Privatisation Of Public Enterprises
Need To Bring It Back On Track

By Uttam Maharjan

THE concept of public enterprises (PEs) emerged after the Great Depression of the 1930s, when it was felt that such PEs were necessary to meet the growing needs of the consumers. In fact, the private sector had not developed fully at that time and so government management and ownership of enterprises was the only option left.

The situation took a dramatic turn in the early 1980s when the world economy underwent a sea change, and open market economy and liberalisation came to the fore. The winds of such a change also influenced Nepal. And since the re-advent of the multi-party democracy in Nepal in 1990, privatisation has been given prominence as part of the economic liberalisation.

The role of the government has changed now. It should not directly involve itself in commercial transactions; rather, it should act as a facilitator. However, it behoves the government to engage itself in social and public welfare activities. This new notion has now ensconced itself in the minds of both the government and private sectors.

To give a boost to privatisation, the government established a privatisation unit under the Ministry of Finance and formulated privatisation policy after the restoration of democracy in the country. Similarly, the Privatisation Act was enforced in 2050 BS so as to reinvigorate the privatisation process. As a result, 16 PEs, have, so far, been privatised.

Soon after being privatised, some companies recorded improvements in investment, production, sales, technical aspects and so on.

The purpose of privatisation is to reduce government expenses and help develop the private sector, with the government assuming the role of coordinator and facilitator. But the privatised companies have not been able to give benefits to the general public. Worse still, some have even been closed down.

The markets of our country are small and limited. The capital market has not developed to the desired extent. Similarly, lack of transparent policy on privatisation, lack of accountability, rampant corruption, financial irregularities and the like are a major setback for the initiation of the process of privatisation.

In a similar vein, bureaucratic red tape and procrastination in decision-making would hamper the process of privatisation. Furthermore, there is no clear-cut agency responsible for effecting privatisation. To expedite privatisation, decision-making should be confined to a single agency, the responsibilities of the parties having a role to play in privatisation clearly defined and a timeframe fixed for the completion of the process.

It does not seem to be fair on the part of the government to wash its hands off the privatised companies. The government should regularly monitor the performance of such companies, giving them guidelines whenever needed. In fact, it is the responsibilities of the government to act as coordinator, facilitator and supervisor of business companies and industries so as to encourage commercial and industrial development in the country.

Although the current Ninth Plan has a target of privatising 30 PEs, the pace of privatisation has been dead slow. However, the current budget has given continuity to privatisation of those companies that do not require government involved and that may attract private sector investment. To encourage private sector investment, an investment-friendly environment is a must. Economic stability, development of markets, including the capital market, security of investment and satisfactory law and order are some of the pre-requisites for attracting investment, both local and foreign. The government has a pivotal role to play in this regard.

Privatisation may be an effective tool for accelerating industrial development if judiciously carried out. So a competent analysis and evaluation of the performance of a PE to be privatised is required to make it viable after being privatised.

Not all PEs need to be privatisation; only those that can be better handled by the private sector should be privatised. Therefore, it would be prudent to stop subsidising loss- incurring companies that may foster better in the hands of the private sector. On the other hand, the companies working in the interests of the public should be retained by the government itself.

The government should show a strong commitment to privatisation by reforming the procedures, and rules and regulations. In fact, the process of privatisation should be simplified and made transparent. What is more, the government should try to attract foreign investment to the private sector.

There is no doubt that the various PEs scattered all over the country should be overhauled. And those that are fit for privatisation should be done so without any delay and the sick companies reformed and rehabilitated so as to gear them up for privatisation.

The performance of the existing PEs in the country leaves a lot to be desired. In a sense, such PEs have changed into white elephants for the government due to their inability to keep abreast with the changing times. Moreover, political interference, raising corruption and lack of strategic vision have crippled the PEs.

The financial condition of most of the PEs is found to be unsound due to under-utilisation of their capacity, inability of their products to compete with similar products in the competitive markets, lack of commercialisation, poor management and accounting systems, increasing liabilities, antiquated rules and regulations and so on. The loss-incurring companies are losing each year and the profit of the profit-making companies too is declining over the years. In fact, the PEs have become a financial burden on the government.

The privatisation of the PEs burdensome to the government will also make it possible to divert funds to the social sector for the benefit of the general public. Therefore, the time has come to gradually privatise the PEs by properly studying their performance and their contributions to society in a manner to give momentum to the overall economic development of the country.

