Tourism pioneer Shyam Bahadur Pandey, chairman of the Shangri La Group of Hotels and Resorts, has passed on his businesses to his sons, but remains member of the Nepal Tourism Board. Nepali Times spoke to him about the state of tourism, and his plans for a new resort in Pokhara, which have been shelved.

Nepali Times: How bad is the situation?
Shyam Bahadur Pandey: It is very bad. There has been so much investment in tourism that if the industry suffers, it will take the entire economy down with it. We cannot imagine the Nepali economy without tourism. The way politics is being handled now is wrong and if this uncertainty continues, we won't be able to recover. Without effective governance, nothing is going to work in Nepal. It is about time we woke up. This mindless power-struggle will not just hurt tourism,
it will stop all progress.

How badly will the present tourism downturn affect the economy?
I am worried not only in terms of the investment in tourism, but also about the time and effort so many Nepalis have put into the sector, including the workers and those aspiring for careers in tourism. This is one industry which has reached the villages and it is difficult to imagine Nepal without tourism. This is not the best of times for Nepal: now we hear of capital flight. While this is happening, we are rapidly converting industries where we had competitive advantages into disadvantages, and doing nothing to change the larger disadvantages into opportunities.

You don't seem very hopeful.
Recovery is not impossible provided someone is there to take positive action. There must be someone somewhere who must be proactive for the country's sake.

What about the effective actions you said are needed?
That is something which is leading us to give up on the present political leadership. Not that things were different during the panchayat, but now the situation has become worse. The nature of the economy has not changed from the reliance on customs duties for revenue, rather than broad industrialisation. Yet the government says there have been benefits and people have earned piles of money, which was its assumption in starting the voluntary income declaration scheme (VDIS). That is the reason for much of the capital flight that has taken place. What we have gained is about Rs 500 million, which is insignificant in terms of the business confidence that has been lost.

So confidence is very low?
The VDIS has hit confidence and we are still unsure. Rather than do something to restore confidence, now the government has begun raiding businesses. As a nation I think we have lost more than
we have gained from the tax scheme.

What is industry doing to change the state of affairs?
Nothing will happen if we are unable to establish law and order. Tourism takes place even in countries that have terrorist movements, so we are not losing hope yet. If we can ensure law and order, we are confident we can turn around the tourism industry, provided that the national airline is made capable. The airline is losing half a million rupees every day and it cannot stay around with that kind of loss. Its demise is very close, especially if we don't take action now, or decide what to do with it. A commission formed on what should be done with the airline has made its recommendations, but if we don't act on them, then no amount of marketing and promotion will help tourism. If we don't have a strong national airline, there will be no tourism in Nepal.

How do we put someone in the cockpit?
These are decisions you can take overnight. It does not take forever to decide how one wants to run the national airline, privatise it or run it as a company. The government has to show some decisiveness. If you are in government, you are expected to decide. Not everyone is expected to take the right decision, but there has to be a decision.

So we need decisions, someone taking risks.
I don't say risks, I say it is someone taking on the responsibility they have been entrusted with, because they are members of government.

You're a member of Nepal Tourism Board. Has it been effective?
If only we can run the national airline and NTB effectively, we will be able to restore the image we have lost in six months, even reach the 500,000 arrival levels within a few years. But the NTB needs a capable national airline to work with. At this time the government and private sector should have been working together. But now we have a crisis of confidence, we do not trust the government and the government does not trust us.

So what should the government do?
If only we can give a sense that the government has begun to work, that can help restore confidence. Then improve the governance of Royal Nepal Airlines. This will not just help tourism, but the country as a whole.