BIPPA should have been signed with India a couple of years ago because it is our nearest neighbour and the largest foreign investor in the country. BIPPA will be a milestone agreement as it promises added security to the Indian investors.

How will the recent BIPPA agreement help in promoting the manufacturing sector?

BIPPA should have been signed with India a couple of years ago because it is our nearest neighbour and the largest foreign investor in the country. BIPPA will be a milestone agreement as it promises added security to the Indian investors. Manufacturing sector today has the biggest setback because of electricity problem. In this context, Indian investors have committed around 3,500 MW power generation in this country. In the second round of power summit going to be held in Kathmandu, we expect another 4-5,000 MW of electricity production commitment. Today, India is one of the largest international investors in the region and last year, Indian investors invested US $ 43 billion outside India. So, there is every reason for them to invest in Nepal as we are their nearest country where they will produce electricity and take to India. BIPPA, along with other agreements, shows a long term commitment of India towards Nepal.

How do you analyse the Nepali manufacturing sector and its growth trend?

In recent years, the manufacturing sector has been neglected because of various reasons. It was neither in the priority of the government nor was there a concern to protect the domestic investments. So, many industries have shut down in the past seven to eight years. Our industries that had significant annual achievements are registering negative growth for a couple of years now. That is because of the wrong attitude of the bureaucracy and of course, none of the politicians are concerned. For the first time in the last 15 years, Nepali Industrialists have revived the hope they had lost after Dr Baburam Bhattarai became the Prime Minister. Manufacturers are treated as criminals in this country, which is why the entire investment climate is in dire straits. Even the facilities committed by the act of 1990 were denied and later withdrawn which is a betrayal to this sector.

Which is the most appropriate sector for manufacturing for Nepal? Why do you think this specific sector is not much developed as expected?

There are so many products necessary to be manufactured in Nepal. Unless the climate for manufacturing and attitude of bureaucrats do not change and unless there is a strong body that can understand the multiplier effects of investment and language of economy, one cannot think of industrialisation. We have discussed the issues and problems we faced after 2000, with Dr Bhattarai. We are hopeful that the industrial revolution will take off after 2012-2013. Many sectors may revive provided there is lowered cost of production and cheaper cost of doing business transactions. There are numerous harassments like high finance cost, no electricity, and so many other reasons due to which industries do not come up. Unless there is power, nobody is going to put money into industry. I will not recommend anybody, at least in my family, to go for manufacturing at this point in time. 

Everybody is complaining that Nepal does not have a suitable industrial environment. Golchha Organisation is one of the most successful corporate houses focused on manufacturing. How are you managing it?

Successes and failures are always part of one’s life. If we are suffering because of the wrong attitude of the government, we might want to close down some industries so that it can give a message. We had to close down Sri Bhrikuti Pulp and Paper Nepal Limited because of the wrong attitude of the government. We are going to close down another important industry, Sri Nepal Boards Ltd due to the same reason. The successive governments thought that importing goods gets them more revenue which they can spend on regular expenses. However, that will leave the country’s development in lurch. There is no desire in the government for development of this country, the only desire is to garner more revenue and enjoy it. At this moment, Golchha Organisation is doing very well with its trading businesses. Trading involves more than 50 per cent of our total turnover while the service sector has around five per cent share and the remaining makes up for our manufacturing concerns.

How long do you think such a situation will persist in the country?

It requires visionary leaders like Lee Kuan Yew of Singapore and Mahathir Mohamad of Malaysia to build successful economies. We have our hopes pinned on Dr Bhattarai and we do see similar capabilities in him. If he could remain the Prime Minister of Nepal for the next 10 years, we believe that he can transform this country. But first and foremost, he should begin with a total transformation of the bureaucracy in Nepal.

Large corporate houses are shifting to the service sector. What is the reason behind it ?

The Nepali people have enhanced their buying power today by virtue of remittance. They want better services and can spend money for that. Service is a sector where you have the possibility of a quick return without making a heavy investment like in an industry. Though are small hurdles like power shortage, strikes and blockades that are affecting this sector as well, it can still manage on its own. That is why the service sector is bound to develop and people are flocking for this sector.

Can a country sustain based on imported goods only as corporate houses and industries are shifting to service sector from manufacturing?

There is always a phase like this and ultimately, the nation will have no alternative. Unless you have a manufacturing sector, how much service can you possibly sell? Everything has a limitation so the service sector too will reach a saturation point. Ultimately, when there is a possibility of easy investment and return, competition to make a mark in the manufacturing sector will intensify. There has to be balance in everything because nothing can grow imbalanced. You cannot say that one sector will grow and another sector is not required.

Why are there very little measures to promote goods that have comparative and competitive advantages?

At the moment, Nepal has no comparative advantage whatsoever. Once we have sufficient power, labourers more inclined towards working rather than politics, banking sector more favourable for investment, a favourable government and its economy-friendly policies, we will have comparative advantages. Unless these logistics are there, one cannot compete. Today, in India, there are industries that are 20 times bigger than what we have in our country. Given India’s automation and advancement, it is difficult for us to compete with our older and manual technology. So, it is almost impossible to achieve higher cost advantage and efficiency in Nepal. If the policies are correct and the sizes of operation are reasonable, we will definitely compete.

There are duplications even with the limited size of the Nepali manufacturing sector. How sustainable is it and what are your suggestions to control such duplications? Duplication has been the phenomenon of the entire world. Nepal is not the only country which faces this problem. There are some industries who lead with original ideas and some others who follow. Only time can tell whether such practices will succeed or not. The capable ones will sustain and the incapable ones will take their own path. Investors have to think which sector they have to go, you can’t push your product. Once there is a pull factor, you will produce more because if you try to push things, you will never get the desired results. The market is the best judge to accept or not to accept such practices.