“Biratnagar is the most industry-friendly city in Nepal”

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“Biratnagar is the most industry-friendly city in Nepal”

Shiv Shankar Agrawal
Chamber of Industries, Morang

Active in the chamber movement for the last 16 years, Shiv Shankar Agrawal is President of Chamber of Industries Morang. Presiding over the plastic and stationery major,  Saraswati Group, he is founder of Koshi Plastic Manufacturers Association and executive committee member of Nepal Chamber of Commerce and FNCCI-CNI Joint Economic Council as well as a member of FNCCI’s Tax and Revenue Committee and Constitution Amendment Committee. He spoke to NewBiz Editor-in-chief Madan Lamsal at Biratnagar focusing on Nepal’s overall business issues and those of the eastern Terai in particular. Excerpts:

Biratnagar, once the industrial capital of the country, now looks far behind other areas and some people have also started labeling Biratnagar as a ‘dead city’. What’s your comment?
 That is wrong. It is not a dead city. Biaratnagar is the most industry-friendly city in the entire country. In most of the other parts of country, the industries are facing hurdles due to labourers. But here, the local chambers have a system of continuous dialogue with the labourers so that we have cordial labour relations. 

In fact, Biratnagar is a place where there are plenty of opportunities. To the east is Bhutan and the most least developed region of Bangladesh. Also some of India’s most least developed areas of Bihar and West Bengal are to the south of Eastern Terai. We have a very good opportunity to expand our trade in those areas. Among the major reasons why we have not been able to develop industries, despite those opportunities, the primary one is the lack of electricity. We don’t have 66 KVA connection. We have only 33 KVA connection which makes the cost of power a bit high - about 50 paisa per unit. This makes a tremendous difference for energy-intensive industries. So, CIM took the lead and got the Kataiya-Kushaha transmission line upgraded. But we are still not sure if the additional electricity that is being imported from India will be provided to us. If that electricity is provided to the area east of the Koshi river, the power outage problem here will be removed. Since the chambers here are very active, if we get regular electricity, the whole country will know how industry-friendly our city is. 

But look at what the government has done. The first factory of the country, a jute mill, was established in Biratnagar in 2003 BS. But there is no industrial district established by the government here as yet. Had there been an industrial district, the industries could set up there and flourish. 

So, the culprit is just the government? 
I don’t know who else to blame – the government or the people’s representatives whom we voted to power. They did not give due attention to the industrial development of their constituencies. There is continuous pressure from the private sector’s side, but it’s still in vain. The political instability can be blamed to some extent. New administrations that come are not stable. By the time one minister agrees with us, there is a change in government and we have to start all over again. This is the main culprit.

Though all the cities have similar problems as Biratnagar, some cities like Birganj and Nepalganj have been making good progress. Doesn’t that indicate something lacking in the private sector initiatives? 
May be, but only to some extent. Now CIM is taking strong initiatives to set up a Special Economic Zone here. An Integrated Check Post (ICP) is also being constructed. I was myself working actively in this to expedite it, but the earthquake posed hurdles. Then there was the Madhesh strike. But I am confident that the work on ICP will progress speedily. ICP will be connected also by railway, but some legal hurdles cropped up in laying the railway line. Once the ICP and railways are in place and one or two hydropower projects of the eastern region are commissioned, there will be no other place in Nepal better than Biratnagar for industries. We put in extra effort and brought the broad-gauge railway connection upto Jogbani with the hope that our costs will come down. But due to the negligence of the government of Nepal, we are still not allowed to bring third country imports from Kolkata to Jogbani. The government should arrange to amend the Nepal-India treaty for this. Such an amendment does not cost anything to the government, but businesses save a lot and that will benefit the government as well. But they don’t do it. So, we feel ashamed to look at our ministers. 

Why are the ministers so negligent? 
The ministers are not at all aware about the country’s development needs. They are least concerned about it. I think the leaders of Nepal will not do anything that does not benefit them directly. But we are going to raise our voice further. We have invited the Commerce Minister to discuss issues that need to be discussed in bilateral meetings with India. I will raise the issues also in the forthcoming FNCCI-CNI-CII joint economic council meeting. 

There was a seemingly minute lapse from Nepal’s side during finalising the trade treaty with India. Because of that, though the expenses between Kolkata and Nepal border are recognised as similar to expenses incurred in the third countries, in customs valuation we have to show this as expenses incurred in India. I have been repeatedly asking the government to correct this lapse. Once it happens, our exports will shoot up. 

