February 2007
Economy & Policy

Private Sector Development or Bust

By Madhukar SJB Rana

Neither a ‘new’ Nepal nor, rather more aptly, a ‘better’ Nepal (as the British Ambassador Dr. Andrew Hall insightfully remarked on the occasion of the Nepal-Britain Chamber of Commerce’s Annual Meet) will come true without institutionalization and further development of the MARKET as the fundamental institution for prosperity and peace. No chatter of a ‘mixed enterprise system’, as was done recently by the Maoist leader, will suffice when the reality of our obligations to the WTO mandate is, so long as we are its member, loud and clear. Thus in the context of MFN (most favoured nation) and national treatment, what are we to understand from the Maoist concept of ‘national capital’, for example?

For markets to be strengthened, private sector development along with trade union development are vital so as to enhance consumer sovereignty, i.e. to make the consumer the king of the market place based on his or her rupee votes. Sadly, amiss in Nepal is an INDUSTRIAL RELATIONS ACT that lays down the rules and regulations for establishing trade unions and how they should engage in collective bargaining for the welfare of labour and the company simultaneously.

Equally important is the proper implementation of the COMPETITION ACT. Ideally, enactment of a PRIVATE TRUST ACT too (already available in draft form since 2005) would further the interests of the non-profit sectors that wish to be engaged in private philanthropy and social entrepreneurship.

Only a vigorous private sector participation in the urban and rural economies can make Nepal a better place than ever before. This would require guaranteeing full rights to private property; full economic freedom to enter, exist, expand and diversify business activities as the market warrants, and to seek or be declared bankrupt which too necessitates the enactment, by parliament, of the already promulgated Bankruptcy Ordinance 2005.

Private sector needs development too. It needs to learn how to be innovative, incorporate new technologies, and improve upon its risk-taking behaviour, particularly in the wake of growing financial crises, and political uncertainties in the era of terrorism. Enterprises need to learn to integrate modern management practices into their cultural ethos as most enterprises are small and medium family enterprises. Further, Private sector needs to learn about networking and e-business opportunities for taking advantage of economic globalization.

Not least, it needs to learn about how private profit and social profit can be brought closer to each other through corporate social responsibility and a new business ethics. It will have to grapple with, and make its contribution in its own innovative ways, through job creation primarily, and reckon with the ‘grand equity’ debates of the day, so to speak: namely, gender empowerment, dalit and ethnic inclusion, and regional balance. Moreover, it has to learn about how to enhance Nepali nationalism through participation in the global and regional economies. This feature will, undoubtedly, be its greatest societal contribution to Nepal, which can only be achieved if the Nepali private sector learns to engage, between themselves, in mergers and acquisitions and reach out, wholeheartedly, to inviting foreign capital and technology transfers, especially in the fields of infrastructure, hydropower, agro-industrials and pharmaceuticals (in the product sectors) and in tourism, education, health, banking and civil aviation in the service sectors.

Last but not least, a collective vision must be developed to make Nepal the south Asian financial centre, as well as a ‘transit economy’ between China and India . These are the new comparative advantages of our geography, provided we do not lose sight of our history as a proud independent kingdom. Then only Nepal will emerge as a magnificent bridge between the two great civilizations of Asia .