Need of Encouraging Think-Tank Expertise

By Nishchal Nath Pandey

A NEPALESE alumni meet of the Regional Centre for Strategic Studies (RCSS) was held in Kathmandu recently. The RCSS is an independent, non-profit seeking NGO for collaborative research, networking and interaction on strategic and international issues connected with South Asia it was set up in 1992 and is currently based in Sri Lanka. The organization which is a forum for studies, training and multi-track dialogue on issues of regional interest organizes various seminars, regional workshops and sponsors and coordinates collaborative research the present meet was participated in by 34 individuals from Nepal.

NGOs that carry out research and analysis on public policy issues have been growing not only in Nepal but also throughout the region. In the US especially, early foreign policy think tanks, such as the Carnegic Endowment for International Peace, founded in 1910 and the Hoover Institution on War, Revolution and Peace founded in 1919 sought to document the causes of war and increase international awareness among the US elite and citizens that possessed firm isolationist tendencies. Other institutes like the Brookings, founded in 1927 have been increasingly focussing on substantive issues of domestic and foreign policy. Nearer home, Institutes like the BIISS of Dhaka, Institute of Policy Studies and Institute of Peace and Conflict Studies, New Delhi, Institute of Regional Studies, Islamabad, Bandaranaike International Diplomatic Training Institute, Colombo and others have been active on not only research but also in networking programmes that promote interaction, communion and exchange between various institutions and individuals. In Nepal, three major study centers exist although they possess other responsibilities as well, notably the Center for Nepal and Asian Studies (CNAS) and Institute of Foreign Affairs (IFA).

At the alumni meet, while Prof. Krishna Khanal who is also at the International Research Committee and Prof. Lok Raj Baral who has been associated with the RCSS since its inception stressed on the need for more productive interaction among the scholars of South Asia while the younger members pointed out the need for follow-up and de-briefing on security issues, non-traditional threats to security, CBM measures and governance etc. Critically analyzing the role of South Asian Association for Regional Cooperation (SAARC) in encouraging interaction and synergy among the scholars, researchers and students of South Asia, the meet delved upon areas where the association could make breakthroughs. While Professors M.P Lohani and Dhruba Kumar were sullen at the pace of progress of the association, there were some optimistic voices also. On the whole, regular meetings focussing on regional and cooperative security, nuclear and upsurge of small arms in the region, by young scholars with encouragement from senior professors and faculty members like the one held this week, do serve to enlighten and disseminate output to the public. It must be realized that countries of South Asia have similar problems and even the threats on security faced by these countries are not wholly disparate. There is a need like never before of a South Asian University, which can cater to the needs of students that, have to go to Europe or America for furthering South Asian studies. This type of university would enhance more knowledge and information about south Asian countries and facilitate interaction and among scholars and researchers.

Policy expertise flows from think tanks into the policy process in a variety of ways. Apart from journals and books, the think-tank expertise may enter the policy process through commentaries, articles and interviews. Think tanks elsewhere have been the sources of personnel to the executive’s positions. Many members of the Heritage Foundation became officials of the Reagen administration. In India and Pakistan, the foreign ministry takes regular suggestions on issues of contentious substance from think tanks and policy study centers. Many of these organizations are partly funded by the government.

But there are inherent and rising problems. Institutions around the world that depend heavily on revenue from the governments have been facing dwindling earnings that naturally have led to cut down on program budgets.

Another challenge is the intellectual or the conceptual task like contriving suitable issues for possible research and investigation. The end of the Cold War has created policy malnutrition for the Institutes that had been thriving on Soviet-US rivalry. Topics like refugee, migration, conflicts centering on ethnicity and religion, nuclear and disarmament issues etc. have been on the rise. There, however has not been any policy inputs to better understand the changing world and the unsteady augmentation of sectarian conflicts and terrorism in the world. For the cause of advancement of cooperation, security and conflict resolution and the hindrances for economic development, the Institutes must concentrate on these salient areas or else confront a hostile attendance. Research documents must be thoroughly and painstakingly perfected focussing on hotspots and heated issues. Articles need to be poised to suit the exigent demands of the government. Seminars/workshops need to be participated by younger generation of thinkers and scholars because they are the future.

