Interview

“Brain drain is better than brain in the drain”

Lochan Lal Amatya is the President of Computer Association of Nepal (CAN). On the eve of the annual event CAN INFO-TECH 2003 scheduled for January 2003, he takes a stock of the situation in the country's IT sector. Excerpts from an interview:

How do you assess the performance of the IT industry in Nepal during the last one year?

It is not as it was expected to be while the IT Policy was being released in 2000. We had a very high hope of attracting investors from abroad. But due to many reasons such as emergency, world recession, delay in the policy implementation etc., it has been very difficult for the entrepreneurs to invest.

But we hope the situation will improve one day, and we also hope that it will be very soon because every institution, related directly or indirectly with IT, is convinced of the role of IT in the economic development of the country. In the past we had the lack of necessary manpower in this industry. Now this should not be a problem as about 5,000 IT professionals will be graduating from various colleges every year starting from the next year.

What have been the major areas of focus for CAN during the last one year for the development of IT industry in view of the fact that the year saw the global market getting out of the initial euphoria about this industry following the debacle of some big technology companies?

We see a huge market for IT in Nepal itself. Nepal has not been able to generate the market as per the potentials. We talk about E-commerce, E-Governance, E-learning. But there has not been any local flavored idea that would facilitate the participation of maximum people. IT has been popular only among IT literate, educated mass. Local content available on the Net is very low in comparison to the foreign content.

Yes, it’s true that the last year saw a downfall of IT industry worldwide. News of big technology companies being downsized and small companies closing down were frequent. But we also know that some companies in this part of the world are increasing their size and they are also increasing their revenue from setting up outsourcing operations for big IT industries of the world. This was possible mainly due to the availability of competent manpower, conducive environment and lower operational costs in these countries. Nepal too could have benefited from this. But there are lots of reasons why Nepal is not yet the destination for IT outsourcing.

When companies decide the location of their new operations and investments, they consider at least the availability of competent human resources, access to their main market, long term stability of the business environment, supporting infrastructure, external security, attractiveness of the location to get and keep the key personnel and of course the costs.

Nepal has some advantages especially in human resource and cost-structure aspects, but the other key factors are not on a satisfactory level to attract international business.  Apart from human resources and the cost structure, there is nothing in which CAN would be able to do except lobbying. CAN feels that we lack International PR, leadership and management in IT area. This can be vouchsafed from the fact that those software companies that are in partnership with foreign experts are doing good export business. We are trying for donor assistance to fill this gap. However, it does not mean that we will need foreign experts all the time. We need them for know how transfer. 

Lack of coordination between the private sector and the government is blamed for almost every problem in Nepal. How was the experience this year in IT field?

Fortunately, IT field is an exception in this connection. The bottom line or the common goal of both the government and CAN is poverty elimination. IT is the tool which can drastically change the living standard and life style of the people creating a knowledge-based society. When the common goal is identified and defined, there cannot be any controversy about the future action. CAN has very good coordination with the Ministry of Science and Technology. The problem however is that though IT is considered a priority sector in the government policy as well as in 10th five year plan, it is not synchronized with the Industrial Policy. We are trying to get this corrected.

We have been expecting facilities, rules and regulations conductive to increase investment in the IT industry. But the facilities have been limited to paper only and most of them are already ineffective or reversed. For example the new Income Tax Act has abolished the incentive on export.

The IT policy 2000 has clearly declared IT as “a priority sector”, but in reality it has been a luxury to use IT. A few examples are: 26% tax on telephone, 4% revenue tax on ISP and 2 % rural development tax on ISP.

There are foreign investors willing to invest in Nepal in IT industry. Non-resident Nepalis are willing to bring here the centers of excellence such as the proposed Institute of Information Technology (IIT/N). We should not delay to accommodate their plans and proposals.

There were a few cases of alleged fraud in this industry during the last one year, both in the hardware as well as in software segments, tarnishing the image of this industry itself. Would you please shed light on what CAN has done to rectify the damage?

