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October, 2002 |
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Interview |
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“We’re
very selective”
Former
President of FNCCI Binod Kumar Chaudhary’s latest ‘venture’ in the
country’s chamber movement - the setting up of Confederation of
Nepalese Industries (CNI), is still in controversy despite the fact
that, as can be seen from participations it gathers in its programs, it
seems to be accepted by a large section of the business community as a
force to reckon within an interview with NBA, he explained the
development in his association and also in his business.
How do you evaluate the
first six months of CNI, the organization that is regarded as your
brainchild? I feel totally satisfied.
Its moves have been consistent with its declared vision and mission. It
has been able to set up a high quality secretariat. We have set up
global linkages, for example with institutions like FICCI of India,
Ceylon Chamber of Commerce, Metropolitan Chamber of Commerce of
Bangladesh, and US Business Chamber. We are also in dialogue with many
other friendly countries that have been helping Nepal in private sector
development, for instance with the Germans, the Americans and the
British. As to the activities where
CNI has focused, we have been very clear right from the beginning that
we do not want to pick up everything that comes on our way. We are very
selective in our agenda. We want to select limited agenda but do full
justice to what we have selected. For instance, we picked up the
proposed industrial policy as one of our agenda, and on this we have
drawn up a well structured road map. We have utilized the expertise of
the Nepalis as well as of the people from the region who have the right
kind of background, for instance, personalities who have been the
chairmen of the Boards of Investment of Sri Lanka and Bangladesh. Discussions have taken
place on this draft with the entrepreneurs and the professionals – it
is discussed with the CEOs through our CEOs forum, with the young
entrepreneurs through our young entrepreneur’s forum and also with
various donors and investors. The process is going on. We are soon going
to organize follow up sessions. Hopefully, within a month or so we will
be submitting it to the government.
We have been raising the
issue of industrial security without mincing our words. Though we have
been criticized for that, we don’t really mind. Too much talking has
been going on about providing the industrial security, without really
hitting the nail on its head. When the security of the entire country
has been by and large entrusted to the army, there is no reason why we
shouldn’t talk to the army and ask them to take over the industrial
security as well. We made this request after our discussion about it
with the Prime Minister. The army has been very receptive and they are
in the process of making the necessary recruitment to create a special
force of 3,000 people to provide industrial security. You see, a
substantial headway has already been made in this regard. One of the other major
achievements of CNI is the creation of the CEO’s forum. It is the
forum of true professional CEOs engaged in the corporate sector of
Nepal. The forum consists of the corporate leaders of almost all of the
multinational companies present here including the top banks, insurance
companies and infrastructure related companies. They bring in the
expertise of the level which Nepal seriously needs in its quest for
promoting the concept of corporate governance. Sometimes we
entrepreneurs try to mix entrepreneurial role with the managerial role.
Now the time has come that we learn to differentiate and keep these two
separate. There is no reason why an entrepreneur can’t be a
professional CEO as well, provided he is properly trained for this and
he has the required background. So, while we bring in the expertise and
experience of entrepreneurs, these are the people who bring in the
experience and caliber of the professional CEOs. We are in the process of
creating the young entrepreneur’s forum. If you look at it, you will
find a third generation of entrepreneurs already emerging in Nepal,
while the first and second generations of entrepreneurs are still
active. We are trying to bring to the mainstream also the third
generation entrepreneurs, which is better trained on the idea of
corporatization and which has a better sense of corporate governance. Would you mind
divulging to us about the efforts that you have made from CNI for united
action with other chambers on business issues? We have been always clear
right from the beginning that we look at ourselves as a resource group
which is open in its thinking, which is ready to work with anyone,
provided the agenda demands such a united action. We have absolutely no
feeling of superiority or inferiority complex. We are going to be guided
by the merit of the issue and would like to work with institutions which
can add value in resolution of those issues. Recently NICCI with
other binational chambers issued a white paper on the state of economy
and similar efforts are being made from other chambers as well. Instead
of doing it all separately could not there be a coordinated approach? First of all I must
congratulate everyone who was involved in the preparation of that
document for NICCI and other binational and national chambers. I think
some of our colleagues too were involved in that process. That is a very
high quality work which basically talks about the current investment
climate as well as the impediment in the investment climate. In the
process of forging the draft industrial policy from CNI, our team has
thoroughly examined the white paper from NICCI from which we have drawn
a lot. I’m not aware of any such work being carried out by FNCCI.
