Inner-View

"Take private sector into full confidence"

The job of the FNCCI president is very demanding and challenging. Taking up the chair, I had to sacrifice my own business and personal life, but I was totally prepared for that. I would like to leave an imprint of my devotion and sincerity to the organization at the end of my tenure. I am very happy that after a long period of pulling and pushing, I was unanimously elected the president. I am also proud that I led the organization into the new millennium and it was a good beginning for us. We are developing a vision for 2010 and the vision paper is under preparation.

How successful do you rate yourself in developing unity along the business community?

My perception and feeling is that I have seen unity among the executive members. I should be very proud of it. There is perfect unity, I understand. And I feel that there is no reason to disunite or disassociate from the working group. Everybody has ample opportunity to work and the doors are all open. There are numerous areas where we can work on and I have been able to sort out yesterday’s disturbed situation.

What about the success in solving the problems of the business community?

There are problems. And I have been telling the government bureaucrats that if they do not focus on the economic agenda, the situation will worsen. And the government also will be the sufferer. I think it is a golden opportunity for the government today to take advantage of the united business community. In the last six or seven months, there has been steady growth in exports to India. The imports also have increased. But the hijacking of the IA plane has created immense problems. Tourism and trade have been badly affected due to Indian Airlines not flying into Nepal. I think it is high time the government got this problem solved. We have been also interacting with our Indian counterpart, CII, and talking with the Indian Embassy. I think this can be solved faster from efforts at the higher level. FNCCI is sending a good-will mission to India and to see if we can address the problems.

Regarding the relation between the government and business community……?

It is a very good thing that the government has realized the importance of the private sector and is taking private sector persons as advisors in ministries. For example our former president Mr. Mulmi is recently appointed advisor to Ministry of Industry. It is a very good gesture and we appreciate it. Similarly, I think getting our past leaders and other people of the business community involved in other ministries would reflect government’s recognition to the private sector. We want the government to be clear on what it thinks is possible and what is not. And we want that all the decisions of the government should be made public immediately after they are taken. It will build up confidence which is very important.

There are talks of need to amend the company act. What special changes have you suggested?

We have had a number of rounds of meetings. We also invited some experts from India. We have had long discussions and have sorted out a number of relevant points to be amended in the company act. For example, we want definition of a sick company clarified, we want provision for share buyback, protection to the controlling interests of the company promoters, regulation for share registrar, clear judicial authority to the Company Board and the like. We want to make the government realize that without taking the private sector into full confidence, development is not possible.

What about the industrial acts?

It is also under process. Our industry committee chairperson is already working on that. Persons from the Ministry of Industry, the National Planning Commission and some others recommended from FNCCI are also working on that.

What are the main priorities that you have been focusing on?

The Ninth Plan of the government has focused on poverty alleviation and employment generation. In line with that, we have been saying to the government that the existing laws like the company act, the labour act and industrial act need immediate change so that we can tell foreign investors that Nepal is a suitable place for foreign investment. And what we also have to focus on today is the infrastructure of the country. Having best of the acts is not sufficient, the infrastructure also has to be good.

Regarding the labour act, what do you think of the minimum wage issue?

This problem is related with the understanding between the government and trade unions. The minimum wage was decided about two and a half years back. And today, trade and industry are in a very poor state. None of the industries are doing well. So we are facing the problem to meet all the demands of the labourers. The government as well as the trade union leaders should consider this aspect. We are not trying to say that we will not give anything. Once the situation improves the wages and other facilities will certainly increase. But at the moment, everyone is facing difficult time and so we have delayed the process. I think it is time that trade union leaders understand the situation and think of the wages in relation with productivity. The normal rules of hire and fire, reward and punishment, strike and lockout, should all go side by side. A system of discipline is necessary. As employers, we too should understand the minimum requirements of the working class. Both the employers and employees should understand the situation. And see there are few sectors where the labourers are under-paid. But there also are areas where they are over-paid. So these differences should be addressed.

How sustainable do you see the recent revival of the stock exchange?

There are very few manufacturing industries, I would say almost none are trading actively in the stock exchange. And no manufacturing unit is doing well because of recession and all the problems. The current upsurge in the stock exchange seems to be derived from some other sources. Today people are not finding a right place for right investment. Maybe people who have the money are not feeling secure to invest in the manufacturing sector. Their priority has always been the financial sector and tourism sector. This could also be due to the poor performance of manufacturing. Unless the industries become dynamic and very enterprising, unless the opportunities are brought about, I think the situation will not improve. So I don’t think it is sustainable.

VAT has again surfaced as a vexing problem after authorities started clamping down on firms for allegedly evading VAT. How is FNCCI trying to resolve the issue?

The implementation of VAT has not brought about expected result. Money has not been flowing into the state coffers as expected out of VAT collections. I think VAT, in isolation, cannot be successful. No matter what commitment the government or the bureaucracy makes, it is not possible to implement VAT successfully unless it is linked up with the income tax and customs duty. It has to be dealt in a package. It should be based on a principle of scaled incentives. Anybody who is under VAT is feeling that he is on the losing side. So this has carried a wrong message to the business community. Unauthorized trade is flourishing and there is no mechanism to control that. FNCCI could have been the right mechanism but unfortunately that has not been accepted by authorities. Regarding the problem, what we have done is in relation with the basic problems of the revenue aspect. We organized three seminars. One was related to income tax, one to customs duty and one to VAT. The seminars were very successful. We will come out with a package and report to the finance minister that these are the causes and these are the solutions. The basic problem I think is not only related with VAT and the revenue aspect, but that there has been too much corruption. In the name of revenue administration, corruption has exceeded tolerable limits. This is a very serious concern. If things continue like this, it will be very difficult for FNCCI to support even the good and positive measures of government. Government should not only preach but act as well in order to solve the problems.

See, water always flows down. In order to bring the people into VAT like I said, VAT should be based on the principle of incentives. Whoever is already under VAT or whoever is paying the taxes should be recognized. They should get additional incentive to make others feel that being outside VAT, they are losing something. These mechanisms have to be developed by the government, not by business sector or FNCCI.

It is said that this is an era of IT. But none of the big business houses has made any investment in this front. What is FNCCI doing to encourage investment in IT?

FNCCI has for the first time formed an IT group which is already working. We had a number of meetings and, in collaboration with Computer Association of Nepal (CAN), we organized a number of seminars. SummIT is going to be organized around the first week of May with FNCCI participation. I think Nepal has a good future in IT because of its location and climatic conditions. Today, there are only a few investors in the IT sector but the IT sector has a very bright future. We have human capital in the country that is unable to find good jobs here but are getting jobs abroad, even in the States. We should work towards providing them opportunities here. We are a land-locked country but we should open our brains.

FNCCI announced a number of programs a couple of months back. How is the progress?

We wanted to do imports and exports promotion and that we are doing with the ministry of commerce by organizing fairs and exhibitions. We are also working on hydropower, which is one of the areas in which FNCCI has been focusing. A few days back we had a programme on the challenges and opportunities in the agro sector. On tourism also we are trying to focus on important tourism areas around the country, not only in Kathmandu. Organizing trade fairs in different regions has given lot of exposures. Also, we have declared April 10 as Industry and Commerce Day to unite business community for the development of the industry and the country. Every two months, an event will be organized.

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