Despite these positive trends, the people involved in this sector are still not happy. The reason: the volume of the business is still far below the potential, and a large chunk of the business is still dependent on India. "We still have not developed sufficient infrastructure for the growth of this industry", say the cine-entrepreneurs who estimate that Hindi movies still occupy almost 80% of the Nepali market.

Being a small market, Nepal has a limit beyond which it will not be able to expand its cinema industry. The foreign market is limited to some Indian locations where there is a concentration of Nepali speaking population. But that also is shrinking, according to Yadav Kharel, producer-director of Nepali movies who is also the Chairman of Film Development Board (FDB) that the government set up a couple of months ago.

In these circumstances, the viable option for Nepal would be to expand this business in such a way that cinema could be produced also in other languages for export to third countries. With a number of international hits filmed in the exotic Nepali locations, the cine-entrepreneurs have recognised the opportunity, but are hamstrung by several factors.

First is the problem of capital. To produce an international hit requires a "hell of a sum of money". Second is the infrastructure. Nepal has no studio of reasonable standard. Whatever it has in the form of Nepal Film Development Company Ltd. is negligible. Hence the need to frequent Indian studios for almost every kind of job. Even cameras are not available in sufficient numbers here, forget anything else, laments one producer.

The reason is the lack of a proper policy, point out cine-entrepreneurs. With the long-demanded FDB in place, the cine-entrepreneurs have now started to be more vocal in voicing their demands to the government. One such demand is for recognizing their business as a manufacturing industry instead of a service industry. "Once it gets the status of manufacturing, we will be able to avail of the facilities enjoyed by the manufacturing units in the import of machines and equipment such as camera, studio equipment etc.", argue the entrepreneurs. They also hope that if cinema is accepted as a manufacturing industry, the companies will be free to fix the retail price of theatre tickets for their movies.

That indicates to confusion as to how to treat a movie - as an enterprise in itself or simply as one of the products that a manufacturing unit produces. The existing Industrial Enterprise Act recognizes ‘cinematography’ as a service industry, at par with workshops, public transport, cold storages, nursing homes and printing presses. As a result, a company involved in cinematography business is entitled to only those facilities that the companies in these other businesses classified as service industry can enjoy. But the cine-entrepreneurs are demanding that they should be allowed more than what other service industry sectors are entitled for. Right now, they also complain, they are not allowed even the facilities that other service industry sector businesses enjoy. For example, the producers have not been able to get refunded the VAT paid on raw stock and services while producing movies. Similarly, though all types of other industrial units are entitled for concessions on income tax, but not cinema industry.

Similarly, nursing homes can import CT Scan machine and the printing press companies can import the press paying concessional import duty, but motion picture companies have to pay the normal duty for the import of a movie camera. This is because the movie camera is classified as belonging to customs classification code no. 90. "It should be under classification no. 84", argued Laxmi Nath Sharma, a movie director, presenting a working paper in a seminar organised by FDB in Kathmandu on November 30, 2000. However, for the import of raw stock (the film), there has been a special concessional duty of Rs. 0.15 per meter since fiscal year 1997/98.

Another point in demanding the status of a manufacturing industry for cinema making is the expectation that with such recognition, the gate will be opened for foreign investment in this industry (also see the next report in this issue). The existing Foreign Investment and Technology Transfer Act has included motion picture business (produced in national languages and language of the nation) under the category of industries in which the foreign investment is not allowed. Though that restriction is thus not for movies that will be made in Nepal in other languages, the cine-entrepreneurs say, allowing foreign investment also in Nepali language movies will help to expand the market for the Nepali cinema industry. "This will help bring in foreign technologies and in exploring markets overseas", they think.

Exploring overseas markets may appear far-fetched at the moment looking at the existing situation of this industry in the country (also see Ananta Wagle’s report in this issue). Though the number of movies produced in Nepal has started to exceed 40 per year but the number of cameras in the country is around 15 only, said Sharma in his working paper lamenting at the technological backwardness of the Nepali cinema industry. There are a couple of 35 mm cameras, the picture from which can be shown on 70 mm cinemascope screen, but because of the problems in ready availability of these cameras, the producers shoot with 16 mm cameras and later blow the picture up on 35 mm. The result is a hazy picture. "We have exotic locations, but the technology we have been using is unable to capture the exoticness", Sharma says.

That is only one example. Nepali cinema industry is poor in other machines as well. The private sector will be able to import these machines only when the cinema industry is accorded manufacturing industry status and facilities commensurate with this status, argue the cine-entrepreneurs.

