Nepal-China trade ties

Except for some literature produced by the Trade Promotion Centre, there is not much one can find on contemporary Nepal-China economic ties. This must be embarrasing for the Nepalese academic community, given the rich historical background. After all, there was a time when Nepal prospered through the trade routes that linked China with India.

The responsibility for this neglect does not solely rest on the shoulders of the venerable community; government policies, especially of the nineties, are equally to be blamed.

China has been on the blind spot of latter-day policy makers despite their emphasis on openness, liberalization and new trade treaties. Even attempts to blend economic policies with the foreign policy, so-called economic diplomacy, could not bring this vast country to the focus deserved by a neighbour.

It is in this environment of neglect that the FNCCI’s sanction of a study* on Nepal-China relations appears commendable. Had there been enough literature flying around, the FNCCI step might have appeared too meagre- an obvious step to bring to light aspects that are already common knowledge even for the layman. Since it is not so, the fact that contemporary issues have been brought to the focus itself is an achievement.

What ails Nepal-China trade? Apart from policies of the two countries, there are infrastructural problems. Most of the overland trade is conducted through the Kodari Highway built some 35 years back and in spite of the long years the last portion of the road, linking Tatopani to the border, is still not blacktopped. A gravel road continues through some distance even on the Tibetan side. Somehow, the repair works carried out recently on the Kodari Highway could not include this last stretch of the road in its list of activities.

Neither are there any kinds of storage facilities and godowns at the border. Trade thus appears to be carried out on an ad hoc basis through this important strategic linkage. Once the Sindhuli-Banepa highway is complete pressures could mount for the existing facilities to be upgraded and new ones added. This road, nearing completion, would not only give a direct access for the plains to the northern border, but would bypass the Kathmandu Valley as a transit point for the first time after modernisation started in Nepal. 

To pass through Kathmandu is painfully costly for goods originating in the Tarai. Roads that come to the capital are famous for meandering through unnecessary miles of difficult mountains and valleys. The Sindhuli link therefore should make trade easier and help to restore the country’s image as the entrepôt that it once was.

Still, this study reveals that this is not the shortest route possible. The proposed road from Rasuwa to Tibet would shorten the distance even more as it passes through the historical Kerung pass. If another link is established between Trishuli and the Galchhi point along the Prithvi highway, this would indeed be the shortest trade route linking most parts of Nepal with the Tibetan region of China. The Chinese have already committed themselves to build a link through Kerung.

Another proposal the study makes is the linking of the settlements along the northern border with short roads with the Tibetan highway that runs along from the east to the west. One of the first beneficiaries would be Humla, one of the most backward places in the Kingdom. About eight kilometers of construction would make this place accessible through roads, though Nepalese from other parts would have to travel to Tibet first, travel along Tibetan territory and then enter Humla. There are other places that could immensely benefit from links to the Tibetan highway. The Nepalese used this method of travelling to reach southern Nepalese towns- via the Indian transport network- before the Mahendra Highway was built.

Roads alone are not enough to carry out trade, although this is a basic requirement. A proper approach, policies and other infrastructural work are absolutely necessary if gains are to be made through trade. And, in this too the Nepalese have not made a dent worthy of consideration in enhancing Nepal-China economic ties.

There is no bank to facilitate transactions on the Nepalese side of the border, neither is it possible for Nepalese to open accounts in Chinese banks on the other side. There is no exchange rate between the two currencies. The language problem and  lack of a trader-friendly visa facility in both the countries have given rise to a dis-organised trading system. Moreover, the road barriers along the Kodari highway and the different costs imposed by the Tibetans on their side discourage trading even further. All these need to be looked into and policy remedies sought. The trading agreement between the two countries needs updating because it was concluded in the early eighties, when both the countries were only contemplating openness. Today, the situation is different; both have come some distance through the path of openness.

The study goes on to suggest ways to reduce the trade deficit that is piling up with growing trade between the two countries. Since, defict trading is a problem with many countries, they read like a set of recommendations to make Nepal an export production centre, not just ways to manufacture exportables to China. But the China-specific suggestion has to do with an industrial district at Panchkhal of which some discussions have been made ever since the establishment of Nepal-China Non-governmental Forum established in 1995.

