NATIONAL 4 - (Spotlight Weekly)

‘No One Will Benefit By Pushing Nepal Into Turmoil’

— Dr. NIKOLAY LISTOPADOV

Despite the transition it has made from being the embassy of the Soviet Union to that of the Russian Federation, security and other facilities at the Baluwatar premises have hardly changed. There is tranquillity inside the embassy built in the 1980s, but the man in charge of the mission, charge d’affaires, Dr. NIKOLAY LISTOPADOV, has a clear focus on the various aspects of Nepal's relations with the Russian Federation. Dr. Listopadov, who is an expert on Myanmar, spent six years in that country before he was posted to Nepal. Having joined the diplomatic service in 1983, Dr. Listopadov spent time in Myanmar meeting with people of Nepalese origin. He spoke to KESHAB POUDEL at his office on Tuesday. Excerpts from the conversation:

Amid the changes in the international scenario, how do you see Nepal-Russia relations?

Nepal-Russia relations are very cordial and friendly. Just recently, we celebrated the 45th anniversary of the establishment of diplomatic relations. Russia-Nepal relations are based on deeply rooted and time-tested friendship. Our friendship has survived under different political systems. The relations flourished during the decades of the Soviet Union and when Nepal was under the Panchayat system. After the collapse of Soviet Union and the restoration of multiparty democracy in Nepal, our relations have become even friendlier. Whatever the situation may be, Russia always wants Nepal to remain an independent, sovereign and peaceful country. Our President Vladimir Putin stressed these views while accepting the credentials presented by Nepalese ambassador to the Russian Federation.

Even after the collapse of Soviet Union, Russia remains a major power in the world. What importance does your country attach to Nepal?

The Russian government attaches great importance to Nepal. We consider Nepal as a very important country from the geo-political and geo-strategic point of view. Nepal is located between two giant countries, India and China. We in Russia appreciate the fact that Nepal has always followed an independent, peaceful and non-aligned foreign policy. Nepal can play a very positive role to maintain stability in South Asia. We are happy to note that the approaches of Russia and Nepal to major international problems are very similar.

How do you see the political situation in Nepal after the royal massacre?

We were very shocked by the tragic incident at the Royal Palace and its aftermath. In Russia, Nepal is seen as a peaceful country. The tragic event provoked some violent events in Nepal. Your multiparty political system and constitutional monarchy together handled the difficult situation with care. Nepalese democracy and monarchy have withstood a great tragedy, unimaginable for a small land-locked country. I am very happy to see that the situation now is much stable and peaceful. The tragedy was a kind of test for the Nepalese people and for the democratic political system. The Nepalese people have demonstrated their wisdom and strength.

As you say, Nepal is a very important country from geo-strategic and geo-political points of view. Don't you see challenges for Nepal in safeguarding its interest?

Nepal is in a very vulnerable position, but no one will benefit from pushing your country into turmoil. Your country's interest will be protected as long as you maintain a peaceful and non-aligned foreign policy.

What impact will the recent friendship agreement between China and Russia have on Asia, particularly on South Asia?

We consider the summit between Russian President Vladimir Putin and Chinese President Jiang Zemin as a very important event. The treaty signed by the two leaders will contribute to stabilizing the overall situation in Asia. Nepal has friendly and cordial relations with China, India and the Russian Federation. All these countries are in favor of a just international order, as we call it, a multi-polar world. The development of friendly relations between Russia, India and China is of great importance to Asia and the world. If there are good relations among them, Asia and the world would become more secure and stable. Close relations between Moscow and Beijing do not represent a threat to any other country. The people of Nepal have shown great interest in the summit in Moscow.

What is the policy of the Russian Federation toward Nepal?

As I have already mentioned, the Russian Federation wants to see Nepal as a sovereign and independent country. From the very beginning of the establishment of diplomatic relations, our government has given great importance to Nepal's independence and sovereignty.

What are the possibilities of developing closer trade relations between Nepal and Russia?