But the officials in the Department of Industry (DOI) say, the cine-entrepreneurs are confused. Bharat Bahadur Thapa, who has been the Director General of DOI for nearly one year, he cannot recall if ever one cine-entrepreneur has approached DOI with complaint of the facilities not being available to the cinema industry. If that is the case, the logical conclusion may be that the cine-entrepreneurs hope to automatically receive all the facilities once they are registered as a cinema industry company. But there is a long distance between the lips and the cup. A number of other formalities have to be fulfilled by the companies before they can avail of the facilities, and the cine-entrepreneurs seem to be unaware of this fact.

Extrapolating the same logic a bit further, it means business professionalism is lacking in the Nepali cinema industry. Though the people involved in it may be good professionals technologically, it is also pointed out that this industry lacks quality manpower in sufficient numbers, thus indicating a need for manpower development.

Thus there is a very good scope in cinema industry for the existing business houses that complain the lack of area for investment. As Neer Shah, a cine-entrepreneur who also heads the Service Industry Committee of FNCCI, puts it, the Nepali cinema industry is "technically backward and needs investment." His indication is that if established business houses come into this sector, they will help bring in the required capital and invest in creating the infrastructure as well as in setting up training in institutions. And some initiation seems to have been made already. For example, PK Shrestha of Panchakanya Group, Binod Chaudhary of Chaudhary Group, B.K. Shrestha of Radisson Hotel and RK Manandhar of Greyhound Electronics Group are partners with Neer Shah in Century Films.

Though it is still to be seen whether their involvement in the company is out of conviction about the business prospects in this sector or just because of their personal relations with Shah, another business house, Maliram Shivkumar, has been found involved already in the business of running a cinema hall (Manakamana Chitralaya).

At present there are only three units in Nepal providing film-processing facilities. But it seems the entrepreneurs have started to be confident of the prospects in this industry. That is perhaps why after some years of privatization of Nepal Film Development Company, another private sector company, Prime, started its operation as a films-processing unit. Only recently, the third such company, Cinematrix, came into existence (see the box in page 34). Despite these developments, film-makers still need to go to India for various reasons. Similarly an Indian company has also set up its Nepal office recently to coordinate the supply of equipment and accessories to the film-makers (see a report in this issue about Dreams Promotion Entertainment Ltd.)

The confusion seems also in the assumption that because the cinema business is a service the retail price for the cinema is fixed by the government. Had that been so, the government would have fixed the rates for all the services that fall under the category of service industry as defined in the Industrial Enterprise Act. While the rates are fixed by the government for public transport services on the roads, the rates for the airline services are allowed to float within a specified range. But printing presses and private nursing homes negotiate with the clients for the prices of the services that they provide.

Therefore, the more plausible explanation for the government controlling cinema price can be found in the logic that this is a mass consumption product. And till recently, its supply outlets (i.e. cinema halls) were very limited, thus causing fear that the cinema halls would over-exploit consumers.

The immediate focus of FDB now seems to be in trying to put the issues in proper perspective. Since cinema business initially started and developed here as an import trade, it is still being treated as a trade, not an industry. Though the Industrial Enterprise Act, 1992, has recognized it as a service industry, the rules scattered across various other laws have different and, often contradictory, provisions. To bring them together and to suggest necessary amendments in them, the Board has set up several committees to study these all, and the reports of these committees are being received.

One major challenge that the Board is to face is that Nepali cinema industry has been Nepali only partly. After shooting in Nepal, most of the value addition in the so-called Nepali movies is done in India where they are taken for all processing jobs, because the processing labs in Nepal are doing only parts of the jobs. These factors have been providing some justification for treating Nepali movies as imported items.

However, Kharel claims that the domestic value addition in cinema industry is very high. To substantiate his logic Kharel informs that it takes about only 50 cans of raw stock (negatives) to shoot a three hour movie and the cost of the imported raw stock is thus only about Rs. 250,000 to which will be added another Rs 50,000 or about for additional prints. Also considering the processing chemicals etc., the total would come out to be less then Rs. 500,000 whereas the total cost of a low budget movie would be around four or five million rupees. That gives a value added figure of nearly 88%. However, because one major part of the total cost also goes to singers, music directors, recording studios and others in India, the figure may actually be lower in several instances. But that money can be stopped from going abroad, it is promised, if the facilities such as recording studios and processing labs can be created within the country itself.

Therefore, the Board has chalked out a plan for the next three years, informs Kharel. According to him, the plan envisages to have within the country, 25 cameras in total, two additional processing labs and two additional shooting studios so that the country would be producing 100 movies per year and Nepali movies take 90% of the cinema market by the year 2003. The Industrial sub-committee formed by the board has also estimated the potential viewership for Nepali cinema by that year to be around 20 million people within the country and about 10 million abroad.

Similarly, the Board also has to implement provisions of the laws and regulations regarding minimum requirements fixed for cinema halls and video halls. Moreover, it also has to streamline the regulations. For example, cinema has to be approved by the censure board in each district for screening in the respective district. That has to be reformed in such a way that once the cinema is approved by the central censure board, it can be screened anywhere within Nepal.

