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	<span style="font-size:14px;"><strong>We Need To Change Mindset To Think Big</strong></span></p>
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					<strong><img alt="suraj baidya" border="1" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/interview.jpg" style="width: 346px; height: 192px; margin: 10px; padding: 10px;" vspace="5" /></strong><br />
					Suraj Vaidya, the President of Vaidya's Organisation of Industries and Trading Houses (VOITH) is contesting the prestigious position of FNCCI President in an election being held during the FNCCI Annual General Meeting scheduled on 11-12 April 2011. In an interview with Pinaki Roy of <em>New Business Age</em>, Vaidya talked about the upcoming FNCCI elections and presented his views on reviving the ailing national economy. Excerpts:</p>
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				<strong>The FNCCI elections this year come with a twist. The culture of consensus for the Senior Vice President to take over the reins has gone for a toss. Why so?</strong></p>
			<p>
				Well, we are going through a democratic system and democracy demands that we have more openness. FNCCI has always been a very open institution. New challenges bring new opportunities and therefore, we see more than just one candidate coming in for this election.</p>
			<p>
				<strong>There has been a war of words of late between the CNI and FNCCI. How does it affect the private sector? Do you ever see the prospect of a single umbrella organisation?</strong><br />
				<br />
				I really don't think there is any war of words. The leaderships on both sides, at this stage, are looking at the smaller pie instead of a bigger one. We need to understand that the state of the economy is in an extremely fragile situation. With power cuts of over 12-18 hours a day, the interest rates coming up to about 17-18 per cent per annum, liquidity crunch in the market and the increasing demands of the labour, we need to regroup ourselves, re-focus and see the common agenda. We must then take it up in this new world of <em>coopitition</em>. We need to cooperate where we can and compete wherever we need to. If we agree on this basic fundamental, CNI can do what they need to and FNCCI can pursue its own agenda. We need to move forward together. Actually, we were one and so the concept of coming back together is always there. I see great possibility for us to come back. But FNCCI needs to first look at whether we can meet the expectations of our members who are so demanding today. People leave because they feel that they haven't been looked after. It is as simple as that. Therefore, if FNCCI improves its working relations, its services to the members and takes up the economic agenda as a leader of the nation, probably the members will come back and see the benefit of being part of the FNCCI. It's very possible that we can come back together if FNCCI takes the right leadership. That way we would be under a single umbrella one day again.</p>
			<p>
				<strong>FNCCI has started sounding like a political organisation lately, trying to broker peace between the government and the opposition parties. Is this the kind of role FNCCI should be pursuing?</strong><br />
				<br />
				I have laid out a few tasks for myself if I get to the post of the FNCCI President. We need to talk economic development of the nation because fundamentally our mandate is to lobby and advocate for friendlier business environment in the country. This is our main agenda and to deviate from any of these issues would not be fruitful for the institution. FNCCI needs to be less active in politics but we need to be interactive with the political parties on economic development issues. Therefore, we will work with the political leadership on economic issues, national development, national budget and planning etc. We need to work with all the political parties as partners. But if it comes to carrying any 'ism', that's something FNCCI needs to stay far away from.</p>
			<p>
				<strong>As a prominent business leader, how do you look at the overall state of the present economy? </strong><br />
				<br />
				The fundamental problem with the businesses and the industries is that the economic agenda so far has been overshadowed by political agenda. There has been less private sector initiative on taking leadership in this area. One of the things that I have set for myself if I come in as FNCCI President is that within six months, we will have an economic agenda which will talk about a very short term - three to five years-planning. It will give us a sense of direction as to where we think the government needs to lay more emphasis on, to create employment opportunities, to create a better investment environment and to be able to make it more profitable for businesses to operate. Once we have an economic agenda, we will go to the political parties and get their views on it. We will hopefully have a national economic agenda signed and accepted by all political parties to strengthen political understanding between them. So, I think the economic-political agenda led by the private sector is what is required today. And unless that happens, we are going to have a lot of problems. The mess that we have today is because the private sector has not been the engine of growth. It's been politics which is trying to be the engine of growth which is negative for the country. This is where we need to reform and move forward.</p>
			<p>
				<strong>There is relative peace in the country, so to speak, after the end of hostilities. Why then are we not seeing any major investments? Where does the problem lie?</strong><br />
				<br />
				The example of the problem is very clear. It took us over seven months to find a prime minister. But people have started doubting how long will he be there. Business is a long term game. It's not that you make money today and walk out tomorrow. The fundamental requirement for any investment is sustained peace that helps to understand where the country's really heading to. It worries us when the parliament gets bogged down debating whether to use such words as 'private-public partnership'. When the political parties start showing hatred towards the very word 'private', it makes investments very uncomfortable. It gives an impression that the private sector can never be made a partner in the development programme. This message is reaching not only the Nepali investors but also to the foreign investors whereas FDI is so critically important to this country. If you look at the hydropower projects planned to be developed, a lot of Indian companies are either holding on to the projects or taking longer time to start them because of the inability to view the political-economic side of things. These are very critical issues that Nepal will have to address squarely in the coming days.</p>
			<p>
				<strong>How about the possibility of a consensus among the candidates for FNCCI Presidentship? How exactly have you projected yourself for the position with your plan of action and manifesto, to lure the members?</strong><br />
				<br />
				My experience tells me that especially when the institution is going through a very difficult time, you tend to come together. But again there is a Nepali culture, a Nepali way of doing things. Democracy and freedom of association and thinking lead to an intellectual debate on how best we need to move forward. Six months ago, I sat with incumbent FNCCI President Kush Kumar Joshi and urged him to take the leadership in creating an environment where we have no elections right across. And I am not talking about the election for the post of President only but for the entire FNCCI. My concern is simple: if the country's new constitution is promulgated, FNCCI's laws and regulations will change drastically. We are not sure which districts, states and municipalities will fall under what areas once the country turns federal. Therefore, FNCCI's constitution itself will change and this will be a huge change through which we need to remain united. I have been trying to emphasise on this with the incumbent President for a long time now but haven't succeeded for whatever reasons. And now we are little over a month from the election date. Therefore, I find it difficult that there would be any understanding. So I am moving ahead on my own.</p>
			<p>
				I have six very simple agenda: First, to provide better service to FNCCI members whereby getting their confidence and be more focused on FNCCI's work and not go beyond its mandate. The focus would be on the economic agenda and if we are able to do that, we would have provided services to the members. The members would mean the people from the districts, the commodity associations and the associate members. The second, to take leadership on the economic plan of this country. I think we have got too much of planning done for this country without real serious inputs from the private sector. FNCCI needs to make an economic vision which will not be a long term one. We are going through a very transitional phase so we need very short and medium term plans. My strategy would be to create an economic vision which would give a rebound to this depressive situation that we have. And hopefully work with the political parties and have the agenda accepted by all political parties whereby it would reflect on government policies for creating a better environment for business. That will be six months from the time I come in. The third agenda is energy. We all talk about the potentials of energy that we have. I am not going to be a politician saying we will bring 5,000 or 10,000 MW of power. But what I would say is that we would lobby and push and do everything possible to make investment in hydropower. We are going to push hard to get approved the electricity bill that has been sitting in the parliament for the last two years. We need laws that are investment friendly. We will urge the government to look at the supply and demand situation. The government needs to look at hydropower development as an area of national priority and give incentives to attract larger investments. The electricity tariff has not been revised for the last 10 years and it needs to be looked at seriously. We need to advise and work with the government on whether it is workable to continue to have NEA responsible for producing, selling as well as managing power. The electricity losses of 18-20 percent are unacceptable to the nation.</p>
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				<strong><img alt="" border="1" height="97" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/interview.jpg" style="width: 175px; height: 97px; margin: 10px; padding: 10px;" vspace="5" width="175" /></strong></p>
			<p>
				Number four would be fiscal discipline for which the private sector first needs to be open and transparent in the way we do business. And we will try and encourage that as much as possible. The last three budgets did not come on time and the government has not been able to rescue the country's economy. In fact, the delay in budget is one of the reasons why the interest rate has gone up so high. The funds have not gone to the districts for development expenditure and as a result, we are lagging behind. Fiscal discipline on our side definitely needs to be looked at but we would also lobby and bring to the attention of the Nepali people, the government's long vision or whatever it may be. Number five, I want to go to the trade unions as partners. We need to sit and plan on how we can create a better investment situation in this country. The labour relation is extremely important to build confidence for investors. We need to see if we can retain the Nepali people leaving the country. We want to improve working relations with the trade unions and the two agenda to look at are linking wages with productivity and linking social security with flexibility. If we can work out these two agenda, we can achieve a lot with the trade unions.</p>
			<p>
				The last point is that Nepal needs to brand itself as an attractive destination because the existing capital in this country would not be sufficient to rebound the economy. So, we need FDI in this country and need to look at India and China as our primary partners for kick starting our economy. I would be taking a lot of delegations to India and China to market Nepal as a friendly and attractive destination in the areas of hydropower investment and tourism. I think these are areas that would help Nepal come back quickly. Therefore, focusing on India and China as partners for Nepal's development is extremely critical. These are the six primary agenda that I have if I become the next FNCCI president.</p>
			<p>
				<strong>Why are you contesting the FNCCI President's post, in the first place? Why are you in the fray at all?</strong><br />
				<br />
				I have been with FNCCI for the last 25 years and have been the Vice President thrice. I am now the Senior Vice President and I really need to move up or leave the space for some other friends who want to come in. More importantly, the new leadership of FNCCI from coming April will be directly responsible for what's going to happen in about two months from there. That is the time when new Constitution is expected to be promulgated though we don't know whether the constitution will be really promulgated. Economy and development will be important agenda that time. Therefore, the FNCCI leadership needs to be mature and determined enough to take on those challenges. I am prepared for that. I see several reasons why the economy has not been at the forefront.&nbsp; In the New Nepal, the economy must be in the forefront. I am concerned about the inflation that's up from 8.5 per cent last year to 14.6 per cent now and the slowdown in the industrial output from 4 per cent to 1.8 per cent. These are all extremely worrying symptoms and I feel I can face these challenges and also come up with an amicable result which will enhance FNCCI's image.</p>
			<p>
				<strong>The image of the business community has been badly tainted by the fake VAT bills episode. How do you view this? What, according to you, can be the course of correction?</strong><br />
				<br />
				I think the private sector has owned it up saying that it is a part of corruption that is going on in the country. But the government and the system itself need to acknowledge that they too are involved in this and therefore, we need to work together to find a solution and get out of this. It's important for us to understand that institutions like FNCCI will stand by the law of the land. If there is any forgery which affects the nation at large, FNCCI needs to take up this issue. By the same token, the government needs to understand that they are also part of it. Such corruption and forgery wouldn't have occurred just by the efforts of only one side. So, the other side too needs to own up and say what they plan to do regarding this.</p>
			<p>
				<strong>We have witnessed a shift from manufacturing to service industry in recent times. What could be the possible reasons?</strong></p>
			<p>
				Nepal needs to revisit itself and re-understand where our sustainable areas of potential investments are. The industrial growth has declined from 4 per cent to 1.8 per cent mainly because we have power shortage and frequent strikes. There have been labour disputes and political interference in large investment businesses. Therefore there are large projects such as the hydropower projects that are intended but haven't really materialised. What is discouraging investment into these areas is lack of foresightedness. How long is Nepal going to wait for things to really happen and to have a stable government that will last beyond a few months? And until Nepal shows that leadership, I think investment in manufacturing is not going to increase. It is a wishful thinking at best and therefore, service industry is something that is but natural. Nepal needs to look at Singapore, Switzerland and Hong Kong which are very small nations lying between large industrial countries. We need to see if we can imitate their success by providing services to bigger countries whereby we can increase our niche in the market and improve the economic condition of this country. So, the service industry is going to be a very important part of Nepal in times to come.</p>
			<p>
				<strong>How does the FNCCI and the private sector plan to revive the ailing national economy?</strong></p>
			<p>
				We need to be positive and work with the media and the government in saying that Nepal is not a poor country. Nepal has tremendous future and potential so the fundamental thing is to change our mindset from thinking poor to thinking big. This will help us initiate a new beginning. Nepal needs to seriously look at how we can generate investment here to employ the 500-700 Nepali people leaving this country on a daily basis because the youth who would make the future of Nepal and the people who have knowledge are leaving us. The doctors, engineers, scientists and businessman-they are all leaving us. Therefore, we need to create a positive environment in this country to try and retain them. This is going to be critically important in the coming years. Nepal needs to look at its niche strength which is human capital. It needs to look at the growth of India and China. They are going to be the world's largest economies by 2020. Nepal needs to be able to make a strategy on how to benefit from the growth of these economies on the two sides of our country. If we focus on that, we would be able to quickly come out of our problems. We need to have a focused vision and short term plan for revival. We also need to try and create employment and good labour relations. At FNCCI, we need to work with the trade unions as partners - we should be people sitting on the same side of the table, not on the opposite sides. If we are all in this together, it will be critically important for us to move forward.</p>
			<p>
				<strong>Some of the projects initiated by the FNCCI lately have failed miserably. It is operating more like an NGO implementing independent projects. Shouldn't FNCCI be taking the lead to envision what is in the best interest of Nepali economy?</strong><br />
				<br />
				Human resource is extremely critical and I want to link this with the FNCCI running a lot of training schools across the country. I think the reason we have not been able to create a sense of success is because we ourselves haven't really focused on exactly what kind of human resource we need to develop. The fundamental issue is what are we training, who are we training and what is the purpose of that training. FNCCI needs to be active in many areas. The JITCO programme which is sending Nepali people to Japan has not been very successful. It's a Japanese company that comes here, interviews people and recruits them. FNCCI is purely mediating this. It probably needs to be in the forefront and take the leadership. I think unless we take leadership, we should not be involved in any such programme.</p>
			<p>
				<strong>Would you like to add anything as a message? </strong></p>
			<p>
				Yes, a message to the leaders. It's high time they understand that politics is not the primary concern of the Nepali people. We are worried as Nepali citizens because it's being projected that next year, there is going to be a food shortage of 400,000 tonnes in this country. With remittance declining, our economy is going to be badly hit. The kind of queues that we see outside the foreign ministry for passports speaks loudly about the confidence of the Nepali people on the country's leadership. Therefore, it's time for them to get off the political agenda and start working on economy because this is the only thing that is going to get the country back on a sustainable basis in a long term. We should get peace and understanding so we want them to treat economy as the primary agenda and the most important thing to get the country back from the state that we are in.</p>
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<p class="NoParagraphStyle" style="margin-bottom: 5.65pt;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span style="line-height: 120%;">''Software Industry in Nepal is Much Bigger than &nbsp;We Think It is''</span></span></strong></span></em></span></p>
<p class="NoParagraphStyle" style="margin-bottom: 5.65pt;">
	<span style="font-size:12px;"><br />
	</span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif=""><img align="left" alt="sanjib" border="1" height="167" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/Sanjib Raj Bhandari1.jpg" style="width: 205px; height: 167px;margin:10px;padding:10px;" vspace="5" width="205" /></span></span></span></em></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif="">Sanjib Raj Bhandari</span><span lang="EN-GB"> is the CEO of Mercantile Office Systems, the pioneer company in Nepal's IT sector. Having seen the evolution of sorts in IT in the past two decades, Raj Bhandari himself has effected a sea-change in his business, priorities and processes. At the beginning, his company was a computer distributer in the mid-1980s, became an internet service provider in 1990s, produced own brands of computers in the beginning of 2000, and now in 2011, Mercantile is chiefly a software producing company. Mercantile-produced software are extensively used in Nepal, especially in the banking sector. Raj Bhandari foresees Nepal's great future in IT, as well as expresses concern that we are among the “bottom few” in the global IT map. He says Nepal also lags in South Asia behind India, Pakistan, Sri Lanka and Bangladesh. Excerpts:&nbsp;&nbsp; </span><span lang="EN-GB" style="letter-spacing: -0.1pt;"><br />
	</span></span></span></em></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company Mercantile has been considered one of the pioneers in Nepal's IT sector. How do you view the growth of the sector over the period of last two decades?</span></span></strong></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The growth has been tremendous over this period. If you look at the very beginning in the early 1990, we had a problem not only with the fact that we were all very new to IT sector, but there were no government policies specially addressing this sector. Computers and its parts were considered luxury items thumbing that the ordinary people do not need them. That psyche was reflected in the government policies. We had a lot of difficulties in doing business not only of hardware but also the software. The policies vis-Ã&nbsp;-vis IT sector were very unfriendly. <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We've come a very-very long way. Today the overall policies are very positive. This transformation has helped both the hardware and software industries to grow. There's been a sea of change not only in the IT development but also on how the government and the people at large perceive the IT now.&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you please elaborate on how Mercantile managed to grow to become the market leader as it is now?</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I run a number of IT companies, of which I run two flagship companies from this building (see picture). The first one is Mercantile Office Systems (MOS), which we started in 1985. It concentrated mainly on distribution of computer and IT related products and software development. We started internet business including email under the MOS in 1992-93. The second one is Mercantile Communications which we started in 1995. We did not know too much when we started internet service under the MOS. It was very much exploring and doing things as you go along. We did not have much technical know-how. Internet was completely new. When we started email service in December 1993, email was not available for the public in India. When we started the internet in 1995, commercial internet had just begun in Singapore. It would not begin in India for another 3 or 4 years. So it was very-very new, we would not know what we were doing, we learnt as we went along, we sought help from a lot of people from outside. Today you can go and hire engineers. In those days, we did not find engineers. We had to actually train our own engineers.&nbsp;&nbsp;&nbsp; <strong><br />
