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Welcome note and a brief information on Economic Summit - 2008
Right Honourable Prime Minister,
Leaders of political parties,
Honourable Ministers, Your Excellency Ambassadors,
Members of the Constituent Assembly,
Office bearers of Nepal government and donor agencies,
Invited Guests,
Dear friends, my colleague entrepreneurs,
Ladies and Gentlemen,
At a time when the nation is looking for a new definition from the point of view of prosperity and national resolve to make it a reality, I would like to welcome the chief guest, special guests and all the guests at the inaugural function of Economic Summit – 2008. Despite unfavourable conditions and challenges, we have become a part of a national resolve. It is a point of departure for 'Double Digit growth – a national commitment. At this point, I want the permission to briefly introduce the summits's background, objectives and significance to this august gathering.
Honourable Prime Minister and guests,
Every bygone era hands over the lessons that it has learnt from its achievements and experience to the new era and guides to keep it on track for the unknown future. Nepal also has an experience and documents of almost half century. Building a prosperous and thriving Nepal through lessons from the history, is the need of today. For this, we should take the experience of the past on the basis of its quality, rather than a prejudice. With this appeal, I would like to present a picture seen and felt by a common Nepali.
Almost half of the population of the country is illiterate and one-third of the people are below absolute poverty. Despite facts showing that the percentage of population below poverty line has gone down, the economic divide between the rich and the poor has widened. If the divide is not managed immediately, there is a danger of another conflict escalating before one conflict gets over. The intellectuals, who carry independent view and thoughts, are either sidelined or have not been able to rise above conservative power politics. The producer section of the social economic sector is confused, worried, insecured and demotivated.
From the economic perspective, Nepal is going through a difficult phase as economic issues could never take centerstage during the 12-year old conflict and 2 years of peace process following it. 2 million people have gone out of the country in search of jobs, as enough opportunities for employment have not been created.
80 percent of the total population is dependent upon agriculture for profession. But it is unfortunate that 35 percent of population is facing scarcity of food. Agriculture is looked down upon. Rather than becoming a profession or business, it has become a profession one is forced to take just to live. The patronage of the nation to make this sector highly productive has fallen to the irrational logic of 'market oriented liberal economy'. As a result, the divide between the urban and rural areas is increasing.
Despite 72 years after establishment of the modern industry in 1993 BS (1936), and 5 decades of planned development, a sustainable base for industrial development has not been established in the country. Most of the industries established in the past have completely been closed, those that are there are also in sick condition. The contribution of industrial sector in the Gross Domestic Product has gone down to 7 percent. Entire industrial sector has been stagnant.
Foreign trade mechanism in Nepal has reached a serious condition. As the focus of the government formed after the first people's movement was in economic sector, total economic growth in 1993 was at 7 percent and export of the country had doubled. Then, there was a wave of opening industries like carpet and garment. During the same time, a new series had begun, when Multinational companies like Dabur, Lever and Colgate had opened with aim of exporting to India. Due to the same reason, following Nepal India treaty in 1996, Nepal's export to India had grown to 28 billion in 2000, from 4 billion. Now, the foreign trade deficit in Nepal has crossed 130 billion Rupees a year. This is around 18 percent of the Gross Domestic Product. Total export from Nepal to India is 40 billion Rupees, while we import 33.5 billion worth of petroleum from India. Due to which, the country is in a condition to exchange 2 billion dollars to pay in Indian Rupees. Our export oriented products, Garment, Carpet and Pashmina are losing market, while our domestic market oriented products are closing as they have not been able to compete with cheaper goods from China and India. In absence of strong base of competent products, these is a danger that provisions of SAFTA, BIMSTEC, WTO would be harmful to us, rather than becoming helpful.
Development of physical infrastructure is the precondition of total and sustainable development. Despite 5 decade long efforts of planned development through foreign assistance, the rate of building physical infrastructure is very slow. We're rich country in water resources, but have crisis of drinking water. We've taps but no water, enough petrol pumps but no supply of oil. Not only petrol and diesel, there is crisis of gas and drinking water. Loadshedding continues even during rainy season. We have mobile phones in hand, but cannot talk. The minimum supply system in the country is entirely disintegrated.