What amazes this writer while hearing news/reports regarding workshops and seminars on topics like "South Asia in 2020", "Future Dimensions of Regional Disharmony" etc. habitually involve the same personalities with the same background and sometimes even the same age group of above 60. The elders and matured scholars that they maybe, do not however resemble the true feelings and aspirations of the young generation. Hence, the need of serious thinking and analyzing is growing like never before. It is the duty of the Research Centers themselves to fashion themselves according to the challenges and demands of modern times.

Social Life Under The Rana Regime

By Guna Dev Bhattarai

DURING the Kirata and the Lichhavi periods there was no water-tight caste system. Before the rise of Jayasthiti Malla (1380 A.D.) the Nepalese society was a mixture of many communities, some of them had migrated from India to Nepal for the protection of their lives and culture from the menace of foreign invaders. That is why Jayasthiti Malla with the counsel and cooperation of learned scholars of India divided the society into four Varnas and various jats (castes). The Brahmins, Kshetriyas, Vaishyas and Shudras were assigned their duty in a befitting manner. Rules and regulations were prescribed with regard to various Samskaras. The social reforms enunciated by Jayasthiti Malla were followed during the Malla period. Even the Shah rulers followed them with some changes according to their choice. The territorial expansion of Nepal brought many ethnic groups under the umbrella of Nepal’s flag. Nevertheless they were free to follow their traditions.

The whole society of Nepal under the Rana regime was profoundly influnced by Hinduism. Nevertheless the Ranas did not or would not interfere in the traditional customs and manners of different communities.

Jung Bahadur Rana after his visit to Europe wanted to wipe out some of the social evils prevailing in the country. Accordingly he promulgated the first legal code of Nepal on January 5, 1854 A.D. The chief aim of the said code was to bring about uniformity in punishing both the high and the low caste people. However, it did not alter the fixed principles of caste system. The Brahmins, Kshetriyas including the Rajputs, Deo Bhajus (priests of some sections of the Newars) dominated the society. We can even now find interior caste people who have been the caretakers of some temples.

During the premiership of Chandra Shumshere Sati system and slave trade and slavery were abolished on June 20, 1920 A.D. and 1st Baisakh 1982 B. S. respectively. If any one tried to force a widow or the widow herself tried to commit suicide in the form of Sati, it would be illegal and punishable as culpable homicide. The emancipated slaves were called Shiva Bhaktas and were granted land at Bhikshya Khori later known as Amlekhgunj.

Polygamy had been a way of life among the rulers of the Malla and early Shah rulers. This trend continued for a long time in the history of Nepal. Even the nobles were used to have legitimate and illegiti-mate wives. In short, polygamy brought about many evils in the then
society and sapped the vitality of the regime in the course of time.

Nepal being the only Hindu Kingdom in the world was bound to protect Hindu customs and traditions. Bhim Shumshere, to a large extent, was credited for the abolition of capital punishment, but Juddha Shumshere revived it in case of treason, treachery aganist the established government.

A society of contrast was clearly discernible between the Ranas and the commoners. The Ranas would lead a life of ease and extravagance whereas the commoners had to toil hard to maintain their lives. They were deprived of even the basic facilities of life. Although the Ranas suppressed the growth of political awakening in the country they never interfered in the prevailing social and religions life of the peopole.

Juddha Shumshere was the first Prime Minister who wanted to bring about some changes in the prevailing society. Accordingly, he fixed the minimum age of marriage of males and females. The mourning period was fixed to thirteen days but the Brahmins were allowed to put on white dress for forty-five days.

The Ranas adopted a policy that would not hamper their vested interests and wanted the people to live in peace. They were dead against the changes initiated from abroad. Madhal Raj and his son Sukra Raj Shastri, followers of the Arya Samaj were punished. The first was forced to exile in India and the second was hanged to death.

The joint family system was in vogue among most of the commoners of Nepal. The Ranas being the most privileged class did not have such system. Even an illegitimate member of a Rana was given a huge building as residence. The Ranas had to face many problems from the sons of different wives. That is why their family life was not as congenial as that of other communities.

The society of the Newar Community was based on a solid structure. There were rare cases of divorce among the upper caste families. The life of the majority of the people was simple, honest and enduring. They had nothing to do with politics of the country. Even in adverse circumstances they would reconcile to their fate.