	</strong></span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">You have been selling your own Mercantile brand of computers and office systems. Do you see any need to bring changes in your products or services? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We have been distributing computers since 1985. In the beginning of 2000, we experimented with our own products. We were very successful for two years, but later we could not compete with the international products. The reason was that we needed to be 25 per cent cheaper than the international products and the other products available. In the beginning, we could maintain the difference but later we could not. So, we slowly phased the production out. We don't have the products now. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company software are extensively used by Nepali companies. What distinguishes your products and services from the others?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I think it is the quality. We have from the very beginning emphasised on quality and we have always maintained ourselves and concentrated on niche market. We have seldom gone for mass market. Most of our services are in the gear to corporates. Some of our products like computer notebooks and communication software are now available for mass marketing. Our services like technical, banking and software services have always been very selective. That's how we actually maintain our profile. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you tell us where does Nepal stand in the global IT map and what position Nepal has in South Asia? What are the hindrances as well as prospects for the growth of this sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">If there were a global IT map, we would find ourselves in the bottom few. I often say that our proximity with India is only in relation to geography. Our proximity with India is not in development scale, manufacturing and specially IT. In South Asia, India is way-way up, then would come Pakistan or Sri Lanka not necessarily in the order, and we would be close behind Bangladesh but it does not mean too much, as we still have a lot of run to cover.&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Nonetheless, the software industry in Nepal is much bigger than we think it is. We do not have proper statistics. But my guess is that there are over 5,000 people working in the software industry of Nepal. There are maybe 40 to 50 companies that have employed some 30 to 40 people each. There could be as many as 10 companies with over 100 people in each. Many of these companies are involved in software exports. Their figures do not reflect national figures because many of them do not want to come out in the open as it would create far too big problems for them. And, as their customer base is abroad and as they do not need a formal registration in Nepal, they choose not to be in the legal hassles here. This is something the government really needs to address. &nbsp;&nbsp;&nbsp; </span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">There are a lot of capabilities within the country to develop software. If you look at the hardware sales, the value addition, in terms services, distribution and warranty the Nepali companies provide, is between 2 to 8 per cent. If you look at the software, the value addition is over 90 per cent. There are some 7-8 companies that are exporting services to where the potential lies.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">How are the government policies impacting on the growth of this sector? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The government role is obviously very-very important here. But, the software industry does not need, does not look for government leadership and does not make their plans and projects relying or looking at the government action. The private sector must lead. If the government can catch up the pace, it's fine. Otherwise, the growth will find its own path. A great example is the trekking business. When the trekking agencies started in the 1970s, they organised themselves without government aid. Later on, the government came in to issue the licenses to them. The government has policies and has made policies in the past too. But execution has been the problem in Nepal. Emphasis really has to be on execution, not so much on formulating and announcing the policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Do you see any possibility of government and private sector working together for the development of IT sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Traditionally, we think that the partnership between the government and private sector is fruitful. But, what we have discovered is that the government has very soft corner for IT sector, but still the cooperation has not yielded true fruits. This is not only the fault of the government. I feel the private sector too has not played its part. When you demand so many things from the government, you make your business compatible to the policies and accountable to the country. If you look at any industrial development in Nepal, it has always been private sector led. So the progress has to be made by private sector. If the government assists, it is welcome; if it doesn’t, it need not be bothered.</span> <br />
	</span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">As I previously mentioned, the initiatives has been taken by the private sector. However, if the government and the private sector were to cooperate, the government could obviously help with better and improved policies. The government could also help by buying software and looking for solutions, let's say in electricity or telecom companies. This encourages Nepali IT companies to take part. But right now, the terms, conditions and perks in international standards that the government boasts are rather punitive to Nepali companies. I repeat they are not only discriminatory but also punitive. Those companies put such conditions which Nepali companies simply cannot meet. Or, if they can be met, they could be agents only. This is very humiliating. It is fine if the government entertains the business from international companies in the area where Nepali IT companies cannot compete. But the Nepali government is disqualifying the Nepali companies for many other reasons. To correct this, the government need not do too many things. What it can do is to just encourage, invite and qualify Nepali companies to take part in business bidding to provide service for Nepal government and institutions. There could be many areas like e-commerce, trade, billing boards for telecom and other government bodies – where the Nepali companies too can perform well, given little amendment in service procurement mechanism. Therefore, for now it would be enough to revoke the punitive and discriminatory policies on the part of the government; let alone making fancy policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The Computer Association of Nepal (CAN) and ICT Association of Nepal are holding Info Tech Fairs every year. How do you evaluate the role of these fairs in promoting IT business in the country?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The CAN and ICT info-tech fair attracts hundreds of thousands of visitors every year. Obviously it plays the central role in awareness, as it educates the public at large. However, it is almost like the flagship event for CAN and ICT. It is important for these organisations to focus and involve in other large events of info-tech. Right now they are perceived as single event institutions. They need to move out of that.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">There are some unused infrastructures on IT, one of them being the IT Park in Banepa, Kavre. Why do you think such utilities are almost defunct? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">In 1992, a high level commission was set up to look at the development of IT and the benefits of IT Park. Ten years down the line, many things have changed, in particular the communication technologies. The IT Park is yet to embrace the changes. That could be the major reason for it being a mess.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">Still, don't you think there is a digital divide prevalent in the country? How do you think such divide can be narrowed down? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Digital divide is alarming. Only one or two per cent of Nepali people have access to internet and IT in general. Increasing the access of people to IT and telecommunications can lower the digital divide as both these sectors are complimentary and intertwined. The number of people having access to IT and telecommunications is increasing. I'm happy with that and hopeful too.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">As a matter of fact, your company operates an online media too. How much do think it has contributed to the growth of online media in Nepal? How economically feasible is it?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">When we established a news portal in 1999, it was definitely not sustainable for the next 5-6 years. But today for the last 3 or 4 years, the portal has been doing fine economically too. We have hired almost 20 people. The portal pays for itself and is also making money. Online media came with more people having access to communication, computer and education. To have access to online media, one must have computer device, must have access to communication and must be educated. In developed markets, the online media has overshadowed the traditional media. I am still doubtful that will happen in Nepal in the foreseeable future. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Every successful company stores plans for future as well. What about yours? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We will obviously expand on our communication network. We will expand our institutional network to cover entire country now. In banking software, we expect to grow at least 100 per cent on year basis. We are also looking on international market and we are very hopeful. As of now, over 50 per cent of the banks, over 70 per cent of the development banks and 90 per cent of the finance companies use our software. This covers almost 1000 branches in the country's financial system. Even if you say each branch in average uses this software 20 to 30 times, some 20 to 30 thousand use our software daily.&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">What could be the way forward?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">With the growth of communication and education and population as well, the IT sector can only grow. I see its great future in Nepal.&nbsp;</span><span style="letter-spacing: -0.1pt;"> </span></span></span></span></p>
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<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span style="background-color: rgb(240, 255, 240);">'I See Prospects in Herbs, Tourism and of course, Carpet'</span></span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	<img alt="" border="1" height="270" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/572699_512919295_905742336_n.jpg" vspace="5" width="180" /><br />
	<br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em>Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview with Nubiz, says his basic priority would be to revive and maintain the old trade surplus figure that Nepal had been enjoying in the past with Germany, now a key member of the European Union. With the nose-diving of carpet and garment exports, Nepal has nothing much to offer to German market. Still, Kakshapati is hopeful that the branding of some of Nepal's food products such as tea and coffee and attracting more German tourists to Nepal can still help get the old trade figures back. Excerpts:</em></span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em><br />
	</em></span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What is your new vision as the new president of Nepal-German Chamber of Commerce and Industry?</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I have segregated it into two parts. The chamber is 18 years old. Some of its legacies I have to carry on. I cannot opt out of the regular programmes the Chamber has been doing. For example, the Chamber has been promoting Nepal's tourism in Germany since 1994. It is called CMT Caravan Motor Touristic. It is a very popular fair in Germany. More than one million people visit the fair each year. So, it must continue. Besides, there are some other regular programmes which I will continue. That is the first part of my aim. As for the new vision, I want to expand whatever economic ties exist between Nepal and Germany. If you look at the overall figures for the past one year or two, our overall trade balance has not been in our favour. But Germany is one country with which we have trade surplus. But the margin of that surplus is now decreasing. I want to bring it back at least to the old figures. That is my main aim.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Germans are looking for new products from Nepal. For example, Nepali tea and coffee have entered into the German market but lack effective branding. I would like to brand it as Nepali tea or Nepali coffee. I see a scope there. Likewise, we are always talking about Nepali herbal and similar products. Herbal is one product which a lot of developed countries are eyeing on. Nepal is so rich in herbal resources. If we produce and market it, Germany would be one of the very popular destinations for these products.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Similarly, besides exporting to Germany, I want to work on capacity building in the country to export different products from Nepal. The Chamber has the past history of such works. For example, it organised a tea seminar in Ilam some years ago. We invited experts from Germany one as the market expert and another as the product expert. These experts directly interacted with the tea producers regarding the choice of taste of Germans and market situation there. That proved very effective. I want to do the same for other products also, for example, herbal, as I have mentioned. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal's herbal products are yet to be processed and branded well. In the case of coffee too, we have to enhance our quality. Today, it is soothing to see professionals involved in coffee production. The bottom-line again is that we have to increase the quantity and improve the quality. When we work with a developed country, quality is always the first priority to have an access into their market.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">During my travel to Germany I found that Nepali business community has not been able to explore the existing opportunities in terms of machinery, information, etc. There are only a handful who have done so. I think Nepali businessmen should also go to the expos in the places in Germany so as to learn things and gain expertise. Therefore, I am also in favour of promoting exchange visits of business people between the two countries.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you think the Nepal Germany trade relation can be made favourable to Nepal? <br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">As I said earlier, Germany is one country where Nepal has trade surplus. But we should not be content with whatever trade figure we have. The Chamber in the past has worked with DIHL which is the authority in Germany to expand trade relation between any countries. When I visited their office in Germany, I found that they have given very tiny space to Nepal. They showed me the huge trade volume they had with China. Through the exchange of visits and co-work among various chambers in Germany, I think we may be able to increase the trade prospects of Nepal. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Even the European countries are removing Nepal from the list of “preferential trading partner very shortly. How can your Chamber contribute to retaining Nepal's status as a beneficiary of developing country concession of EU?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Yes, I also heard that. It is an agenda for me to talk with the EU representatives in Nepal first and find out what was the reason behind it. There could be so many reasons, and I will work on how to address the situation. First and the foremost, I must know the reasons. After that, we the Chamber and other organisations like the carpet association, etc can lobby together. I will also work closely with German development institutions like GTZ. We, as individual organisations and with others jointly, will lobby to retain our position in the EU.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Chamber of Commerce and Industry is one the oldest bilateral chambers in Nepal. How do you view its achievements?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think it was the first bi-national chamber in Nepal. The establishment of the Chamber introduced the concept of bi-national chambers in our country. Some 18 years ago, nobody thought of a bi-national chamber could be so important. One of the major achievements of the Chamber is that we have been able to join hands with various German trade bodies and even development agencies like GTZ. The Chamber has enhanced and promoted ties between Nepal and Germany. An example is tourism. The Chamber has been instrumental in the arrival of German tourists in Nepal as well for expanding market of Nepali products such as carpet and garment in Germany. From time and again, we have been taking business delegations to Germany. Such steps are helpful in strengthening trade links.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Most of the economic activities in EU seem to be consolidated under EU umbrella. Do you think the bilateral trade relations of a country like Nepal with individual member countries of EU hold long term importance?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Though EU has certain umbrella policies, bilateral trade&nbsp;&nbsp; relations too hold importance. There are layer of two policies in EU: one is at macro level, i.e., the umbrella policy, and another at the micro-level, i.e., the individual country's policies. Both policies work together. I don't think the situation will change so drastically in a very short period of time. Our chamber has a direct link to the German trade bodies. Of course, there is a big umbrella called EU but within that big umbrella, there are small umbrellas too. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What do you think are the areas Nepal can benefit in the trade with Germany?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If we talk about trade from Germany to Nepal, there are so many factors. We have members who have the business of &nbsp;German medical equipments in Nepal. And there is possibility of cooperation in hydroelectricity development. There are so many other sectors like Information Technology, in which Nepal can attract investments. Germany being a highly developed country, Nepal can learn many things from it.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Despite our almost half a century long trade relation, where do you think Nepal lacked taking advantage from the German market?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think, what Nepal lacks is its own confidence. The political and social situations, among other factors, are responsible for that. We have not been able to use the potentials that the German cooperation offers to us. A number of joint venture companies have shut down because of our own reasons, such as the lack of security. We have a recent example. One executive member who had been manufacturing garments shifted his office elsewhere from the previous location owing to violence and security lapses. So, there indeed was opportunity which we could not simply tap.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the major export items of Nepal to Germany? <br />
	</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If you look at the old data, 80 per cent of the trade is occupied by carpet and garment. Gradually, food market such as tea and coffee is also coming in. Nepal has very limited products to export. We have to increase their quality. We don't have much choice.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the challenges in Nepal-German trade?</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The most pertinent challenges are seen in the tourism sector. If we compare the data of German tourists arrival in Nepal, it was 45 to 55 thousand in 1998. Now it has decreased to 20 to 25 thousand only. It is the biggest challenge why have we not been able to attract German tourists as in the 1990s or the 80s? Second challenge is on retaining the market for our carpet. Its export has now nosedived compared to the previous years.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Do you have German collaboration in your business too?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">My primary business is restaurant and I have investments in a bank, among other sectors. At present, I am working with German companies on new products. So basically I'm a restaurateur. I joined the Chamber in the 1990s, as I was asked to. Earlier, I had a travel agency, so my keen interest is in tourism. So I hope to promote tourism along with other sectors being in the Chamber. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you foresee the Nepal-German economic ties in the longer run?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);">The relation between two countries is of course fundamentally economic and I think this kind of bi-national chamber always helps to promote trade. As of now, we have 22 or 23 bi-national chambers. Nepali business community should have this kind of platform that helps make an easier access into business-related information and facilitation in the counterpart country.</span></span></p>
<p>
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">&nbsp;</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Facts and Figures:</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
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<ul>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the biggest export markets for Nepal and ranked 4th after India, USA and Bangladesh. During the FY 2009/10, the Nepali export to Germany could maintain favourable trade position but the export volume decreased by Rs 2,391 million, 14.1 per cent less compared to the previous year. <br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Nepal's overall exports declined in FY 2009/10 by 11.1 per cent to Rs 60.9 billion whereas imports continued to increase by 29.1 per cent to Rs 375.6 billion. This development has further widened the overall trade deficit which was about Rs 314.7 billion (+41.5%) in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Due to the decline of exports, the overall Nepal-German foreign trade has also slightly declined in the FY 2009/10. The total bilateral trade fell from Rs 5,029 million to Rs 4,713 million a decline of 6.3 per cent compared to the previous year. Imports from Germany rose by 3.5 per cent compared to FY 2008/09 to Rs 2,322 million.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the few countries with a positive trade balance for Nepal (after Bangladesh, Bhutan and Canada) although the trade balance came down from a comfortable surplus of Rs 541 million in FY 2008/09 to Rs 69 million in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Exports to Germany In FY 2009/10, the decline of exports to Germany was caused by a decline in Textiles, clothing and accessories (9.6%), Food (19.0%) and Others <br />
		</span></span></span></li>
</ul>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Foreign Trade</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">(52.6%). The export of carpets almost 60 per cent of the total exports to Germany further dropped down from Rs 1.53 billion to Rs 1.42 billion. It was a decline of 6.8 per cent. Germany is one of the biggest export markets for Nepalese carpet industry. It ranked second after the USA. The exports of woolen shawls decreased by 39.7 per cent (Rs 242.1 million) while exports of clothing slightly increased by 3.5 per cent (Rs 270.8 million) in comparison to the previous year. The decline in food exports to Germany were caused by decreasing exports of lentils, coffee and spices while the exports of tea (13.3%) and medical plants further increased. Germany, with an export volume of Rs 33.2 million, is the second biggest export market for Nepalese tea mainly the orthodox tea after India. The exports of paintings came down by 69.4 per cent to Rs 75.4 million. <br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Imports from Germany In FY 2009/10, the total imports from Germany experienced a slight increase of 3.5 per cent compared to the previous figure of Rs 2.3 billon. The development of the various product categories, however, was quite different. The imports of Machineries and electrical equipments, the major import goods from Germany that stand for more than 50 per cent of the total imports, increased by 7.5 per cent to Rs 1.2 billion. A closer look to this category reveals that Germany is an important supplier for mechanical machineries especially for the packing, printing, food, tobacco and textile sector. The imports of mechanical machineries increased by 2.6 per cent to Rs 932.1 million. And the imports of electrical machineries and equipments increased by 29.7 per cent compared to the FY 2008/09. <br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The imports of vehicles went up from Rs 6.5 million to Rs 80.4 million. The imports of medical devices and laboratory equipments increased by 13.8 per cent to Rs 275.7 million. And the imports of chemical and pharmaceutical substances and plastic rose by 11.4 per cent to Rs 265.7 million.</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><i>(Source: Nepal-German Chamber of Commerce and Industry.)</i></span></span></strong></p>
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			'description' => 'Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview',
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			'id' => '199',
			'article_category_id' => '46',
			'title' => 'Dr Yubaraj Khatiwada',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 14px;"><strong><br />
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	<span style="font-size: 14px;"><strong>Banks Should Serve To Remote Areas Too</strong></span></p>
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	<span style="font-size:14px;"><img alt="yubaraj" border="1" height="321" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/yubarajkatiwada.jpg" vspace="5" width="292" /><br />
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				<strong>When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors. Dr Khatiwada, who started his career with NRB in the early 1980s retired as an Executive Director to serve the National Planning Commission as its Vice- Chairman. He also worked as a consultant for the United Nations Development Programme in Sri Lanka. In a recent interview with Nubiz, he shares his views on the current state of Nepal's economy, the controversial issues in the latest Monetary Policy and the measures he plans to adopt to regulate the banking and financial sector. Excerpts:</strong></div>
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				<strong>We only want the salaries of the CEOs managed as the component of the wider financial governance. The global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives.</strong></div>
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				<strong>Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas.</strong></div>
