am confident that there will be no problems after my exit.