Legal Reforms
For Financial Sector Development

By Bashu Dev Phulara

THE scope of the legal environment for financial sector development and justice is widening worldwide. Various countries are proceeding quickly with modernising their legal and judicial institutions. Laws governing business firms and financial organisations now regulate the market.

Current Efforts

A workable and clear legal infrastructure is the base for safeguarding acceptable financial sector development for developing countries. In the absence of strong legal framework, the risks linked with financial institution increase. The present Constitution of Nepal has been lauded as one of the most liberal and democratic instruments in the world. A number of new policies and legislations were introduced in different sectors to allow active participation of the private sector. Economic liberalisation has formed the basic development strategy of the government. The expressed intention and commitment of the government is to act as the facilitator, rather than administrator of development.
For the past several years, the government has been engaged in financial sector reforms. The Nepal Rastra Bank is enhancing a more sensitive regulator of monetary institutions. The role of the government as an owner-manager of commercial banks, such as Rastriya Banijya Bank and Nepal Bank Limited, is becoming atypical. As of 2002, Nepal's financial sector has emerged as the focal point of the country's scheme of economic development. In due course, the sector has turned into a key stadium for multidimensional legal reform.

The government and various development partners, such as the Asian Development Bank, the World Bank, the International Monetary Fund and others are working in concert style over that thrust of activities. Civil society groups are also amalgamated into this liberal environment. However, reform practices under the optical glass expose merged sketching of challenges, vulnerabilities and opportunities.

Capable lawmakers and skillful judicial activists certainly raise economic growth by designating new-fashioned mercantile laws. For that reason, the need of legal reforms for corporate sector development have been felt.. The fresh guidance of openness and transparency has thrown open the door for rapid improvement in corporate governance. Right now, the threat is to grab the opportunity and to complete significant gains for corporate governance in Nepal.

As noted elsewhere in policy statement of the Asian Development Bank 2002, corporate governance is being taken into account as a part of legal reform programme. The proceedings of writing and adopting a coherent set of laws to govern business behaviours for financial institutions are well advanced. The laws governing finance and corporate governance were discovered to be dated and contradictory.

Despite several efforts, the present legal environment is far from satisfactory. This is true for corporate activities, arranged by different statutes. The diverse laws controlling the financial sector are in conflict with the company laws. On that account, there is an apparent need to craft the new laws on vital areas of financial regime. Such statutes are key to the successful operation of financial markets.
The aim of legal reforms is to develop laws and institutions to maintain the progress of an effective marketplace. The reform procedure is also associated with other items. Poorly directed reform programmes may not address the major problems faced by the public investors in financial market. Legal reforms should be focused on socio-economic norms.

Strong corporate governance hinges on an effective legal system and without a strong legal system corporate governance device will either perform badly or fail to perform. So, the judiciary has a crucial role in widening the corporate governance. Though Nepalese judiciary has been working pragmatically as regards the civil and political rights of the citizens, it is not giving much emphasis on corporate governance. Although, there are numerous cases approaching before the courts, the cases related to corporate governance are not many.

By the same token, most of the judges and judicial personnel are yet to be equipped with essential information and skills of corporate laws. Judicial personnel along with the private lawyers should be familiar with the world wide corporate movements. Their abilities should be modernised through ongoing legal education and appropriate training. Besides, constitution of National Judicial Academy (NJA), that could provide training to the concerned authorities will be effective. Similarly, all the statutes relating to corporate governance should be designed with universal standard in view.

Moreover, administration of the court system should be reviewed, in terms of corporate governance.
The saying "business is the game of money" is now replaced by another saying "time is money". Furthermore, understandable and competent management should be advanced for the solution of complex commercial issues in the time of ever increasing knowledge-based economy. Alternative Dispute Resolution (ADR) mechanism should be entirely incorporated for the settlement of financial and business disputes. Also required is a distinct commercial bench in the Supreme Court to hear the cases involving commercial affairs. The Judges of specialised commercial bench should be well educated in commercial transactions. In addition, they are required to be more active in the emerging issues pertaining corporate governance.