Similar is the case with Chinese investment. Some important steps were made when government to government cooperation was the order of the day. Large industries were established with Chinese assistance and technology which played an instrumental role in import-substitution. When the private sector started being given a larger role in economic matters in both countries, that pace has slackened. In Nepal, the high profile Chinese aided industries were handed over to the private sector.

The study finds comparative advantages in the hydropower sector from which both countries could benefit through joint-venture.

Tourism is another area identified. The authors would like to see Nepalese benefit particularly from Indian tourists’ desire to visit Mansarowar and Mt. Kailash. But they should know that both China and India are neighbours themselves and that the two religious sites are nearer to the Indians via India itself, rather than via Nepal. And they have not pointed out why the Indians would prefer to visit Tibet through Nepal rather than do it through their own northern borders. Unless this question is answered, there is little likelihood of any practical progress over the matter.

There are 31 Chinese joint venture projects going on in different phases at the moment in Nepal. The Chinese construction companies could invest more in Nepal if there were facilities solely aimed at making their life easier. For example, lack of bonded warehouse facilities has made it difficult for them to keep their equipment in Nepal when they are out of jobs, necessitating the transportation of the heavy equipment to and from China frequently.

Though the book may not promise much for those who have been watching Nepal-China economic ties closely, it would surely provoke one into thinking about the changing perceptions in both the countries and the need to adjust their policies to suit them.

Decentralisation
A Big Gap Yet To Be Removed

By Mukti Rijal

THERE exists a gap between the formality and reality This is even truer in the context of local self-governance and decentralisation.

That Decentralisation has received more emphasis can not be contested as important donors this country has relied on for development cooperation have focussed their energy to give a facelift to the process of bottom led development process. The UN agencies and bilateral development cooperation partners have shown their inclinations to work with the local government institutions especially in identifying the development needs and planning for their implementation, UNDP has provided support to implement participatory development and governance program in over forty districts while many other cooperation agencies have preferably chosen to work with the local government institutions to institute the process of grassroots democratisation and participatory development. Even the specialised UN agencies like UNICEF and UNFPA have found it more sensible to work with the local governments and pushed for the concept of decentralised planning process to safeguard rights of the child and women. A news item had it that a deliberation was held in Chitwan recently to formulate strategic planning for seven years especially keeping in view the need top protect the rights of women and children through social and economic development. The strategic planning exercise was carried out on the premise of bottom up development planning with districts development committee performing the role of a nodal institution.

Preconditions
All this emphasis provided to decentralised development and governance process holds importance and relevance viewed against the failure of centralised planning. The story of development in Nepal is a case of failed development with poverty growing rampant and income levels of the common people sinking low. However, decentralised development and governance process has some definite preconditions without fulfilling which the scheme can not really yield any successes. The line agency offices at the district level provide a model of delegation and deconcentration that work to fulfill the largest of central agencies . The only institutions at the local level that can be described as the decentralised units are the elected bodies in the form of district development committees, village development committees and municipalities. They are created by an act of the parliament having democratic legitimacy and their accountability lies with the people. However, they are yet to acquire the formalism of the local government being endwed with resources and capacity to command loyalty and allegiance of the sectoral agencies operating at the local level. From a democratic point of view they are the elected institutions and tend to be answerable to the people. They possess a semblance of the separation of power especially with councils vested with the deliberative, checking and balancing functions. Their democratic base is wider and large.

For example, village development committees have a total number of fifty-three popularly mandated functionaries. However, the village based democratic units possess no capacity to perform minimum functions that local government units would generally do. The local self-governance act enacted last year has enumerated a huge list of functions to be executed by the village development committees among others. The reality is that a sizeable number of VDCs in the country even have not been able to receive a copy of the act, not to talk of implementing the provisions enshrined in the law. The government has formulated the local self-governance rules. Thanks to the promptness with which the government has acted to issue the rules to comply with the demands of the local government units. The moot points lies in its implementation. Will the local government units with their existing strength and capacity implement the provisions of the rules is a question that should be assessed in a more objective term.

