Nepal is in political turmoil. Uncertainty looms after nine billion rupees spent in the past four years for the sole purpose concluded with zero output. The major political parties failed to agree on critical issues plaguing the country. The uprising of subtle ethnic clashes further adds to the flailing Nepal’s problem. However, in the midst of our country’s socio-political transition and a diminishing financial health, I still see a dim light in the tunnel.
For a country like Nepal, which depends heavily on foreign aid and remittance, we haven’t been able to do much. It’s a shame. To operate independently a country must have the capacity to use its resources and generate income. But we have failed and quite miserably too. Since 1960s when Nepal first started receiving substantial amount in foreign aid, and until now where we still continue to do so, we have failed to show positive gains from this.
Exact details of where the aid money is spent are hardly accounted for. According to a World Bank report, remittance from millions of Nepalis abroad accounts for nearly 60 percent of Nepal’s total economy. Yet, we are not being able to protect this income and create a favorable environment for investment. The infrastructures haven’t been upgraded; in fact the 10-year people’s war ravaged the country by destroying the little progress we had made in building bridges, roads and connecting far flung villages with the electric grid.
Nepal is hardly in a position to generate and operate its national budget. So, what can be done? This must be the single most important question our feuding political parties should ask themselves every day. Here is the solution. If only all the political parties agreed on one issue—the reputation of Nepal.
What I see is money still pouring in from foreign countries; not in the name of aid but in the name of Foreign Direct Investments (FDIs). Our slogan of the year ‘Investment Year 2012’ sounds more like ‘Never Invest in Nepal’. The investment year 2012 was proudly announced by the caretaker PM but he failed to shed much light on it. Why parody the investment year when Nepal is in a never-ending process of uncertain political and democratic transition? The unaccountable bandhs by various castes have crippled the country’s production. As if this wasn’t enough, political parties have goons threatening factories and shops to shut down on need basis. The uncertainty has disoriented the private sector and now entrepreneurs are largely looming under the clouded suspicion of wait and watch or take the money offshore. What is the use of this ‘loktantra’ if the citizens cannot work to earn their income? Let us not even talk about those citizens who work on a daily wage basis. It is just not important enough for the country’s leaders at the moment. The prolonged transition has led to the increment in prices of goods that are considered basic necessity making the poor poorer. For starters, GoN can behave more responsibly by stating clearly with an action plan as to when it thinks the political situation in the country will be stable and favorable for investment. I see no advantage and more harm in attracting investment that the government cannot protect.
Despite the glooming facts, like I said, I still see a dim light in the tunnel. Although most countries are already wary about investing in Nepal it is never too late. Stability in the name of stable income is the utmost priority the grudging political parties must agree on.
Effective laws and regulations that assure investors of stability and favorable excise taxes despite the changing political scenario can be a first step towards showing the world that Nepal is ready for business. Recently, an article in The Herald Tribune claims that foreign investors in India are pulling away after the Foreign Ministry proposed new taxes on foreign institutions doing business in India. It also claims that the total foreign investment in India was USD 30 billion in 2010 compared to USD 16 billion in 2011. Nepal must learn from India’s stance on foreign businesses and grab this opportunity to review its own policies and make amendments attractive to the investors. It is pertinent that Nepal opens a one-window policy for foreign investors to quickly set up businesses legally without any hassles. The one-window policy will work to the advantage of GoN as it can provide a one-stop solution to investors and collect good chunks in taxes. The one-window policy can be the ultimate window to attracting investors in a true transparent manner. If only GoN sees the same light in the tunnel that I along with many other Nepali citizens see. For the greater good of the country GoN must make permanent amendments to favor foreign investments and act now. If Nepal can target quarter of those investments pulling away from India, Nepal will walk on the path to creating more jobs, investment in infrastructure, boost local production and increase the per capita income.
As the global economic landscape shifts, it is time Nepal takes notice and grabs the opportunity to lure foreign investors who are looking for favorable taxes and perks to invest. Nepal should take advantage of the depreciating rupee to seek foreign investment and build Nepal locally without the interference from donor countries and avoid being ground zero for all possible political experiments. !