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				<strong>Monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets.</strong></div>
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			<strong>Some say Nepal's economy is on the verge of collapse and Nepal is heading towards becoming a failed economy, while others say it's an exaggeration. What's your view?</strong><br />
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			I think both are extreme viewpoints. Actually, the Nepali economy is not doing well compared to our neighbouring countries. That doesn't necessarily mean we are going to collapse. We have downward risk such as being overtly dependent on agriculture and remittance. Both of them have either climatic socks or say international market socks. So, we are vulnerable. <br />
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			The fact is :Nepali economy will run at a very low equilibrium, with low growth, low employment, and low forex reserves. If you have a good economic environment across the political spectrum, we could have high growth and accordingly high employment and high income scenario. People are expecting better results. Perhaps out of frustration, that's why they like to comment on the negative extremes.<br />
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				<strong>Why have people's expectations grown so unrealistically ?</strong></p>
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				China is growing at 9-10 per cent and amidst global recession. India is growing at 8 per cent and Bihar is registering a double digit growth. We raise the people's expectations saying that the new Nepal will have a double digit growth. And then we end up with less than a fraction of that when our per capita income happens to be the lowest in South Asia. If we compare ourselves with Bhutan, it's per capita income is in excess of US $ 2000 and there is pressure building up to upgrade Bhutan from its current LDC status. People are bound to compare and voice their frustration. But we must also look at our own history; we have been growing at 5 per cent on an average for the last 25-30 years and now we are growing at the rate of 4 per cent. The frustration is coming mostly from looking at the progress made by other countries in the region. I would say that we could do much better if we had political stability.</p>
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			<strong>Why haven't our macroeconomic indicators improved even after the peace deal? </strong><br />
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			Well, macroeconomic indicators o inflation, growth, trade and balance of payment etc.help to create an enabling environment for investment. We could not do well in the balance of payment from last year and we had huge deficit during the first six months. We managed to recover in the year end somewhat. We have a double digit inflation making people speculate towards the real assets rather than focussing on the financial side. So, it has created some distortions in the economy but that is not the story behind weak economic performance. Actually, the structural weaknesses like resumption of power outage of the economy are important to address. You cannot grow power intensive manufacturing or power intensive services when you have heavy power shortage. You cannot have labour intensive industry simply because the trade union is stronger and perhaps the political parties themselves don't have control over their own trade unions. You can see the anarchy in the labour market. Everybody is avoiding two types of industries or services--labour and power intensive ones. You are back to being dependent on agriculture which again we are left at the mercy of rain. Only if we could sort out these issues, then we can be hopeful over the state of the economy.</div>
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			<strong>A few months ago, the central bank tried to restrict the banking sector's investment in the real estate and housing. Is the progress as expected of it? </strong><br />
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			Well, we have not stopped it. We have only set a limits where the investment in the real estate in the true sense of the world, should not exceed 10 per cent of a bank's lending portfolio. If some banks have invested say five percent, they still have room but if a bank has already lent 25per cent in this sector alone, it has to bring down the figure. So, industry wise there is still some space. And now if banks collect more deposits they can create more room for the real estate financing too. Also, we have separated housing from the real estate business. Housing for medium class families or low income group families is a necessity because people need to have shelters. So, we are still encouraging housing. Regarding the result, the speculative moves in the land deals have almost stopped. Coming to the financial repercussion, people have apprehension that the borrowers might not be able to repay the loan. If the banks have some more deposits collected, they can still roll over your credit. So that way we are not even asking everybody to collapse.<br />
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			<strong>Why do you think there has been a sort of organised protest against NRB's recent guidelines aimed at limiting the salaries of Bank CEOs? Don't you think it's for a bank to decide the salary for its top executive?</strong><br />
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			On our part, we only want the salaries of the CEOs managed as the component of the wider financial governance. We have seen that the global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives. There is no point in the CEOs earning huge incentives by undertaking risky ventures to maximise profits and then leave the industry and move to a different occupation. This has often led to the banks landing in financial troubles. So the system would be at risk if extravagant salaries and incentives are linked to profits which lead to risk taking behaviour. <br />
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			When somebody is having socially unacceptable benefits at the cost of a wide range of stakeholders such as the depositors, the share holders, and the borrowers, it could create a tension in society and we sense it already. Highly paid executives must be compensated adequately for their productivity but that also needs to be at a socially acceptable range. It is also an issue that is being taken up globally. I do not see any reason for Nepal to be an exception in this matter. We are looking at managing salaries in a transparent way which will be socially acceptable. Besides, it will be sustainable for the institution too.<br />
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			&nbsp;I guess my friends in the banking sector have understood it differently, and were hence provoked. We have basically focused on setting norms that would guide the salaries and perks of the CEOs, not on limiting it in numeric terms. We are definitely not looking at fixing salaries; it's for the banks themselves to determine salaries for their CEOs. The recent guidelines which have existing laws embedded in them are only the parameters to follow.<br />
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			<strong>There does not seem to be much success in the operationalising of the monetary policy for this fi scal year. How would you evaluate it?</strong><br />
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			It is premature to judge the output of the monetary policy. On the macro outputs, things are improving, the rate of inflation is decelerating. It has come down to single digit on basis of new calculations. On the built up of reserves, we expect to have Rs 9 billion additional reserves in one year. In the first three months, no additional built up has taken place. As this is the festival season, we Nepalis spend more. The November data will show how we can recover towards that direction. There are a couple of other areas where we needed the compliment of fiscal budget such as for mergers and acquisitions where fiscal incentives are also necessary. This indeed has been addressed by the national budget. Similarly, we need this for some of the developing financing areas where the central bank and the finance ministry have to work together like in hydro-power financing, tourism financing etc.<br />
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			One issue that has also drawn flak is on the conditions set to open bank branches in the Kathmandu valley. Critics opine this was brought into effect too late, after existing banks have had enough braches in the valley. The new banks are allowed to have their corporate office and one more branch in the valley. But if they want to have more branches, we want them to serve the remote and the semi-remote areas too. If a new bank opens at least one such branch, it can always come back to open a third one in the valley. <br />
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			And to facilitate their business transactions, we have allowed them to have multiple branches in the border areas. So the new banks are in a position to open at least ten branches which is a good number. In this context, even the banks have to find new areas of savings mobilisation. I think it should work for the banks to explore virgin areas for the operationalisation of savings and credit. The problem begins when some banks are opening branches without properly accessing the commercial viability of the branches and accessing the capital base.<br />
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			&nbsp;In that case, it becomes the responsibility of the central bank to intervene. That's why we have stepped in this process to see that the banks branching policies are in the right place. It's certainly not to create bureaucracy. It is simply to ensure that a majority of the population in this country have access to finance.</div>
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			<strong>The central bank has announced to withdraw all notes bearing the image of former monarch from the market by the end of 2067 BS. What are the costs and benefi ts of this move? What are the bank's plans to introduce more durable notes?</strong><br />
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			The withdrawal of the notes in circulation with the former king's image needs to be honoured. We have been delaying because there is a cost involved to it. We want such notes to be naturally phased out in a manner such that the notes that come back to the bank will not be re-circulated. In terms of volume, most notes have already come back to the central bank. We have in circulation notes worth about Rs160 billion outside the central bank out of which only about Rs 4 billion notes are with the former king's image. On the issuance and printing of more durable notes, it has two dimensions. <br />
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			The short life of the existing notes is because of our culture and habits. We certainly lack the consciousness and responsibility to handle notes. We must understand that this is a national property and spoiling or damaging notes costs money. Any savings from printing notes adds to the government's coffer in the form of dividend. This ultimately goes to the people in different areas like education, health, transportation etc. Habits like culturally colouring, writing and worshiping with water over notes have to change over time. The second point is the quality of the note itself. That would imply shifting away from paper notes to polymer notes. Polymer notes, if properly printed and designed, last longer than paper notes. That is the policy shift we have to make. The polymer notes we had earlier with Rs 10 denomination didn't yield a good result. Although most countries are now already entering the polymer notes scheme, we are still in the process of finalising it. We are looking at better quality polymer notes in circulation and also at raising the people's awareness on handling them properly.<br />
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			<strong>On the one hand, NRB seems convinced that the existing number of banks in Nepal is too high, while on the other you continue to issue new licences. Isn't it a contradiction?</strong><br />
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			Actually, when we gave letters of intent to at least half a dozen banks, we decided that we have to have a moratorium on establishing new banks. When we say no more banks, we don't say that there are already six banks which have been almost approved. My colleagues in the central bank had taken this decision before my appointment as the Governor. They had indeed said ''no to more banks after having approved at least half a dozen of them. That's what has confused people. Since my appointment, I haven't approved a single new commercial bank. The banks that have opened are a result of the decisions made in the past. There are two more banks coming up very soon which are again decisions from the past. Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas. The other dimension is that some banks have asked for upgradation from class C or B to class A. They have been issued letters of intent before or have been given some kind of assurance from us. Now, with our policy of no more commercial banks we need to make decisions on those who have already been given green signal to be graduated. Whatever the internal challenges may be, the main issue is that we have enough commercial banks - 30 of them on the last count. In terms of number, 30 commercial banks are enough but in terms of financial access, services and the capacity of the banks to go into the rural market, we are lagging behind. The total capital of the commercial banks is perhaps between Rs. 50 to 60 billion.<br />
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			If you are developing a 200 MW power project, you can access the cost but even the entire capital may not be enough. In that sense, this is still a small shallow financial market. So now the challenge is to seek ways to expand the services of the existing banks as well as to enhance the quality of the banks. The reallocation of the resources from less productive to more productive areas and to see that the poor are having some access to capital needs a look-in too.<br />
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			<strong>Banks are reportedly going to face a liquidity crunch again? </strong><br />
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			What are NRB's plans to avert this situation? First, the central bank must guide or warn them about such a scenario. Before Dashain when banks had a lot of cash, apparently they were trying to bring the interest rates down. Publicly, I said that it's too hard to decrease it, perhaps you have to wait and see, and perhaps you should look for new avenues of investment. So that was my concern and that is still valid. I would request the banks to continue with the interest rate that is necessary. The second point is we have seasonal withdrawals. Before Dashain, people want to have new currency notes so they withdraw more money from the banks. They also change old notes with new ones. Usually, the new notes are with the people till Tihar. Once the festivities end, these notes are back in circulation in the market. Thirdly, you must take into account the harvesting season. The new notes can come to the market only when there are certain activities in the agricultural sector. You should have new production which has to be transacted that demands money. Once the notes circulation gains momentum, it enhances liquidity and that brings money back to the banks. That cycle will start when the paddy comes to the market. The other factor is remittance. If there is a high flow of remittance, the money comes to the banks and then gets converted into Nepali currency. Either spending or saving the money is eventually bringing it to the bank. Increased remittance is a trend that starts with the start of the festive season. This money is spent largely during the festivals. The official exchange rate between Indian and Nepali currencies is still fixed at NRs 160 for IRs 100. However, in the market, an IRs 100 note is already being exchanged for NRs 165. Do you think that calls for a devaluation of the Nepali currency vis-a-vis the Indian one? I would not recommend that as we have enough Indian currency with us. The artificial trading of Indian rupee is for some other reason. Why do you think there are people who need Indian rupee in cash and even ready to pay a higher margin? NRB has been giving unlimited amount of Indian currency through the banking channels. So the story is not about the exchange rate, it has to do with governance and its controlling measures. And also about stopping the legal imports to Nepal because the issue is somewhere else than the import exchange market. Why does one need to pay NRs 165 for IRs 100 when the banks can issue cheques, drafts, LCs, and even the ATMs can be used for the purpose? It is about people who indulge in business practices outside the purview of the formal legal system. The solution to this lies with the broader surveillance issue, trade management, customs management etc.</div>
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			<strong>Is that the reason for NRB to cut down the volume of Indian Currency given to the money changers? </strong><br />
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			Yes. We realise that this could put the country at a great risk. Speculation is rife that in the border areas, there might be a lot of illegal activities provoking factors which might pose a threat to the peace process. And still the central bank is liberally distributing cash currency which may not be a wise decision after all. These are times when we are concerned about terrorist financing. While looking at anti-money laundering measures, we want to talk about financial disclosures and encouraging cash transactions in the border areas.<br />
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			<strong>The new monetary policy has provisioned mandatory lending to the deprived sections of the population by fi nancial institutions. But it they are trying to form subsidiary institution of their own which is agian likely to be centred in the urban areas. The actual target population, to a large extent, still lacks access to funds. How do you plan to address this issue?</strong><br />
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			We have been able to address this issue partly. What we have said that you can have some institutional arrangement to retail credit in the urban sector but that cannot be more than 1/3rd of your total volume. The major component must go to the real borrowers through some or the other mechanism. The money going to the deprived sector through any institution cannot be re-deposited in the bank at an interest payment that we have stopped. We have also strengthened our supervision to see that the money marked for the deprived sector should be spent on a daily basis. If the financial institutions fail to do so, we would not count the spending under the deprived sector. We are definitely trying to strengthen the process. We have also asked the banks to have a plan to increase their resources allocation towards the agricultural sector. It should, in part address the issues of the weaker section of society. It's a myth that poor people are not bankable. I think there is more credibility attached to them because they don't have the capacity to become defaulters.<br />
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			<strong>What is your response to the criticism that the new monetary policy could lead towards a more restrictive regime akin to a control of socialist nature?</strong><br />
			<br />
			Critics may say what they like to but nobody is disagreeing on the evaluator economic system or the system of social justice. However, the monetary policy is not designed to address these issues but to direct credit. People must first understand monetary policy vis-a-vis the credit policy. Monetary policy is totally designed towards the macroeconomic strategy, low inflation, better reserves, enabling growth with adequate provision of credit etc. On the other hand, the credit policy could be selective and qualitative in a country like ours whereby access to finance and formal credit for some productive sectors cannot be denied. These sectors include agriculture, tourism, water, and hydroelectricity etc. If this makes us restrictive and socialistic, I would simply accept that. But monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets. What a credit policy does is something that every country does. Look at the overall picture in South Asia. Directed sector credit programmes, productive sector credit programmes in some of the South Asian countries is higher than in Nepal. We cannot challenge Bangladesh, India, Maldives, or Sri Lanka on that account. Their credit policies are stronger than ours. So I would like to ask my good friends to look at these examples in the region.</div>
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	<span style="font-size:14px;"><strong>We Need To Change Mindset To Think Big</strong></span></p>
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					<strong><img alt="suraj baidya" border="1" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/interview.jpg" style="width: 346px; height: 192px; margin: 10px; padding: 10px;" vspace="5" /></strong><br />
					Suraj Vaidya, the President of Vaidya's Organisation of Industries and Trading Houses (VOITH) is contesting the prestigious position of FNCCI President in an election being held during the FNCCI Annual General Meeting scheduled on 11-12 April 2011. In an interview with Pinaki Roy of <em>New Business Age</em>, Vaidya talked about the upcoming FNCCI elections and presented his views on reviving the ailing national economy. Excerpts:</p>
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			<p>
				<strong>The FNCCI elections this year come with a twist. The culture of consensus for the Senior Vice President to take over the reins has gone for a toss. Why so?</strong></p>
			<p>
				Well, we are going through a democratic system and democracy demands that we have more openness. FNCCI has always been a very open institution. New challenges bring new opportunities and therefore, we see more than just one candidate coming in for this election.</p>
			<p>
				<strong>There has been a war of words of late between the CNI and FNCCI. How does it affect the private sector? Do you ever see the prospect of a single umbrella organisation?</strong><br />
				<br />
				I really don't think there is any war of words. The leaderships on both sides, at this stage, are looking at the smaller pie instead of a bigger one. We need to understand that the state of the economy is in an extremely fragile situation. With power cuts of over 12-18 hours a day, the interest rates coming up to about 17-18 per cent per annum, liquidity crunch in the market and the increasing demands of the labour, we need to regroup ourselves, re-focus and see the common agenda. We must then take it up in this new world of <em>coopitition</em>. We need to cooperate where we can and compete wherever we need to. If we agree on this basic fundamental, CNI can do what they need to and FNCCI can pursue its own agenda. We need to move forward together. Actually, we were one and so the concept of coming back together is always there. I see great possibility for us to come back. But FNCCI needs to first look at whether we can meet the expectations of our members who are so demanding today. People leave because they feel that they haven't been looked after. It is as simple as that. Therefore, if FNCCI improves its working relations, its services to the members and takes up the economic agenda as a leader of the nation, probably the members will come back and see the benefit of being part of the FNCCI. It's very possible that we can come back together if FNCCI takes the right leadership. That way we would be under a single umbrella one day again.</p>
			<p>
				<strong>FNCCI has started sounding like a political organisation lately, trying to broker peace between the government and the opposition parties. Is this the kind of role FNCCI should be pursuing?</strong><br />
				<br />
				I have laid out a few tasks for myself if I get to the post of the FNCCI President. We need to talk economic development of the nation because fundamentally our mandate is to lobby and advocate for friendlier business environment in the country. This is our main agenda and to deviate from any of these issues would not be fruitful for the institution. FNCCI needs to be less active in politics but we need to be interactive with the political parties on economic development issues. Therefore, we will work with the political leadership on economic issues, national development, national budget and planning etc. We need to work with all the political parties as partners. But if it comes to carrying any 'ism', that's something FNCCI needs to stay far away from.</p>
			<p>
				<strong>As a prominent business leader, how do you look at the overall state of the present economy? </strong><br />
				<br />
