Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), had busy days when the apex business body hosted the 26th regional conference of Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) in Kathmandu from October 4 to 6, 2012. The conference held on the eve of Investment Year 2012/13 was an important event for both the FNCCI and government. But given the long-running political stalemate, Vaidya, in an interview with Bhoj Raj Poudel of Republica, said he does not have much expectation form the Investment Year. Excerpts:
How did the international business leaders respond to Nepal´s present political situation and your investment proposals?
Investors from the Asia-Pacific region got first hand information on the real situation in Nepal. We received a very strong interest from business leaders to invest in Nepal. Some of them even declared their immediate investment plans. However, the investors also expressed concerns over some of the legal framework, particularly on protection of foreign direct investment (FDI). In a nutshell, the conference was successful and responses from investors were very encouraging.
Do you mean the conference proved fruitful in projecting Nepal as a good investment destination?
Yes it did. But we must understand that getting investment from abroad is a long process. As a business community, we have convinced the international investors about good prospects of doing businesses here. However, our efforts alone will not suffice. The government too should take steps to win their confidence. For this, it needs allay concerns of the investors and make attractive offers through amendment and enactment of laws. I sincerely hope our government will take steps in this direction, so that we could materialize our dreams of luring their investment soon.
Investors from which countries were eager to invest in Nepal?
Investors from Korea, Taiwan and The Philippines have expressed strong interest to invest in Nepal. Others too have held business-to-business meetings, interacted with potential local partners and have enquired at length on areas of their interests like agriculture, tourism and hydropower.
Do you think investors will come when there is such severe power shortage of and high incidence of labor unrest?
We are pretty optimistic they will come.
Being optimistic is one thing, but what about the reality?
Yes, there are problems in doing business in Nepal. But problems exist wherever you go. We have sold investment ideas on areas in which we enjoy extra edge, like hydropower, tourism, agro-processing and mining industry. We have offered even fresh areas, in which no investments have been made so far. If we put our house in order and deliver on what we committed, I am sure those investors will truly put in their money in Nepal.
Political deadlock is still on and much-touted policy reforms have not yet happened. What is the general psychology of private sector at this juncture?
We are really in a painful state. The private sector feels paralyzed, for power cuts, labor stir and other structural constraints continue to haunt us and the government has not built an environment to announce meaningful policy intervention and offers to the private sector.
In such a situation, what do you think should be the immediate priorities of the government?
The government should immediately announce a full-fledged budget so that we can have a clear cut policy to work with for a year. This is crucial for us to make new business decisions and investment. We appreciate the efforts government made to prioritize mega-infrastructure and other crucial development projects. But their implementation has remained stalled because of the lack of budget. Given that no new policies and laws are possible in the absence of broader political understanding, we have hence been urging the government to take steps to end the present instability.
The government should also immediately enact laws, reform policies, something which it has committed to the domestic as well as foreign investors in order to bring in new investment in the market.
How you see the Investment Year 2012/13?
Achieving its goals will not be easy. We are in a politically tumultuous situation. We don´t know whether the election will take place. We don´t know whether the constitution will be written. Even if the election happens, we don´t know who will lead the government and how the basic policies and laws will be framed in the country. Confusion on these matters could easily deter the potential foreign investors.
For investment year to be successful, the government must also need to reform labor laws, restrict destructive forms of strikes that affect production process, work out reliable power supply mechanism for industries, and provide attractive incentives to the investors. Reforms on all those fronts are crucial if we are to market Nepal as lucrative investment destination. However, all those reforms are not likely to happen in the present situation of political deadlock. Hence, the Investment Year 2012/13 program does not excite us the way it should.