Unleashing Nepal

Remarks by Kul Chandra Gautam
At the Launch of Sujeev Shakya’s Book:Unleashing Nepal
Kathmandu, 12 October 2009

Sujeev Shakya is a dreamer; but a dreamer with his feet on the ground. In this book Unleashing Nepal, he unleashes a torrent of ideas, big and small, which cumulatively could change the face of Nepal within a generation.

We have heard before many leaders speak about how they wanted to transform Nepal into a Switzerland or a Singapore. These days many leaders speak about building an even more shining New Nepal, that would be not only economically prosperous but politically inclusive and socially egalitarian.

But few such leaders ever provide us with any specifics, other than asking us to believe that some old outdated ideologies will produce new miracles.

A fascinating analysis I found in this book is how over the decades, the people of Nepal have seemingly voted for leaders based on alluring but empty promises, or sometimes even based on threats.

In most mature democracies, the decisive issue in most elections is the economy. Remember Bill Clinton’s famous expression “It’s the economy stupid”. But here in Nepal, so far, it seems quite possible to win elections based on political slogans devoid of any economic substance.

In an otherwise bleak analysis of Nepal’s economic performance from the days of the Shah Kings, the Rana Prime Ministers, the Panchayat regime and parliamentary democracy, Sujeev recounts one small flash of economic dynamism that occurred in the early 1990s.

The economic liberalization policy of that period opened up the Nepali economy. Certainly the liberalization policy had its detractors and some real drawbacks. But it broke many fossilized monopolies.

The monopoly of Radio Nepal was broken and dozens of FM radio stations started broadcasting, giving people choice to hear multiple views and voices.

The monopoly of RNAC was broken giving people a choice of many airlines with better service.

The monopoly of centralized issuance of passports by the Foreign Ministry in Kathmandu was broken and people could get passports in their districts and explore the world. It took me one and half years to get my first passport. Now you can get it in one day.

The monopoly of a few State-controlled banks was broken, ending the era of having to stand in line for hours getting shoddy service to deposit or to withdraw your own money in the bank. New banks that opened subsequently were customer-friendly and started providing modern and more efficient banking services.

Notable progress was made in expanding basic education and health services, roads and rural infrastructure. Nepal achieved the highest economic growth in recent memory in the early 1990s, peaking at 7.9 percent growth in GDP in 1993-94.

This was the era when the so-called “License Raj” ended in India, allowing it to graduate from the infamous Hindu growth rate; and China achieved double digit growth with the blossoming of Deng Xiao Ping’s “socialist market economy” replacing Maoist autarky.

But political instability and the rise of Maoist insurgency led to the bursting of the economic bubble in Nepal. We had 11 prime Ministers in 10 years; law and order deteriorated, corruption proliferated. And sadly, Nepal proved once again how politics continued to trump economics.

In this book Sujeev outlines how we might build a strong economy in Nepal. As far as I know, Sujeev is not a politician. So he is not doling out empty campaign promises as political leaders tend to do. His prescriptions for unleashing Nepal’s potential are informed by a good analysis of Nepal’s feudal past, chaotic present and optimistic future.

Now, I have neither the time nor the intention to summarize the book, and inadvertently discourage you from buying the book and reading it. But just to whet your appetite, here are some of the ways Sujeev argues we can unleash a new Nepal:

Learning from the positive outcomes of breaking up certain monopolies in the past, he makes a strong case that we break up Nepal’s two remaining huge and inefficient monopolies – the Nepal Electricity Corporation and the Nepal Oil Corporation.

I am sure that none of us who has had to endure up to 18 hours of power-cuts and waiting in line for hours to get a meager ration of adulterated gasoline would shed many tears if these monopolies were shaken up by some competition.

Sujeev advocates for 6 priority areas of reforms with specific suggestions: land reform, tax reform, capital market reform, financial sector reform, labour reform, and fiscal reforms. These reforms, he believes, would help unleash a chain of creativity and dynamism in the Nepalese economy encouraging the private sector to invest in creating jobs and wealth.

The book identifies a number of areas as potential niche markets for Nepal to excel and become a world-class service provider. For example, with Nepal’s enormous potential for diverse kind of tourism, the hospitality industry would be one where Nepal can shine.

The author urges us to get over our mentality of seeing ourselves as a vulnerable little, land-locked country, a soft little yam between two hard rocks, and think of Nepal as the great land-bridge between the world’s largest and most vibrant economies.

Indeed we are urged to embrace globalization with a gusto and think of Nepal’s economic borders as enveloping the whole world. Nepal is wherever Nepalis are, he argues.

Today on the eve of the 4th Global NRN conference here in Kathmandu, we know that Nepalis are spread across all continents and almost all countries of the world.

The potential contribution of NRNs and what Sujeev calls Bipalis (Bideshi Nepalis) could be one of the great assets in a dramatic transformation of Nepal.

I must confess sometimes I found Sujeev’s enthusiasm and imagination knows no bounds. I was a little startled when he suggested in the book that Nepal even consider becoming what you might call the world’s sin capital – opening up gambling like in Macau or offshore financial services – sometimes known as money laundering – as in some of the Caribbean or Pacific Islands.

I first wondered how will our conservative Bahun leaders react to such proposals, or for that matter, how will our puritanical Maoist leaders – who have just adopted a code of conduct in which they forsake ownership of private property, and forbid their children from attending private schools, react to such seemingly immoral ideas?

But on my second revisionist thoughts, I figured that – well – when it comes to making money, all our leaders are very pragmatic.

Right here in the Annapurna hotel I understand the Maoist workers have sidelined all others to have exclusive right to run the casino. Some of us were stunned to see how the Maoists reached out to a Hindu priest whose father they had murdered to do big time fund raising for one of their charitable projects.

Indeed, as Deng Xiao Ping once said, it is glorious to be rich. And that it does not matter whether the cat is black or white so long as it catches the mice.

And I think it is a safe bet that sooner rather than later, our Comrades too will graduate from being Maoist to Dengists. And Sujeev Shakya may not be so naïve in dreaming big after all.

Well, if there is such a great potential to unleash Nepal, what are some of the obstacles we need to overcome?

Several decades ago, Dor Bahadur Bista wrote what many of us consider a classic book on Nepal’s development challenges entitled “Fatalism and Development”. He identified two over-arching obstacles to development – a phenomenon of nepotism always favouring “afno manchhe”; and fatalism which led Nepalis to readily accept failure as their fate.

Both of these still continue to be huge challenges, though today activism has significantly replaced fatalism. Sujeev adds to these 3 other phenomena as the greatest obstacles to Nepal’s development today.

– Hyper-politicization whereby party-affiliated trade unions actually work against the best long-term interest of labourers; teachers and students unions who become the greatest obstacles to improving quality education, and all manners of organized groups that thrive in creating and perpetuating self-defeating chaos.

– The emergence of a culture of violence that is eroding the very fabric of Nepali society.

– The short-sightedness of our private sector in which businessmen are keen to make a quick buck by trading, smuggling, arbitrage, seeking protection for their non-competitive enterprises rather than investing in production, manufacturing and creating jobs on a sustainable basis.

There are many other nuggets of wisdom in the book for the government, for donors, for NGOs, and for all of us to reflect on.

Let me conclude with Sujeev’s take-home message on his vision for unleashing Nepal: “I want to see Nepal as a capitalist welfare state that believes in private enterprise while also taking responsibility for the welfare of its citizens. The unleashing of Nepal’s potential rests on these two pillars”, he says.

I found that pretty convincing. If you are not convinced, I urge you to buy and read the book!

Thank you.