				The fundamental problem with the businesses and the industries is that the economic agenda so far has been overshadowed by political agenda. There has been less private sector initiative on taking leadership in this area. One of the things that I have set for myself if I come in as FNCCI President is that within six months, we will have an economic agenda which will talk about a very short term - three to five years-planning. It will give us a sense of direction as to where we think the government needs to lay more emphasis on, to create employment opportunities, to create a better investment environment and to be able to make it more profitable for businesses to operate. Once we have an economic agenda, we will go to the political parties and get their views on it. We will hopefully have a national economic agenda signed and accepted by all political parties to strengthen political understanding between them. So, I think the economic-political agenda led by the private sector is what is required today. And unless that happens, we are going to have a lot of problems. The mess that we have today is because the private sector has not been the engine of growth. It's been politics which is trying to be the engine of growth which is negative for the country. This is where we need to reform and move forward.</p>
			<p>
				<strong>There is relative peace in the country, so to speak, after the end of hostilities. Why then are we not seeing any major investments? Where does the problem lie?</strong><br />
				<br />
				The example of the problem is very clear. It took us over seven months to find a prime minister. But people have started doubting how long will he be there. Business is a long term game. It's not that you make money today and walk out tomorrow. The fundamental requirement for any investment is sustained peace that helps to understand where the country's really heading to. It worries us when the parliament gets bogged down debating whether to use such words as 'private-public partnership'. When the political parties start showing hatred towards the very word 'private', it makes investments very uncomfortable. It gives an impression that the private sector can never be made a partner in the development programme. This message is reaching not only the Nepali investors but also to the foreign investors whereas FDI is so critically important to this country. If you look at the hydropower projects planned to be developed, a lot of Indian companies are either holding on to the projects or taking longer time to start them because of the inability to view the political-economic side of things. These are very critical issues that Nepal will have to address squarely in the coming days.</p>
			<p>
				<strong>How about the possibility of a consensus among the candidates for FNCCI Presidentship? How exactly have you projected yourself for the position with your plan of action and manifesto, to lure the members?</strong><br />
				<br />
				My experience tells me that especially when the institution is going through a very difficult time, you tend to come together. But again there is a Nepali culture, a Nepali way of doing things. Democracy and freedom of association and thinking lead to an intellectual debate on how best we need to move forward. Six months ago, I sat with incumbent FNCCI President Kush Kumar Joshi and urged him to take the leadership in creating an environment where we have no elections right across. And I am not talking about the election for the post of President only but for the entire FNCCI. My concern is simple: if the country's new constitution is promulgated, FNCCI's laws and regulations will change drastically. We are not sure which districts, states and municipalities will fall under what areas once the country turns federal. Therefore, FNCCI's constitution itself will change and this will be a huge change through which we need to remain united. I have been trying to emphasise on this with the incumbent President for a long time now but haven't succeeded for whatever reasons. And now we are little over a month from the election date. Therefore, I find it difficult that there would be any understanding. So I am moving ahead on my own.</p>
			<p>
				I have six very simple agenda: First, to provide better service to FNCCI members whereby getting their confidence and be more focused on FNCCI's work and not go beyond its mandate. The focus would be on the economic agenda and if we are able to do that, we would have provided services to the members. The members would mean the people from the districts, the commodity associations and the associate members. The second, to take leadership on the economic plan of this country. I think we have got too much of planning done for this country without real serious inputs from the private sector. FNCCI needs to make an economic vision which will not be a long term one. We are going through a very transitional phase so we need very short and medium term plans. My strategy would be to create an economic vision which would give a rebound to this depressive situation that we have. And hopefully work with the political parties and have the agenda accepted by all political parties whereby it would reflect on government policies for creating a better environment for business. That will be six months from the time I come in. The third agenda is energy. We all talk about the potentials of energy that we have. I am not going to be a politician saying we will bring 5,000 or 10,000 MW of power. But what I would say is that we would lobby and push and do everything possible to make investment in hydropower. We are going to push hard to get approved the electricity bill that has been sitting in the parliament for the last two years. We need laws that are investment friendly. We will urge the government to look at the supply and demand situation. The government needs to look at hydropower development as an area of national priority and give incentives to attract larger investments. The electricity tariff has not been revised for the last 10 years and it needs to be looked at seriously. We need to advise and work with the government on whether it is workable to continue to have NEA responsible for producing, selling as well as managing power. The electricity losses of 18-20 percent are unacceptable to the nation.</p>
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				<strong><img alt="" border="1" height="97" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/interview.jpg" style="width: 175px; height: 97px; margin: 10px; padding: 10px;" vspace="5" width="175" /></strong></p>
			<p>
				Number four would be fiscal discipline for which the private sector first needs to be open and transparent in the way we do business. And we will try and encourage that as much as possible. The last three budgets did not come on time and the government has not been able to rescue the country's economy. In fact, the delay in budget is one of the reasons why the interest rate has gone up so high. The funds have not gone to the districts for development expenditure and as a result, we are lagging behind. Fiscal discipline on our side definitely needs to be looked at but we would also lobby and bring to the attention of the Nepali people, the government's long vision or whatever it may be. Number five, I want to go to the trade unions as partners. We need to sit and plan on how we can create a better investment situation in this country. The labour relation is extremely important to build confidence for investors. We need to see if we can retain the Nepali people leaving the country. We want to improve working relations with the trade unions and the two agenda to look at are linking wages with productivity and linking social security with flexibility. If we can work out these two agenda, we can achieve a lot with the trade unions.</p>
			<p>
				The last point is that Nepal needs to brand itself as an attractive destination because the existing capital in this country would not be sufficient to rebound the economy. So, we need FDI in this country and need to look at India and China as our primary partners for kick starting our economy. I would be taking a lot of delegations to India and China to market Nepal as a friendly and attractive destination in the areas of hydropower investment and tourism. I think these are areas that would help Nepal come back quickly. Therefore, focusing on India and China as partners for Nepal's development is extremely critical. These are the six primary agenda that I have if I become the next FNCCI president.</p>
			<p>
				<strong>Why are you contesting the FNCCI President's post, in the first place? Why are you in the fray at all?</strong><br />
				<br />
				I have been with FNCCI for the last 25 years and have been the Vice President thrice. I am now the Senior Vice President and I really need to move up or leave the space for some other friends who want to come in. More importantly, the new leadership of FNCCI from coming April will be directly responsible for what's going to happen in about two months from there. That is the time when new Constitution is expected to be promulgated though we don't know whether the constitution will be really promulgated. Economy and development will be important agenda that time. Therefore, the FNCCI leadership needs to be mature and determined enough to take on those challenges. I am prepared for that. I see several reasons why the economy has not been at the forefront.&nbsp; In the New Nepal, the economy must be in the forefront. I am concerned about the inflation that's up from 8.5 per cent last year to 14.6 per cent now and the slowdown in the industrial output from 4 per cent to 1.8 per cent. These are all extremely worrying symptoms and I feel I can face these challenges and also come up with an amicable result which will enhance FNCCI's image.</p>
			<p>
				<strong>The image of the business community has been badly tainted by the fake VAT bills episode. How do you view this? What, according to you, can be the course of correction?</strong><br />
				<br />
				I think the private sector has owned it up saying that it is a part of corruption that is going on in the country. But the government and the system itself need to acknowledge that they too are involved in this and therefore, we need to work together to find a solution and get out of this. It's important for us to understand that institutions like FNCCI will stand by the law of the land. If there is any forgery which affects the nation at large, FNCCI needs to take up this issue. By the same token, the government needs to understand that they are also part of it. Such corruption and forgery wouldn't have occurred just by the efforts of only one side. So, the other side too needs to own up and say what they plan to do regarding this.</p>
			<p>
				<strong>We have witnessed a shift from manufacturing to service industry in recent times. What could be the possible reasons?</strong></p>
			<p>
				Nepal needs to revisit itself and re-understand where our sustainable areas of potential investments are. The industrial growth has declined from 4 per cent to 1.8 per cent mainly because we have power shortage and frequent strikes. There have been labour disputes and political interference in large investment businesses. Therefore there are large projects such as the hydropower projects that are intended but haven't really materialised. What is discouraging investment into these areas is lack of foresightedness. How long is Nepal going to wait for things to really happen and to have a stable government that will last beyond a few months? And until Nepal shows that leadership, I think investment in manufacturing is not going to increase. It is a wishful thinking at best and therefore, service industry is something that is but natural. Nepal needs to look at Singapore, Switzerland and Hong Kong which are very small nations lying between large industrial countries. We need to see if we can imitate their success by providing services to bigger countries whereby we can increase our niche in the market and improve the economic condition of this country. So, the service industry is going to be a very important part of Nepal in times to come.</p>
			<p>
				<strong>How does the FNCCI and the private sector plan to revive the ailing national economy?</strong></p>
			<p>
				We need to be positive and work with the media and the government in saying that Nepal is not a poor country. Nepal has tremendous future and potential so the fundamental thing is to change our mindset from thinking poor to thinking big. This will help us initiate a new beginning. Nepal needs to seriously look at how we can generate investment here to employ the 500-700 Nepali people leaving this country on a daily basis because the youth who would make the future of Nepal and the people who have knowledge are leaving us. The doctors, engineers, scientists and businessman-they are all leaving us. Therefore, we need to create a positive environment in this country to try and retain them. This is going to be critically important in the coming years. Nepal needs to look at its niche strength which is human capital. It needs to look at the growth of India and China. They are going to be the world's largest economies by 2020. Nepal needs to be able to make a strategy on how to benefit from the growth of these economies on the two sides of our country. If we focus on that, we would be able to quickly come out of our problems. We need to have a focused vision and short term plan for revival. We also need to try and create employment and good labour relations. At FNCCI, we need to work with the trade unions as partners - we should be people sitting on the same side of the table, not on the opposite sides. If we are all in this together, it will be critically important for us to move forward.</p>
			<p>
				<strong>Some of the projects initiated by the FNCCI lately have failed miserably. It is operating more like an NGO implementing independent projects. Shouldn't FNCCI be taking the lead to envision what is in the best interest of Nepali economy?</strong><br />
				<br />
				Human resource is extremely critical and I want to link this with the FNCCI running a lot of training schools across the country. I think the reason we have not been able to create a sense of success is because we ourselves haven't really focused on exactly what kind of human resource we need to develop. The fundamental issue is what are we training, who are we training and what is the purpose of that training. FNCCI needs to be active in many areas. The JITCO programme which is sending Nepali people to Japan has not been very successful. It's a Japanese company that comes here, interviews people and recruits them. FNCCI is purely mediating this. It probably needs to be in the forefront and take the leadership. I think unless we take leadership, we should not be involved in any such programme.</p>
			<p>
				<strong>Would you like to add anything as a message? </strong></p>
			<p>
				Yes, a message to the leaders. It's high time they understand that politics is not the primary concern of the Nepali people. We are worried as Nepali citizens because it's being projected that next year, there is going to be a food shortage of 400,000 tonnes in this country. With remittance declining, our economy is going to be badly hit. The kind of queues that we see outside the foreign ministry for passports speaks loudly about the confidence of the Nepali people on the country's leadership. Therefore, it's time for them to get off the political agenda and start working on economy because this is the only thing that is going to get the country back on a sustainable basis in a long term. We should get peace and understanding so we want them to treat economy as the primary agenda and the most important thing to get the country back from the state that we are in.</p>
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<p class="NoParagraphStyle" style="margin-bottom: 5.65pt;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span style="line-height: 120%;">''Software Industry in Nepal is Much Bigger than &nbsp;We Think It is''</span></span></strong></span></em></span></p>
<p class="NoParagraphStyle" style="margin-bottom: 5.65pt;">
	<span style="font-size:12px;"><br />
	</span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif=""><img align="left" alt="sanjib" border="1" height="167" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/Sanjib Raj Bhandari1.jpg" style="width: 205px; height: 167px;margin:10px;padding:10px;" vspace="5" width="205" /></span></span></span></em></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif="">Sanjib Raj Bhandari</span><span lang="EN-GB"> is the CEO of Mercantile Office Systems, the pioneer company in Nepal's IT sector. Having seen the evolution of sorts in IT in the past two decades, Raj Bhandari himself has effected a sea-change in his business, priorities and processes. At the beginning, his company was a computer distributer in the mid-1980s, became an internet service provider in 1990s, produced own brands of computers in the beginning of 2000, and now in 2011, Mercantile is chiefly a software producing company. Mercantile-produced software are extensively used in Nepal, especially in the banking sector. Raj Bhandari foresees Nepal's great future in IT, as well as expresses concern that we are among the “bottom few” in the global IT map. He says Nepal also lags in South Asia behind India, Pakistan, Sri Lanka and Bangladesh. Excerpts:&nbsp;&nbsp; </span><span lang="EN-GB" style="letter-spacing: -0.1pt;"><br />
	</span></span></span></em></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company Mercantile has been considered one of the pioneers in Nepal's IT sector. How do you view the growth of the sector over the period of last two decades?</span></span></strong></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The growth has been tremendous over this period. If you look at the very beginning in the early 1990, we had a problem not only with the fact that we were all very new to IT sector, but there were no government policies specially addressing this sector. Computers and its parts were considered luxury items thumbing that the ordinary people do not need them. That psyche was reflected in the government policies. We had a lot of difficulties in doing business not only of hardware but also the software. The policies vis-Ã&nbsp;-vis IT sector were very unfriendly. <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We've come a very-very long way. Today the overall policies are very positive. This transformation has helped both the hardware and software industries to grow. There's been a sea of change not only in the IT development but also on how the government and the people at large perceive the IT now.&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you please elaborate on how Mercantile managed to grow to become the market leader as it is now?</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I run a number of IT companies, of which I run two flagship companies from this building (see picture). The first one is Mercantile Office Systems (MOS), which we started in 1985. It concentrated mainly on distribution of computer and IT related products and software development. We started internet business including email under the MOS in 1992-93. The second one is Mercantile Communications which we started in 1995. We did not know too much when we started internet service under the MOS. It was very much exploring and doing things as you go along. We did not have much technical know-how. Internet was completely new. When we started email service in December 1993, email was not available for the public in India. When we started the internet in 1995, commercial internet had just begun in Singapore. It would not begin in India for another 3 or 4 years. So it was very-very new, we would not know what we were doing, we learnt as we went along, we sought help from a lot of people from outside. Today you can go and hire engineers. In those days, we did not find engineers. We had to actually train our own engineers.&nbsp;&nbsp;&nbsp; <strong><br />
	</strong></span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">You have been selling your own Mercantile brand of computers and office systems. Do you see any need to bring changes in your products or services? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We have been distributing computers since 1985. In the beginning of 2000, we experimented with our own products. We were very successful for two years, but later we could not compete with the international products. The reason was that we needed to be 25 per cent cheaper than the international products and the other products available. In the beginning, we could maintain the difference but later we could not. So, we slowly phased the production out. We don't have the products now. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company software are extensively used by Nepali companies. What distinguishes your products and services from the others?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I think it is the quality. We have from the very beginning emphasised on quality and we have always maintained ourselves and concentrated on niche market. We have seldom gone for mass market. Most of our services are in the gear to corporates. Some of our products like computer notebooks and communication software are now available for mass marketing. Our services like technical, banking and software services have always been very selective. That's how we actually maintain our profile. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you tell us where does Nepal stand in the global IT map and what position Nepal has in South Asia? What are the hindrances as well as prospects for the growth of this sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">If there were a global IT map, we would find ourselves in the bottom few. I often say that our proximity with India is only in relation to geography. Our proximity with India is not in development scale, manufacturing and specially IT. In South Asia, India is way-way up, then would come Pakistan or Sri Lanka not necessarily in the order, and we would be close behind Bangladesh but it does not mean too much, as we still have a lot of run to cover.&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Nonetheless, the software industry in Nepal is much bigger than we think it is. We do not have proper statistics. But my guess is that there are over 5,000 people working in the software industry of Nepal. There are maybe 40 to 50 companies that have employed some 30 to 40 people each. There could be as many as 10 companies with over 100 people in each. Many of these companies are involved in software exports. Their figures do not reflect national figures because many of them do not want to come out in the open as it would create far too big problems for them. And, as their customer base is abroad and as they do not need a formal registration in Nepal, they choose not to be in the legal hassles here. This is something the government really needs to address. &nbsp;&nbsp;&nbsp; </span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">There are a lot of capabilities within the country to develop software. If you look at the hardware sales, the value addition, in terms services, distribution and warranty the Nepali companies provide, is between 2 to 8 per cent. If you look at the software, the value addition is over 90 per cent. There are some 7-8 companies that are exporting services to where the potential lies.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">How are the government policies impacting on the growth of this sector? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The government role is obviously very-very important here. But, the software industry does not need, does not look for government leadership and does not make their plans and projects relying or looking at the government action. The private sector must lead. If the government can catch up the pace, it's fine. Otherwise, the growth will find its own path. A great example is the trekking business. When the trekking agencies started in the 1970s, they organised themselves without government aid. Later on, the government came in to issue the licenses to them. The government has policies and has made policies in the past too. But execution has been the problem in Nepal. Emphasis really has to be on execution, not so much on formulating and announcing the policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Do you see any possibility of government and private sector working together for the development of IT sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Traditionally, we think that the partnership between the government and private sector is fruitful. But, what we have discovered is that the government has very soft corner for IT sector, but still the cooperation has not yielded true fruits. This is not only the fault of the government. I feel the private sector too has not played its part. When you demand so many things from the government, you make your business compatible to the policies and accountable to the country. If you look at any industrial development in Nepal, it has always been private sector led. So the progress has to be made by private sector. If the government assists, it is welcome; if it doesn’t, it need not be bothered.</span> <br />
