Nepali Times
Economic Sense
Open and shut case


Last week's issue of this paper was heavy with opinion on foreign investment in media and competition. This week, let's look beyond just media to foreign investment in general.

Nepal commits to foreign investment at every meeting with multilateral agencies, government plans never fail to mention how we should be investment friendly. After the WTO entry and agreement to every free trade zone that emerges, Nepal has now committed itself to allow foreign investment in sectors still reserved to the domestic industry. So lawyers, accountants, consultants and many other businesses and services have been asked to be ready to face foreign competition.
The reality is that we never like to give up our small fiefdoms that churn out products and services that can neither face foreign competition nor provide suitable alternatives. How many local ad agencies folded up after foreign companies were allowed in?

We talk about riding the global economy, but are not been able to leave tradition behind. These range from following a unique Bikram calendar, having a financial year that begins and ends in different days each year. The communication system, computer software and 24x7 working environment of the future will only support international systems. Online airline bookings to mobile banking services will not understand Magh or Falgun. Investors in the New York Stock Exchange will not want to hear the Asad masanta results of a Nepali company listed in their bourse. The 15 minute time difference with India is just quaint, not practical.

If we agree to have passports written and signed in English (though immigration forms are in Nepali-and officers still try to match them!), why can't we have international dates and financial years for business? The fact that we do not want to even think of embracing future trends are indicators of our attitude towards foreign investment. This is not just to attract capital, it is also to woo knowledge and technology.

There goes the Beed again, harping on his favourite peeve, you may say. But take hotels and the travel trade: 30 years ago after foreign investment and tie-ups in the hotel industry were allowed, Nepal's hotel sector became one of the most sought after for employment. Hotel training allowed many Nepalis to go abroad to work and compete with the best in the world. In contrast, the travel business was protected and foreign investment or tie-up disallowed.

This resulted in having good hotels, but without the knowhow for bringing tourists in droves and providing auxiliary services. The travel business has promoted 'protectionism' through various travel bodies that harp against entry of foreign investment or tie-ups. These associations prefer to find answers to businesses by attending junkets abroad rather than bringing in international standards of professionalism and services.

Of course, we shouldn't make ourselves so wide that foreigners take advantage. It is an issue of a mindset required to think and debate openly without getting into emotional nationalistic tangles. If Nepali business is to progress, then gradual and regulated foreign investment is the only way. And this paradigm shift has to start from the private sector.

(11 JAN 2013 - 17 JAN 2013)