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VOL. 27, NO. 20, January 25, 2007 (Magh 11 2064 B.S.) |
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"Economic Growth Starts Now"
Introduction
By Nancy J. Powell, U.S. Ambassador to Nepal
Thank you Mr. Shrestha for that gracious introduction. And thank you to the Pokhara Chamber of Commerce and Industry and to the Pokhara Community Information Center -- that is the American Corner -- for hosting me today. I recognize that there are also a number of people from other groups here today, including businesspeople, academics, government officials, former visitors to the United States, youth leaders and members of the media.
I have had the pleasure of spending the last two days in Kaski District, mostly right in Pokhara, a place I first visited more than 25 years ago. I confess the city is considerably larger now than it was then, but it is still as charming as ever.
I have come to Pokhara in order to get a sense of how "Pokhreli" see the situation in Nepal moving forward and to hear your hopes and concerns for your country. I wanted to take this opportunity to talk to you this afternoon about the U.S. agenda for Nepal, particularly the economic and development agenda. I have entitled my remarks: "Economic Growth Starts Now." I intend to close by launching a book that addresses free market economic principles in more detail in a creative way.
A Few Political Comments
We meet at an exciting moment in Nepal’s history. The country is emerging from a decade of violence and strife. The Interim Government has announced that an election will be held on April 10, in 83 days, to select an assembly to draft a new constitution. For the first time in more than eight years, the Nepali people will have an opportunity to choose their representatives. You will have a say in shaping a new democracy for this wonderfully diverse nation. The United States strongly supports the upcoming polls and is committed to doing its part to help them become a reality. From our perspective, the election is a key step in the peace process, but, in important ways, the real work will begin after the election is over. Many of the commitments made in the Comprehensive Peace Agreement and the other peace accords have yet to be implemented. True and lasting peace will require more than an election. It will require a national commitment to transform this country's government and its institutions into bodies that reflect and serve the needs and aspirations of all Nepalis, regardless of gender, ethnicity, caste, religion or economic status.
The Need for Economic Growth
As political parties begin their campaigns for elections, I hope they are beginning, let me suggest that discussions also focus on Nepal’s economic challenges and the options for policy responses by a newly elected government. The overarching challenge is to restore robust economic growth that is inclusive and equitable. Peace will always be at risk as long as Nepal lacks a robust rate of economic growth. Without the opportunities brought about by economic growth, Nepalis will not find the jobs they need to improve their quality of life and to be full participants in society. Without economic growth, your businesses will not have the means to stay afloat, let alone earn the profits with which to offer your sons and daughters the opportunities you wish for them. Without economic growth, the Government of Nepal will not have the tax revenues to provide the services, including the infrastructure that Nepalis and Nepal desperately need.
Let me also suggest that the experience of the last forty years shows that the most successful nations in terms of economic development have been the ones in which the private sector has been the engine of growth.
Ending Donor Dependency
Let me now add another, somewhat controversial, reason why economic growth is so important. Without economic growth, Nepal will continue to be dependent on the generosity of donor countries to meet its expenditures. Over the past half century, since the United States first began its assistance program to Nepal, our principal aid agency, the U.S. Agency for International Development, has granted nearly $1 billion to this country. In 2007 alone, our total assistance program was in excess of $70 million. We are committed to continuing our assistance going forward. However, it is my hope and my strong conviction that in the coming decade Nepal can end its dependency on foreign assistance. And to see the way to do this, we don't have to look beyond the beautiful, snow-capped mountains I saw on my flight to Pokhara.
Hydropower As An Answer
I am talking, of course, about hydropower. Nepal has the potential to become economically self-supporting if it utilizes the huge water resources with which it is blessed as the source of many of the region's great rivers. Water is a renewable resource and Nepal has only scratched the surface of its potential as a contributor to the country's economy. As you all know from frequent load-shedding, Nepal does not generate enough electricity to meet current demand. Experts estimate that Nepal has the potential to generate at least 43,000 MW of hydroelectricity. The main challenge is to find ways to develop Nepal’s immense hydropower potential in an environmentally and socially sustainable manner. This will provide affordable energy to the population and provide additional revenue through large-scale export. There is already a Government Of Nepal policy in place - the Hydropower Development Policy (HDP 2001) mandating a focused and accelerated approach to hydropower development to meet domestic needs and for large scale exports, a better and stronger regulatory regime, unbundling of the government-owned NEA, and streamlining of promotional and licensing procedures to increase private sector investment in competitive hydropower development at affordable prices. Progress on implementing this policy should be one of the priorities for a newly elected government. I know already of at least one major U.S. energy company that is looking very seriously at working in this sector.