According to Mukund Dhungana, a member of FDB, the Board is also trying to develop as an one window agency so that the foreign or Nepali film-makers would not need to spend much of their time for receiving permissions of various types from various agencies. It has recommended the Ministry of Information and Communication to reduce by 50% the existing charges levied on film producers from SAARC countries so that they would be more attracted to come to Nepal to shoot their films. And the attraction among the producers from SAARC countries and abroad is there, points out Kharel informing that two contacts per week in average are being made in FDB for documentaries to be shot in Nepal. Similarly, two feature films are proposed to be shot here by producers from Hong Kong and Bangladesh. Dhungana says, the next challenge is in the unauthorized import of Hindi movies for which the average customs may run to the extent of Rs. 40,000 per movie. This has been making it difficult for Nepali movies to compete with technically advanced Hindi movies.

That means cinema business is like any other type of business, but with a difference in that the company produces one product (movie) after a considerably long period of time and sells it to the distributors for a specific period and also perhaps for a specific locality. Another difference is in that the retail price (cinema hall ticket) of the product is fixed by the public authority. The retailer or the producer has very little control over that.

Under this context, the producer can bargain for the price of the product with the distributor on the basis of the expected crowd that the movie may be able to attract. In a limited market like that of Nepal, that means the greater the expected number of repeat visitors for the movie the higher the distributor or the retailer would be ready to pay for the distribution or screening rights.

To produce that type of ‘hit’ movie, the producer has to have good story and good presentation that appeals to the crowd. For that the technical aspects of the movie have to be at par or above the competitors. Since the major competitors of Nepali movies are those movies made in Bombay, producers here have to be able to use machines, processing facilities etc. that are at par with those being used by Indian producers.

Other than Indian
Little Buddha
Everest
Caravan

Indian

Jonny Mera Naa
Hare Ram Hare Krishna
Khuda Gabah

That is only an indication that the worldwide trend of the slow death of mass-viewership cinema has started gripping Nepali market as well, think analysts. In their separate working papers presented at a seminar in mid July last year, Nabin Subba and Pradeep Bhattarai, renowned film critics, had noted that the first-world has already declared death of cellulloid cinema, and therefore, the cinema halls are being dismantled and supermarkets being erected in their places. In Nepal, the on-going process is of constructing big cinema halls. Bhattarai predicted that after 25 or 30 years, similar situation may develop here as the first-world countries are experiencing today. Or, it is also likely that cinema halls in the cities will be dismantled while new ones will be built in the villages of today.

That means, the Nepali producers have to start thinking right now about making cinema that would be compatible with the technological changes.

(to produce 100 movies a year )

Every year Nepal witnesses entry of near about 100 such film production teams, mainly for shooting purposes. The shooting of Eric Velli’s ‘Caravan’ by Gallart is a prominent example. The film’s name and viewership received special boost by gaining nomination into the Oscar Academy Awards. The success of ‘Caravan’ in the international arena and Neer Shah’s involvement in the production of the film has brought new zeal and enthusiasm among other Nepali film-makers.

In a conference conducted by the Film Development Board focusing on the problems of the Nepali film industry and their solutions , film-maker and former President of Nepal Motion Picture Association, Uddhav Poudel, blamed technical deficiencies for Nepali films not gaining recognition internationally. Putting forward a solution to overcome the situation, Poudel suggested that Nepali film-makers should collaborate with overseas film-makers and come up with products a la ‘Caravan’.

Neer Shah views that Nepal’s attraction for the world film market is evident from the large number of companies that have been flocking regularly into Nepal. Echoing Poudel’s views, he opines that the present crisis faced by the Nepali cinema industry can be overcome by Nepali film-makers initiating joint-venture projects with these overseas film productions companies.

This is of course not the first instance that Nepali film-makers have realised the benefit of joint-venture projects. It is just that they have not been able to think of and implement any concrete course of action in this respect.

The first attempt of collaborating with a foreign partner was initiated in 1984-85 with ‘Jivan Jyoti’ – a Nepal - Bangladesh JV. Then came other projects with Sri Lankan and Pakistani film companies as foreign partners. If ‘Dharti Aakash’ was a Nepal – Bangladesh – Pakistan joint project, ‘Hami Ek Haun’ saw a Sri Lankan film-maker join the group.

The formation of SAARC played a significant role on this front. Bangladeshi investors renewed their enthusiasm by committing themselves to a number of projects with Nepali production teams. It was in fact then that ‘Jivan Jyoti’ materialised.

Joint-venture efforts also brought Nepal and Pakistan closer together. If Shiva Shrestha went on to become the top-notch hero in Pakistan for some time, Sushma Shahi stayed there for good.

