Lifestyle Investor

Takashi Miyahara has been living in Nepal for the last 41 years and has been an ace tourism entrepreneur of this country for over 34 years. However, he is still an alien, as he does not possess a Nepali citizenship as yet though he applied for one last June.

Though Miyaharasan is full of praise for the Nepal of the past, he has lots of complaints about the present. Still he applied for the Nepali citizenship in June last year and has been relentlessly pursuing the application, though in vain. When asked to explain it, Miyahara says though he has lots of complaints as a businessman with today’s Nepali bureaucracy, he is married to a Nepali and has a daughter and feels comfortable with the Nepalis. And now he is interested to live in Nepal as an ordinary citizen, not as a businessman.

The background to Miyahara’s complaints and love about Nepal makes an interesting case story illustrating the plight of a foreign investor who invests in Nepal in a personal, not corporate, capacity.

Lifestyle Investor

Miyahara’s case illustrates the typical example of lifestyle investors that Nepal has been receiving. Such investors are individuals (not corporate) who first get attracted by the country’s natural, cultural and social heritages, and try to find out ways for long-term living here. And the best way they find is to become an investor. Such attraction of the foreigner can be converted into a very good avenue to attract more foreign direct investment, if the government takes proper policies and implements them in a strategically calculated manner. But as this case depicts, the record of Nepali bureaucracy in this field is not so encouraging so far.

When Miyahara first arrived here from his native country Japan in 1962 as a mountaineer, he was just 28 years old. That year he became the first person to scale 6,800 meter high Mt. Mukut in the Dhawalagiri range and that experience fascinated him so much that no sooner he went back home upon completion of his expedition, he was trying to come to Nepal for longer-term stay. A holder of Bachelor’s degree in Chemical and Mechanical Engineering, Miyahara left the engineering job in prestigious Japanese companies, and approached the Department of Cottage Industry of Nepal for a job here, a request that was readily granted by the Nepali government starved of such highly skilled technical manpower.

“Then”, he recounts, “while going from place to place within Nepal in the course of the two year contract with the Department of Cottage Industry preparing schemes for prospective industries , I saw that there were good prospects for the development of tourism industry in Nepal, and I started that.”

It should be noted that there was no Japanese embassy in Nepal till early 1970s. Thus Miyahara can be considered to be the virtual first Japanese ambassador to Nepal. He set up Trans Himalayan Tours (P) Ltd. in 1968 as a Nepali travel agency and started bringing in Japanese tourists in “big way”, as he puts it. The next year he set up Himalaya Kanko Kaihatsu Co. Ltd. (HKK) in Japan, and this company was soon sending 1,500-1,600 Japanese tourists per year to Nepal.

The business was further diversified in 1970 by setting up Trans Himalayan Trekking (P) Ltd. to operate trekking services. In 1971, Royal Nepal Airlines Corporation (RNAC) started flying to Japan and Miyahara was the one to promote RNAC in Japan. His firm was Sales Agent of RNAC from 1975 to 1982 and then General Sales Agent until 1991. His firm is still the Passenger Sales Agent of RNAC in Japan.

Thus, Miyahara has been the first person to start the people to people link between Nepal and Japan. Hotelier-mountaineer Miyahara also tried to scale Mt. Everest in 1994 from the south cole, but had to return from 8793 meters height due to eyesight problem. But his relation with Mt. Everest started much earlier than that. In 1970, he started, with investment from him and his Nepali and Japanese friends, the construction of Hotel Everest View (HEV) at Syangboche near Namche Bazaar, the gateway to Mt. Everest.

Situated at the height of 3,820 metres offering a breathtaking close up view of 15 Himalayan peaks (including Everest, Lhotse and Nuptse), this property was inaugurated in 1973 and it earned the fame as a hotel situated at the highest altitude on the earth and got itself recorded so in the Guinness Book of World Records. “So it is a manmade heritage of Nepal”, points out proud Miyahara though with a wry smile feeling the pang of perpetual losses incurred from this property so far.

According to him, the property has caused him a loss of about one million US Dollar so far. It is a separate interesting story about how the HEV started, why it faced the problems, what efforts were made to save it and why these
efforts failed.

One such effort to save the HEV was the setting up of another hotel in Kathmandu. In 1972, Miyahara started work for Hotel Jaya International, which is now the Hotel Himalaya (at Kopundole). The idea was to bring the tourists from Japan first to Hotel Himalaya, then to send them to HEV.

These two projects (HEV and Hotel Himalaya) offer two very excellent example in site selection for hotel property, though both have not set any example of matching business success. Therefore, Miyahara says his friends rate him “very good in site selection but not so good in doing business”.

That means, also the Hotel Himalaya is not making any profit. Though it has been in perpetual loss all along, it was doing alright till two years ago, but it recorded a huge loss of Rs. 10 million in the year ended mid-July 2001 and that loss increased to Rs. 13 million in the following year, informs Miyahara showing the annual reports of his hotel. This is despite the fact that Miyahara draws his salary not from Hotel Himalaya but from Tokyo based HKK. On top of that Hotel Himalaya has not been paying any money to HKK on account of various charges that the hotel has to pay the Japanese company. Miyahara says, Hotel Himalaya owes over Rs. 100 million to HKK as of now. 

Mitsui’s Return

Hotel Himalaya was a property set up with 85% shareholding from Mitsui (a real estate company that claims the credit of being first company to construct high rise buildings in Japan), 5% from other Nepali shareholders and the rest 10% from Miyahara’s companies - Trans Himalayan Tours and HKK.

But Mitsui withdrew from the project three years ago for a number of reasons, says Miyahara. One, it was a very small investment for a giant like Mitsui. So they did not find it worth pursuing. Second, the tourism business in Nepal was not picking up as expected. Last, but not the least, Mitsui was irritated with the way Nepali bureaucracy
was behaving. 

Miyahara had to pay Mitsui for their share, which he did by borrowing in Japan. Unfortunately the situation in tourism industry here further deteriorated. The declining Japanese economy and the deteriorating law and order situation of Nepal added to the miseries.

Then Miyahara tried to sell his hotel and he also received some interested parties, but he could not sell it because the offer he received was ‘very low’. Therefore, now he is planning some expansions in the property. Since one of the reasons for the failure of the hotel was its over-dependency in a single market – Japan – Miyahara is now changing his strategy targeting more local business. In this connection, the first thing that he is planning is an annexure to the existing property by utilizing the land that is lying unused in the premises. The additional space to be created with the budgeted investment of some Rs. 50 million will be used for restaurants, shops and the like. Though the plan for this annexure was there for some time, Mitsui did not allow it to be implemented as they did not want to go for any additional investment with the losses continuing from the existing operations.

Despite these bitter experiences in Nepal, Miyahara says he is satisfied at his selection of Nepal as a place of work.

“People here praise me as the one who promoted Nepal in Japan, though they do not show that appreciation in their action.” he says, adding, “I’m happy however that I came and worked in Nepal. Had I been in Japan I would be working as an engineer in some factory and nobody would have noticed me. But in Nepal there are so many people who know me. I have earned prestige here. I’m satisfied with the direction of the work, though I’m dissatisfied with the profitability side.”