Therefore I can’t comment on what they have been doing. What do you say about
the allegation from a number of quarters that CNI is being run as a
one-man company of Binod Chaudhary? Such comments are not
widespread, though you may be referring to the isolated cases of
comments by one or two persons whose opinions carry no weight. It is not
possible for me to go on responding the individual opinions of people
who are neither here nor there. What are the broader
plans for the CNI for the immediate future? We are consistently
looking forward to developing CNI into a true think tank, which will be
able to pick up the issues that are important in promoting the economic
prosperity of the country through the private sector involvement and
which will have the capacity required to bring in the required resources
from wherever they are available. The work that we are carrying out on
the draft industrial policy is going to be a model of what kind of
quality work we are talking about. We will continue to move forward in
that direction to institutionalize this process. As the leader of the
CNI, which you claim to be the true representative of the industrial
sector as contrasted to the trading sector of the country, what are the
major four or five issues that you have identified as the priority areas
for immediate attention? Number one is security,
about which we have already started work. Number two is working towards
making the investment climate more investment-friendly. We are already
working on that through helping to formulate a proper policy framework
which addresses some of the lapses of the past and which fills in the
gaps that still exist in the policy. For instance, let’s take a case
of the mineral sector. Look at all the previous policies including the
one which is still in practice. Everywhere it falls in the category of
the priority sector. But nobody has bothered to find out why, despite
the government attaching a high priority to it at least in words, this
sector has not been developed. Why so many of the limestone deposits
could not be exploited? Why the projects like Orind Magnesite and Ganesh
Himal have floundered? Obviously there are gaps in the policy. When you
are talking about the investment climate you have to look at not only
the industrial policy but at the overall policy framework. You have to
improve all these policies as well as the rules and regulations and the
implementing mechanism in totality. Why are Andhra Pradesh and Karnataka
of India more successful than Bihar and U.P. in attracting investment?
To get the answer to that question you have to look at the overall
environment in totality. They have been able to professionalize their
system of delivery. They have been able to come out with policies which
are market and investment friendly, which are competitive and attractive
to investors. They have been able to arouse a sense of confidence in the
mind of the investors. We are working towards bringing about similar
change in the mindset of the people here to bring about similar change
in the environment. Are you satisfied with
the performance of CNI in meeting it’s objectives? I am very satisfied with
the way CNI is progressing, with the kind of participation that is
growing. We have seen very quality participation. It is expanding. It
invites the right kind of people to participate in its discussions. Give
us one more year and you will find that there is a true organization
that the people can count on for some sound, dependable quality inputs
rather than just of-the-cuff remarks and the observations. How is the overall
business of the Chaudhary Group against the background of the current
recessionary trend? Chaudhary Group is not an
oasis in the middle of the desert. We are obviously being affected by
the overall business environment of the country. However, I would say
that because we are practicing a greater degree of corporate governance
and because our focus has been very clear in terms of our core
competency and because we are running those businesses in which we have
the comparative advantage, we have been able to keep the decline in
business above the level of the overall decline in the economy. We take
this as a major achievement. For instance, if you look at our last
year’s performance we have remained flat, whereas the overall
industrial sector has declined by around 40% to 60%. So, the moment the
things become little bit normalised you will see a quantum jump in our
overall activities. The credit for achieving this must go to the
carefully crafted strategic direction that the group adopted few years
ago. You must have seen that now we are not going into all sorts of
business. We have been very selective. There was a time when we were
trying to do everything that could be done in this world. But now we are
concentrating in areas of our core competencies which are FMCG,
financial services, infrastructure including real estate, services, and
some selected trading activities. For this we have given a lot of
emphasis on the human resource development. Today I can say that we
have started one of the most aggressive and one of the most extensive
human resource development programs in terms of creating a new breed of
mid-level managers within Nepal. At present we have 26 MBAs undergoing
training within our group - 16 of them are Nepalis and 10 are Indians.