Let me give one example from the recent economic blockade. All the export-import cargo trucks were diverted to Biratnagar and there was a very long queue resulting in huge detention and demurrage charges. So, we called on the prime minister and finance minister and suggested that as the Biratnagar customs point does not have the capacity to handle so much, the solution would be to allow the cargo trucks to be parked at Biratnagar Jute Mills premises. I also asked them to gradually convert this place intio a customs area. It took three months to convince them. But the permission was received just three days before the blockade was lifted. 

Infrastructure development in Biratnagar looks neglected. Everything looks in shambles. Why? 
This situation is due to the work in progress. We had no proper drainage system. Now this is being managed and in that process some problems have come. Once the construction work is completed, it will look nice. All roads are now being widened. All the people are sacrificing their precious land for this noble purpose. Now nobody will be able to stop the momentum that has gathered for the development of Biratnagar. 

What are the other problems facing Biratnagar? 
We can send our agricultural products to India. That market is huge. But we are now sending such products illegally. Indian authorities ask for quality certification which requires a lab and we don’t have easy access to such labs. I had raised this problem with the then Indian ambassador Rakesh Sood and he had assured to set up a lab near Biratnagar if the Nepal government agreed to it. But it has not happened yet.

Can’t the private sector set up one such lab and ask the government for authorisation? 
I’m thinking of doing a feasibility study for this. Perhaps the industrialists are not thinking about it as it is more directly related to agriculture, not industry. 

What are the businesses with high potential in this region? 
One weakness we have is our failure so far to commercialise agriculture. Large scale production is required to attract the buyer and ensure quality uniformity. That requires land pooling. The initiative that the government has to take for this is still not there. Businessmen are rarely in agriculture. So, the agriculture sector is not formalised and as a result there has been no commercialisation of agriculture. In the minerals sector, some businessmen have got the license, but they have not shown interest to set up an industry for this. Newcomers have no opportunity as the mines are already in the hands of others. 

This region has good potential in hydropower as well. But all the investors throughout the country are facing the same problem in hydropower. The problems that crop up due to local people are discouraging the investors to enter this sector. The government should set up a mechanism to solve the policy hassles in the central level as well as local level problems including security. 

Eastern hills have a unique high value product called Rudraksha (Eliocarpus ganitrus seeds). One single tree yields an income as high as Rs 1 million. Due to big cardamom and Rudraksha farming, the people there are rich and the land price in those places is as high as in Kathmandu. One farmer I met told me that he saves about Rs 10 million a year after providing for all expenses. Thus eastern hills have very good prospects, but not for the manufacturing industry. The major reason is lack of electricity. For big industries, we need 66 kva connection. We are trying to get this. 

Can’t Biratnagar be developed as a hub for medical education and tourism?
In the medical field, Biratnagar is already at the forefront. People from India even come here to treat their eyes. Also the two medical colleges here get large numbers of patients from India. The case is the same with the BP Koirala Health Institute in Dharan. That means hospitals here are better than those in the nearby Indian areas. But the branding of our hospitals is still not up to standard to compete with India’s international class hospitals. This needs attention. Biratnagar and the entire Koshi zone can be developed as a tourism hub. Government statistics don’t count Indians as tourists if they come overland, not by air. But thousands of Indians come to Biratnagar daily in their vehicles for medical purposes. Thus, the Koshi zone is already a medical tourism hub. The Nepal Tourism Board should revise the statistics accordingly, but they have not done anything about it. 

Bhedetar and Pathibhara are good tourism destinations. But they need better infrastructure. Last year there was the Kumbha Mela at Barahchetra. But that did not get enough publicity. Nor was it managed well. The government should have taken care of it. 

How are your own businesses doing? 
We have a plant for making plastic pencils and another for making plastic master batch, which is an input for the plastic industry. The market is good for these products. But we are constrained by the lack of electricity to run the factories. Even generators are idle as diesel is not available. If we get it somehow, we cannot show the expense in our books. After a lot of pressure, the council of ministers allowed the import of fuel, but the ministry of commerce has not yet finalised the process. 

That means, the speed of development depends on how industry-friendly the attitude is of those in the government. 
Since plastic bags are facing strong opposition from environmentalists, the plastic industry is likely to face hurdles in the near future. The public understanding about plastic is misguided. Various products are packaged in materials that cannot be recycled, but there no opposition to those items whereas plastic can be recycled. We are even ready to bring the technology to make biodegradable plastic if the government gives permission. 

In pencils, we are facing challenges from Indian imports. We are now engaged in branding our product. 

Would you like to add anything else?
Two years ago we asked the then minister of industry to open a branch of company registrar’s office in Biratnagar. We invested in the infrastructure for that office as asked by the minister and the office was opened with much fanfare. But the office closed after operating for just one day. We soon learnt that the government could not send the personnel to man the office as the Finance Ministry did not approve the budget. Should we take it as a conspiracy to kill off Biratnagar? I don’t know.

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