What was also tried during these joint-venture attempts was to make a film and dub it into different regional languages. If on the one hand this made the film watchable in all seven countries of SAARC, on the other, it served as a catalyst of unity. But although the idea gained success initially, the success did not last for too long. Three years down the line, production of such films had to be stopped. And so half-way through the making, ‘Mamta’ was stalled.

The Nepali government, in 1998, adopted a new policy under which the entertainment tax was cut down by two-thirds. However, joint-ventures were not entitled to the benefit. And this was perhaps another reason why joint-venture projects failed to progress after that period.

But ‘Caravan’ has opened the door to JV projects once again. Neer Shah, whose National Studio had a hand in the making of ‘Caravan’, feels the need for a handling agency here in Nepal which would help tap foreign investments and make way for Nepali participation in projects like ‘Caravan’.

It is however not clear as to the kind of opportunities Nepali film-makers have been looking for. But the scope of producing films with foreign partners obviously exists, both in Nepal and around the world. ‘The Last Emperor’ was a Chinese-Italian JV film. At home, ‘Mukundo’, directed and produced by Chiring Ritar Sherpa, had also been financially supported by Japan’s national television network NHK. In fact, it is learned that NHK had approved the storyline and subject for ‘Mukundo’.

The potential for attracting foreign investments in cinema does exist. The right policy by the government and the right projects by film-makers will realise this potential, film pundits analyse.

Yadav Kharel’s ‘Prem Pinda’, which was recognized as a quality film without actually doing much in terms of securing financial return, is learned to be doing well across the borders. Using his good offices, Kharel also ensured Prem Pinda’s participation in the French film festival. So although ‘Prem Pinda’ was made in Nepal, it found its real viewers outside. Surprisingly, however, the film was not a great success in India, which is the most prominent foreign market for Nepali films. This was also not the first instance that a Nepali film-maker had exploited personal relationship to market his film abroad. But ‘Prem Pinda’ is perhaps the most successful in terms of financial turnover. What the film has also done is that it opened up doors for other Nepali ventures to enter the foreign market with a business perspective.

Of course, only those film-makers with good connections at the Ministry of Information and Communication (MIC) have gained permission to exhibit their films overseas. And even then, not all films could do as well as ‘Prem Pinda’. The viewers most of the time were from among the Nepali Diaspora. Ashok Sharma can be credited with starting the trend of marketing Nepali films to cities where Nepali speaking population is concentrated and thus reaping good returns. Sharma relates that the prospect of marketing films abroad really dawned on him after he successfully launched a film in London.

After London, various cities of USA presented themselves as lucrative centres for Nepali film exhibition. After Sharma, Bhuvan KC ran his film ‘Nepali Babu’ successfully in the US. But it was Karishma Manandhar’s ‘Dhuk Dhuki’ that did the best business. ‘Dhuk Dhuki’ has so far fetched Manandhar about one million rupees, and the film is still going strong.

Besides America and England, the Gulf countries and Hong Kong are recognised as other potential markets for Nepali movies. Amrit Lama, the producer and actor of ‘Paapi’, has found yet another market in Germany. And it is learned that his upcoming venture ‘Taal’ is made keeping in mind the taste of the audience there. Hari Bansha Acharya’s ‘Tan Ta Saharai Bigris Ni Badri’ has now really opened doors in Hong Kong for other film-makers to promote their films. Badri is learned to have been almost as big a hit in Hong Kong as in Nepal. The overwhelming success of ‘Badri’ will now see Keshab Bhattarai also launch his film ‘Aphno Manchhe’ in Hong Kong.

According to Nepali film pundits, film-makers are now seriously considering overseas audiences when making films. The unlimited foreign market is encouraging more and more film-markers to look across the borders while planning a new venture, they say.

There is, however, another perspective. Nepali film-makers have till date not been able to rope in foreigners to watch their films. The Nepalis living in foreign soil are more or less forced to purchase tickets at exhorbitant price rather than they showing interest in watching the film. Resultantly, these cine-goers are more and more reluctant to watch Nepali films, it is believed. So the market is actually on the decline rather than the other way round.

Film-makers think that more areas to market Nepali movies abroad must be explored. But unfortunately, all activities in this regard have been concentrated targeting the Nepali community outside. No one has tried sub-titling or dubbing Nepali films in foreign languages and selling them off to foreigners. If sub-titles in English can be placed, Nepali films will definitely find bigger audiences abroad, view analysts. Says Chairman of Film Development Board, Yadav Kharel, "Our film industry will get a big boost if we are able to sell our films abroad. But to do that, we must also try new story-lines and subject matters.’’

Nepali film-makers also complain that the Ministry of Information and Technology is not at all co-operative with them, especially in granting permission to exhibit their films abroad. The ministry has its own view – the problem of people going abroad and staying there. But at the end of the day, it is the Nepali film industry that is the loser.

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