Lack of infrastructure hinders IT growth

By Ram Sharan Sedhai

KATHMANDU, Oct 26 - Though information technology is the fastest growing industry elsewhere, its pace is slower in Nepal, which is attributed to the dearth of infrastructures.

Countries advanced in the knowledge-based industry boast of timely infrastructures like: information superhighwayxs across their territory in most cases, enabling them to expand their business in an astronomical magnitude.

Though the technology makes geography irrelevant, it has not delivered the same in Nepal in the absence of basic needs like electricity and telephone facilities. Some people take the pace of development of IT as natural while others say the growth is below expectation.

Bhoop Raj Pandey, Chairman of Nepal Telecommunications Authority (NTA), a regulatory body of telecom services, says, "The present growth of IT in the country is not disheartening though it is below expectation". 

The growth of information technology (IT) largely depends upon the development of telecom and electricity, which itself is below expectation and is reeling under state-monopoly. Internet Service Providers (ISPs) grumble at the bureaucratic hassle that even doesn't supply telephone lines in time, which discourages the entry of such service providers.

Muni B Sakya, Executive Director of High Tech Pioneer Private Limited, says, Nepal Telecommunications Corporation (NTC) should fix lower phone tariff to internet users and it should end bureaucratic hassles. Sakya also suggests government to provide Very Small Aperture Terminal (VSAT) to private ISPs as the existing VSAT is underused. This brings down the cost of ISPs, ultimately benefiting the end users and spreading the internet use.

 It has been hardly over three years that ISPs began their services. And there are over 10 ISPs providing internet and e-mail services, mostly stationed in the capital city alone. Over the years, the number of internet subscribers has reached approximately to 22,050 including that of the NTC. It is estimated that the number of internet users could be four times higher than the number of subscribers. 

According to Shishir Kumar Singh, Office Secretary of Internet Service Providers Association of Nepal (ISPAN) the number of internet accounts were calculated on the basis of internet usage, which he says is more reliable.

Chairman Pandey, takes the growth as natural. He says that currently students are using internet most, which is very good. It takes some years to show its economic impact, he adds.

However, current researches on new technology show that it begins to show impacts on productivity only when its use crosses the 50 percent penetration rate. From this account Nepal has a long way to go.   

At the current level of use, there is even no return to investors. ISPs say they are not making any profit from those services compared to their investment. They claim that they are taking hardly a peanut return from the business, while the consumers are demanding for free use of internet.      

Shishir K Singh, Administrative Manager of Everest Net says, "Until there is no revenue sharing with NTC, we cannot make those services cheaper or free and unless they are free, the number of clients would not rise". If NTC fails to do so in time, the ISPs would lay their own cables making the services more efficient and cheaper, which will ultimately affect NTC very badly, Singh says.

Chairman Pandey says the idea of revenue sharing is very good if it reduces the prices or even makes the services free but NTA can't force NTC for revenue sharing among ISPs. We can encourage them in this direction but cannot impose it, says he.

ISPs have been arguing that the recent decision of the government to double the license fee and renewal fee for frequency would be detrimental to the nascent industry. They say that as soon as the increased price comes into effect, they would be forced to raise their service charges, which will discourage the end users.

Pandey says the government should rethink about it as it pushes up charges,  it directly affects the end users.

Singh says the business calls for unlimited investment but government has neither recognized ISP as an industry nor a public limited barring foreigners to invest in them. This has kept the prospective foreign investment in one of the most globalized technologies at bay.

Relocation of industries from Kathmandu not imminent 

By Prem Khanal

KATHMANDU, Oct 26 - It is not a new story, every successive governments after the restoration of democracy have vowed for the relocation of Kathmandu-based industries with an aim to curb deteriorating environment and boalting population in the bowl-shaped valley.

However, every time the issue boils up, it ends up in a political fuss and disappears from the debating proscenium to be wrapped up in a deep freeze for some time.

But, this time the case looks pretty different. Prime Minister Girija Prasad Koirala has not only publicly reiterated his stance for relocation but has recently revealed an intense negotiation between Asian Development Bank and the government on the issue of relocation. 

The proposed industrial replacement plan has unquestionably gained a new height after a top ADB officials confirmed that discussions on the possible cooperation to relocate factories beyond the valley is going on.

However, the relocation is unlikely to take place in the near future as government is without serious homework regarding the relocation spot. Chandi Shrestha, Spokesman of Ministry of Industry, Commerce and Supplies also conceded that the government is yet to begin its homework on relocation. "At the moment, we are working for the construction of Export Processing Zone (EPZ) in Bhairahawa, Birjung and Biratnagar. The Indian Government has principally agreed to extend its technical cooperation for the construction of Birjung EPZ," Shretha informed.

The announcement, which came in haste and without any consultation with the private entrepreneurs has shaken up the confidence of industrialists from the valley.

Expressing dissatisfaction over the recent announcement of Prime Minister, A G Sherpa, President of Central Carpet Association of Nepal (CCAN) said that such precipitated message aimed to collect cheap supports of the environmentalists has jeopardized the entire investment of the industry.  " Such announcement, one the one hand greatly erodes the value of the physical assets that the carpet industries and other industries own in the valley, on the other hand it terminates further investment in the industry resulting a decline in output and export," he said.

Most of the leading industrialists opine that they are basically not against the spirit of the government to develop a clean Kathmandu, however, they unanimously argue that the government should come up with a concrete long-term plan for public discussion if it is really serious about deteriorating environment of the valley.

Puskar Dev Pant, Vice President of Nepal Garment Association said that government must prove that carpet and garment industries are solely responsible environmental pollution to justify its industrial translocation plan.

Bijay Bhahdur Shrestha, former president of the association also argued that the government should first formulate an acceptable environmental parameter to all concerned industries. "If the carpet industry fails to meet the required environmental standard, than we will be ready to leave the valley," he said.

Notwithstanding their dissatisfaction, most of the leading garment and carpet entrepreneurs maintain a view that they are ready to cooperate with the government by moving out of the valley if the government arranges sound infrastructure facilities with adequate security arrangement.

"Moving out of the valley might be beneficial for the exporting  industry as a whole, since we can get enough land for expansion and cheap labor force, provided the government developed adequate infrastructure," Jafer Amed, Immediate Past President of CCAN Said.

The cost of such relocations is the major issue at present. Who is going to bear the cost and if government plans to bear it, will it be able to mobilize adequate resources?

"Since a establishment of a average size modern garment factory costs 80 to 100 million rupees, arrangement of easy financing on the reasonable interest rate - soft loan - is another major determinants to motivate industrialists to move to a new place," Pant said. The industrialists also say that due to various reasons such as, soaring price, growing competition and squeezing profit margin in the international market, they are not in a position to make huge investment in the new places. 

 The government, so far, has pin pointed carpet and garment industry as the main source of pollution hazards, but experts argue that the government should understand that every production steps of the carpet and garment manufacturing do not create environmental pollution. Only carpet washing and dying and garment washing actually use excessive amount of water originating environment problems.