	</span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">As I previously mentioned, the initiatives has been taken by the private sector. However, if the government and the private sector were to cooperate, the government could obviously help with better and improved policies. The government could also help by buying software and looking for solutions, let's say in electricity or telecom companies. This encourages Nepali IT companies to take part. But right now, the terms, conditions and perks in international standards that the government boasts are rather punitive to Nepali companies. I repeat they are not only discriminatory but also punitive. Those companies put such conditions which Nepali companies simply cannot meet. Or, if they can be met, they could be agents only. This is very humiliating. It is fine if the government entertains the business from international companies in the area where Nepali IT companies cannot compete. But the Nepali government is disqualifying the Nepali companies for many other reasons. To correct this, the government need not do too many things. What it can do is to just encourage, invite and qualify Nepali companies to take part in business bidding to provide service for Nepal government and institutions. There could be many areas like e-commerce, trade, billing boards for telecom and other government bodies – where the Nepali companies too can perform well, given little amendment in service procurement mechanism. Therefore, for now it would be enough to revoke the punitive and discriminatory policies on the part of the government; let alone making fancy policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The Computer Association of Nepal (CAN) and ICT Association of Nepal are holding Info Tech Fairs every year. How do you evaluate the role of these fairs in promoting IT business in the country?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The CAN and ICT info-tech fair attracts hundreds of thousands of visitors every year. Obviously it plays the central role in awareness, as it educates the public at large. However, it is almost like the flagship event for CAN and ICT. It is important for these organisations to focus and involve in other large events of info-tech. Right now they are perceived as single event institutions. They need to move out of that.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">There are some unused infrastructures on IT, one of them being the IT Park in Banepa, Kavre. Why do you think such utilities are almost defunct? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">In 1992, a high level commission was set up to look at the development of IT and the benefits of IT Park. Ten years down the line, many things have changed, in particular the communication technologies. The IT Park is yet to embrace the changes. That could be the major reason for it being a mess.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">Still, don't you think there is a digital divide prevalent in the country? How do you think such divide can be narrowed down? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Digital divide is alarming. Only one or two per cent of Nepali people have access to internet and IT in general. Increasing the access of people to IT and telecommunications can lower the digital divide as both these sectors are complimentary and intertwined. The number of people having access to IT and telecommunications is increasing. I'm happy with that and hopeful too.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">As a matter of fact, your company operates an online media too. How much do think it has contributed to the growth of online media in Nepal? How economically feasible is it?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">When we established a news portal in 1999, it was definitely not sustainable for the next 5-6 years. But today for the last 3 or 4 years, the portal has been doing fine economically too. We have hired almost 20 people. The portal pays for itself and is also making money. Online media came with more people having access to communication, computer and education. To have access to online media, one must have computer device, must have access to communication and must be educated. In developed markets, the online media has overshadowed the traditional media. I am still doubtful that will happen in Nepal in the foreseeable future. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Every successful company stores plans for future as well. What about yours? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We will obviously expand on our communication network. We will expand our institutional network to cover entire country now. In banking software, we expect to grow at least 100 per cent on year basis. We are also looking on international market and we are very hopeful. As of now, over 50 per cent of the banks, over 70 per cent of the development banks and 90 per cent of the finance companies use our software. This covers almost 1000 branches in the country's financial system. Even if you say each branch in average uses this software 20 to 30 times, some 20 to 30 thousand use our software daily.&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">What could be the way forward?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">With the growth of communication and education and population as well, the IT sector can only grow. I see its great future in Nepal.&nbsp;</span><span style="letter-spacing: -0.1pt;"> </span></span></span></span></p>
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<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span style="background-color: rgb(240, 255, 240);">'I See Prospects in Herbs, Tourism and of course, Carpet'</span></span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	<img alt="" border="1" height="270" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/572699_512919295_905742336_n.jpg" vspace="5" width="180" /><br />
	<br />
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em>Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview with Nubiz, says his basic priority would be to revive and maintain the old trade surplus figure that Nepal had been enjoying in the past with Germany, now a key member of the European Union. With the nose-diving of carpet and garment exports, Nepal has nothing much to offer to German market. Still, Kakshapati is hopeful that the branding of some of Nepal's food products such as tea and coffee and attracting more German tourists to Nepal can still help get the old trade figures back. Excerpts:</em></span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em><br />
	</em></span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What is your new vision as the new president of Nepal-German Chamber of Commerce and Industry?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I have segregated it into two parts. The chamber is 18 years old. Some of its legacies I have to carry on. I cannot opt out of the regular programmes the Chamber has been doing. For example, the Chamber has been promoting Nepal's tourism in Germany since 1994. It is called CMT Caravan Motor Touristic. It is a very popular fair in Germany. More than one million people visit the fair each year. So, it must continue. Besides, there are some other regular programmes which I will continue. That is the first part of my aim. As for the new vision, I want to expand whatever economic ties exist between Nepal and Germany. If you look at the overall figures for the past one year or two, our overall trade balance has not been in our favour. But Germany is one country with which we have trade surplus. But the margin of that surplus is now decreasing. I want to bring it back at least to the old figures. That is my main aim.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Germans are looking for new products from Nepal. For example, Nepali tea and coffee have entered into the German market but lack effective branding. I would like to brand it as Nepali tea or Nepali coffee. I see a scope there. Likewise, we are always talking about Nepali herbal and similar products. Herbal is one product which a lot of developed countries are eyeing on. Nepal is so rich in herbal resources. If we produce and market it, Germany would be one of the very popular destinations for these products.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Similarly, besides exporting to Germany, I want to work on capacity building in the country to export different products from Nepal. The Chamber has the past history of such works. For example, it organised a tea seminar in Ilam some years ago. We invited experts from Germany one as the market expert and another as the product expert. These experts directly interacted with the tea producers regarding the choice of taste of Germans and market situation there. That proved very effective. I want to do the same for other products also, for example, herbal, as I have mentioned. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal's herbal products are yet to be processed and branded well. In the case of coffee too, we have to enhance our quality. Today, it is soothing to see professionals involved in coffee production. The bottom-line again is that we have to increase the quantity and improve the quality. When we work with a developed country, quality is always the first priority to have an access into their market.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">During my travel to Germany I found that Nepali business community has not been able to explore the existing opportunities in terms of machinery, information, etc. There are only a handful who have done so. I think Nepali businessmen should also go to the expos in the places in Germany so as to learn things and gain expertise. Therefore, I am also in favour of promoting exchange visits of business people between the two countries.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you think the Nepal Germany trade relation can be made favourable to Nepal? <br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">As I said earlier, Germany is one country where Nepal has trade surplus. But we should not be content with whatever trade figure we have. The Chamber in the past has worked with DIHL which is the authority in Germany to expand trade relation between any countries. When I visited their office in Germany, I found that they have given very tiny space to Nepal. They showed me the huge trade volume they had with China. Through the exchange of visits and co-work among various chambers in Germany, I think we may be able to increase the trade prospects of Nepal. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Even the European countries are removing Nepal from the list of “preferential trading partner very shortly. How can your Chamber contribute to retaining Nepal's status as a beneficiary of developing country concession of EU?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Yes, I also heard that. It is an agenda for me to talk with the EU representatives in Nepal first and find out what was the reason behind it. There could be so many reasons, and I will work on how to address the situation. First and the foremost, I must know the reasons. After that, we the Chamber and other organisations like the carpet association, etc can lobby together. I will also work closely with German development institutions like GTZ. We, as individual organisations and with others jointly, will lobby to retain our position in the EU.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Chamber of Commerce and Industry is one the oldest bilateral chambers in Nepal. How do you view its achievements?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think it was the first bi-national chamber in Nepal. The establishment of the Chamber introduced the concept of bi-national chambers in our country. Some 18 years ago, nobody thought of a bi-national chamber could be so important. One of the major achievements of the Chamber is that we have been able to join hands with various German trade bodies and even development agencies like GTZ. The Chamber has enhanced and promoted ties between Nepal and Germany. An example is tourism. The Chamber has been instrumental in the arrival of German tourists in Nepal as well for expanding market of Nepali products such as carpet and garment in Germany. From time and again, we have been taking business delegations to Germany. Such steps are helpful in strengthening trade links.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Most of the economic activities in EU seem to be consolidated under EU umbrella. Do you think the bilateral trade relations of a country like Nepal with individual member countries of EU hold long term importance?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Though EU has certain umbrella policies, bilateral trade&nbsp;&nbsp; relations too hold importance. There are layer of two policies in EU: one is at macro level, i.e., the umbrella policy, and another at the micro-level, i.e., the individual country's policies. Both policies work together. I don't think the situation will change so drastically in a very short period of time. Our chamber has a direct link to the German trade bodies. Of course, there is a big umbrella called EU but within that big umbrella, there are small umbrellas too. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What do you think are the areas Nepal can benefit in the trade with Germany?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If we talk about trade from Germany to Nepal, there are so many factors. We have members who have the business of &nbsp;German medical equipments in Nepal. And there is possibility of cooperation in hydroelectricity development. There are so many other sectors like Information Technology, in which Nepal can attract investments. Germany being a highly developed country, Nepal can learn many things from it.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Despite our almost half a century long trade relation, where do you think Nepal lacked taking advantage from the German market?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think, what Nepal lacks is its own confidence. The political and social situations, among other factors, are responsible for that. We have not been able to use the potentials that the German cooperation offers to us. A number of joint venture companies have shut down because of our own reasons, such as the lack of security. We have a recent example. One executive member who had been manufacturing garments shifted his office elsewhere from the previous location owing to violence and security lapses. So, there indeed was opportunity which we could not simply tap.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the major export items of Nepal to Germany? <br />
	</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If you look at the old data, 80 per cent of the trade is occupied by carpet and garment. Gradually, food market such as tea and coffee is also coming in. Nepal has very limited products to export. We have to increase their quality. We don't have much choice.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the challenges in Nepal-German trade?</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The most pertinent challenges are seen in the tourism sector. If we compare the data of German tourists arrival in Nepal, it was 45 to 55 thousand in 1998. Now it has decreased to 20 to 25 thousand only. It is the biggest challenge why have we not been able to attract German tourists as in the 1990s or the 80s? Second challenge is on retaining the market for our carpet. Its export has now nosedived compared to the previous years.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Do you have German collaboration in your business too?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">My primary business is restaurant and I have investments in a bank, among other sectors. At present, I am working with German companies on new products. So basically I'm a restaurateur. I joined the Chamber in the 1990s, as I was asked to. Earlier, I had a travel agency, so my keen interest is in tourism. So I hope to promote tourism along with other sectors being in the Chamber. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you foresee the Nepal-German economic ties in the longer run?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);">The relation between two countries is of course fundamentally economic and I think this kind of bi-national chamber always helps to promote trade. As of now, we have 22 or 23 bi-national chambers. Nepali business community should have this kind of platform that helps make an easier access into business-related information and facilitation in the counterpart country.</span></span></p>
<p>
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">&nbsp;</span></span></p>
<p>
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Facts and Figures:</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<ul>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the biggest export markets for Nepal and ranked 4th after India, USA and Bangladesh. During the FY 2009/10, the Nepali export to Germany could maintain favourable trade position but the export volume decreased by Rs 2,391 million, 14.1 per cent less compared to the previous year. <br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Nepal's overall exports declined in FY 2009/10 by 11.1 per cent to Rs 60.9 billion whereas imports continued to increase by 29.1 per cent to Rs 375.6 billion. This development has further widened the overall trade deficit which was about Rs 314.7 billion (+41.5%) in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Due to the decline of exports, the overall Nepal-German foreign trade has also slightly declined in the FY 2009/10. The total bilateral trade fell from Rs 5,029 million to Rs 4,713 million a decline of 6.3 per cent compared to the previous year. Imports from Germany rose by 3.5 per cent compared to FY 2008/09 to Rs 2,322 million.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the few countries with a positive trade balance for Nepal (after Bangladesh, Bhutan and Canada) although the trade balance came down from a comfortable surplus of Rs 541 million in FY 2008/09 to Rs 69 million in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Exports to Germany In FY 2009/10, the decline of exports to Germany was caused by a decline in Textiles, clothing and accessories (9.6%), Food (19.0%) and Others <br />
		</span></span></span></li>
</ul>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:=""><br />
	</span></span></span></p>
<p>
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Foreign Trade</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">(52.6%). The export of carpets almost 60 per cent of the total exports to Germany further dropped down from Rs 1.53 billion to Rs 1.42 billion. It was a decline of 6.8 per cent. Germany is one of the biggest export markets for Nepalese carpet industry. It ranked second after the USA. The exports of woolen shawls decreased by 39.7 per cent (Rs 242.1 million) while exports of clothing slightly increased by 3.5 per cent (Rs 270.8 million) in comparison to the previous year. The decline in food exports to Germany were caused by decreasing exports of lentils, coffee and spices while the exports of tea (13.3%) and medical plants further increased. Germany, with an export volume of Rs 33.2 million, is the second biggest export market for Nepalese tea mainly the orthodox tea after India. The exports of paintings came down by 69.4 per cent to Rs 75.4 million. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Imports from Germany In FY 2009/10, the total imports from Germany experienced a slight increase of 3.5 per cent compared to the previous figure of Rs 2.3 billon. The development of the various product categories, however, was quite different. The imports of Machineries and electrical equipments, the major import goods from Germany that stand for more than 50 per cent of the total imports, increased by 7.5 per cent to Rs 1.2 billion. A closer look to this category reveals that Germany is an important supplier for mechanical machineries especially for the packing, printing, food, tobacco and textile sector. The imports of mechanical machineries increased by 2.6 per cent to Rs 932.1 million. And the imports of electrical machineries and equipments increased by 29.7 per cent compared to the FY 2008/09. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The imports of vehicles went up from Rs 6.5 million to Rs 80.4 million. The imports of medical devices and laboratory equipments increased by 13.8 per cent to Rs 275.7 million. And the imports of chemical and pharmaceutical substances and plastic rose by 11.4 per cent to Rs 265.7 million.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><i>(Source: Nepal-German Chamber of Commerce and Industry.)</i></span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
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			'description' => 'Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview',
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		'Article' => array(
			'id' => '199',
			'article_category_id' => '46',
			'title' => 'Dr Yubaraj Khatiwada',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size: 14px;"><strong>Banks Should Serve To Remote Areas Too</strong></span></p>
<p>
	<span style="font-size:14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size:14px;"><img alt="yubaraj" border="1" height="321" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/yubarajkatiwada.jpg" vspace="5" width="292" /><br />
	</span></p>
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				<strong>When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors. Dr Khatiwada, who started his career with NRB in the early 1980s retired as an Executive Director to serve the National Planning Commission as its Vice- Chairman. He also worked as a consultant for the United Nations Development Programme in Sri Lanka. In a recent interview with Nubiz, he shares his views on the current state of Nepal's economy, the controversial issues in the latest Monetary Policy and the measures he plans to adopt to regulate the banking and financial sector. Excerpts:</strong></div>
		</div>
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<p>
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				<strong>We only want the salaries of the CEOs managed as the component of the wider financial governance. The global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives.</strong></div>
		</div>
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<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
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			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas.</strong></div>
		</div>
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<p>
	 </p>
<p>
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	<div justify="" style="width: 595px;">
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			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets.</strong></div>
		</div>
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</div>
<p>
	 </p>
<p>
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<div style="width: 595px;">
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: left;">
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			<strong>Some say Nepal's economy is on the verge of collapse and Nepal is heading towards becoming a failed economy, while others say it's an exaggeration. What's your view?</strong><br />
			<br />
			I think both are extreme viewpoints. Actually, the Nepali economy is not doing well compared to our neighbouring countries. That doesn't necessarily mean we are going to collapse. We have downward risk such as being overtly dependent on agriculture and remittance. Both of them have either climatic socks or say international market socks. So, we are vulnerable. <br />
			<br />
			The fact is :Nepali economy will run at a very low equilibrium, with low growth, low employment, and low forex reserves. If you have a good economic environment across the political spectrum, we could have high growth and accordingly high employment and high income scenario. People are expecting better results. Perhaps out of frustration, that's why they like to comment on the negative extremes.<br />
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		<div align="justify">
			<p>
				<strong>Why have people's expectations grown so unrealistically ?</strong></p>
			<p>
				<br />
				China is growing at 9-10 per cent and amidst global recession. India is growing at 8 per cent and Bihar is registering a double digit growth. We raise the people's expectations saying that the new Nepal will have a double digit growth. And then we end up with less than a fraction of that when our per capita income happens to be the lowest in South Asia. If we compare ourselves with Bhutan, it's per capita income is in excess of US $ 2000 and there is pressure building up to upgrade Bhutan from its current LDC status. People are bound to compare and voice their frustration. But we must also look at our own history; we have been growing at 5 per cent on an average for the last 25-30 years and now we are growing at the rate of 4 per cent. The frustration is coming mostly from looking at the progress made by other countries in the region. I would say that we could do much better if we had political stability.</p>
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			<strong>Why haven't our macroeconomic indicators improved even after the peace deal? </strong><br />
			<br />
			Well, macroeconomic indicators o inflation, growth, trade and balance of payment etc.help to create an enabling environment for investment. We could not do well in the balance of payment from last year and we had huge deficit during the first six months. We managed to recover in the year end somewhat. We have a double digit inflation making people speculate towards the real assets rather than focussing on the financial side. So, it has created some distortions in the economy but that is not the story behind weak economic performance. Actually, the structural weaknesses like resumption of power outage of the economy are important to address. You cannot grow power intensive manufacturing or power intensive services when you have heavy power shortage. You cannot have labour intensive industry simply because the trade union is stronger and perhaps the political parties themselves don't have control over their own trade unions. You can see the anarchy in the labour market. Everybody is avoiding two types of industries or services--labour and power intensive ones. You are back to being dependent on agriculture which again we are left at the mercy of rain. Only if we could sort out these issues, then we can be hopeful over the state of the economy.</div>
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		<div>
			<strong>A few months ago, the central bank tried to restrict the banking sector's investment in the real estate and housing. Is the progress as expected of it? </strong><br />
			<br />
