Investors not happy about accountability, transparency in Nepal

Mahesh Kumar Agrawal, president of Nepal Chamber of Commerce (NCC) is the MD of Relaxo footwear industries, Rising Polymer industries, Reliance Umbrella industries, Hemant trade centre; director of Mahalaxmi Maida mills and the proprietor of Mahesh overseas enterprises. He is also a member of the National Development Council, National Water Resources Development Council and Board of Trade. He has been awarded prestigious awards such as Udyog Rattan Award by the Institute of Economic Studies, New Delhi and Indo-Nepal Rattan Award by International Friendship Forum of India, New Delhi. Sushma Amatya of The Independent talked with him recently. The excerpts:

Q: What is your role as the president of NCC? Tell us about its organisational strength and activities.
A: The role of the president of this organisation is not only to solve the problems faced by its members but also to keep them well informed, train them,   aid them in their progress and to promote them nationally as well as internationally. NCC is the first Chamber of Commerce formed in 2008 BC. It has been actively interacting with the individuals and organisations involved in industry, trade and economic sectors. We have cooperated and have had agreements with various international agencies such as Osaka Chamber of Commerce and Industries, Japan; Federation of Shanghai Chamber of Commerce and Industries, China; West Bengal Chamber of Commerce and Industries, India; Chamber of Commerce, Singapore and many others.

We are closely affiliated with multi-national forums and international agencies who provide us with their expertise; for example with International Trade Centre, Asia Pacific Centre branch of technology, ESCAP, UNCTAD, International Chamber of Commerce etc. We often conduct training programs and seminars here in collaboration with the agencies. We will be forming an International Chamber of Commerce Nepal Committee. We send delegations from Nepal to international fairs and promote our products. Our main aim is to work collectively towards  strengthening our trade, industry and economic sector. On the national level, we try to find ways to work together with various departments of the government and keep our members informed regarding its latest plans and policies.

I have been working as a president of NCC since 2052 BC. I will soon be completing my second and last term in the near future. I worked for two terms as a vice-president of this organisation. Altogether I have been involved with this organisation for 19 years continuously.

Q: How important do you think is political stability to industry and trade sector?
A: It is very important. In addition to political stability, we need political commitment. This means reassurance to the economic sector by the political sector, it also means that there will be no deviations from plans and policies for the pre-determined period once they are implemented. The investments made in the trade and industry sectors are long term with fixed investments that take a long time to break even. To safeguard this interest as well to attract foreign investments, these two factors are very important.

Long term stability of any project should be guaranteed to protect the interests of the investors who invest with a long-term perspective. Any issues arising later should be dealt with immediately. Any lapses in the political stability affects the economic sector directly.

Q: What can be done to steer our economy towards the right direction? What are the challenges?
A: We are making our economic policies in tune with global policies, based on a liberal market economy. We do work in tandem with the advice offered by various international agencies. But just having the right policies is not enough. Implementation and execution are equally important. Here, we see that when it comes to implementation, we are confronted with many barriers. It is often found that the executors of policies either do not understand the policies or are giving it an undesirable twist. No matter how well formulated economic policies are, if it lacks proper execution, it is of no use. We need to work for strongly implementing the policies and we should be able to point out  where any deviation has come up. Regular interaction and monitoring and prompt action are required to steer the economy towards a right direction. Besides this, harassment and delaying factors are also playing a big role in slowing the progress in the economic sector here. These areas need to be watched and made sure no unfair means take place.

Foreign investors are interested in coming to our country but they are not happy about the state of accountability, transparency and our legal frame-work. To accelerate our economy and to attract investors, we need to pay attention to those factors seriously and take the necessary steps. And there should be more interaction between the government and the private sectors. There should be an integrated approach, better coordination and a clear direction in mind.

I also feel that our business community need to be better informed, encouraged and strengthened more. They need to move away from the traditional norms and move with the changing times. We do not see enough development of entrepreneurial skills here. We need to build an environment of encouragement and confidence in our economic sector.

Q: Has our market picked up now?
A: The export sector has definitely picked up but the domestic sector has not. This is due to the lack of  purchasing power brought about by low income, unemployment and lack of opportunities.

Q: How do you feel about the recent controversy regarding the appointment of the governer of the Nepal Rastra Bank, the Central Bank of Nepal?
A:  Any appointment must be based on a person’s merit and capability; not on any other factors. Only deserving candidates should be entrusted with responsible positions.

Q: Are you satisfied with the plans of the present government for economic development?
A: Plans and policies have been made with 5 to 20 years perspective. But where achievement is concerned we yet have to see any desired results. Targets have not been reached. Though GDP is reported to have risen, we are not satisfied with the economic scenario. There are many things that we have to work on. The business community needs to be educated on liberal market economy. There are grievances that, many business people do not heed the economic indicators. If we continue to disregard the changing scenario, problems like unemployment, a stagnant economy and other similar issues will increase.

Q: What do you think are the major hindrances for the government for not being able to implement its plans in an organised manner?
A: The government lacks adequate indigenous resources. This compels us to depend on foreign aid and grants. There are many projects which have been left in the care of the private sector but even they seem to lack adequate opportunities where resources and collaborations are concerned. But some in the private sector are doing very well. Weak implementation and interference of unforeseen circumstances are other major drawbacks. People are realising all over the world that trade is a vital factor. All other developments are closely connected with trade.

Q: What sort of programmes should the government bring about to control inflation?
A:  According to our principles, price hike should not come about due to domestic reasons as full competition is encouraged within the market. But if there is any disturbance from the source or point of origin, if there is devaluation in our currency, then price hike is inevitable. Whatever the reason, transparency is a must. There are certain items the prices of which have come down; for example the textiles and the ready made wears. To stabilise the prices, full competition should be encouraged, there should be no dearth of supply and the pipe-line of supply and distribution must be clog free.

Q: There is a lot of talk going on regarding VAT implementation and law and order. What have you observed regarding these factors?
A:  It has only been a few months that VAT has been implemented and there have been thousands of registrations. Though monitoring and evaluation are being carried out, defaults have been observed where compliance is concerned. I think instead of looking for a hundred per cent compliance, phase wise compliance would have been wiser. Any other aspects of VAT should be looked into and there should be better interaction between the business community and the government.

The economy is such a sensitive sector that any threat to its peace and security plays havoc with it. There have been instances of disturbances in the economic sector where the issue of peace and sucurity is concerned. We all have a responsibility towards maintaining peace and security amongst us.