Legal Premises

Last but not the least; it can be argued that laws and judicial system are certainly the crucial walls for financial sector development. The standing legal framework would remain incomplete if it fails to affirm these elements of good governance. Introducing new laws would not yield any results until and unless the mindsets of government representatives are changed.

Women Entrepreneurs Need New Vision

By Maina Dhital

HAJURI Bista, who lived in Paris for a considerable period, became restless after she settled in Kathmandu despite being a well-heeled woman with grown up children. She was thinking of doing something as she had seen well-to-do women of developed countries doing modest business.
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At the same time she came across an advertisement placed by WEAN Cooperative in the 1990s and came into contact with WEAN. Women Entrepreneurs Association of Nepal (WEAN) Cooperative is an organisation established with a view to organising women entrepreneurs and helping them in marketing their products.

At that time WEAN provided entrepreneurship training to about four dozen elderly women, but very few of them involved themselves in enterprises. And some of the enterprising women including Hajuri Bista decided to prepare pickles. Hajuri began with preparing pickles of garlic, ginger, fish and meat. Till that time only the pickles of mango and lapsi were known to the local people.

Druk brand pickles imported from India was very popular among the Nepalese, which was almost the synonym for pickle. At such a juncture of time, WEAN Cooperative introduced the pickles prepared by Hajuri and other women to the local market. People preferred the local pickles to the Indian ones and WEAN christened its product as Navaras, the nine flavours. Navaras found a place in the shelves of modest groceries to big departmental stores.

Entranced by the growing popularity of Navaras, quite a few women received pickle preparation training and entered into the business. As a result, there is a tough competition among the women entrepreneurs. Now even Navars is facing the problem of market while the new entrants have not been able to establish their brands.

Similar trend is dogging the handicraft business. Most of the women entrepreneurs go for existing business rather than finding new avenues. The more the people are in the same business, the harder it becomes for the new entrants. It leads to diminishing interests of consumers that directly bring down the price and their utility.

Nepalese pashmina was very popular in the international market about three years back whose exports was worth Rs five billion and 640 million in fiscal year 2000/01. But its exports plunged to Rs one billion and 410 million in the next fiscal year.

Nepalese pashmina was sold like hot cakes after Queen Elizabeth of the United Kingdom wrapped herself in pashmina shawl publicly. An unexpected number of people began producing pashmina products, which led to an unhealthy competition compromising with the quality of the products. It is the prime factor behind market crash, though some national and international factors attribute to the un-thought-of decline in the demand for pashmina products. According to the organisation of the pashmina entrepreneurs, about 80 per cent of the newly set up industries have been closed down.

Success gained from copying others is ephemeral. Now entrepreneurs need to diversify their products in order to cater to the changing taste of customers. There are a very few women who dare abandoning traditional business and go for a new ones. It would be wiser to make a survey and study the market than opening a business allured by the success of the predecessors. Although some government and non-government organisations have been extending support to women entrepreneurs, they have also not been able to give up the traditional practice. There is a growing need of organizations that support and train women entrepreneurs by studying the market and commissioning a survey.

Carrying a market survey before doing a business pays the investors. Shyam Kakshapati can be taken for example. Entered into business from Shyam's Grocery, Kakshapati now owns around a dozen bakery cafes. He is probably the first person to open fast food outlets. He jumped into the venture after studying the taste of customers. "I came to the conclusion that the young generation is in want of a place where they can eat delicious foods at comparatively lower price and an entertaining environment. And I opened The Café De Park at Ratna Park", Kakshapati relates his past.

In 1976 he opened Nanglo Bakery Café. Now there are a lot of people who have opened fast food cafes emulating the success of Kakshapati. Take New Baneshwor for an instance. A number of fast food cafes stretched from Babarmahal to New Baneshwor has made the section of the road 'fast food street'. "Now there is tough competition. Therefore, the new generation should not jump into any business without making market study", shares Kakshapati his experience.