They are in every department. These 16 MBAs are from Kathmandu
University. Some of them are from the engineering background. We are
opening our own CG Learning Centre. We are giving number one priority to
the human resource development. And now we have already started to see
the results. How is the
diversification drive of Chaudhary Group going at present? We are not going to go
into new areas . Our future expansion will be in our core competency
areas and for that we will try to have strategic alliances wherever
possible. We want to become regional, we want to become global. Right
now we are doing everything that is essential for us to survive the
challenges of the open market and the regional competition. Many of the operations
of Chaudhary Group in the recent past used to have Chief Executives
drawn from various MNCs. Now the number of such CEOs with MNC background
seems to have gone down. Why? We realized that things
are not going to change no matter whom you place at the top unless your
foundation is strong, unless your core management team is strong at all
levels. The departmental heads are to be strong; mid level
managers are to be strong, and the managers are to be strong with right
background, and with right kind of training and with the right kind of
motivation. We were suffering from a fallacy in the past that good
people at the top will solve the problems throughout the organisation.
Now, after having realized the weakness of the past we have started the
process of restructuring the whole management team from the grass root
level. Today we feel that we are (a) developing leaders and (b) we find
that because of the strong management team at all levels, who is the CEO
at the top has become not so important. I hope the Nepali managers will
gradually substitute the expatriates at the senior managers’ levels. Except in housing,
Chaudhary Group does not seem to be doing well in the other fields of
its operation. Even in noodles, Wai Wai seems to be losing to the more
recent entrants Mayos and Rum Pum. What is the actual situation? I think this is an area
where I would not like to go into specifics. But as I just said, despite
the problems that the country is going through, all our businesses are
doing better than the competitors. So much so that even the brewery
which was undergoing some problems until a couple of years ago is
running at full capacity, although the entire production is being
exported. We were on one stage concentrating in one or two brands, but
today we own many more brands. What you have to look at is the total
basket of brands and the total basket of products that the company is
dealing in. Today perhaps our FMCG division is dealing with at least
twenty brands that the group produces. Each of these brands is
developing on its own way in South Asian markets including Nepal. As a
matter of fact the real estate business is undergoing through some tough
times because following the success of the couple of projects that we
developed, ten or twelve companies have suddenly come up, in the typical
Nepali style of doing business by copying. But we always welcome
positive competition. Some of the facilities
of Chaudhary Group are being leased to other manufacturers. How
beneficial has this exercise proved? This is the case in beer.
We know that we have to keep our capacity utilized. After we ran into
some difficulty with Singha we came out with our own brand which also
didn’t do well. Therefore, we started to contract out our capacity and
we have a good deal. We are quite happy utilizing our capacity. Perhaps
by the time your paper goes to the press, you will see one more brand of
our beer in the market. You have been trying for
the last several years to enter also into the field of banking. But your
most recent efforts to enter this field failed after your claim on the
Nepal Indosuez Bank was rejected by the court. What are you planning now
about this field? We will continue. You
know, we won the case about Nabil in the Supreme Court. So that
process is still going on. We are hoping that a decision favorable to us
will be made also by Nepal Rastra Bank. What are the other
major plans of Chaudhary Group for the immediate future? Consolidation.
Consolidation of the existing activities internally as well as expanding
with strategic alliances and expanding our FMCG activities which will
include cigarettes and beer. Cigarette is going to be one of our major
challenges for this year. We will definitely focus on that part of our
business. For the details let the time speak for itself. How do you see the
latest moves of CIAA against some revenue officers? The only comment that I
have to make is the repetition of what we have been saying for years. We
protest the discretionary power that is given to various tax
authorities. When you give discretionary power there is always room for
discretionary judgment the benefits of which will go not to the
exchequer but to the individuals. So the real correction process
will begin only when you will stop giving discretionary power to the tax
collectors. The system should be based on transparent policy where
nobody can apply his personal judgment to reduce or increase
somebody’s tax liabilities and nobody can extort bribe by holding
somebody at ransom by threatening to increase the tax assessment. It is also reported
that CIAA is contemplating to make similar moves against some private
sector business people. How do you see such an eventuality? I have always seen that whenever there is any issue relating to corruption it is the businessman who is taken as the first culprit. As a matter of fact it is the first time that I am seeing some attempt of also dealing with the other side in a larger and in a systematic manner. The businessmen have always been vulnerable. They will remain vulnerable. Let’s do away with this process of playing cat and mouse by making the system transparent. |
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