But here in Nepal, they remain unprotected. Consider the following examples.
It takes about a forty-five minute bus ride from Janakpur to the nearest Indian border town, Jatahi. Unless you have your own vehicle, you will need to take a bus to get there. You will need to tolerate a crowded bus that makes several stops before it reaches the border. There are no other options. From a business perspective, this doesn’t make sense—there is clearly a market for vehicles with a capacity of 10 to 12 that travels more frequently.
As it turns out, someone actually wanted to introduce small vehicles on this route. But he decided not to pursue it when the bus operators threatened to beat him up. So here you go: A business that would have provided employment to some, provided profit to a few, and better service to consumers is not available—all because, the competitors flexed their muscles and the new entrant got scared.
Another example of organized bullying is of the bus cartels of Nepal. Night buses from Nepalgunj to Kathmandu make only 3-4 trips a month, but charge enough to make up for the profit. Cartel members have agreed upon a certain price, and no one dares to violate the agreement. If you want to buy a fleet of buses and make 10 trips a months and set your own price, good luck.
Flexing muscles is not always that crude. Often it is done in a perfectly legal manner. Consider this: Suppose you want to buy a Tata Nano. If you want to buy it from India yourself and pay import tariffs and other taxes, you will not be allowed to do so. You will be asked for an import license! The only choice you have is to buy it from the dealer of Tata Nano in Nepal. So it is not surprising that on top of the hefty tax that our government already charges, you will need to pay for the hefty profit for the Tata dealer.
Sometimes the government involvement is not even discreet. If you want to use the latest technology (ISP) to allow consumers to make international calls at a fraction of the current price, you will be sent to jail. It is illegal in Nepal to offer cheaper telephone services using ISP. This is because the government does not want to face competition from new players.
If you are forced to pay almost triple on your vehicles compared to your Indian competitors, the products you produce are bound to be expensive.
Yet another example of government continuing to stifle business for its revenue’s sake is that of the import tariff on vehicles from India (176 percent). If you are forced to pay almost triple on your vehicles compared to your Indian competitors, the products you produce are bound to be expensive. It is naturally going to be difficult to compete with Indians who will have a cost advantage.
These are all examples of the cost of doing business. They are not captured in any rankings of the World Bank or the IMF. But they are real and severe.
Our politicians need to start talking about creating a good environment to do business, and make our businessmen competitive in the global market. Unless there is a thriving business community, there will not be a bustling labor market. And without a bustling labor market, there will not be political stability.
There is no party that has publicly advocated for the rights of this important group. Any party that repositions itself to fill this space is likely to make electoral gains and be a powerful force in bringing prosperity.
Writer is an Assistant Professor of Economics and Finance at Texas A&M International University
680anand@gmail.com
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