			Well, we have not stopped it. We have only set a limits where the investment in the real estate in the true sense of the world, should not exceed 10 per cent of a bank's lending portfolio. If some banks have invested say five percent, they still have room but if a bank has already lent 25per cent in this sector alone, it has to bring down the figure. So, industry wise there is still some space. And now if banks collect more deposits they can create more room for the real estate financing too. Also, we have separated housing from the real estate business. Housing for medium class families or low income group families is a necessity because people need to have shelters. So, we are still encouraging housing. Regarding the result, the speculative moves in the land deals have almost stopped. Coming to the financial repercussion, people have apprehension that the borrowers might not be able to repay the loan. If the banks have some more deposits collected, they can still roll over your credit. So that way we are not even asking everybody to collapse.<br />
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			<strong>Why do you think there has been a sort of organised protest against NRB's recent guidelines aimed at limiting the salaries of Bank CEOs? Don't you think it's for a bank to decide the salary for its top executive?</strong><br />
			<br />
			On our part, we only want the salaries of the CEOs managed as the component of the wider financial governance. We have seen that the global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives. There is no point in the CEOs earning huge incentives by undertaking risky ventures to maximise profits and then leave the industry and move to a different occupation. This has often led to the banks landing in financial troubles. So the system would be at risk if extravagant salaries and incentives are linked to profits which lead to risk taking behaviour. <br />
			<br />
			When somebody is having socially unacceptable benefits at the cost of a wide range of stakeholders such as the depositors, the share holders, and the borrowers, it could create a tension in society and we sense it already. Highly paid executives must be compensated adequately for their productivity but that also needs to be at a socially acceptable range. It is also an issue that is being taken up globally. I do not see any reason for Nepal to be an exception in this matter. We are looking at managing salaries in a transparent way which will be socially acceptable. Besides, it will be sustainable for the institution too.<br />
			<br />
			&nbsp;I guess my friends in the banking sector have understood it differently, and were hence provoked. We have basically focused on setting norms that would guide the salaries and perks of the CEOs, not on limiting it in numeric terms. We are definitely not looking at fixing salaries; it's for the banks themselves to determine salaries for their CEOs. The recent guidelines which have existing laws embedded in them are only the parameters to follow.<br />
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			<strong>There does not seem to be much success in the operationalising of the monetary policy for this fi scal year. How would you evaluate it?</strong><br />
			<br />
			It is premature to judge the output of the monetary policy. On the macro outputs, things are improving, the rate of inflation is decelerating. It has come down to single digit on basis of new calculations. On the built up of reserves, we expect to have Rs 9 billion additional reserves in one year. In the first three months, no additional built up has taken place. As this is the festival season, we Nepalis spend more. The November data will show how we can recover towards that direction. There are a couple of other areas where we needed the compliment of fiscal budget such as for mergers and acquisitions where fiscal incentives are also necessary. This indeed has been addressed by the national budget. Similarly, we need this for some of the developing financing areas where the central bank and the finance ministry have to work together like in hydro-power financing, tourism financing etc.<br />
			<br />
			One issue that has also drawn flak is on the conditions set to open bank branches in the Kathmandu valley. Critics opine this was brought into effect too late, after existing banks have had enough braches in the valley. The new banks are allowed to have their corporate office and one more branch in the valley. But if they want to have more branches, we want them to serve the remote and the semi-remote areas too. If a new bank opens at least one such branch, it can always come back to open a third one in the valley. <br />
			<br />
			And to facilitate their business transactions, we have allowed them to have multiple branches in the border areas. So the new banks are in a position to open at least ten branches which is a good number. In this context, even the banks have to find new areas of savings mobilisation. I think it should work for the banks to explore virgin areas for the operationalisation of savings and credit. The problem begins when some banks are opening branches without properly accessing the commercial viability of the branches and accessing the capital base.<br />
			<br />
			&nbsp;In that case, it becomes the responsibility of the central bank to intervene. That's why we have stepped in this process to see that the banks branching policies are in the right place. It's certainly not to create bureaucracy. It is simply to ensure that a majority of the population in this country have access to finance.</div>
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			<strong>The central bank has announced to withdraw all notes bearing the image of former monarch from the market by the end of 2067 BS. What are the costs and benefi ts of this move? What are the bank's plans to introduce more durable notes?</strong><br />
			<br />
			The withdrawal of the notes in circulation with the former king's image needs to be honoured. We have been delaying because there is a cost involved to it. We want such notes to be naturally phased out in a manner such that the notes that come back to the bank will not be re-circulated. In terms of volume, most notes have already come back to the central bank. We have in circulation notes worth about Rs160 billion outside the central bank out of which only about Rs 4 billion notes are with the former king's image. On the issuance and printing of more durable notes, it has two dimensions. <br />
			<br />
			The short life of the existing notes is because of our culture and habits. We certainly lack the consciousness and responsibility to handle notes. We must understand that this is a national property and spoiling or damaging notes costs money. Any savings from printing notes adds to the government's coffer in the form of dividend. This ultimately goes to the people in different areas like education, health, transportation etc. Habits like culturally colouring, writing and worshiping with water over notes have to change over time. The second point is the quality of the note itself. That would imply shifting away from paper notes to polymer notes. Polymer notes, if properly printed and designed, last longer than paper notes. That is the policy shift we have to make. The polymer notes we had earlier with Rs 10 denomination didn't yield a good result. Although most countries are now already entering the polymer notes scheme, we are still in the process of finalising it. We are looking at better quality polymer notes in circulation and also at raising the people's awareness on handling them properly.<br />
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			<strong>On the one hand, NRB seems convinced that the existing number of banks in Nepal is too high, while on the other you continue to issue new licences. Isn't it a contradiction?</strong><br />
			<br />
			<br />
			Actually, when we gave letters of intent to at least half a dozen banks, we decided that we have to have a moratorium on establishing new banks. When we say no more banks, we don't say that there are already six banks which have been almost approved. My colleagues in the central bank had taken this decision before my appointment as the Governor. They had indeed said ''no to more banks after having approved at least half a dozen of them. That's what has confused people. Since my appointment, I haven't approved a single new commercial bank. The banks that have opened are a result of the decisions made in the past. There are two more banks coming up very soon which are again decisions from the past. Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas. The other dimension is that some banks have asked for upgradation from class C or B to class A. They have been issued letters of intent before or have been given some kind of assurance from us. Now, with our policy of no more commercial banks we need to make decisions on those who have already been given green signal to be graduated. Whatever the internal challenges may be, the main issue is that we have enough commercial banks - 30 of them on the last count. In terms of number, 30 commercial banks are enough but in terms of financial access, services and the capacity of the banks to go into the rural market, we are lagging behind. The total capital of the commercial banks is perhaps between Rs. 50 to 60 billion.<br />
			<br />
			If you are developing a 200 MW power project, you can access the cost but even the entire capital may not be enough. In that sense, this is still a small shallow financial market. So now the challenge is to seek ways to expand the services of the existing banks as well as to enhance the quality of the banks. The reallocation of the resources from less productive to more productive areas and to see that the poor are having some access to capital needs a look-in too.<br />
			 </div>
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			<strong>Banks are reportedly going to face a liquidity crunch again? </strong><br />
			<br />
			What are NRB's plans to avert this situation? First, the central bank must guide or warn them about such a scenario. Before Dashain when banks had a lot of cash, apparently they were trying to bring the interest rates down. Publicly, I said that it's too hard to decrease it, perhaps you have to wait and see, and perhaps you should look for new avenues of investment. So that was my concern and that is still valid. I would request the banks to continue with the interest rate that is necessary. The second point is we have seasonal withdrawals. Before Dashain, people want to have new currency notes so they withdraw more money from the banks. They also change old notes with new ones. Usually, the new notes are with the people till Tihar. Once the festivities end, these notes are back in circulation in the market. Thirdly, you must take into account the harvesting season. The new notes can come to the market only when there are certain activities in the agricultural sector. You should have new production which has to be transacted that demands money. Once the notes circulation gains momentum, it enhances liquidity and that brings money back to the banks. That cycle will start when the paddy comes to the market. The other factor is remittance. If there is a high flow of remittance, the money comes to the banks and then gets converted into Nepali currency. Either spending or saving the money is eventually bringing it to the bank. Increased remittance is a trend that starts with the start of the festive season. This money is spent largely during the festivals. The official exchange rate between Indian and Nepali currencies is still fixed at NRs 160 for IRs 100. However, in the market, an IRs 100 note is already being exchanged for NRs 165. Do you think that calls for a devaluation of the Nepali currency vis-a-vis the Indian one? I would not recommend that as we have enough Indian currency with us. The artificial trading of Indian rupee is for some other reason. Why do you think there are people who need Indian rupee in cash and even ready to pay a higher margin? NRB has been giving unlimited amount of Indian currency through the banking channels. So the story is not about the exchange rate, it has to do with governance and its controlling measures. And also about stopping the legal imports to Nepal because the issue is somewhere else than the import exchange market. Why does one need to pay NRs 165 for IRs 100 when the banks can issue cheques, drafts, LCs, and even the ATMs can be used for the purpose? It is about people who indulge in business practices outside the purview of the formal legal system. The solution to this lies with the broader surveillance issue, trade management, customs management etc.</div>
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		<div>
			<strong>Is that the reason for NRB to cut down the volume of Indian Currency given to the money changers? </strong><br />
			<br />
			Yes. We realise that this could put the country at a great risk. Speculation is rife that in the border areas, there might be a lot of illegal activities provoking factors which might pose a threat to the peace process. And still the central bank is liberally distributing cash currency which may not be a wise decision after all. These are times when we are concerned about terrorist financing. While looking at anti-money laundering measures, we want to talk about financial disclosures and encouraging cash transactions in the border areas.<br />
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			<strong>The new monetary policy has provisioned mandatory lending to the deprived sections of the population by fi nancial institutions. But it they are trying to form subsidiary institution of their own which is agian likely to be centred in the urban areas. The actual target population, to a large extent, still lacks access to funds. How do you plan to address this issue?</strong><br />
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			We have been able to address this issue partly. What we have said that you can have some institutional arrangement to retail credit in the urban sector but that cannot be more than 1/3rd of your total volume. The major component must go to the real borrowers through some or the other mechanism. The money going to the deprived sector through any institution cannot be re-deposited in the bank at an interest payment that we have stopped. We have also strengthened our supervision to see that the money marked for the deprived sector should be spent on a daily basis. If the financial institutions fail to do so, we would not count the spending under the deprived sector. We are definitely trying to strengthen the process. We have also asked the banks to have a plan to increase their resources allocation towards the agricultural sector. It should, in part address the issues of the weaker section of society. It's a myth that poor people are not bankable. I think there is more credibility attached to them because they don't have the capacity to become defaulters.<br />
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			<strong>What is your response to the criticism that the new monetary policy could lead towards a more restrictive regime akin to a control of socialist nature?</strong><br />
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			Critics may say what they like to but nobody is disagreeing on the evaluator economic system or the system of social justice. However, the monetary policy is not designed to address these issues but to direct credit. People must first understand monetary policy vis-a-vis the credit policy. Monetary policy is totally designed towards the macroeconomic strategy, low inflation, better reserves, enabling growth with adequate provision of credit etc. On the other hand, the credit policy could be selective and qualitative in a country like ours whereby access to finance and formal credit for some productive sectors cannot be denied. These sectors include agriculture, tourism, water, and hydroelectricity etc. If this makes us restrictive and socialistic, I would simply accept that. But monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets. What a credit policy does is something that every country does. Look at the overall picture in South Asia. Directed sector credit programmes, productive sector credit programmes in some of the South Asian countries is higher than in Nepal. We cannot challenge Bangladesh, India, Maldives, or Sri Lanka on that account. Their credit policies are stronger than ours. So I would like to ask my good friends to look at these examples in the region.</div>
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			'description' => 'When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors.',
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			'content' => '<p>
	<span style="font-size:14px;"><strong>We Need To Change Mindset To Think Big</strong></span></p>
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					Suraj Vaidya, the President of Vaidya's Organisation of Industries and Trading Houses (VOITH) is contesting the prestigious position of FNCCI President in an election being held during the FNCCI Annual General Meeting scheduled on 11-12 April 2011. In an interview with Pinaki Roy of <em>New Business Age</em>, Vaidya talked about the upcoming FNCCI elections and presented his views on reviving the ailing national economy. Excerpts:</p>
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				<strong>The FNCCI elections this year come with a twist. The culture of consensus for the Senior Vice President to take over the reins has gone for a toss. Why so?</strong></p>
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				Well, we are going through a democratic system and democracy demands that we have more openness. FNCCI has always been a very open institution. New challenges bring new opportunities and therefore, we see more than just one candidate coming in for this election.</p>
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				<strong>There has been a war of words of late between the CNI and FNCCI. How does it affect the private sector? Do you ever see the prospect of a single umbrella organisation?</strong><br />
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				I really don't think there is any war of words. The leaderships on both sides, at this stage, are looking at the smaller pie instead of a bigger one. We need to understand that the state of the economy is in an extremely fragile situation. With power cuts of over 12-18 hours a day, the interest rates coming up to about 17-18 per cent per annum, liquidity crunch in the market and the increasing demands of the labour, we need to regroup ourselves, re-focus and see the common agenda. We must then take it up in this new world of <em>coopitition</em>. We need to cooperate where we can and compete wherever we need to. If we agree on this basic fundamental, CNI can do what they need to and FNCCI can pursue its own agenda. We need to move forward together. Actually, we were one and so the concept of coming back together is always there. I see great possibility for us to come back. But FNCCI needs to first look at whether we can meet the expectations of our members who are so demanding today. People leave because they feel that they haven't been looked after. It is as simple as that. Therefore, if FNCCI improves its working relations, its services to the members and takes up the economic agenda as a leader of the nation, probably the members will come back and see the benefit of being part of the FNCCI. It's very possible that we can come back together if FNCCI takes the right leadership. That way we would be under a single umbrella one day again.</p>
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				<strong>FNCCI has started sounding like a political organisation lately, trying to broker peace between the government and the opposition parties. Is this the kind of role FNCCI should be pursuing?</strong><br />
				<br />
				I have laid out a few tasks for myself if I get to the post of the FNCCI President. We need to talk economic development of the nation because fundamentally our mandate is to lobby and advocate for friendlier business environment in the country. This is our main agenda and to deviate from any of these issues would not be fruitful for the institution. FNCCI needs to be less active in politics but we need to be interactive with the political parties on economic development issues. Therefore, we will work with the political leadership on economic issues, national development, national budget and planning etc. We need to work with all the political parties as partners. But if it comes to carrying any 'ism', that's something FNCCI needs to stay far away from.</p>
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				<strong>As a prominent business leader, how do you look at the overall state of the present economy? </strong><br />
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				The fundamental problem with the businesses and the industries is that the economic agenda so far has been overshadowed by political agenda. There has been less private sector initiative on taking leadership in this area. One of the things that I have set for myself if I come in as FNCCI President is that within six months, we will have an economic agenda which will talk about a very short term - three to five years-planning. It will give us a sense of direction as to where we think the government needs to lay more emphasis on, to create employment opportunities, to create a better investment environment and to be able to make it more profitable for businesses to operate. Once we have an economic agenda, we will go to the political parties and get their views on it. We will hopefully have a national economic agenda signed and accepted by all political parties to strengthen political understanding between them. So, I think the economic-political agenda led by the private sector is what is required today. And unless that happens, we are going to have a lot of problems. The mess that we have today is because the private sector has not been the engine of growth. It's been politics which is trying to be the engine of growth which is negative for the country. This is where we need to reform and move forward.</p>
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				<strong>There is relative peace in the country, so to speak, after the end of hostilities. Why then are we not seeing any major investments? Where does the problem lie?</strong><br />
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				The example of the problem is very clear. It took us over seven months to find a prime minister. But people have started doubting how long will he be there. Business is a long term game. It's not that you make money today and walk out tomorrow. The fundamental requirement for any investment is sustained peace that helps to understand where the country's really heading to. It worries us when the parliament gets bogged down debating whether to use such words as 'private-public partnership'. When the political parties start showing hatred towards the very word 'private', it makes investments very uncomfortable. It gives an impression that the private sector can never be made a partner in the development programme. This message is reaching not only the Nepali investors but also to the foreign investors whereas FDI is so critically important to this country. If you look at the hydropower projects planned to be developed, a lot of Indian companies are either holding on to the projects or taking longer time to start them because of the inability to view the political-economic side of things. These are very critical issues that Nepal will have to address squarely in the coming days.</p>
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				<strong>How about the possibility of a consensus among the candidates for FNCCI Presidentship? How exactly have you projected yourself for the position with your plan of action and manifesto, to lure the members?</strong><br />
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				My experience tells me that especially when the institution is going through a very difficult time, you tend to come together. But again there is a Nepali culture, a Nepali way of doing things. Democracy and freedom of association and thinking lead to an intellectual debate on how best we need to move forward. Six months ago, I sat with incumbent FNCCI President Kush Kumar Joshi and urged him to take the leadership in creating an environment where we have no elections right across. And I am not talking about the election for the post of President only but for the entire FNCCI. My concern is simple: if the country's new constitution is promulgated, FNCCI's laws and regulations will change drastically. We are not sure which districts, states and municipalities will fall under what areas once the country turns federal. Therefore, FNCCI's constitution itself will change and this will be a huge change through which we need to remain united. I have been trying to emphasise on this with the incumbent President for a long time now but haven't succeeded for whatever reasons. And now we are little over a month from the election date. Therefore, I find it difficult that there would be any understanding. So I am moving ahead on my own.</p>