There are great possibilities in increasing the trade volume between Russia and Nepal. Russia is a technologically and scientifically advanced country that produces many things that could be exported to Nepal. We have a good example of cooperation right now. Private Nepalese companies have bought several Russian MI-17 helicopters and others have rented it from Russian companies. These helicopters appear to be particularly useful in the mountainous terrain Nepal. The Royal Nepalese Army imported one MI-17 helicopter two years ago. We hope the Royal Nepalese Army finds the MI-17 is useful and will buy more Russian helicopters. I am sure there are many Russian items that can find a market in Nepal. For example, Nepal can import chemical fertilizers from Russia, as our country is one of the largest producers of urea and other fertilizers. Nepalese items like medical herbs, handicrafts and other products can also find markets in Russia.

What is the trade volume between the two countries right now?

If we exclude the helicopters, the volume of trade between Russia and Nepal is very modest. It may be about 1 million US dollars. There have been some occasional deals between individual businessmen of the two countries. Nepalese businessmen import chemicals and fertilizers from Russia and export handicrafts and medical herbs, among other things. We want to increase the volume of bilateral trade.

You say Nepal can benefit by importing Russian technology. What areas do you have in mind?

As you know, during the 1960s, 70s and 80s several projects were built in Nepal with Soviet assistance. I would like to mention Panuti Hydropower Station, Birgunj Sugar Mill, Birgunj Agricultural Tools Factory, Janakpur Cigarette Factory and Resin and Turpentine and some other projects were built with Soviet support. As these projects were built a decade ago, we are ready to take part in their modernization and upgrading work using the new technology. We have already approached Nepalese organizations and we hope that the response will be positive. I have already mentioned the helicopterbusiness. As you know, Russian helicopters are very advanced, we want to establish a facility in Nepal to maintain Russian helicopters Nepal uses.

How do you evaluate the exchange of high-level visits between Nepal and Russia?

Exchange of visits at different levels is very important because it contributes to strengthening relations and increasing mutual understanding. We appreciate very much the fact that His late Majesty King Mahendra and His late Majesty King Birendra visited Russia. We considered His late Majesty King Birendra as a great friend of Russia. We are shocked by the tragedy that happened at Narayanhity Royal Palace on June 1. King Gyanendra visited Russia in 1985 when he was Prince. In December 2000, a delegation of the Council of Federation, the upper house of Russian parliament, visited Nepal. The mayor of Kathmandu Municipal Corporation Keshav Sthapit also visited Russia. House of Representatives Speaker Taranath Ranabhat has been invited to pay an official visit to Russia at the head of a parliamentary delegation. We are also planning to invite a delegation of the upper house of the Nepalese parliament. We are trying to revitalize high-level visits between the two countries. We are also planning to increase consultative visits between high officials of our ministries of foreign affairs.

How does Russia view the Maoist insurgency in Nepal?

It is a matter of great satisfaction that both sides have agreed to talk. With the declaration of the truce and its firm observation by the government and the Maoists, I think events are moving in the proper direction. Negotiations are the best way to achieve piece. As you know, we are also facing an insurgency in Chechnya. The situation is getting better, as there is Chechen government and administration in place. In the broader context, I would like to stress that the problems of international terrorism and extremism and violence are not confined to particular countries or regions but affect the whole international community. We should combine our national efforts to solve these problems. Violence and terrorism in Nepal will affect other countries as well.

During the Soviet era, a large number of Nepalese students received cultural or government scholarship for higher studies. What is the situation now?

Although geographically Russia and Nepal are far apart, we have spiritual and emotional interactions. Nepalese students consider Russia a good place to get higher education. More than 5,000 students have received degrees from the former Soviet Union and Russia. This is quite a big number. Wherever I go to even the most remote parts of Nepal, I meet people speaking Russian. >From Jomsom to Lumbini, I have met people who have graduated from Russian universities. The Russian government now provides 15-20 seats for Nepalese students and large number of other Nepalese students are going to Russian universities. The quality of education in Russia is very high and is cheap. We are happy to see Mitra Kunja, the alumni association of former students of Russian universities, helping to develop friendly relations between the two countries.