The capacity of the local government units has not buttressed in real, through the laws and regulations have given them more power and functions. Let us take the case of village development committees. They have a secretary to carry out a large number of functions. A secretary has to maintain accounts, keep data and statistics and create and update files on disputes submitted for mediation, monitor and evaluate projects, oversee activities of the user groups and on top of that work as secretary to the council and  committee. There are other functions entrusted to a secretary that fall in the domain of social welfare and resource mobilisation. It is not possible for a VDC to act and administer functions as a local government if the capacity is not increased commensurate to the responsibilities. The people representatives may articulate the legitimate aspirations and needs of the people but they can not be realised unless there is a sufficient administrative and institutional capacity to translate them into concrete plans and actions. Formal instruments like laws and regulations are not enough. Important aspects is the capacity that can execute requirements and instruments of laws and regulations. It is in this form that we are very much behind.

Infrastructure
The infrastructures at the ground level are very poor except the big size of the popularly elected representatives. It is time efforts are put to strengthen the administrative, technical and financial capacity of the local governments so that they are able to narrow the gap between formality and reality. Both softwares and hardwares, should be combined together to give concrete shape to scheme of decentralisation. Otherwise, decentralisation tends to remain in the form of pious wishes and declarations.

Should Alcohol Be Encouraged?

By BT

A recent government notice must have shocked many as it tried to promote alcoholism without a whit of hesitation and a sense of social moral. The notice issued by the Value Added Tax (VAT) Department came as a strong warning against the noble minded local people who have declared alcohol-free zones at different places to do away with the booze-induced social crimes and anomalies.

As if the manufacturers of alcoholic drinks are speaking, the VAT notice threatens the people that it is illegal to declare any place inaccessible to alcoholic drinks, especially those that are produced in factories. Here, indirectly, the influence of the alcohol producing businessmen on the government officials to issue this warning is clearly evident. They appear to be worried about such social campaigns because they are going to have adverse impact on the sale volume of their products. However, the tone of the notice is that the government is concerned about the possible decrease in the collection of tax. Given the kind of social evils the consumption of alcoholic drinks can invite, the government should have taken the decreased use of intoxicants positively. On the contrary, the government’s motive seems to make Nepal madiramaya. Is the goal to make everyone tipsy?

There are a host of other things that people much more urgently need than jaand and raksi. There are people who are forced to live without enough food to eat and clean water to drink. There are others who cannot afford going to school and avail basic health care. When people in far flung areas are deprived of such basic facilities and instead amply supplied with the bottles of firewater, it is natural and laudable that social workers and women especially, launch anti-alcohol campaigns. It is indeed brazen when the government curtails the food depots in remote and famine bit areas and reproaches the anti-boozing drive to make sure that the intoxicating gifts of prominent businessmen reaches every home. There is a clear nexus between the profit-oriented traders and the official and politicians. The reality is that the politicians need fund and the traders need decisions in their favour.

In its notice, the VAT Department says that there is currently no legal provision to discourage the consum-ption of alcoholic beverages. Fine, Then, where is the legal provision that says alcoholism should be encouraged? Can concerned officials come up with the clauses that criminalises the anti-alcoholism activities of social organisations and political parties? If there is such a provision that should be removed without any delay.

There are many social activities that are based on the motive of social good and moral values. You need not carry and consult the book of laws every time you do something exemplary for the society as a whole. And it does not suit the government officials to discourage such noble moves by giving the threat of law. If it is merely the plot of the bureaucrats in league with traders, the politicians should unite and create new provision. If there is a law to regulate the consumption of alcohol, bureaucrat-business nexus cannot work.

The VAT Department notice says that burning the factory made drinks will only give rise to the wide use of locally brewed drinks and will negatively affect public life and health. The officials do not seem to realise the concept of alcohol-free zone at all. In such an area, no alcohol is used, be it from big distilleries or the local brewers. However, when alcohol free zones are abolished, as the government has wished, there will be ample amount of drinks available, both local and factory made. It is also not clear how factory produced raksi in plastic pouches and bottles that have paid their dues to the VAT Department, does not invite social anomalies?