Tourism
I would also like to mention three other areas that merit attention in the pursuit of sustainable and equitable economic growth. The first is tourism. As residents of Pokhara, I don't need to talk to you about the importance of tourism. I know it is one of the mainstays of the local economy. It is also a key pillar of the national economy but so much more can be done. The country's potential again has yet to be fully realized. In spite of the difficult political and security environment, you had a banner year for tourism. I am pleased that among the rising numbers of visitors was a significant increase in American tourists, whom I am told, are at the high end when it comes to tourism value, and I hope that continues. If Nepal is to take advantage of its potential, it will, however, have to address well-known bottlenecks, such as the difficulty of obtaining flights in and out of Kathmandu and an overstretched international airport. It will also need to figure out ways to route tourists to other, less-traveled areas of the country, and to take advantage of the market in developed countries for eco and adventure tourism.
Technology
Technology is the second area I would like to draw to your attention. I am glad that there are a large number of professors and other academics present from the nearby schools, colleges, and university. I note that Nepal has already shown the ability to provide high-end information technology services to a small but growing IT business community currently based largely, in Kathmandu. This area also has potential to grow and could help spark innovation and productivity gains in other sectors. This will require, however, improvements in the quality and relevance of education. It will also require the appropriate government regulatory environment. India has already achieved great success in this area and Nepal is well-positioned to build on India’s success.
Cultural Diversity
Finally, I would like to mention one other area of comparative advantage: Nepal's cultural diversity. In the current political environment, there may be some of you in the audience who are wondering where I am headed with this idea. Some of you may be wondering if Nepal's cultural diversity is a strength. Isn't it leading to all sorts of divisions. My answer to those questions is that diversity can be a source of division, but it does not have to be. I speak as the Ambassador of a country which prides itself on its diversity. With all its problems, America's diversity has proven itself to be a tremendous boon to my country in dealing with the challenges of the 21st Century. The same can be true of Nepal. Specifically, in the economic area, cultural diversity enriches the appeal of Nepal to tourists. But it can also do much more. Nepal's more than 100 ethnic groups have their own traditions and cultural imagery which can provide a welcome antidote to the cultural uniformity which has so often accompanied the positive benefits of globalization and modernization. People in the U.S. and other countries long for customized, niche products whether textiles or handicrafts, that impart a uniqueness to the buyer. Nepal can meet take advantage of those niche markets.
Promise Already There
Much will depend on establishing the policy framework that will provide the incentive for Nepalis to pursue their dreams. You have the entrepreneurial spirit. I am always struck when driving around Kathmandu by the way commercial activities frequently seem to be bursting out all over. Just look at the hardy vendors who throng the sidewalks downtown. No one can question their desire to provide goods and services that people need. But, on a larger scale, for many of the measures that promote economic growth to work, desire is far from enough. You need one more thing: popular understanding of basic economic principles and the benefits of open markets. People who do not understand the challenges and benefits of business may portray entrepreneurs and the business community as obstacles to economic development. Nothing could be further from the truth. By providing jobs, products, and investment capital, the business community is the very engine of economic growth and development. But certainly, you, and all of us, could do a better job of explaining to the communities in which we work how what we are doing is contributing to a stronger, more peaceful, more prosperous Nepal..
Book Dedication
I am going to close with a modest contribution to helping inform Nepalis about how a market economy works. You saw on your invitation that we are launching a book today. It is my pleasure to announce that the U.S. Embassy has recently translated into Nepali and published a primer on basic economic principles. “The Adventures of Jonathan Gullible…A Free Market Odyssey” by Ken Schooland has been translated into 33 different languages, from Albanian to Urdu….with Nepali, make that 34 different languages. The book has won countless awards. Nobel prize winner Milton Friedman said that “The Adventures of Jonathan Gullible presents basic economic principles in a very simple and intelligible form. It is an imaginative and very useful piece of work.” It is my pleasure to offer each one of you a personal copy. “The Adventures of Jonathan Gullible” will soon be found in most libraries in Nepal, not least of which will be the Samudaik Sambandha Kendra, our very own American Corner right here in your Pokhara Public Library.
Conclusion
I hope you will share this book with your friends and family. As I said early on, Nepal is at an exciting moment in its history. You have the opportunity and the privilege to shape your future, not just politically, but also economically. You have the potential through wise use of your hydropower resources and other areas of competitive advantage to begin to establish economic independence. The challenge and the opportunities are yours. (Excerpts of speech given by U.S. ambassador Powell addressing Pokhara Chamber of Commerce/American Corner in Pokhara on January 18.)