How does Russia view Nepal's stand on disarmament?

The approaches of Russia and Nepal to major international problems are similar, especially on issues concerning international strategic stability. Russia and the United States are in consultations over Washington's plan to build a missile defense system and how that would impact the 1972 Anti-Ballistic Missile (ABM) Treaty. We appreciate the Nepalese government's strong support for the ABM Treaty. At the United Nations, Nepal's delegation speaks for safeguarding this treaty. Russia considers this treaty as a cornerstone of international stability and security. We want to continue the dialogue with the United States on all these issues.

‘Professionally Run Banks Will Not Engage In Unhealthy Competition’

— SANANDAN SINGH

SANANDAN SINGH, general manager of Lumbini Bank Limited, has had a long innings in the banking sector. Before joining Lumbini Bank as general manager, Singh served at Nabil Bank in various positions. Singh, a young and energetic professional, joined Lumbini Bank five months ago. He spoke to KESHAB POUDEL on various issues relating to Nepal's banking sector. Excerpts:

How do you see the role of Lumbini Bank in the overall context of the country's banking sector?

We are transforming our role from a regional bank to a national bank. The paid-up capital of the bank is Rs 350 million and we are going to float shares worth Rs 150 million to the public within the next few months. According to the directives of the Nepal Rastra Bank, we have to issue the shares as soon as we open the bank here. As someone involved in the commercial banking sector, I am very happy to note that the central bank is playing a very effective role. Lumbini Bank also wants to play a more role at the national level. As we enter the national level, we will show our presence.

What are your views on the role of the Nepal Rastra Bank?

Only an effective and strong central bank can manage the economic situation. The central bank is a regulatory monitoring body. Nowadays, Nepal Rastra Bank has also become very much effective, a fact appreciated by all. Nepal Rastra Bank is a guardian of commercial banks. From that point of view, we definitely want a strong guardian. The central bank has very competent work force. This is the reason their monitoring has become effective. Nepal has now a large pool of competent work force in the banking sector. After the opening of joint-venture banks, the number of experts in the banking sector has continued to go up. The NRB has regularly monitored the situation of other commercial banks. Commercial banks have to follow certain statutory requirement, including annual internal and external audits. The audit system helps to maintain the credibility of the banks. We have learned many things from joint-venture banks. The appointment of large number of Nepalis to top decision-making positions is a clear reflection of our expertise. The expatriate population has played a major role in teaching and training Nepalis. Whether it is Himalayan Bank, Nabil Bank or any other banks, local work force have built confidence.

How do you assess the decision of Credit Agricole Indosuez to withdraw from Nepal Indosuez Bank?

This is a normal process. In an open and liberalized economy, everyone is free to take decision on its own. If the French bank withdraws, another multinational may come. This is happening in all the joint-venture banks Dubai Bank withdrew its share from Nabil Bank and Grindlays sold its shares to Standard Chartered Bank. There is no need to panic by a bank’s decision to withdraw. Nepal has its own work force to run such joint-venture banks effectively. If they pull out in decent manner, nobody has to worry. I am hopeful that Indo-Suez bank will also do its business successfully.

At a time when many new private banks are coming up, how competitive has the sector become?

Although there is a recession, there is still much scope for banks. The recession is just a temporary phenomenon. Various factors are responsible for the recession. When almost all banks are making profits, one cannot say that the banking sector is unprofitable. Even a new bank like Kumari has made a profit. It is normal in banking terms and a positive development in the present context. Although we are based in Narayanghat, we are also handling a lot of business in Kathmandu. Although we are far from the capital, people have confidence in our bank. Although Lumbini is a regional bank, it is gradually coming up as a national bank. There is much scope for banks, but proper mechanisms and efficient practices are required.