Yes, there were a few of alleged fraud (though not yet decided by the court) in this industry, which has somehow affected the image of this industry. As you may be aware, CAN has no specific authority to stop the people committing frauds. This has to be controlled by licensing or registration authority. However, CAN is very much alert not to let such cases to be repeated in the future. We have started a system such that once we notice any scheme or new type of promotional activities advertisement of such a nature that seems likely to lead to a fraud, we study these facts and take necessary measure in time.

Now there are threats on information security as well, which is very serious and impacts directly on the image of the industries and businesses based on ICT. Therefore, we have formed a technical committee to research, study the facts, find out security vulnerabilities and coordinate with other groups doing research on security. So we are putting pressure on the government to enact the Cyber law.

Lack of an apex certifying agency is said to be one of the major shortcoming of the computer education business in the country. What efforts are being made by CAN to resolve this problem?

This issue has been in discussion from the very beginning. The concept of establishing this association (CAN) was originated in a discussion program on the subject: “How to standardize computer training?” But currently computer education does not mean only the training. Four Nepali universities have taken up the responsibility of producing 5,000 graduates on IT every year from the next year. We have suggested the universities as well as the University Grants Commission to standardize their courses. Currently there are more than 10 differently named Bachelor level courses on IT education. Most of them have very similar course content. It is time to consolidate all these courses. We think there should be not more than five courses. For this, CAN is ready to assist the universities if they come together to resolve it.  

CAN is also sharing these ideas with sectoral member associations like Information Technology Professional Forum (ITPF) and Information Technology Education Association of Nepal (ITEAN).

Has CAN made any evaluation of the effectiveness of the IT training being imparted in Nepal and the problem of brain drain from this sector?

Regarding Brain Drain, I’m very much moved by what I heard from one Nepali professional working abroad. He said “Brain drain is better than brain in drain”. Some foreign experts have found that Nepali IT professionals have very good learning curve. We can learn very fast on new technology. This is a very good sign if we are able to attract the professionals to come back. It will be good because we need to learn newer technology continuously.

Nepal has already fallen far behind the other neighbors in developing IT industry, and it is feared that we have already missed the digital revolution as we missed the industrial revolution. How much chance is left for us, in your view?

I agree to the fact that we are far behind in digital revolution though we are part of it. But it is also true that digital revolution is not going to end and be replaced with a newer one. There are still new opportunities in this area. Till date, this revolution benefited the developed countries and people with good level of income. Now it is shifting to the other parts of the world and benefiting them.

What is going to be the main agenda for CAN for the coming year?

The prime agenda will be the implementation of the IT Policy 2000. Cyber law will be another prime concern because this is urgently needed promote authentication and digital signature and control cyber crime. The accommodation of IT Industry in the Industrial policy will be the focal agenda for 2003. Besides these, we will be focusing also on bringing more investment in this sector, increasing quality of the Nepali IT industry to bring it to the international level, expanding the domestic market, promoting research activities in IT sector and developing close coordination with sectoral member associations, academic institutions, international associations and the government.

Has CAN conducted any study on the level of investment in the IT sector in Nepal?

We have tried to do this several times, but due to the lack of sufficient funding and poor feedback from the industry, we are still not in a position to give authentic survey results. However, I can give you some very close estimates. For example, the number of E-mail/Internet subscribers is at about 35,000 and the number of users is about 120,000. The number of computers in the country is nearly 140,000 and the number of computer users is around 500,000. About 70% of the computers are in the capital. The market size is roughly USD 40 Million (nearly Rs. 3 billion) including PC sales, training, software projects, GIS, internet subscription and NTC's software. The biggest consumers of IT in Nepal are international organizations, Joint Venture banks, communication service providers (NTC, ISP, VSAT) and business firms associated with tourism.

The total turnover of the IT industry in the year 2001 was close to Rs. 3 billion, which was a 25% increase over the year 2000 figure of Rs. 2.4 billion.

