Private sector can deliver sustainable economic growth: Williams S. Martin
Williams S Martin is the Political and Economic Chief at the Embassy of the Unites States of America ( USA) in Kathmandu. In a written interview, Martin highlights the economic relation between Nepal and US and US cooperation to Nepal. Showing concerns over the decreasing trend of exports from Nepal, he suggests that an environment conducive to business and investment needs to be created. Excerpts:
How do you assess the economic relation between Nepal and United States?
The United States established official relations with Nepal in 1947 and opened its Embassy in Kathmandu in 1959. Relations between the two countries have always been friendly. U.S. policy objectives toward Nepal center on helping Nepal build a peaceful, prosperous, and democratic society. Since 1951, the United States has provided more than U.S. $1 billion in bilateral economic assistance to Nepal. In recent years, annual bilateral U.S. economic assistance through the U.S. Agency for International Development (USAID) has averaged more than U.S. $40 million per year. The U.S. also supports development activities in Nepal through multilateral assistance agencies, including the World Bank, the Asian Development Bank, and various United Nations Development programs. The U.S. is one of the largest contributors to these multilateral donor agencies. The U.S. and Nepal are also active trading partners with nearly 90 million in U.S. imports from Nepal in 2007 and USD 27 million in U.S. exports to Nepal. In addition, to bilateral trade and development assistance, there are also a number of U.S. Businesses in Nepal that provide employment to many Nepalese and million of dollars in tax revenue to the Government of Nepal each year.
How do you assess the economic condition of Nepal?
There are several sectors in Nepal that show great promise and have the potential to transform the Nepalese economy. However, over the last decade, the unstable political and security environment has discouraged investment and forced many businesses to close or move their operations to other countries. To be competitive in the global economy, Nepal needs to create an environment that promotes and supports investment and business. The government, the labor unions and the private sector must work together to create a favorable investment climate in which both domestic and foreign investors can be confident that their operations will be uninterrupted and predictable. Labor, energy and security issues must be addressed openly and the business community must be recognized as an essential partner in the prosperity of Nepal’s communities. Moreover, all the stakeholders must be committed to adopting transparent business practices that will support future investment in Nepal.
What are the priority areas of the US in Nepal in terms of assistance?
USAID supports agriculture, health, family planning, environmental protection, democratization, governance, and hydropower development efforts in Nepal. The United States also contributes to international institutions and private voluntary organizations working in Nepal. To date, U.S. contributions to multilateral organizations working in Nepal exceed $725 million, including humanitarian assistance. The U.S. plans to continue its collaboration with the government, beneficiaries, and other partners as it implements future programs. Last year, the U.S. provided more than $75 million in direct bilateral foreign aid. The U.S. expects its fiscal year 2009 budget to reach similar levels. In fact, the U.S. Congress just appropriated an additional $7 million in fiscal year 2008 funds to support Nepal’s democratic transition and promote economic growth.
U.S. foreign assistance programs will continue to support the government's most important development priorities. The U.S. currently has three assessment teams in Nepal to review priority needs in the democracy and governance, economic growth, and peace building areas. These teams have been meeting with government officials, civil society leaders, rural communities and other donors.
The U.S. plans to maintain its support for the peace process and for Nepal’s transition to a more representative democracy. The U.S. is also supporting the Nepali government's plan to provide health services to all citizens and has recently begun programs to increase agricultural productivity, to repair public infrastructure in flood and conflict-affected areas, and to increase rural incomes through vocational training.
How is the Embassy supporting Nepali exporters and business community in order to promote their products in USA market?
As a beneficiary country under the United States Generalized System of Preferences (GSP), Nepal is entitled to major trade preferences (non-reciprocal duty concessions) on its exports to the United States. In addition to normal duty concessions, Nepal, as a Least Developed Country (LDC), qualifies for special duty concessions and waivers. Under the GSP Nepal is entitled to duty concessions on over 5000 products. The Political/Economic Section at the U.S. Embassy can provide various types of information to Nepalese businesses interested in doing business in the U.S. The Business Facilitation Center at the American Library provides web-based research facilities and provides directories in hard copies and in CDs with contact details of U.S. companies. The U.S. Embassy also hosts speakers, organizes conferences and workshops and provides training opportunities for government officials and members from various commercial and industry associations.
Nepali exporters are of the view that they are loosing their lucrative export market in US. How do you view this?
In recent years, the global trading regime has undergone a major shift from protected markets to competitive and open markets. To compete effectively in these markets Nepalese businesses need to move toward innovative products whose price and quality make them competitive in the global market. Nepal’s traditional exports, including textiles, apparels, carpets and cashmere (Pashmina) continue to be tested against these challenges. For example, until 2005, Nepal’s garment market in the United States was protected by the Multi Fiber Arrangement (MFA). After January 2005, when the World Trade Organization’s Agreement on Textile and Clothing (ATC) replaced the MFA, this market was no longer protected. These fundamental changes resulted in both challenges and opportunities in the textile and apparel trade for many countries. Nepali exporters now need to focus on areas where Nepal has a competitive advantage and the government must support their efforts by ensuring that supply chains are safe and government fees and procedures are fair and predictable.
What role do you think the government and the private sector should play in order to boost national productivity and balance the trade with other countries?
Nepal ’s trade figures show a decreasing trend in overall exports and an increasing trend in imports. The creation of an environment conducive to business and investment is essential for Nepal’s economy to grow. The government needs to encourage investments in a number of critical sectors and the private sector must take a leadership role in drafting a national strategy for economic growth. The government has a critical role to play in creating a secure and business-friendly environment that will attract and sustain foreign investment, but, ultimately, only the private sector can deliver lasting and sustainable economic growth.
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