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| ashu |
Posted
on 17-Feb-04 08:59 PM
What follows was written by Sujeev Shakya, who writes a fortnightly column on economics and business matters in The Nepali Times.
Sujeev is also a senior manager at Soaltee Group, one of Nepal's largest business houses that has successfully worked with foreign investors and partners.
Enjoy the article
oohi
ashu
ktm,nepal
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Open and shut case
No foreign investment please, we’re Nepali
By Artha Beed
http://www.nepalitimes.com/issue183/economic_sense.htm
Last week’s issue of [The Nepali Times] was heavy with opinion on foreign investment in media and competition. This week, let’s look beyond just media to foreign investment in general.
Nepal commits to foreign investment at every meeting with multilateral agencies, government plans never fail to mention how we should be investment friendly. After the WTO entry and agreement to every free trade zone that emerges, Nepal has now committed itself to allow foreign investment in sectors still reserved to the domestic industry. So lawyers, accountants, consultants and many other businesses and services have been asked to be ready to face foreign competition.
The reality is that we never like to give up our small fiefdoms that churn out products and services that can neither face foreign competition nor provide suitable alternatives. How many local ad agencies folded up after foreign companies were allowed in?
We talk about riding the global economy, but are not been able to leave tradition behind. These range from following a unique Bikram calendar, having a financial year that begins and ends in different days each year.
The communication system, computer software and 24x7 working environment of the future will only support international systems. Online airline bookings to mobile banking services will not understand Magh or Falgun. Investors in the New York Stock Exchange will not want to hear the Asad masanta results of a Nepali company listed in their bourse. The 15 minute time difference with India is just quaint, not practical.
If we agree to have passports written and signed in English (though immigration forms are in Nepali—and officers still try to match them!), why can’t we have international dates and financial years for business? The fact that we do not want to even think of embracing future trends are indicators of our attitude towards foreign investment. This is not just to attract capital, it is also to woo knowledge and technology.
There goes the Beed again, harping on his favourite peeve, you may say. But take hotels and the travel trade: 30 years ago after foreign investment and tie-ups in the hotel industry were allowed, Nepal’s hotel sector became one of the most sought after for employment. Hotel training allowed many Nepalis to go abroad to work and compete with the best in the world. In contrast, the travel business was protected and foreign investment or tie-up disallowed.
This resulted in having good hotels, but without the knowhow for bringing tourists in droves and providing auxiliary services. The travel business has promoted ‘protectionism’ through various travel bodies that harp against entry of foreign investment or tie-ups. These associations prefer to find answers to businesses by attending junkets abroad rather than bringing in international standards of professionalism and services.
Of course, we shouldn’t make ourselves so wide that foreigners take advantage. It is an issue of a mindset required to think and debate openly without getting into emotional nationalistic tangles. If Nepali business is to progress, then gradual and regulated foreign investment is the only way. And this paradigm shift has to start from the private sector.
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| czar |
Posted
on 18-Feb-04 12:18 PM
"30 years ago after foreign investment and tie-ups in the hotel industry were allowed, Nepal’s hotel sector became one of the most sought after for employment. Hotel training allowed many Nepalis to go abroad to work and compete with the best in the world."
Does anyone have any data to support his assertion?
The large numbers of successful people in the hospitality industry has more to do with the Asian attitude towards guests and our naturally friendly ways than just Soaltee’s professional workforce development contributions. Consider that six of the top ten and 50% of the top twenty hotels voted the best in the world are in Asia.
http://www.travelandleisure.com/worldsbest/results.cfm?cat=hotels
Of them, the two most successful groups, the Peninsula and the Oriental, are Asian companies based out of Hong Kong. Both are owned and operated by Asians and listed in the Hong Kong stock exchange. To my knowledge, neither had an FDI component before achieving success.
As I understand it, there is a sizeable group of Nepalese in the middle-East working in the construction industry, particularly in scaffolding. Given their numbers, I'd say they were world-class scaffolding workers, even though Nepal has no domestic FDI supported housing industry that can take credit for its creation. How about natural agility enhanced by years of scampering up bhogate, plum and other assorted fruit trees and still others for fodder and firewood?
FDI of the right kind brings technology transfer, but more importantly, exposure to international STANDARDS of work ethics and practices and alien concepts like performance based evaluation and rewards. Parts of the Nepalese banking sector could well serve as a decent role model here.
It helps, however, to be selective about the kinds of FDI that a country welcomes. Profitability alone may not be sufficiently useful a guideline to follow. Strategic advantages may form part of the criteria too. I forward two examples.
VSNL in telecomm: In my view, VSNL does not possess world-class technology and nor does it have sufficient experience in free market business practices, sheltered as it were as a SOE (state owned enterprise). I’d have thought perhaps a company like Vodaphone or other European operators might have provided a better value. Not because they are European and hence possess a certain cachet, but because they have the best technology and proven track record in open competitive markets. Perhaps their lack of interest stems from our meager market size and/or our (in)famously bumbling bureaucracy wasn’t up to the task.
Joint development of power and water resource with India: Geo-political realities dictate that it’s to our advantage to allow this to some extent, but should it not be balanced with investments from third party countries as well? How advantageous is it for Nepal to allow India, with its own agenda inimical to Nepal’s welfare, to have full sway over Nepal’s strategic resources just to garner FDI? Despite its recent tribulations, a company like ABB could surely be worthy partner.
In raising these issues, it’s my attempt to further widen the discussion on an interesting topic.
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| el diablo |
Posted
on 18-Feb-04 01:17 PM
Czar, good insights!
FYI, the Peninsula Hotel group is headed by Michael Kadoorie, scion of a dynasty of Iraqi Jews originally from Baghdad, the Peninsula began life as a gamble. Opening a hotel on Kowloon early last century meant instant exile from the bounds of colonial society, then ensconced on Hong Kong Island. But Kowloon was the last stop on the trans-Siberian rail link bringing travellers from Europe.
Not exactly your typical Asian Tai-Pan!
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