Kathmandu, May 21
While the world was under the grip of
COVID-19 pandemic and it was putting its efforts to develop vaccines and other
medicines to prevent the contagion, Deurali Janta Pharmaceutical (DJPL) in
Nepal had begun research for the development of a vaccine against the
coronavirus. But the government processes in research and development, and
procurement of biochemicals and consulting service from abroad posed so many
hurdles that the company abandoned the activity mid-way.
Scientists at the Nepal Academy of Science and
Technology (NAST) successfully developed a prototype of oxygen cylinder in May
2021 by using local products. Although the cylinders manufactured by NAST could
bear three-time more pressure than it should, it couldn't go for the industrial
production yet.
These two incidents hint at the poor status
of innovation in the country.
Nepal lacks innovation in all three major
sectors of the economy – agriculture, industry and service - while the industry
is the one that suffered the most from it. In the last decade after the conclusion
of the peace process, the industrial sector growth remained stagnant with about
14 per cent contribution to the economy while service sector expanded by 10 per
cent to reach 62 per cent and agriculture sector shrunk by 10 per cent from
about 35 per cent. Industrialists say that the sector not only failed in making
innovations but also in transferring significant technology that could disrupt
the production process.
Likewise, only one patent and 31 designs were
registered at the Department of Industry (DoI) in nine months of the current
fiscal year 2021/22 while no patent and 23 designs were registered in the
previous year. Probably, the registration of only 79 patents in Nepal so far shows
the pathetic condition of industrial development and innovation here.
On the contrary, local businessmen have
registered the trademarks of some of the global brands in their name and
created hurdles for the companies in branding and promotion. Kansai Nerolac
Paint is one such case where the original producer is selling its product with
a new name 'KNP' while a local trader has the original name.
Lack of innovative climate
Former President of Confederation of
Nepalese Industries (CNI) and Executive Director of DJPL, Hari Bhakta Sharma,
said that the country lacks favourable environment for research and innovation.
Laws related to intellectual property rights, land use and industrial
enterprise do not incentivise innovation while the governments have been paying
lip service to the promotion of research and development, he said.
According to Sharma, Nepal could have
competitive advantage in information and communication technology, bio-tech and
academia but it needs a policy regime that promotes risk-taking and innovative
capacities in the entrepreneurs.
It is not easy to attract foreign
innovators by a private sector industry since there is a cumbersome process and
reverse taxation on such experts which means they have to pay 13 per cent Value
Added Tax and 15 per cent TDS. Industries that are running at a thin margin of
profits and struggling to overcome the impacts of earthquake, economic blockade
and a pandemic can't afford to expend a large sum to hire them.
Meanwhile, a sad part of it is that trading
is safe and manufacturing is risky which is made riskier by policies in Nepal,
said Sharma. Industries have to worry about the management of land, human
resources, environment and external sector pressure which lacks innovative
thinking.
FDI helps technology transfer
However, Director General of the DoI,
Ramchandra Tiwari, said that the industries with Foreign Direct Investment
(FDI) have supported in the transfer of the latest technology to Nepal.
"FDI does not only bring the funds but also the technology," he said.
In the nine months of this fiscal, DoI has
received the commitment of Rs. 26.14 billion which is less than the pledge of
Rs. 33.42 billion made in the same period of previous year. Specially, large industries with FDI have major role in innovation
and technology transfer but of the total 142 companies with foreign investment,
only three are large and three are medium enterprises, according to the DoI.
Industry-academia tie-up
A tie-up between the industry and academia
in Nepal is almost non-existent although some efforts are made recently by the
NAST and Kathmandu University while Pokhara University has introduced a new
course on innovation and entrepreneurship in collaboration with the Ministry of
Industry, Commerce and Supplies (MoICS).
While all stakeholders have agreed that
innovation centres should be established at the universities and joint efforts
should be put into it by the private sector and the government, the public-private
cooperation is limited to internship and job placement. But National Science,
Technology and Innovation Policy formulated in 2019 pledged to create a conducive
environment for the engagement of academic institution and private sector in
research, technology development and innovation.
Similarly, cooperation between the DoI and
NAST is not rigorous and result oriented, it is limited to discussions and
interactions.
As a result, startups are not getting the
support they require to flourish in the current business environment in the
country. The budget of FY 2021/22 announced free company registration, renewal
and tax discount for startups, Rs. 2.5 million loan at 1 per cent interest, non-collateral
loan for small and medium enterprises, commercial agriculture, women
entrepreneurs and returnee migrant workers, its implementation is not
encouraging. Likewise, the challenge fund of Rs. 1 billion set up to help new
entrepreneurs has also been largely unused.
The Economist said in a recent report that
the enterprises are immensely benefitted from the proximity to brain trusts.
Meanwhile, Chief of the Faculty of
Technology at the NAST, Dr. Rabindra Prasad Dhakal, said that there were
preliminary discussions between the science body and MoICS for cooperation.
Likewise, NAST is partnering with the
Gandaki Province government to establish a bio-char industry in public-private
partnership model there. A feasibility study for the production of electric
scooter is being conducted in Lumbini province as well.
Similarly, the KU has established an
innovation centre for business innovation and incubation and is running an idea
studio to support in business management. According to Dr. Biraj Singh Thapa,
Associate Professor of Department of Mechanical Engineering at the KU, the
university is also running Energize Nepal Project to create industry-university
link. It offers funding to the students with innovative business ideas jointly
with the industry.
"We offer competitive grants to the
students. The programme has also partnered with other universities and
institutions like the Tribhuvan University's Institute of Engineering,"
said Dr. Thapa.
Innovation Centre seeks producers
The National Innovation Centre (NIC) has
successfully tested and developed prototype of multiple products including
e-vehicles, solar drier, baby warmer, coffee roaster, corn roaster and tea
drier. But apart from a couple of innovations like baby warmer and solar drier,
many of them are yet to find an industrial producer.
Chairperson of the NIC, Mahabir Pun, said
that no industry has approached the NIC for any innovation. "If the
research is conducted in Nepal for mechanical innovation, it would reduce the
cost and there could be timely maintenance of such facility as well," said
Dr. Pun. "But Nepali factories import the technology and machines. It
seems they do not have faith in indigenous idea and technology."
According to him, there is no operational
tie-up between NIC and NAST although both the institutions are working in the
areas of invention and innovation. He
said that the NIC wants to forge collaboration and cooperation with the private
sector producers and businesses.
Innovation policy
Countries like Singapore have created
startup policies and implement scheme to attract domestic and foreign youth
with innovative ideas.
The National Science, Technology and
Innovation Policy, 2019 was formulated with the aim to develop entrepreneurship
and increase production by efficient utilisation of means of production,
modernization of agriculture and industrial infrastructure development,
development of production-oriented entrepreneurship through the adoption of
emerging and cutting-edge technology.
Through this policy the government has
assimilated that the country doesn't have environment for the development of
scientific research and technology development, cooperation and partnership
among the stakeholders including the private sector, legal provision for the
operation and management of research institutions, and link between the
research by the academia and commercial production.
The lack of innovation and technology
transfer has repercussions on industrial growth, reduction of production cost,
increment in the productivity and competitiveness of Nepali products in the
international markets. According to the private sector stakeholders, the delay
in promoting research and innovation to support business and industry will
cause further deterioration in industrial production and growth.
Published in The Rising Nepal daily on 22 May 2022.
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