Nepali Times
Economic Sense
Dahal Capitalism 1.0


Early this week a Nepali-language business weekly broke the story of Bank CEOs being hauled into a room at the Rastra Bank and being politely "asked" to put up a consortium to finance a hospital project.

This was perhaps the first time the Maoist have positively influenced a business decision after coming above ground two years ago. It is when regulators start acting as facilitators for powers-to-be then you can be sure new pages are being written in this country's economic history.

The Maoists supposedly have acquired an ailing hospital project to set an example for a low-cost public healthcare service. While it is heartening to see a would-be government trying to emulate the Cuban model of quality healthcare for all, we can only wait and watch to see the gap between showcase schemes and reality.

After using strong-arm tactics in business decisions on tender allotment, natural resource allocation and building roads through UNESCO Cultural Heritage Sites, they have finally struck big. If this is Dahal Capitalism 1.0, then it leaves us wondering what the later versions will be like.

Your weekly Beed has often given the Maoists the benefit of doubt, especially after they emerged as the leading party in the Constituent Assembly elections. But we have also raised worries about them hijacking the economic agenda. The Maoists do have to show results, granted, but this is not the time for a Gulag or Cultural Revolution-style utopian experiments.

Government or party-operated social service delivery has been tried and tested round the world. It has failed the sustainability test. Even in socialist countries, healthcare and education is left to innovative models of partnerships between communities, private sector and government. Perhaps in Nepal we should learn from models that have failed miserably.

The impending uncertainty over the new government will eclipse the economic agenda for some more time. Despite the budget being around the corner, no one seems to be in any particular hurry to address fiscal issues. The budget seems to be a mere formality.

Spiraling international oil prices have made another price hike inevitable and the serpentine queues are here to stay. The populist temptation to dole out subsidies and freebies will undermine the budget. There are no free lunches, especially for developing countries like ours. And given our governance crisis and disbursement problems donors will not pour water on sand for much longer.

Investors have not been convinced about the sincerity of the Maoists about guarantees to private property. The rise of crime and anarchy is seriously worrying to investors already here.

However, businesses are also looking out for opportunities during this state of confusion by embracing the powers-to-be thereby continuing the legacy of business-politics nexus dating back to the Panchayat era. Surely, as this columnist has been often repeating, a few business people will gain when the experiments of new forms of capitalism is on.

If political parties are going to be forcing banks to invest in hospitals, schools and media then surely they can be convinced about getting financiers to rescue Nepal Airlines? The sky is the limit for a party that seems to want to go places.

(11 JAN 2013 - 17 JAN 2013)