CAN was very much busy in organizing seminars and interactions throughout the last year at a rate of almost one seminar every month. How have been the achievements of these seminars?

One of the activities CAN is organising seminars and talk programs on IT. This will create forum for the professionals, investors and bureaucrats to discuss and share ideas. We at CAN try to organise such program in a very informal way so that each of the participants can express their views and learn from each other.

The established business houses do not seem attracted to this sector, thus giving the impression that it is not a serious business. What did CAN do to encourage the participation of established business houses in this sector during the last one year?

Yes, you are right for first part of your statement. But I differ with you on the second part. A lot of business houses are looking at these IT opportunities and few of them have already started software or hardware business. But due to the national and international scenario, big houses are hesitant to invest not only in IT but also in any kind of new business.

Is there any serious joint venture with foreign investor developing in this sector?

There are already more than nine joint venture enterprises in this sector with foreign collaborators. We hope that these JV companies will increase in size and number if proper policy is implemented encouraging them to make more investment.

A lot of JV activities can be brought into Nepal because we already have a very good set-up developed for this industry. For example we have: 74 software development companies, four universities, 200 computer trading companies, 16 ISPs, 58 networking companies, 26 system integrators, 177 training institutes, nine VSAT service providers, six pager services providers, one mobile telephone service provider, 29 IT enabled service providers, 81 consultancy providers, 24 graphic designers, 13 web service providers, 50 other service providers and 39 solution providers. There are three Interactive Multimedia CD-ROM Developers, two IT Media and 58 other units. Nine of these businesses are in foreign joint venture.

Would you please shed light on the status of the Cyber Laws proposed by CAN two years back? What is CAN doing to get the law enacted?

The document has been prepared and submitted for approval of the parliament. But till date, the parliament has not worked for such activities. We are trying to get the law enacted by lobbying in the Ministry.

Two years have already completed of the Cyber Policy announced, but many of the important provisions of the policy such as IT education, free internet connection to the schools etc. are not implemented as yet. What is CAN doing about it?

The Cyber policy was announced by Ministry of Science and Technology (MOST) while the Communication Policy was announced by Ministry of Information and Communication. Unless these two policies are not implemented in a coordinated way, we should not expect  either free internet connection to school IT in education. Though this may be possible in the main cities, it will not be so in remote parts of the country. We are trying to convince the government agencies on these facts.

How has been the relation between CAN and the government. Is the delay in implementing the cyber policy and law an indication of not so good relations between CAN and the government?

We always have good relation with the government, no matter who may be leading CAN. The MOST has formed Nepal Information Technology Center (NITC) as provided for in the IT policy 2000. One of our vice president, is leading that institution. Government has also formed National Information Technology Council under the chairmanship of the Prime Minister. Similarly, National Information Technology Coordination Committee is there to co-ordinate the actions between different government ministries. We hope the good relations will continue.

How do you comment on the allegation that CAN at present is suffering internal wrangling among the office bearers and the members, thus reducing the effectiveness of the organization?

I do not agree with this allegation. This may have happened during election, which is normal under a democratic set up. We all take it sportingly. After the election, we do not have such feeling within our executive committee. Yes, some times we argue a lot on some issues in our weekly meetings. I think we should not take it as a wrangling.

Regarding wrangling among the members of CAN, we take it positively as a spur to improve the organization further. We also understand that if we do something for this industry there will be criticism initially. But we hope we will convince all and get good suggestions.

As a senior officer of Nepal Telecommunication Corporation (NTC), how do you look at the allegation that NTC has been one of the major factors for stunting the growth of IT industry in Nepal?

I am not authorised to comment on behalf of NTC, but I do not agree fully with the allegation you have mentioned about. It may be true that NTC could not provide required services to certain customers due to resource constraint. But we should not expect the facilities and services as available in developed countries. We have high demands of newer technologies but we have limited purchasing capacity. In such cases, especially in Information Communication Technology (ICT) area, any new service comes to be expensive.

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