Both China and India are in course of becoming first and third largest economy in the world by 2020. China has, for past 3 decades grown at 9.9 percent while India, for past few years grown at 9 percent. Nepal's average growth rate, in last five years, has been less than 4 percent. Nepali's monthly income has not climbed above 3,500. Even in that there is a gap in income between urban and rural sector. We always point towards conflict as a reason for this, but if we visit world history, economic growth rate is seen high even in nations facing conflict.
The most important infrastructure for building a nation is skilled manpower. Right education, dignity of profession and training platform are the preconditions for this. Due to incomplete, insufficient, incontextual and impractical education system, on one hand, there is dearth of skilled manpower in the country, on the other, political leaders do not have time to work due to hordes of unemployed youth. More than 2 million youth, who went abroad to work, kept the economy running through their income, during the conflict. But, due to the same education and training, they are forced to survive in incomes less than 150 dollars a month.
Honourable Prime Minister and guests,
The facts I've mentioned earlier, shows the true picture of present day Nepal. But it should not mean that the country has only challenges and problems. As many problems and challenges there are, so many possibilities and opportunites are also present. But, why is Nepal lagging behind, despite all that? What is the proper and reliable solution of these? This is the main question of today. We thought, we have to enter this subject. For that, we chose not a question, but a subject – Double Digit Growth : A National Commitment. When we raised this question in the past, there would be only one answer – 'Development would begin by itself, after political issues are taken care of first." We always said – "Social and political stability cannot come in the absence of economic progress. These are complementary sides." To raise the monthly income of Rs. 3,500 to 12,000, the annual investment of the nation for next 10 years has to go up to 400 billion from 176 billion. Now the question arises – Where does this additional 225 billion come from? Who will invest? Which sectors to invest in? And, the political will to collect the investment, making policies needed for that and administrative capacity to bring in such investment; where will it come from? We organized this summit, to find real answers to these questions and ascertain the realities, complexities and preconditions attaced with the issue.
Actually, resources are not our problem. When bank shares of 300 million rupees are issued, applications are received worth 10 billion. The series of banks with 2 billion investiment doesn't seem to end. In absence of proper investment climate, the investors have concentrated in real estate and share markets, resulting in high prices in these sectors. This can give birth to an accident some day. The liquidity worth 3 billion dollars, which we get from foreign countries, have not been invested in productive sector. The problem is not of entrepreneurship or management because, Nepal's entrepreneurs and managers have made their identity, not only in Nepal but also out of the country. If there is a problem, it is of environment for investing these resources without any obstacle.
Certainly, the country is going through one transition after another. It is natural fo ask how can such high economic development be possible during such endless transition. In this context, what I would like to humbly request the knowlegdable audience is, if self respect and existence of Japan was not hurt after bomb explosions in Hiroshima and Nagasaki, perhaps the national commitment of a prosperous Japan would not have been born. History has witnessed it, the national passion that came out in Japan in such difficult condition was not directed from a single political party or a single leader's vision. It was, actually, the inner collective voice of the people, which was a resultant of the unprecendented national crisis, people's pain and their feeling of humiliation. Today, our country also needs such national commitment, from all political parties, all political leaders and development partners for economic development.
The nation has transformed into Federal Democratic Republic. If you look at Nepali history, Nepal stands on the brink of new era. Nepali people have already given their mandate for forming a constitution. The constituent assembly has been established, with the responsibility of taking Nepal to a new era, addressing the wishes of Nepali people. The national government in the leadership of CPN Maoist, which has been shaped by 12 years of war and revolution, has been formed. That means, the political issues have got a proper way out. Revolutionary changes have been made to the political structure. Now, if any agenda is left, that is the economic agenda. In the country that has always been focused in politics, it is time that economic agenda be kept in the ceterstage and government, entire political parties and their affiliate organizations and country's entire force be focused on making not only 'New Nepal' but 'A prosperous New Nepal'.
I am not here as any economist, development expert or a planner, but a common respresentative of the corporate world. Normally, corporate world does not indulge in network of statistics, but talks about opportunities, challenges and possibilities and the processes to attain them. We believe that after there is clarity on the goal, the resources for that take care of themselves. An entrepreneur is dreamer, he does not keep quiet saying there's no resources. He creates resources. We feel that if a common Nepali's income is to be taken to Rs. 12,000 from 3,500, the state needs to think like an entrepreneur.