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				I have six very simple agenda: First, to provide better service to FNCCI members whereby getting their confidence and be more focused on FNCCI's work and not go beyond its mandate. The focus would be on the economic agenda and if we are able to do that, we would have provided services to the members. The members would mean the people from the districts, the commodity associations and the associate members. The second, to take leadership on the economic plan of this country. I think we have got too much of planning done for this country without real serious inputs from the private sector. FNCCI needs to make an economic vision which will not be a long term one. We are going through a very transitional phase so we need very short and medium term plans. My strategy would be to create an economic vision which would give a rebound to this depressive situation that we have. And hopefully work with the political parties and have the agenda accepted by all political parties whereby it would reflect on government policies for creating a better environment for business. That will be six months from the time I come in. The third agenda is energy. We all talk about the potentials of energy that we have. I am not going to be a politician saying we will bring 5,000 or 10,000 MW of power. But what I would say is that we would lobby and push and do everything possible to make investment in hydropower. We are going to push hard to get approved the electricity bill that has been sitting in the parliament for the last two years. We need laws that are investment friendly. We will urge the government to look at the supply and demand situation. The government needs to look at hydropower development as an area of national priority and give incentives to attract larger investments. The electricity tariff has not been revised for the last 10 years and it needs to be looked at seriously. We need to advise and work with the government on whether it is workable to continue to have NEA responsible for producing, selling as well as managing power. The electricity losses of 18-20 percent are unacceptable to the nation.</p>
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				Number four would be fiscal discipline for which the private sector first needs to be open and transparent in the way we do business. And we will try and encourage that as much as possible. The last three budgets did not come on time and the government has not been able to rescue the country's economy. In fact, the delay in budget is one of the reasons why the interest rate has gone up so high. The funds have not gone to the districts for development expenditure and as a result, we are lagging behind. Fiscal discipline on our side definitely needs to be looked at but we would also lobby and bring to the attention of the Nepali people, the government's long vision or whatever it may be. Number five, I want to go to the trade unions as partners. We need to sit and plan on how we can create a better investment situation in this country. The labour relation is extremely important to build confidence for investors. We need to see if we can retain the Nepali people leaving the country. We want to improve working relations with the trade unions and the two agenda to look at are linking wages with productivity and linking social security with flexibility. If we can work out these two agenda, we can achieve a lot with the trade unions.</p>
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				The last point is that Nepal needs to brand itself as an attractive destination because the existing capital in this country would not be sufficient to rebound the economy. So, we need FDI in this country and need to look at India and China as our primary partners for kick starting our economy. I would be taking a lot of delegations to India and China to market Nepal as a friendly and attractive destination in the areas of hydropower investment and tourism. I think these are areas that would help Nepal come back quickly. Therefore, focusing on India and China as partners for Nepal's development is extremely critical. These are the six primary agenda that I have if I become the next FNCCI president.</p>
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				<strong>Why are you contesting the FNCCI President's post, in the first place? Why are you in the fray at all?</strong><br />
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				I have been with FNCCI for the last 25 years and have been the Vice President thrice. I am now the Senior Vice President and I really need to move up or leave the space for some other friends who want to come in. More importantly, the new leadership of FNCCI from coming April will be directly responsible for what's going to happen in about two months from there. That is the time when new Constitution is expected to be promulgated though we don't know whether the constitution will be really promulgated. Economy and development will be important agenda that time. Therefore, the FNCCI leadership needs to be mature and determined enough to take on those challenges. I am prepared for that. I see several reasons why the economy has not been at the forefront.&nbsp; In the New Nepal, the economy must be in the forefront. I am concerned about the inflation that's up from 8.5 per cent last year to 14.6 per cent now and the slowdown in the industrial output from 4 per cent to 1.8 per cent. These are all extremely worrying symptoms and I feel I can face these challenges and also come up with an amicable result which will enhance FNCCI's image.</p>
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				<strong>The image of the business community has been badly tainted by the fake VAT bills episode. How do you view this? What, according to you, can be the course of correction?</strong><br />
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				I think the private sector has owned it up saying that it is a part of corruption that is going on in the country. But the government and the system itself need to acknowledge that they too are involved in this and therefore, we need to work together to find a solution and get out of this. It's important for us to understand that institutions like FNCCI will stand by the law of the land. If there is any forgery which affects the nation at large, FNCCI needs to take up this issue. By the same token, the government needs to understand that they are also part of it. Such corruption and forgery wouldn't have occurred just by the efforts of only one side. So, the other side too needs to own up and say what they plan to do regarding this.</p>
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				<strong>We have witnessed a shift from manufacturing to service industry in recent times. What could be the possible reasons?</strong></p>
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				Nepal needs to revisit itself and re-understand where our sustainable areas of potential investments are. The industrial growth has declined from 4 per cent to 1.8 per cent mainly because we have power shortage and frequent strikes. There have been labour disputes and political interference in large investment businesses. Therefore there are large projects such as the hydropower projects that are intended but haven't really materialised. What is discouraging investment into these areas is lack of foresightedness. How long is Nepal going to wait for things to really happen and to have a stable government that will last beyond a few months? And until Nepal shows that leadership, I think investment in manufacturing is not going to increase. It is a wishful thinking at best and therefore, service industry is something that is but natural. Nepal needs to look at Singapore, Switzerland and Hong Kong which are very small nations lying between large industrial countries. We need to see if we can imitate their success by providing services to bigger countries whereby we can increase our niche in the market and improve the economic condition of this country. So, the service industry is going to be a very important part of Nepal in times to come.</p>
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				<strong>How does the FNCCI and the private sector plan to revive the ailing national economy?</strong></p>
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				We need to be positive and work with the media and the government in saying that Nepal is not a poor country. Nepal has tremendous future and potential so the fundamental thing is to change our mindset from thinking poor to thinking big. This will help us initiate a new beginning. Nepal needs to seriously look at how we can generate investment here to employ the 500-700 Nepali people leaving this country on a daily basis because the youth who would make the future of Nepal and the people who have knowledge are leaving us. The doctors, engineers, scientists and businessman-they are all leaving us. Therefore, we need to create a positive environment in this country to try and retain them. This is going to be critically important in the coming years. Nepal needs to look at its niche strength which is human capital. It needs to look at the growth of India and China. They are going to be the world's largest economies by 2020. Nepal needs to be able to make a strategy on how to benefit from the growth of these economies on the two sides of our country. If we focus on that, we would be able to quickly come out of our problems. We need to have a focused vision and short term plan for revival. We also need to try and create employment and good labour relations. At FNCCI, we need to work with the trade unions as partners - we should be people sitting on the same side of the table, not on the opposite sides. If we are all in this together, it will be critically important for us to move forward.</p>
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				<strong>Some of the projects initiated by the FNCCI lately have failed miserably. It is operating more like an NGO implementing independent projects. Shouldn't FNCCI be taking the lead to envision what is in the best interest of Nepali economy?</strong><br />
				<br />
				Human resource is extremely critical and I want to link this with the FNCCI running a lot of training schools across the country. I think the reason we have not been able to create a sense of success is because we ourselves haven't really focused on exactly what kind of human resource we need to develop. The fundamental issue is what are we training, who are we training and what is the purpose of that training. FNCCI needs to be active in many areas. The JITCO programme which is sending Nepali people to Japan has not been very successful. It's a Japanese company that comes here, interviews people and recruits them. FNCCI is purely mediating this. It probably needs to be in the forefront and take the leadership. I think unless we take leadership, we should not be involved in any such programme.</p>
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				<strong>Would you like to add anything as a message? </strong></p>
			<p>
				Yes, a message to the leaders. It's high time they understand that politics is not the primary concern of the Nepali people. We are worried as Nepali citizens because it's being projected that next year, there is going to be a food shortage of 400,000 tonnes in this country. With remittance declining, our economy is going to be badly hit. The kind of queues that we see outside the foreign ministry for passports speaks loudly about the confidence of the Nepali people on the country's leadership. Therefore, it's time for them to get off the political agenda and start working on economy because this is the only thing that is going to get the country back on a sustainable basis in a long term. We should get peace and understanding so we want them to treat economy as the primary agenda and the most important thing to get the country back from the state that we are in.</p>
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	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span style="line-height: 120%;">''Software Industry in Nepal is Much Bigger than &nbsp;We Think It is''</span></span></strong></span></em></span></p>
<p class="NoParagraphStyle" style="margin-bottom: 5.65pt;">
	<span style="font-size:12px;"><br />
	</span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif=""><img align="left" alt="sanjib" border="1" height="167" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/Sanjib Raj Bhandari1.jpg" style="width: 205px; height: 167px;margin:10px;padding:10px;" vspace="5" width="205" /></span></span></span></em></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif="">Sanjib Raj Bhandari</span><span lang="EN-GB"> is the CEO of Mercantile Office Systems, the pioneer company in Nepal's IT sector. Having seen the evolution of sorts in IT in the past two decades, Raj Bhandari himself has effected a sea-change in his business, priorities and processes. At the beginning, his company was a computer distributer in the mid-1980s, became an internet service provider in 1990s, produced own brands of computers in the beginning of 2000, and now in 2011, Mercantile is chiefly a software producing company. Mercantile-produced software are extensively used in Nepal, especially in the banking sector. Raj Bhandari foresees Nepal's great future in IT, as well as expresses concern that we are among the “bottom few” in the global IT map. He says Nepal also lags in South Asia behind India, Pakistan, Sri Lanka and Bangladesh. Excerpts:&nbsp;&nbsp; </span><span lang="EN-GB" style="letter-spacing: -0.1pt;"><br />
	</span></span></span></em></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company Mercantile has been considered one of the pioneers in Nepal's IT sector. How do you view the growth of the sector over the period of last two decades?</span></span></strong></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The growth has been tremendous over this period. If you look at the very beginning in the early 1990, we had a problem not only with the fact that we were all very new to IT sector, but there were no government policies specially addressing this sector. Computers and its parts were considered luxury items thumbing that the ordinary people do not need them. That psyche was reflected in the government policies. We had a lot of difficulties in doing business not only of hardware but also the software. The policies vis-Ã&nbsp;-vis IT sector were very unfriendly. <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We've come a very-very long way. Today the overall policies are very positive. This transformation has helped both the hardware and software industries to grow. There's been a sea of change not only in the IT development but also on how the government and the people at large perceive the IT now.&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you please elaborate on how Mercantile managed to grow to become the market leader as it is now?</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I run a number of IT companies, of which I run two flagship companies from this building (see picture). The first one is Mercantile Office Systems (MOS), which we started in 1985. It concentrated mainly on distribution of computer and IT related products and software development. We started internet business including email under the MOS in 1992-93. The second one is Mercantile Communications which we started in 1995. We did not know too much when we started internet service under the MOS. It was very much exploring and doing things as you go along. We did not have much technical know-how. Internet was completely new. When we started email service in December 1993, email was not available for the public in India. When we started the internet in 1995, commercial internet had just begun in Singapore. It would not begin in India for another 3 or 4 years. So it was very-very new, we would not know what we were doing, we learnt as we went along, we sought help from a lot of people from outside. Today you can go and hire engineers. In those days, we did not find engineers. We had to actually train our own engineers.&nbsp;&nbsp;&nbsp; <strong><br />
	</strong></span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">You have been selling your own Mercantile brand of computers and office systems. Do you see any need to bring changes in your products or services? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We have been distributing computers since 1985. In the beginning of 2000, we experimented with our own products. We were very successful for two years, but later we could not compete with the international products. The reason was that we needed to be 25 per cent cheaper than the international products and the other products available. In the beginning, we could maintain the difference but later we could not. So, we slowly phased the production out. We don't have the products now. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company software are extensively used by Nepali companies. What distinguishes your products and services from the others?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I think it is the quality. We have from the very beginning emphasised on quality and we have always maintained ourselves and concentrated on niche market. We have seldom gone for mass market. Most of our services are in the gear to corporates. Some of our products like computer notebooks and communication software are now available for mass marketing. Our services like technical, banking and software services have always been very selective. That's how we actually maintain our profile. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you tell us where does Nepal stand in the global IT map and what position Nepal has in South Asia? What are the hindrances as well as prospects for the growth of this sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">If there were a global IT map, we would find ourselves in the bottom few. I often say that our proximity with India is only in relation to geography. Our proximity with India is not in development scale, manufacturing and specially IT. In South Asia, India is way-way up, then would come Pakistan or Sri Lanka not necessarily in the order, and we would be close behind Bangladesh but it does not mean too much, as we still have a lot of run to cover.&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Nonetheless, the software industry in Nepal is much bigger than we think it is. We do not have proper statistics. But my guess is that there are over 5,000 people working in the software industry of Nepal. There are maybe 40 to 50 companies that have employed some 30 to 40 people each. There could be as many as 10 companies with over 100 people in each. Many of these companies are involved in software exports. Their figures do not reflect national figures because many of them do not want to come out in the open as it would create far too big problems for them. And, as their customer base is abroad and as they do not need a formal registration in Nepal, they choose not to be in the legal hassles here. This is something the government really needs to address. &nbsp;&nbsp;&nbsp; </span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">There are a lot of capabilities within the country to develop software. If you look at the hardware sales, the value addition, in terms services, distribution and warranty the Nepali companies provide, is between 2 to 8 per cent. If you look at the software, the value addition is over 90 per cent. There are some 7-8 companies that are exporting services to where the potential lies.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">How are the government policies impacting on the growth of this sector? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The government role is obviously very-very important here. But, the software industry does not need, does not look for government leadership and does not make their plans and projects relying or looking at the government action. The private sector must lead. If the government can catch up the pace, it's fine. Otherwise, the growth will find its own path. A great example is the trekking business. When the trekking agencies started in the 1970s, they organised themselves without government aid. Later on, the government came in to issue the licenses to them. The government has policies and has made policies in the past too. But execution has been the problem in Nepal. Emphasis really has to be on execution, not so much on formulating and announcing the policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Do you see any possibility of government and private sector working together for the development of IT sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Traditionally, we think that the partnership between the government and private sector is fruitful. But, what we have discovered is that the government has very soft corner for IT sector, but still the cooperation has not yielded true fruits. This is not only the fault of the government. I feel the private sector too has not played its part. When you demand so many things from the government, you make your business compatible to the policies and accountable to the country. If you look at any industrial development in Nepal, it has always been private sector led. So the progress has to be made by private sector. If the government assists, it is welcome; if it doesn’t, it need not be bothered.</span> <br />
	</span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">As I previously mentioned, the initiatives has been taken by the private sector. However, if the government and the private sector were to cooperate, the government could obviously help with better and improved policies. The government could also help by buying software and looking for solutions, let's say in electricity or telecom companies. This encourages Nepali IT companies to take part. But right now, the terms, conditions and perks in international standards that the government boasts are rather punitive to Nepali companies. I repeat they are not only discriminatory but also punitive. Those companies put such conditions which Nepali companies simply cannot meet. Or, if they can be met, they could be agents only. This is very humiliating. It is fine if the government entertains the business from international companies in the area where Nepali IT companies cannot compete. But the Nepali government is disqualifying the Nepali companies for many other reasons. To correct this, the government need not do too many things. What it can do is to just encourage, invite and qualify Nepali companies to take part in business bidding to provide service for Nepal government and institutions. There could be many areas like e-commerce, trade, billing boards for telecom and other government bodies – where the Nepali companies too can perform well, given little amendment in service procurement mechanism. Therefore, for now it would be enough to revoke the punitive and discriminatory policies on the part of the government; let alone making fancy policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The Computer Association of Nepal (CAN) and ICT Association of Nepal are holding Info Tech Fairs every year. How do you evaluate the role of these fairs in promoting IT business in the country?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The CAN and ICT info-tech fair attracts hundreds of thousands of visitors every year. Obviously it plays the central role in awareness, as it educates the public at large. However, it is almost like the flagship event for CAN and ICT. It is important for these organisations to focus and involve in other large events of info-tech. Right now they are perceived as single event institutions. They need to move out of that.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">There are some unused infrastructures on IT, one of them being the IT Park in Banepa, Kavre. Why do you think such utilities are almost defunct? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">In 1992, a high level commission was set up to look at the development of IT and the benefits of IT Park. Ten years down the line, many things have changed, in particular the communication technologies. The IT Park is yet to embrace the changes. That could be the major reason for it being a mess.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">Still, don't you think there is a digital divide prevalent in the country? How do you think such divide can be narrowed down? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Digital divide is alarming. Only one or two per cent of Nepali people have access to internet and IT in general. Increasing the access of people to IT and telecommunications can lower the digital divide as both these sectors are complimentary and intertwined. The number of people having access to IT and telecommunications is increasing. I'm happy with that and hopeful too.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">As a matter of fact, your company operates an online media too. How much do think it has contributed to the growth of online media in Nepal? How economically feasible is it?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">When we established a news portal in 1999, it was definitely not sustainable for the next 5-6 years. But today for the last 3 or 4 years, the portal has been doing fine economically too. We have hired almost 20 people. The portal pays for itself and is also making money. Online media came with more people having access to communication, computer and education. To have access to online media, one must have computer device, must have access to communication and must be educated. In developed markets, the online media has overshadowed the traditional media. I am still doubtful that will happen in Nepal in the foreseeable future. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Every successful company stores plans for future as well. What about yours? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We will obviously expand on our communication network. We will expand our institutional network to cover entire country now. In banking software, we expect to grow at least 100 per cent on year basis. We are also looking on international market and we are very hopeful. As of now, over 50 per cent of the banks, over 70 per cent of the development banks and 90 per cent of the finance companies use our software. This covers almost 1000 branches in the country's financial system. Even if you say each branch in average uses this software 20 to 30 times, some 20 to 30 thousand use our software daily.&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">What could be the way forward?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">With the growth of communication and education and population as well, the IT sector can only grow. I see its great future in Nepal.&nbsp;</span><span style="letter-spacing: -0.1pt;"> </span></span></span></span></p>
