Minister for Industry Matrika Yadav has proudly and ceremoniously cut the ribbon to open up the One Window Service Center. Then, anybody willing to set up any industries could go in and seek the services available at the different stalls set up there. Probably, this is the follow-up action of the Investment Summit 2019 held in Kathmandu during the last days of March 2019.


Now, anybody willing to start off any manufacturing business in Nepal could go to the One Window Service Center at Tripuresvor, Kathmandu, and shop any services required for setting up middle and large industries; mind it, it is only for those folks willing to open up such industries not for the small industries.


However, the small-scale industries comprising 80 percent of the industries in Nepal have to follow the same old process. They have to walk on the same old thorny path at the civil service offices where they might trip over several obstacles but they could carry a bunch of one-hundred-rupee banknotes and ward off such hindrances offering one each of the notes at each stumble and get out of the problem on the way. That has been the real life of the folks working on small-scale industries, and would be so for many yeas to come, as everybody knows that the laws and rules and regulations have been favorable to the civil officials than to the industrialists and business people.


After the functioning of the service center, anybody desiring to set up any industries could walk in the One Window Service Center, and probably buy the necessary services without any formal or informal payments, as the government of Nepal adequately pays those guys providing the services there. S/he will find the stalls of industry registration, custom and revenue, environment, administration and law, visa easing, foreign investment and technology transfer, land acquiring, infrastructures including energy and communication, and foreign exchange easing. Missing banking stall is surely the most important one that will provide the investors with loans required for establishing industries.


Anybody having even a little knowledge of foreign investment could understand that the foreign investors come with a little or no money and borrow the money in the country and invest there only to seize the windfall profit to repatriate all profits to the home country. So, bringing billions of dollars for investment in Nepal might be only an illusion.


Restrictive laws and tricky civil administration, and the weak enforcement of laws, and then the shaky rule of law probably would be the deterring factors to the establishment of industries. Possibility of violation of the human rights, and the Media Council Bill submitted at the parliament clearly for prohibiting the independent and free reporting might be a hindrance to operating industries. Foreign investors also take an account of the independence of judiciary and efficient delivery of justices. Could Nepal ensure the efficient judicial services as required by the huge foreign investors? Foreign investors would take into account of all these things seriously before thinking to launch an investment adventure of opening up any manufacturing units.


As a former scholar studying the activities of multi-national companies, I understand that foreign investors also reflect on how the labor disputes are resolved, how strong the labor organizations means the trade unions are, how favorable the Labor Act has been for the laborers and the industry owners, how the minimum wages are enforced, and how often the governments are changed in other words the political stability, how vulnerable the country has been to foreign interferences means the possibility of blockade or embargo or restriction of movement of goods across the border.


Nepal had experienced the brutal embargo the then Indian Prime Minister Narendra Modi had imposed in September 2015, which ended only in February 2016. At that time, Nepalis had to undergo severe shortage of fuels, medicines and other daily necessities that Nepal imported from India. However, the then prime minister incidentally the current Prime Minister KP Oli sat and cracked jokes, and he waited for Modi to surrender, who eventually did.


India had the prejudice against flourishing industries, businesses, agriculture, and even skills in Nepal. So, Indian officials sometimes blocked off the entry of the Nepalese goods to India on even a minor pretext only to make the Nepalese producers and businesspersons suffer. India had made many restrictions on buying the Nepalese products. Sometimes, India said that it would buy the Nepalese products only if the inputs were made of entirely the Nepalese origin and so on in other words the Indian market is heavily unreliable, could not depend on, and India could make even troubles on the movement of the Nepalese goods through the Indian territory.


Could Nepal look to the north and see whether China could counter some of the difficulties India had caused and might cause in the future? The Chinese decision makers are in Beijing too far away from Nepal. They have the main concerns for anything that might cause the troubles to the rulers in Tibet otherwise they face the huge natural curtain such as the highest mountains that divide Nepal and Tibet, and hide the Nepalese concerns for the fast economic and social development. Nepal is too small for the Chinese leaders of the world class to seriously consider, who have the concerns for leading the world rather than taking care of the tiny country like Nepal, which could neither make any dent on their foreign policy nor in the global businesses. So, they could entirely ignore Nepal.


Certainly, China has opened up its territory and the seaports for the Nepalis to export and import goods through those seaports and the territory. However, crossing the vast Tibetan highland mass would be prohibitory for profitably transporting the folks and the goods. So, this provision might be only for using in the case of emergency when India unexpectedly would block off the Nepalese products from entering India.


Nepal is not Cambodia or Laos where the Chinese manufacturers could go and set up their manufacturing units to offset the problems of the trade dispute between China and United States of America. The media reported that the Chinese manufacturers have flocked to Cambodia to shift the Chinese manufacturing units there to produce and export their goods from there to America. Cambodia and Laos have cheap labor that are also benefits to the investors in manufacturing units. America and China could not sort out the trade disputes, yet. So, these small fast developing countries could take the advantage of the big countries fighting against each other.


So, no matter what window or service center you open up most of the manufacturers might not come to Nepal to set up factories, and produce and export goods from Nepal in the near future. However, some foreigners with the intention of doing different businesses other than what they officially stated to do might come to do shady businesses so that they could make quick profits using the loopholes Nepal provided them with.

Siddhi B Ranjitkar

May 19, 2019

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