Honourable Prime Minister and Guests,
As far as we understand, the parties may have difference of opinion of political issues. But, everyone has same opinion on economic development. There could be differences on how to attain that, but there's no difference in the target. So, the time has come that all of us, with one voice, commit for nation's economic prosperity. I want to request that it begins from this stage itself.
To realize this commitment, looking at traditional private sector from a new angle, we have identified 18 possible sectors for this summit. And we have arranged for presentations from all those sectors in the working sessions of the summit. We urge and believe that serious discussions take place to reach a conclusion. However, I would request permission from this knowledgeable gathering on how a common Nepali's monthly income can be raised to Rs. 12,000.
If Nepal is to be developed, a total change has to be brought about in agriculture. Unless there is qualitative change in agriculture that is related to the livelihood of 80 percent of the population, it is not possible for the common Nepali to rise above the poverty line. As long as agriculture sector is not made productive, sustainable and fast economic growth is difficult. While talking of agriculture, we have to learn a lesson from US stand, which obstructed WTO meeting, for the benefit of its farmers. 800 thousand people in our country are landless and 25 percent land barren. As long as these paradoxes are not managed, collective produce of agriculture cannot increase. It should be noted here that when urban population gets loan at 6-7 percent interest rate to buy vehicles and TV, the farmers pay 14-15 percent interest on their loan. This is only an example of where agriculture lies, in our priorities. In no country, from US to Japan, would you see such condition, where agriculture is not protected from any angle. Increasing division of land should be stopped. Through this, cost of production would decrease and rate of increase of agriculture produce would also grow. Apart from this, a long list of sectors benefitting from this can be presented, as growth in agriculture sector is the basis of non-agriculture sector.
In this context, success story of Dr Kurien's White Flood (milk revolution), which changed the picture of Gujrat, can be presented. Finland has been able to make itself prosperous through forest and forest related industries and business. The forests of Nepal are still its wealth. Nepal can earn 4-5 billion rupees a year through carbon trading itself. A kilo of Yarshagumba fetches more than 100 thousand Nepali rupees. But, various herbs available in Nepal are being sold for almost nothing. Many districts send hundreds of thousands of rupees worth of vegetables. We can compete with China and India in citrus fruits. Lemon of Bhojpur and Bajhang can fulfill the entire demand of the country yet export it outside. If agriculture is taken as important engine of economic growth and its positive examples implemented throughout the nation, a lot of progress can be achieved in a short term, in the sector.
Honourable Prime Minister and guests,
To qualitatively develop the foreign employment sector, which has established itself as an important source of economic prosperity, if we train 50 thousand people monthly according to foreign market, the number of people going out, which stands at 15 thousand, can be tripled. From this, the present income can be increased at least 10 times. I feel, this is one such sector that can help Nepal take an immediate leap in economy.
Development of Hydro-electricity is an important pillar of Nepal's economic prosperity. Unfortunately, hydropower sector always remained a political card. Even now, we face 16 hours of loadshedding a week, which goes to 48 hours in the winters. Despite so many plans of rearing electricity in Nepal for half a century, even today, we have not been able to produce more than 600 megawatts of electricity. After so many years, we are still importers of hydro-electricity. We have not been able to become exporters.
There is no difference of opinion in any party for development of water resources in Nepal. The only difference lies in whether to take out five thousand or 20 thousand megawatts. The issues of tariff have become inconsequential now. Private sector project Western Seti can become a national benchmark for tariff. There is no discussion on what the government would get while awarding big electricity projects to foreign private companies. The agreement between government and Sutlej in Arun-3, is itself a benchmark. Unfortunately, even now, files of hydropower projects worth 25 thousand megawatts are still in ministries, undecided. Now, projects are not being formed, but people have started becoming owner of rivers by taking license. We need to move ahead after learning from these stories. If we formulate national plan on producing 10 thousand megawatts yearly in next 10 years and use 5 thousand megawatts internally, hydro electricity sector alone can take Nepalis income to 12,000.
