New govt should work to bring economy on track: Dhakal

Chandra Prasad Dhakal is Senior Vice-President and president elect of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Also chairman of  the IME Group, Dhakal will assume the post of the top leadership in the business body following its general assembly slated for April next year. Now, the economic status of the country is not that healthy with liquidity crisis, high bank interest rates, decreasing demand and external sector pressure which have created multifaceted challenges for the government as well as the private sector. In this backdrop, Modnath Dhakal of The Rising Nepal talked to Dhakal about the priorities for the private sector and his leadership, and the way out of the current impasse. Excerpts:

 

The second elections after the promulgation of the constitution were recently held successfully, and the results have already been out. How has the private sector taken it?

The results of the periodic elections have been out. The successful holding of the polls have shown that the political system of the country is on the right track. Nepal is now trying to move ahead politically in a constitutional way.  I believe that this election will guide the country towards economic development. I am hopeful that the political parties will forge consensus to maintain political stability, which we have repeatedly said is the prerequisite for economic prosperity.

                        

Some private sector entrepreneurs entered the election fray representing various political parties while some others are in the list of the proportional representation (PR) lists. How hopeful are you that the entry of businesspersons in the parliament will help prioritise the issues of the private sector in the House?

This is definitely a good thing for us. It is expected that this will help in raising the voice of the private sector in the parliament and removing the obstacles faced by the private sector at policy level. In order to strengthen the issue of overall economic development, their representation has raised hope in the private sector, and we believe that they will successfully represent the entire business community.

 

However, there is a growing suspicion that participation  of the private sector in policy making will be 'unnatural' and that it will be motivated by their commercial interest. What would you say about this?

Such representation from the private sector should not be for  the only limited personal interests but for the overall economic interest of the country. In our context, there is a tendency to present some issues only in a negative way. However, I believe that the representation from the private sector will help in building a prosperous Nepal by developing infrastructure, creating jobs, and making maximum use of resources.

 

A new government will be formed in a few days. What are the expectations of the private sector with the new government, and what should be the priorities of new the government?

The private sector is passing through a big crisis right now. For various internal and external reasons, the current situation is worse than it was during the time of earthquake and coronavirus pandemic. Getting rid of this situation and accelerating the economic activities should be the first priority of the new government. It is necessary to find a way to make the overall economy sustainable. Since the political agenda has been achieved in a way with the implementation of the new constitution and successful holding of the elections, the new government should accord priority to the economic agenda. The important responsibility of the new government will be to bring the troubled economy back on the right track.

 After a long gap, the industrialists recently took to the streets with their problems. They are demanding reforms in the latest financial policies stating that they have pushed the businesses into crisis. Has the business environment been that difficult?

The economy, which was affected by the COVID-19 pandemic, had begun to witness a revival in the immediate aftermath of the pandemic. But with the liquidity problems, price hike and the Russian invasion of Ukraine, all the commercial activities have been slowed down. The cost of doing business is increasing unnaturally, and many manufacturing industries have either closed down or running in a limited capacity. It has negatively impacted the government revenue collection. So, if this situation is not addressed in time, more complications may arise in the future. The situation of business persons coming to the street is unfortunate, but their concerns should be addressed at the earliest. The Ministry of Finance, Nepal Rastra Bank and other related regulatory bodies should exhibit flexibility in order to resolve the current crisis, and this is not impossible.

 

Most of our economic indicators look weak. Common people are facing the brunt of inflation. In this situation, what steps should the government take to bring the economy back on the track?

You are right but even in this situation, I have seen some positive signs. Number of youth going abroad for jobs is increasing which has also increased the inflow of remittances. Talking about the indicators of the economy, our money reserves have increased a little last month, and the balance of payment has also improved although it is not satisfactory. Therefore, we need to find ways to increase foreign exchange reserves. Various concessions and facilities should be offered for those who send remittances, the main source of foreign exchange, through legal means. Likewise, exports and tourist inflow should also be increased.

The impact of external influences on the Nepali economy is not that big and unmanageable. Some people are trying to portray  that the current crisis is leading the Nepali economy to the path of Sri Lanka's, but this is not the case. Although there is some disappointment in the areas of foreign investment, there is a positive growth in tourist arrivals. Now, we should focus on making the domestic economy viable and managing liquidity.

 

You are elevating to the leadership of the FNCCI from April 2023. What issues will the FNCCI prioritise for the promotion of the private sector under your leadership?

According to the statute of the FNCCI, I was elected as the senior vice-president in the election held two and a half years ago, so I will have the opportunity to lead the federation for the next three years after the general meeting slated for April. As the senior VP, I have dedicated myself to the success of the current Executive Committee and to the promotion of interests of all members involved. I have always stood for the promotion of the private sector and policy lobbying. During these two and a half years, I reached different districts of all the seven provinces, met with the representatives of the commerce and industry associations there, and had the opportunity to meet with local business community, provincial and local government official. I have learned a lot from the dialogues held with them. I have realised that not only the private sector, but also the heads and officers of the provincial and local governments, as well as political parties and staff administration, have great faith, trust on and expectations from the FNCCI.

While taking the leadership of the Federation, my first priority will be to change the perception towards the private sector. There is still a feeling that the private sector only earns profits and does not fulfill its obligations to the society. What I feel is in some cases we have failed to tell the society about the importance of the private sector which is a strong engine of economic development and job creation. I will try to explain this matter in a way that is acceptable to all. When the attitude towards the private sector changes, it can create a kind of positive energy in the economy as a whole.

The FNCCI will coordinate with all concerned bodies to create jobs, increase domestic productions and speed up the overall economy. My role will be to develop the district and municipal chambers of the Federation to bring in foreign and domestic investments for the production of goods according to their potential and to lead local economy. We still have a lot of work to do to create an industrial and business environment. We have already identified what it is to be done and advanced it as an agenda.

 

What role will you play in improving the internal structure of the FNCCI?

It is the responsibility of all members of the FNCCI to implement the provisions of the statute. Currently, the district and municipal chambers have 50 per cent weightage in the FNCCI elections and the rest 50 per cent comes from commodity associations and associates. But the district and municipal sectors, with half of the weightage, have only one vice-president. I will work to amend the statute to create another VP for that sector. I have realised that more work needs to be done to increase the role of district and municipal chambers.

 

You are also the chairman of the IME Group, one of the country's leading business organisations. What are the new investment plans and priorities of  the IME Group?

If you look at the investments made by the IME Group so far, we have emphasised on projects that directly benefit the government, society and common people. Let's talk about remittance. When the government was looking for a way to bring remittances from abroad easily in a formal way, we started that work through IME. It not only addressed the government's concern but also created a formal channel for remittance inflow, and as a private sector, we got business opportunities. Our group always pays attention to this when making an investment.

Currently, our main areas of investment are hydropower, tourism infrastructure and digital economy. In hydropower, we are also working as partners with the non-resident Nepalis. Likewise, if we strengthen the tourism infrastructure, we can attract and provide service to many more foreign tourists. So, we have prioritised building and operating cable cars for easy access and entertainment to the major tourist destinations of every province, and hotels. Cable car projects in Butwal and Gaidakot have reached the last stage of construction. These projects will be operational within two months. Similarly, the resort project with cable car has also progressed in Chisapani in Karnali and cable car in Sickles in Kaski. We plan to carry out similar projects in other provinces as well.

Likewise, we have given high emphasis to the digital financial system. Nepal Rastra Bank is also emphasising on the cashless economy, so we are providing the facility to make financial transactions through the digital system through the IME Pay. We are also working on infrastructure development for digital security. 

 Published in The Rising Nepal daily on 9 December 2022.