Nepali Fight against Global Recession
Find the silver line around the dark clouds
As was discussed in length in the previous issue of this magazine, and as has transpired from various
ongoing debates on different fora, the persistent recessionary trend in the industrialised world is going to negatively affect Nepal as well. While the whole world is suffering from a plague, one cannot remain complacent that the plague has not affected him so far. While some sectors of the Nepali economy are going to face the negative impact from this global crisis immediately, other may face it a bit later.
With the Euro Zone and Japan in recession officially, opinion polls have shown that US economy too is already in recession which is to be confirmed after the data for the quarter ending on December 31 will be officially published.
Still there may be some areas of the Nepali economy where this crisis may have positive impact. Therefore, it would be wise for the Nepali companies to start exploring these areas. At the same time, they also have to start changing their tack in their existing businesses.
One opportunity this crisis may offer is in terms of the availability of quality human resource. This crisis will, on the one hand, stop the outflow of the good human resource and, on the other, bring back some of those who had gone out.
The investors across the world are hastily pulling out their investment from various emerging economies. They have parked that money in the USA driving up the value of the US dollar. And the reason is the safety they feel in the USA due to the high credibility of the US government. Had the Nepali government been equally credible, part of that money could have come to Nepal as well. Unfortunately, the Nepali government has not yet won the confidence of the Nepali investors themselves.
This crisis has also given the Nepali government an opportunity to increase revenue by increasing import duty on some of the raw materials. It may increase duty on those raw materials in which the international prices have reduced substantially in the recent months. This sharp price decrease has badly affected the industries that imported such raw materials when the international prices were high. If the government raises the import tax on these material, this will have another benefit of stabilising the prices of the products made from such raw materials. In the meanwhile, the manufacturers should reduce the prices of their products and induce demand instead of reducing production and retrenching their staff.
Though the government may not hold the level of credibility as sought by the international investors, Nepali businessmen can still attract some of them to invest in businesses that are not going to be affected no matter who comes in the government. Thus it is time to test the capability of the Nepali businessmen to be innovative and come up with business ideas that can be sold to these international investors.
Yet another opportunity available is that the falling commodity prices can be utilised to develop the infrastructure as it will create jobs in such projects and in the long-run add to the economic efficiency of the country. Therefore, the chambers should take a lead and convince the government to make appropriate policies for this purpose. n