Are there sufficient sectors for investment?

To some extent, the banks themselves have to explore investment opportunities. Instead of relying on the clients, the banks have to identify new areas of investment. There need to become more aggressive. I do not know about others, but Lumbini Bank is promoting some hydropower projects. We want to promote hydropower in Nepal, particularly in small hydropower projects. We are currently backing a couple of small hydropower projects in Nepal. Lumbini Bank wants to support projects that tap natural resources and projects that help national self-sufficiency. The country has to promote industries based on local raw materials, including paper and jute mills and agro-based industries. We want to invest in these areas with a view to saving foreign currency. If we promote such industries, Nepal will get many opportunities. Rather than investing only in trading business, we want to go into areas where employment can be generated. In trading business, the profit margin is high and quick but there is no possibility of generating employment. Lumbini Bank has a clear vision and policy for investment. We want our investment to generate employment as well as save foreign currency.

As you said, Lumbini Bank wants to invest in Kathmandu. How competitive is the market in the capital city?

It is really competitive, as around 15 commercial banks are competing with each other. Except in a few industrial cities like Biratnagar and Birgunj where many banks from outside have open branches, competition outside Kathmandu is less intense. In Kathmandu, you have to compete for survival. We can generate deposits and lend it to the public. We want to do business in all major cities where opportunities are available. Unlike other cities, Kathmandu has multiple areas for investment, including trading, industries and tourism. Many people want to deposit money in the bank when they do not find other areas for investment. People generally believe their money is safer in the bank. Banks also want to invest in viable and productive sectors. There need to be a conducive environment for it. The government needs to develop concrete policies to promote investment in productive sectors.

How do you evaluate the present situation?

Political stability is one of the important prerequisites for economic development. I don't think we can achieve our targets of economic growth without stability. We need to have political stability to encourage joint foreign investment in the country. The foreign joint-venture industries are doing extremely well in Nepal. As the Nepalese market is very small for joint ventures, they want to market their products abroad. For instances, Dabur Limited, Nepal Lever and Asian Paints are doing extremely well. Many foreign banks want to come in but they are still in a wait-and-watch position. Unfortunately, Kodak's pullout has sent negative signals about Nepal's chances to lure foreign joint ventures.

What is the investment position of Lumbini Bank?

The amount of loan is about Rs 1.6 billion and deposits about Rs 1.8 billion. Based in Narayanghat, we have not received non-fund-based business like Letter of Credit, guarantees, fees and commission and foreign exchange, which are also substantial earnings of banks. I hope the non-fund-based business will increase after we start operations in Kathmandu. Right now, we have branches in Butwal, Narayanghat and Hetauda where we don't have to deal with foreign exchange.

What are the major challenges before commercial banks?

To sustain, reconcile, consolidate and strengthen the loan portfolio, recoveries are the major challenges of the commercial banks. We also have other responsibilities such as educating clients about the banking sector. We need to develop a more cooperative attitude and adopt a creative relationship approach. Lenders and depositors will come to the bank because of confidence and credibility. Relationship banking has also started now. I feel very comfortable to give loans to those who I know well. I would also lend money to those whose analysis and financial appraisal is convincing.

How do you see the banking sector reform program?

I have already told you that the Nepal Rastra Bank is doing an effective job by giving right directions to the commercial banks. The reform program implemented by the central bank would also help to correct the mistakes and make the banking system more effective and reliable.

It is said that there is unhealthy competition among private commercial banks. How do you see the situation?

I agree that there needs to be healthy competition among private commercial banks. Bankers have also realized the need of healthy competition. It will affect our survival. We cannot go for cut-throat competition. There is still ample scope for business since, as I have already mentioned, banks are making profits. I want to say that professionally managed banks are very much successful compared to others. Experience has shown that banks that are operated by professional groups will not go for unhealthy competition. I am very much of the view that professionalism is necessary.