Laxmi Sharma is such an entrepreneur, whose journey into entrepreneurship is filled with adventurous stories. Begun from 'grassroots' Laxmi Sharma now owns Laxmi Wood Crafts which produces buttons from wasted bones and horns of animals and pieces of woods. In her own words it is an 'ever green business'. "My nature of not following others led me to this business", she says. Quality, price and delivery determine the market of products, she adds.

Service

AC Nelson Multi-national Company known as Org Mark has been carrying out researches and surveys for the past one decade, but it has not been able to commission market surveys for new entrepreneurs. "Most of out clients are multi-national companies", says Research Executive Manorama Adhikari. She said that none of the local companies wants market research and survey and particularly the company has done survey for WHO, PSI, UNICEF, GTZ, Bottlers Nepal and Nepal Lever Limited. Although magazines like Himal and Business Age have got research done, not other company has asked for such service yet, but we are ready to offer the service, she further said.

Anti-microbial Resistance

By Dr. Banshi Sharma

MICROBES such as bacteria, virus, fungus and parasites are responsible for the infectious agent as well as production of anti-microbial substances. Due to indiscriminate use of antibiotics drug resistant species of microbes were developed. The nature normally selects for resistant gene. Survival of fittest holds true in this case too. In nature there are different types of microbes that can change their living situation according to their surroundings. In medical term, a resistant microbe is one, which does not get killed by an anti-microbial agent after a standard course of treatment.

Plenty of anti-microbial agents have been used in the field of crop, livestock production and as a growth promoter in poultry ration. These agents exert pressure on microbial population of the environment.

The emergence of resistance gene in different organisms in on the rise. There are gonorrhea resistance bacteria emerged from Africa and Asia and now globally available. The resistant of Salmonella and Camphylobacter might first come from animal food. Therefore, treatment of typhoid, tuberculosis and other bacterial diseases becomes difficult.

Infections caused by resistant microbes fail to respond to treatment, resulting in prolonged illness and greater risk of death. When there is no good response of first line anti-microbes, then people depend upon second line of anti-microbes. The vast amount of antibiotics had been sold in pharmacy, drug house without physician's prescription in the third world. All of them (pharmacist, doctor's etc.) have pressure from patients for early recovery. Therefore, judicial use of anti-microbial medicine might be the need of time.

WHO has been helping developing countries for establishing laboratory based surveillance networks for resistance of drugs. They have anti-microbial resistance monitoring (ARM) activities. ARM has database on resistance microbes. WHO provides current information about microbes and resistance genes in them and this information is helpful for clinicians too.

Bacterial species such as Enterococcus faecalis, Mycobacterium tuberculosis and pseudomonas aeruginosa already evade every antibiotic in the clinician's armamentarium.

Resistance genes commonly are carried on plasmids, tiny loops of Deoxyribonucleic Acid (DNA) that can help bacterial survival in the time of various hazard situation in the environment. Though the genes may also occur on the bacterial chromosome, the larger DNA molecule, that stores the genes, is needed for the reproduction and routine maintenance of a bacterial cell.

Antibiotics can kill susceptible bacteria. However, resistant bacteria acquire resistant gene due to mutation or by activation of the function of the plasmids in the harsh condition. Then there is plenty of room for proliferation of the resistant bacteria. Meanwhile, antibiotics are responsible for eliminating highly susceptible bacteria in the population. Antibiotics select bacteria, which have antibiotics resistant gene in their plasmids. One should be aware to this fact for indiscriminate use of antibiotics for therapeutic uses.

Consumers also should refrain from demanding antibiotics for common colds and other viral infections and might consider seeking non-antibiotics therapies for minor conditions.

Physicians should try to identify the causative pathogen before beginning therapy, so they can prescribe antibiotic targeted specifically to microbes rather than broad-spectrum antibiotics product. The patients must use full dose.

The time says that we should accept bacteria as normal, particularly beneficial components of the world. We should not try to eliminate them. But we would eliminate only pathogens causing diseases.