March 27, 2017 12:45 AM NPT
Speaking at the annual Boao Forum in China’s Hainan province on Saturday, Prime Minister Pushpa Kamal Dahal invited the Asian business community “to invest in various profitable sectors including hydropower, infrastructure development and tourism in Nepal”. Perhaps most of his intended audience was not convinced that they could profitably do business in Nepal. This is because although Nepal has long promised an ‘investment-friendly’ climate, for instance through the introduction of ‘one window’ to channel all such investments, there are still far too many
hurdles for international investors. Maybe the biggest of them is its hidebound and corrupt bureaucracy. Even the simple process of registering a new business, which should ideally take no more than an hour, consumes at least a week in Nepal. Nepali bureaucracy has always been notoriously slow. The majority of our bureaucrats also refuse to do anything unless they are first bribed, or given their ‘commission’ to move a file forward.
Officials at the Investment Board lament how Nepali bureaucrats tend to pour cold water on even the most promising investment projects, even if the concerned ministers are willing to
support such projects.
This bloated and inefficient bureaucracy of ours must be whipped back into shape if the country is to have any hope of attracting quality investment. The only way to achieve this is through a strict policy of reward and punishment, through the promotion of a meritocratic culture within our ministries and other government line agencies. Currently government officials tend to get promoted and rewarded on the basis of their seniority, not on how well they do their jobs. The other big deterrent of foreign investment is lack of coordination among government line agencies. The perfect illustration of this is the chaos around the Melamchi Drinking Water Project. The project completion time has been repeatedly extended, on various pretexts. So instead of clean and plentiful water the Kathmandu residents were promised, they get copious amounts of dust emanating from the roads that have been dug up to lay Melamchi pipelines. There seems to be little coordination between the project and the Department of Roads on when to dig up particular stretches and when to rebuild the
destroyed roads. Separately, the Ministry of Energy gives its go-ahead for a promising hydro project but then the Ministry of Environment takes ages to complete the mandatory Environment Impact Assessment (EIA).
Nepal first needs to get its priorities right before we invite foreign investors. Today’s investors have a global outlook and they are constantly scouring the world, looking for the right places to park their cash. If they don’t find the right investment climate in Nepal, they will invest somewhere else, in the countries that are more serious about striking mutually beneficial agreements with them. According to the World Bank there are currently at least 106 countries where it’s easier to do business as compared to Nepal. Hence, instead of making vacuous statements about our commitment to foreign investment, our major political actors should be together working to remove the roadblocks. For unless there is broad political consensus in favor of FDI and national development foreigners will continue to hesitate to invest in Nepal.