Nepali Times
Strictly Business
Vaidya's medicine



With all that red abir and khaada, were those the election victory celebrations of a business body or the student wing of a political party? That was the question going through my mind upon watching the TV footage of Suraj Vaidya's victory in this week's Federation of Nepalese Chambers of Commerce and Industry (FNCCI) elections.

The FNCCI bills itself as "an umbrella organisation of Nepal's private sector." But its working definition of that private sector is visibly narrow: a few family-run behemoths that have done well since the time the government handed monopoly licenses some 50-odd years ago, many large trading firms that import goods and sell locally at high margins, a growing number of businesses outside of Kathmandu that have been started by many locally influential jamindars, and various lobbying groups that push for pro-industry and pro-firm concessions.
Characterising the FNCCI as such is not to criticise it. It is to explain what it is.

As such, one should not expect FNCCI to advance the agenda of entrepreneurship, innovations, and bold thinking, such as by finding ways to better treat Nepal's migrant workers. Nor should one expect it to promote small and medium businesses that provide self-employment to many. Nor does one expect it to push for pro-market and pro-competition economic policies that call for a level playing field.

And so, given its nature and the expectations of members who will presumably want to extract their pound of flesh after having spent more than 50 million rupees on the elections, can there be a vision for the new FNCCI leadership? Yes, if Vaidya spends his three-year term focusing on these two critical problems facing the private sector.

Image: The Nepali private sector needs a drastic image makeover. It needs to sell itself to the public as a provider of jobs, as a pillar of the community, and as the payers of taxes which in turn pay for public goods. At present, private sector companies are widely and unfairly perceived to be dominated by a few crooks that are seen as tax cheats. This gives the whole sector a bad image at a time when businesses need public support.
Vaidya and his team need not be defensive about the entire range of unsavoury business practices in vogue. But they should use their position to positively sell, through speeches, activities and white papers, the upside of broader private sector-led growth for jobs and prosperity in Nepal.

Security: Few businessmen think of starting a factory in Nepal for fear of having to deal with militant and politically charged trade unions. So long as Maoist unions remain as active as they are, nobody in his right mind will invest in the type of company that can generate hundreds of jobs.

In the five years since Jana Andolan II, businesses have not enjoyed the fruits of a peace dividend in the form of security. The numbers of labour strikes, physical attacks, acts of intimidation, and extortion have all gone up. Indeed, the only thing one remembers from the outgoing FNCCI president Kush Joshi's time is his call to unite against the six-day Maoist banda last May. The challenge facing Vaidya's team to enable a secure environment for honest business is big.

But if Vaidya is planning to stick to the FNCCI tradition of getting into bed with politicians, then the celebratory scenes of Wednesday only confirm that like with politics, it's going to be business as usual.

1. Priya

Well I read that the UML had "put its weight behind Vaidhya" before the election. It doesn't take a rocket scientist to conclude that FNCCI under Vaidhya is very unlikely to eschew its "tradition of getting into bed with politicians."

2. Bidhan Shrestha
Nepalese Business environment are controlled by a few family-run behemoth. The monopoly they enjoy should be scraped. All these large organization should be brought under NEPSE. So, that the general people can also invest in these companies. All big companies are under these big family run business and the the state of the people working for them is miserable. Dear FNCCI executives learn that people in your organization are the asset of your company. Taking care of them is your first priority. The state Nepal is now is because of these business persons.

3. Nirmal

Nice one! Do you know recently I had an opportunity to bring a multi-millionaire industrial project to Nepal, probably the first one for its nature in the history of our country. However, the only things essentials for the project(and of course for me being the coordinator of the project of the company and obviously i'm not going to betray my bosses as all honest nepali people) are:continous power supply that is needed to run the industry and the industrial security which is utmost for the future of any company. I had to be sincere and tell them that these are things that NO INDUSTRIALIST COULD FIND IN NEPAL right now, be they nepali ones or foreigners. All we have is hollow promise and contradictoric reality. I'm not going to cheat anyone because of my patriotism.

4. Bikas Gautam
Absolutely true!

5. AJ
Dear Mr. Tiwari,

I think you have confused FNCCI and the private sector as some branch of the government or a social organization. Let me point out some of the holes in your arguement.

1) Family Run Businesses

It cannot be denied that FNCCI is populated with family businesses but this has more to do with government policy rather than the businesses themselves. Just look at India, it was too dominated with family businesses but once the economy opened up and look what you have today.

2)  The Better Treatment of Migrant Workers

As a student of business, how does this make sense to you. Migrant workers, who do they benefit, who are the stakeholders? The foreign company, the manpower company and the government are the stakeholders here. Instead of FNCCI, shouldn't the manpower companies push this agenda, to maximize their returns? How does a Nepali business company benefit from the better treatment of migrant workers unless its a social cause?

3) Pro-Market and Pro-Competition Policies

Why would businesses want that? Cornering the market and being a monopoly is very profitable for businesses so it makes no sense to pursue such a policy. Rather it should be the government that should pursue this. Even in USA, it was the government that brought pro-market and pro-competition policies. Example: AT&T was broken up for being a monopoly, this created the baby Bells. Economists as yourself should encourage and show the benefits of such policies to the government.

4) Image

I totally agree with you.

5) Secuirty

Most problems that affect businesses also affect the common man. While a big businessman can hire security guards for their factories and offices, what can small shops and businesses do?

In conclusion, Mr. Tiwari, all the points that you have made, are more significant for the government rather than for businesses.

6. Raju Ghimire
The article is interesting

7. Unknown
A very relevant and timely article. It is after quite a while that NT has published a relevant 'business' article.

Good job, Ashu !

8. Dorji Tsering Sherpa
The slogan of the Vaidya's panel was CHANGE for Progress which was clearly shown in the formation of the team. It won them the election. Now the time has come to be able to Walk the Talk. To initiate changes of any kind require a lot of grit and determination which I know Suraj Vaidya and his team of young educated and experienced business men and women has. Let us wish them all the best at such a time when the country is itself in such a turmoil and confusion.

9. SagarOnta
A true overview of current situation of FNCCI. Sadly, what you described is the state of many Nepali institution, be it in engineering, medicine, education, etc. While Vaidya ji does seem to come from the same mold as rest of the elites of Nepal, we can only hope that his leadership will be a breath of fresh air in the otherwise same humdrum of KTM's Land Rover circle. In the few instances I have interacted with him, he seemed genuine. But then, people how met lawmaker Gayatri Shah and BP Yadav said the same thing. Nepal is in desperate need of a good leader, in any shape or form. Could Mr. Vaidya be one of the rare one? Only time will tell. 

10. Om Shrestha
It will be really difficult to break the ice when one likes to be surrounded by same sycophants and listen to them for planning. No wonder the same faces will be following during foreign state trips as trade delegates be it under UML or Maoist leadership.  Vaidya has vision let's see how he implements during this crucial period.  As usual they will be debating  hot with the leaders, beaurecrats in the TV and wining dining together again.  Is he willing to break  the embargo on import of reconditioned vehicles to break the monopolistic attitude of the automobile dealers in this free economy period.

(11 JAN 2013 - 17 JAN 2013)