Nepali Times
"Society still looks down on business people."

Recently elected president of the Nepal Automobiles Association, Rohini Thapaliya is also vice-president of the Nepal-German Chamber of Commerce of Industry and co-chair of the Nepal-EU Economic Forum at the FNCCI. Thapaliya has a range of business interests-trading and representation as well as manufacturing furniture and aluminium fittings. We spoke to Thapaliya to talk about his businesses, corruption and the difficulties in doing business here in Nepal.

Nepali Times: What is the range of your business?
Rohini Thapaliya: My father began the Shree Padma Saw Mill in Simra in 1963. Because there was little value addition in milling and it contributed little to employment, he moved into wooden furniture. Other reasons for the shift were raw material shortages and environmental concerns, which is why we started to focus instead on aluminium. We set up Altech in 1987 to produce windows, doors and other fixtures using technology from Germany. We stress quality because we believe that it will ultimately pay. We also have a trading house called Padmashree, which is involved in import, export and representation. We represent Mazda for the of marketing Mazda-Ford products in Nepal. Our diesel pickups have gotten a very good response because of the good price and technology. We've not been able to do as much with cars because of the fuel quality here. Our fuel quality is 87 octane, but for effective pollution control the new vehicles of Euro-I to III standards need 93 octane fuel, mainly because we don't have carburettors anymore and most engines are computerised.

How come you get to use a royal crest on your furniture?
We were awarded that honour in 1997, the 25th year of the coronation of His Late Majesty King Birendra. We've supplied furniture to the palace for about 17 years and were honoured in recognition of the quality of our products, as well as the import substitution we've been able to introduce. We supply to five-star hotels, the Cabinet room and other high government offices. We have not been able to export on a large commercial scale because of a shortage of raw materials, and the bulk of the product, but we have sold small amounts of furniture in Japan, Germany and the United Kingdom.

Does this sort of exclusivity make your products expensive?
Definitely the royal crest makes our products exclusive and that gives people the impression that we might be expensive. But if you compare them with other products on the market, we might just be cheaper and more durable. We discourage discounts because we want to assure quality. Many people plan to purchase furniture during Dasain and Tihar when we usually have special discounts.

You also sell Bosch power tools, how are sales on that front?
Since last year we've been representing Bosch power tools from Germany which is among the 10 largest companies in Germany that make power tools for carpentry, civil construction, electrical and plumbing works. There has been a good response here because we also have after sales service and spares supply. I myself have been in furniture and have used power tools from Japan, Sweden, India, Taiwan, and others, and faced spare parts problems and lack of after sales services. Taking lessons from that, we guarantee repair and maintenance of all machines we are sell-all repairs are done within 48 hours. For the initial marketing in Nepal we also have very good, special rates from Bosch, which makes our products 50-100 percent cheaper than those sold in India.

And how is the automobile industry doing?
The government continues to look at automobiles as a luxury and puts them in the highest tax bracket. This is one industry that is growing fast everywhere, including India and China. Automobiles reflect the change in people's needs as a society develops, so growth in this sector is inevitable. There are other benefits, too. The automobile industry contributes about 14 percent of direct revenue, including two-wheelers, spares and lubricants. Indirectly, it employs over 200,000 in the formal and informal sectors, drivers, mechanics, their helpers, people working for spares stores, etc. There are issues about congestion, to solve which we need to find ways to phase out old vehicles with proper compensation schemes. Pollution problems also need to be tackled. The solution is not to stop importing cars but find better ways to deal with old vehicles, which often cause more problems than the new ones.

What caused automobile imports to drop by 15 percent last year?
There is still some confusion on certification vis-?-vis pollution standards. The pollution standards, COP, and type approval, became controversial because the government did not consult the private sector adequately. Last year the government decided to phase out 20-year-old vehicles. That wasn't implemented because we didn't have adequate consultations with the people affected by the decision.

What's your general assessment of the ease of doing business in Nepal?
It is difficult. In manufacturing, we have very high cost of production, because we are landlocked and have high electricity costs. Our labour is cheap but not disciplined. We want productive labour, not cheap labour. Tourism depends a lot on externalities, making it unpredictable despite the huge investments that have been made. Then there's trading, which depends on the demand generated in the overall economy, which is beyond the control of individual companies or industries. It is challenging to succeed in business in Nepal.

What about the representation side of things?
This is another service sector. I represent several international companies who appoint local firms and individuals to facilitate marketing. It is uneconomical for large companies to set up their own marketing offices, so they seek individuals and companies to represent them.

But representation has become almost a dirty word.
Unfortunately, no one in business in Nepal has a "good" name. Society looks down on businesspeople. This has to change. In other places, entrepreneurs have a very different standing in society because there they are recognised as employers and drivers of the economy. We need to change our mindset, because political change without economic activity can't solve our problems. The government employs about 300,000 people, while the carpet sector alone used to employ 200,000. The private sector employs millions. Attitudes are slowly changing, including in government, but not fast enough. It is easy to blame businesses for being corrupt and profit-seeking. But everyone in business actually wants corruption to come down because they don't want to keep giving money from their pockets. Since the system does not work that way, they are often forced to pay their way to reduce other costs associated with the transactions. There is a need for change across the board. We must focus on how we can do business and respect and support those in business.

(11 JAN 2013 - 17 JAN 2013)