Going round the Nepali market, anyone can see that the country is becoming the largest ‘department store on earth (141000 sq. km). To make the expression harsher, one can even go on to say that it is becoming a dumping yard of the whole world.
The case in point is the reckless import of everything from everywhere. The growth in the number of speciality showrooms for foreign products is much more faster than the growth, if any, in the number of similar outlets for domestic products. The growth in the number of manufacturing establishments is in fact slowing down. All this indicates that Nepal is fast reverting to the status of the entrepot centre that it was during the Malla period a millennium ago.
Being an Entrepot Centre or a free port is however not bad per se, provided that this is what the country really wants to be and is sincerely pursuing a policy to achieve this. But Nepal is in no way after such goal. The problem with this unintended development is that the country is now facing the wrath of one of the two neighbours, which is also its largest trading partner. India’s complaint that Chinese goods are flooding its market and that these goods get channelled there via Nepal may not be based on the total truth, but the developments here have been providing sufficient basis for India to make such allegation and use it as a bargaining chip in trade negotiations with Nepal. The situation may change in the future and it may be the turn of China to make similar allegations if the Indian goods start becoming more competitive.
There will be no end to it as long as Nepal continues to court special trading relations with these two countries simultaneously. Such concessional arrangements are always for a specified’ duration and the country would be doing something wise if the period of such concession is used to develop the competitive strength of the sectors in which the comparative advantages lie. To blame is the Nepali private sector itself, which is fast losing the opportunity of the proximity to these two huge markets. It has become characteristic of Nepali private sector to first demand something, and when that demand is fulfilled, to completely forget what the demand originally was. The example very frequently cited is the Fulbari transit route to Bangladesh (which is not utilised ) followed by the Nepal-India Trade Treaty (very little utilised for the originally intended purpose). And the most recent example is going to be the opportunity being provided by China by designating Nepal as one of the official destinations for Chinese tourists. This fantastic opportunity for the Nepali tourism industry to pull itself out of the current slump is likely to be wasted as the Nepali private sector seems still unprepared to cater to the highly sensitive Chinese tourists. Except a few Chinese restaurants being opened, nothing serious seems being done.
Still, the greatest blame goes to the government itself which goes with the argument that it has prepared the ground for the private sector to produce here and export to India, and therefore, it was entirely up to the private sector to go and develop an industrialised Nepal. It continued with this attitude throughout the last one decade. And the result is that the industrialised Nepal dreamed in 1990 and in 1996 still remains a dream.