Another pillar for Nepal's prosperity is tourism. The sector, which was hit for a long period due to conflict, has got a new enthusiasm after restoration of peace. The number of tourists that had gone down to 250 thousand, has gone up to 500 thousand. But we cannot develop tourism properly with the the infrastructures that we have. The condition of national flag carrier, Nepal Airlines, is in pitiful condition. Airports are in bad condition. Domestic flights are not satisfactory. Land route is also not very good, due to bandhs, strikes and insecurity at highways. As hotels were converted into nursing homes and department stores, the increased number of tourists are sure to face scarcity of rooms. The issue that there can be other tourist destinations apart from Kathmandu, Pokhara and Chitwan, is limited among the tourism entrepreneurs. If Dubai, which had nothing but desert, can collect 13 million tourists a year due to its vision, Nepal can definitely get 2 million tourists. For that, infrastructure development and structural change is the precondition. Not benefitting from the beauty given by nature and destinations like Pashupatinath and Lumbini as well as interest and love of world community towards Nepal and Nepalis, is nothing but lack of political will and poor management.
In absence of productive and service industry, no country can solve employment problems and increase revenue. Product specific and Sector specific Special Economic Zones can be opened near the entry points of Indian and China border, in association of neighbor countries, targeting these two big markets of the world. Industrial sector development of China and India run on this basis. Likewise, various regional destinations can be made for education, health and entertainment sectors. For this, the state has to provide infrastructure and attractive investment packages compared to other countries.
Honourable Prime Minister and Guests,
I have only tried to present few things on a few sectors, among so many opportunities that Nepal has. Additional sectors will be visited during the summit itself. However, in absence of good governance and reliable delivery, all these opportunities can go to waste. For this, bureaucracy is the government's permanent mechanism. But, due to various political experiments on bureaucracy, its administrative capacity has gone down. Due to increased political interference, the civil servants' self confidence has decreased and they seem to have no confidence on their profession's permanency. As a result, indirectly, corruption has been institutionalized. Delivery system of the state has had a serious accident. Commission for Investigation of Abuse of Authority has become a strong basis for people not to take decisions, fearing they'd have to appear before it. It is a big challenge to treat this disease itself.
Another important aspect is the economic model. I think, which economic model to adopt is not an issue of discussion in 21st century. The principles of economic models adopted by US to China and Vietnam are all same. Private entrepreneurship, Public Private Partnership, Government concentrating on infrastructure building and entrepreneur concentrating on investment and busimess. Government's job is not to do business. Examples of what happens when the government does business are, Nepal Oil Corporation, Electricity Authority and Nepal Airlines Corporation. The want of a few politicians and bureaucrats to control business activities for temporary and limited benefit has to be given up. A question has come up, within the country and outside asking if the government which has come from the background of communists can mould itself into the viewpoint and working style of Chinese and Vietnam's parties. The present activities of trade unions, sluggishness of security agencies and daily strikes and bandhs do not point towards that. If sustainable and fast economic growth is to be achieved, it is a precondition that the investors should be given an environment where they can work without obstacles.
We believe that the new constitution to be made would keep necessary provisions which stabilizes the roadmap of permanent and sustainable economic development. But, the representatives like us in the constituent assembly are worried. Whenever new constitution and restructuring of the state is talked about, the ethnic base is always kept in the front. But, it is my humble request if economic sustainability, productivity, infrastructure to get product into the market, just division of natural resources is not made the main basis of state restructuring, an emotional war of getting states for every caste may be won but making country a prosperous one would remain a dream. My request is, please do not consider my saying as an insult to the sensitivity to ethnic of language. With due respect to the ethnic and linguistic identity and culture, today's need is to envision a prosperous and able state from management perspective. I feel, this is a big challenge for the constituent assembly too.
Honourable Prime Minister and Guests,
Nepali people, who have paid high prices for conflict and are waiting for results, cannot be kept at bay in the name of transition. Let's take this transition as an opportunity to build national commitment. This is the departure point of the same national campaign. I request everyone to take this summit in this perspective.
We heartily expect that this three-day summit become a basis for building a commitment among us. Your active participation would endorse this summit as a departure point. With the same request and expectation, I would like to welcome you all and conclude my words.
Thank You!
Binod Chaudhary
President
31st August, 2008 |
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