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<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span style="background-color: rgb(240, 255, 240);">'I See Prospects in Herbs, Tourism and of course, Carpet'</span></span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	<img alt="" border="1" height="270" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/572699_512919295_905742336_n.jpg" vspace="5" width="180" /><br />
	<br />
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em>Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview with Nubiz, says his basic priority would be to revive and maintain the old trade surplus figure that Nepal had been enjoying in the past with Germany, now a key member of the European Union. With the nose-diving of carpet and garment exports, Nepal has nothing much to offer to German market. Still, Kakshapati is hopeful that the branding of some of Nepal's food products such as tea and coffee and attracting more German tourists to Nepal can still help get the old trade figures back. Excerpts:</em></span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em><br />
	</em></span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What is your new vision as the new president of Nepal-German Chamber of Commerce and Industry?</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I have segregated it into two parts. The chamber is 18 years old. Some of its legacies I have to carry on. I cannot opt out of the regular programmes the Chamber has been doing. For example, the Chamber has been promoting Nepal's tourism in Germany since 1994. It is called CMT Caravan Motor Touristic. It is a very popular fair in Germany. More than one million people visit the fair each year. So, it must continue. Besides, there are some other regular programmes which I will continue. That is the first part of my aim. As for the new vision, I want to expand whatever economic ties exist between Nepal and Germany. If you look at the overall figures for the past one year or two, our overall trade balance has not been in our favour. But Germany is one country with which we have trade surplus. But the margin of that surplus is now decreasing. I want to bring it back at least to the old figures. That is my main aim.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Germans are looking for new products from Nepal. For example, Nepali tea and coffee have entered into the German market but lack effective branding. I would like to brand it as Nepali tea or Nepali coffee. I see a scope there. Likewise, we are always talking about Nepali herbal and similar products. Herbal is one product which a lot of developed countries are eyeing on. Nepal is so rich in herbal resources. If we produce and market it, Germany would be one of the very popular destinations for these products.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Similarly, besides exporting to Germany, I want to work on capacity building in the country to export different products from Nepal. The Chamber has the past history of such works. For example, it organised a tea seminar in Ilam some years ago. We invited experts from Germany one as the market expert and another as the product expert. These experts directly interacted with the tea producers regarding the choice of taste of Germans and market situation there. That proved very effective. I want to do the same for other products also, for example, herbal, as I have mentioned. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal's herbal products are yet to be processed and branded well. In the case of coffee too, we have to enhance our quality. Today, it is soothing to see professionals involved in coffee production. The bottom-line again is that we have to increase the quantity and improve the quality. When we work with a developed country, quality is always the first priority to have an access into their market.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">During my travel to Germany I found that Nepali business community has not been able to explore the existing opportunities in terms of machinery, information, etc. There are only a handful who have done so. I think Nepali businessmen should also go to the expos in the places in Germany so as to learn things and gain expertise. Therefore, I am also in favour of promoting exchange visits of business people between the two countries.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you think the Nepal Germany trade relation can be made favourable to Nepal? <br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">As I said earlier, Germany is one country where Nepal has trade surplus. But we should not be content with whatever trade figure we have. The Chamber in the past has worked with DIHL which is the authority in Germany to expand trade relation between any countries. When I visited their office in Germany, I found that they have given very tiny space to Nepal. They showed me the huge trade volume they had with China. Through the exchange of visits and co-work among various chambers in Germany, I think we may be able to increase the trade prospects of Nepal. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Even the European countries are removing Nepal from the list of “preferential trading partner very shortly. How can your Chamber contribute to retaining Nepal's status as a beneficiary of developing country concession of EU?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Yes, I also heard that. It is an agenda for me to talk with the EU representatives in Nepal first and find out what was the reason behind it. There could be so many reasons, and I will work on how to address the situation. First and the foremost, I must know the reasons. After that, we the Chamber and other organisations like the carpet association, etc can lobby together. I will also work closely with German development institutions like GTZ. We, as individual organisations and with others jointly, will lobby to retain our position in the EU.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Chamber of Commerce and Industry is one the oldest bilateral chambers in Nepal. How do you view its achievements?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think it was the first bi-national chamber in Nepal. The establishment of the Chamber introduced the concept of bi-national chambers in our country. Some 18 years ago, nobody thought of a bi-national chamber could be so important. One of the major achievements of the Chamber is that we have been able to join hands with various German trade bodies and even development agencies like GTZ. The Chamber has enhanced and promoted ties between Nepal and Germany. An example is tourism. The Chamber has been instrumental in the arrival of German tourists in Nepal as well for expanding market of Nepali products such as carpet and garment in Germany. From time and again, we have been taking business delegations to Germany. Such steps are helpful in strengthening trade links.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Most of the economic activities in EU seem to be consolidated under EU umbrella. Do you think the bilateral trade relations of a country like Nepal with individual member countries of EU hold long term importance?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Though EU has certain umbrella policies, bilateral trade&nbsp;&nbsp; relations too hold importance. There are layer of two policies in EU: one is at macro level, i.e., the umbrella policy, and another at the micro-level, i.e., the individual country's policies. Both policies work together. I don't think the situation will change so drastically in a very short period of time. Our chamber has a direct link to the German trade bodies. Of course, there is a big umbrella called EU but within that big umbrella, there are small umbrellas too. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What do you think are the areas Nepal can benefit in the trade with Germany?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If we talk about trade from Germany to Nepal, there are so many factors. We have members who have the business of &nbsp;German medical equipments in Nepal. And there is possibility of cooperation in hydroelectricity development. There are so many other sectors like Information Technology, in which Nepal can attract investments. Germany being a highly developed country, Nepal can learn many things from it.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Despite our almost half a century long trade relation, where do you think Nepal lacked taking advantage from the German market?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think, what Nepal lacks is its own confidence. The political and social situations, among other factors, are responsible for that. We have not been able to use the potentials that the German cooperation offers to us. A number of joint venture companies have shut down because of our own reasons, such as the lack of security. We have a recent example. One executive member who had been manufacturing garments shifted his office elsewhere from the previous location owing to violence and security lapses. So, there indeed was opportunity which we could not simply tap.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the major export items of Nepal to Germany? <br />
	</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If you look at the old data, 80 per cent of the trade is occupied by carpet and garment. Gradually, food market such as tea and coffee is also coming in. Nepal has very limited products to export. We have to increase their quality. We don't have much choice.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the challenges in Nepal-German trade?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The most pertinent challenges are seen in the tourism sector. If we compare the data of German tourists arrival in Nepal, it was 45 to 55 thousand in 1998. Now it has decreased to 20 to 25 thousand only. It is the biggest challenge why have we not been able to attract German tourists as in the 1990s or the 80s? Second challenge is on retaining the market for our carpet. Its export has now nosedived compared to the previous years.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Do you have German collaboration in your business too?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">My primary business is restaurant and I have investments in a bank, among other sectors. At present, I am working with German companies on new products. So basically I'm a restaurateur. I joined the Chamber in the 1990s, as I was asked to. Earlier, I had a travel agency, so my keen interest is in tourism. So I hope to promote tourism along with other sectors being in the Chamber. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you foresee the Nepal-German economic ties in the longer run?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);">The relation between two countries is of course fundamentally economic and I think this kind of bi-national chamber always helps to promote trade. As of now, we have 22 or 23 bi-national chambers. Nepali business community should have this kind of platform that helps make an easier access into business-related information and facilitation in the counterpart country.</span></span></p>
<p>
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">&nbsp;</span></span></p>
<p>
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Facts and Figures:</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<ul>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the biggest export markets for Nepal and ranked 4th after India, USA and Bangladesh. During the FY 2009/10, the Nepali export to Germany could maintain favourable trade position but the export volume decreased by Rs 2,391 million, 14.1 per cent less compared to the previous year. <br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Nepal's overall exports declined in FY 2009/10 by 11.1 per cent to Rs 60.9 billion whereas imports continued to increase by 29.1 per cent to Rs 375.6 billion. This development has further widened the overall trade deficit which was about Rs 314.7 billion (+41.5%) in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Due to the decline of exports, the overall Nepal-German foreign trade has also slightly declined in the FY 2009/10. The total bilateral trade fell from Rs 5,029 million to Rs 4,713 million a decline of 6.3 per cent compared to the previous year. Imports from Germany rose by 3.5 per cent compared to FY 2008/09 to Rs 2,322 million.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the few countries with a positive trade balance for Nepal (after Bangladesh, Bhutan and Canada) although the trade balance came down from a comfortable surplus of Rs 541 million in FY 2008/09 to Rs 69 million in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Exports to Germany In FY 2009/10, the decline of exports to Germany was caused by a decline in Textiles, clothing and accessories (9.6%), Food (19.0%) and Others <br />
		</span></span></span></li>
</ul>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:=""><br />
	</span></span></span></p>
<p>
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Foreign Trade</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">(52.6%). The export of carpets almost 60 per cent of the total exports to Germany further dropped down from Rs 1.53 billion to Rs 1.42 billion. It was a decline of 6.8 per cent. Germany is one of the biggest export markets for Nepalese carpet industry. It ranked second after the USA. The exports of woolen shawls decreased by 39.7 per cent (Rs 242.1 million) while exports of clothing slightly increased by 3.5 per cent (Rs 270.8 million) in comparison to the previous year. The decline in food exports to Germany were caused by decreasing exports of lentils, coffee and spices while the exports of tea (13.3%) and medical plants further increased. Germany, with an export volume of Rs 33.2 million, is the second biggest export market for Nepalese tea mainly the orthodox tea after India. The exports of paintings came down by 69.4 per cent to Rs 75.4 million. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Imports from Germany In FY 2009/10, the total imports from Germany experienced a slight increase of 3.5 per cent compared to the previous figure of Rs 2.3 billon. The development of the various product categories, however, was quite different. The imports of Machineries and electrical equipments, the major import goods from Germany that stand for more than 50 per cent of the total imports, increased by 7.5 per cent to Rs 1.2 billion. A closer look to this category reveals that Germany is an important supplier for mechanical machineries especially for the packing, printing, food, tobacco and textile sector. The imports of mechanical machineries increased by 2.6 per cent to Rs 932.1 million. And the imports of electrical machineries and equipments increased by 29.7 per cent compared to the FY 2008/09. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The imports of vehicles went up from Rs 6.5 million to Rs 80.4 million. The imports of medical devices and laboratory equipments increased by 13.8 per cent to Rs 275.7 million. And the imports of chemical and pharmaceutical substances and plastic rose by 11.4 per cent to Rs 265.7 million.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><i>(Source: Nepal-German Chamber of Commerce and Industry.)</i></span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
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			'description' => 'Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview',
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		'Article' => array(
			'id' => '199',
			'article_category_id' => '46',
			'title' => 'Dr Yubaraj Khatiwada',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size: 14px;"><strong>Banks Should Serve To Remote Areas Too</strong></span></p>
<p>
	<span style="font-size:14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size:14px;"><img alt="yubaraj" border="1" height="321" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/yubarajkatiwada.jpg" vspace="5" width="292" /><br />
	</span></p>
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				<strong>When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors. Dr Khatiwada, who started his career with NRB in the early 1980s retired as an Executive Director to serve the National Planning Commission as its Vice- Chairman. He also worked as a consultant for the United Nations Development Programme in Sri Lanka. In a recent interview with Nubiz, he shares his views on the current state of Nepal's economy, the controversial issues in the latest Monetary Policy and the measures he plans to adopt to regulate the banking and financial sector. Excerpts:</strong></div>
		</div>
	</div>
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<p>
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<p>
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	<div justify="" style="width: 595px;">
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				<strong>We only want the salaries of the CEOs managed as the component of the wider financial governance. The global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives.</strong></div>
		</div>
	</div>
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<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
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			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas.</strong></div>
		</div>
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<p>
	 </p>
<p>
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<div style="width: 595px;">
	<div justify="" style="width: 595px;">
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			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets.</strong></div>
		</div>
	</div>
</div>
<p>
	 </p>
<p>
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<div style="width: 595px;">
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: left;">
		<div>
			<strong>Some say Nepal's economy is on the verge of collapse and Nepal is heading towards becoming a failed economy, while others say it's an exaggeration. What's your view?</strong><br />
			<br />
			I think both are extreme viewpoints. Actually, the Nepali economy is not doing well compared to our neighbouring countries. That doesn't necessarily mean we are going to collapse. We have downward risk such as being overtly dependent on agriculture and remittance. Both of them have either climatic socks or say international market socks. So, we are vulnerable. <br />
			<br />
			The fact is :Nepali economy will run at a very low equilibrium, with low growth, low employment, and low forex reserves. If you have a good economic environment across the political spectrum, we could have high growth and accordingly high employment and high income scenario. People are expecting better results. Perhaps out of frustration, that's why they like to comment on the negative extremes.<br />
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	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: right;">
		<div align="justify">
			<p>
				<strong>Why have people's expectations grown so unrealistically ?</strong></p>
			<p>
				<br />
				China is growing at 9-10 per cent and amidst global recession. India is growing at 8 per cent and Bihar is registering a double digit growth. We raise the people's expectations saying that the new Nepal will have a double digit growth. And then we end up with less than a fraction of that when our per capita income happens to be the lowest in South Asia. If we compare ourselves with Bhutan, it's per capita income is in excess of US $ 2000 and there is pressure building up to upgrade Bhutan from its current LDC status. People are bound to compare and voice their frustration. But we must also look at our own history; we have been growing at 5 per cent on an average for the last 25-30 years and now we are growing at the rate of 4 per cent. The frustration is coming mostly from looking at the progress made by other countries in the region. I would say that we could do much better if we had political stability.</p>
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			<strong>Why haven't our macroeconomic indicators improved even after the peace deal? </strong><br />
			<br />
			Well, macroeconomic indicators o inflation, growth, trade and balance of payment etc.help to create an enabling environment for investment. We could not do well in the balance of payment from last year and we had huge deficit during the first six months. We managed to recover in the year end somewhat. We have a double digit inflation making people speculate towards the real assets rather than focussing on the financial side. So, it has created some distortions in the economy but that is not the story behind weak economic performance. Actually, the structural weaknesses like resumption of power outage of the economy are important to address. You cannot grow power intensive manufacturing or power intensive services when you have heavy power shortage. You cannot have labour intensive industry simply because the trade union is stronger and perhaps the political parties themselves don't have control over their own trade unions. You can see the anarchy in the labour market. Everybody is avoiding two types of industries or services--labour and power intensive ones. You are back to being dependent on agriculture which again we are left at the mercy of rain. Only if we could sort out these issues, then we can be hopeful over the state of the economy.</div>
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		<div>
			<strong>A few months ago, the central bank tried to restrict the banking sector's investment in the real estate and housing. Is the progress as expected of it? </strong><br />
			<br />
			Well, we have not stopped it. We have only set a limits where the investment in the real estate in the true sense of the world, should not exceed 10 per cent of a bank's lending portfolio. If some banks have invested say five percent, they still have room but if a bank has already lent 25per cent in this sector alone, it has to bring down the figure. So, industry wise there is still some space. And now if banks collect more deposits they can create more room for the real estate financing too. Also, we have separated housing from the real estate business. Housing for medium class families or low income group families is a necessity because people need to have shelters. So, we are still encouraging housing. Regarding the result, the speculative moves in the land deals have almost stopped. Coming to the financial repercussion, people have apprehension that the borrowers might not be able to repay the loan. If the banks have some more deposits collected, they can still roll over your credit. So that way we are not even asking everybody to collapse.<br />
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			<strong>Why do you think there has been a sort of organised protest against NRB's recent guidelines aimed at limiting the salaries of Bank CEOs? Don't you think it's for a bank to decide the salary for its top executive?</strong><br />
			<br />
			On our part, we only want the salaries of the CEOs managed as the component of the wider financial governance. We have seen that the global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives. There is no point in the CEOs earning huge incentives by undertaking risky ventures to maximise profits and then leave the industry and move to a different occupation. This has often led to the banks landing in financial troubles. So the system would be at risk if extravagant salaries and incentives are linked to profits which lead to risk taking behaviour. <br />
			<br />
			When somebody is having socially unacceptable benefits at the cost of a wide range of stakeholders such as the depositors, the share holders, and the borrowers, it could create a tension in society and we sense it already. Highly paid executives must be compensated adequately for their productivity but that also needs to be at a socially acceptable range. It is also an issue that is being taken up globally. I do not see any reason for Nepal to be an exception in this matter. We are looking at managing salaries in a transparent way which will be socially acceptable. Besides, it will be sustainable for the institution too.<br />
			<br />
			&nbsp;I guess my friends in the banking sector have understood it differently, and were hence provoked. We have basically focused on setting norms that would guide the salaries and perks of the CEOs, not on limiting it in numeric terms. We are definitely not looking at fixing salaries; it's for the banks themselves to determine salaries for their CEOs. The recent guidelines which have existing laws embedded in them are only the parameters to follow.<br />
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			<strong>There does not seem to be much success in the operationalising of the monetary policy for this fi scal year. How would you evaluate it?</strong><br />
			<br />
			It is premature to judge the output of the monetary policy. On the macro outputs, things are improving, the rate of inflation is decelerating. It has come down to single digit on basis of new calculations. On the built up of reserves, we expect to have Rs 9 billion additional reserves in one year. In the first three months, no additional built up has taken place. As this is the festival season, we Nepalis spend more. The November data will show how we can recover towards that direction. There are a couple of other areas where we needed the compliment of fiscal budget such as for mergers and acquisitions where fiscal incentives are also necessary. This indeed has been addressed by the national budget. Similarly, we need this for some of the developing financing areas where the central bank and the finance ministry have to work together like in hydro-power financing, tourism financing etc.<br />
			<br />
			One issue that has also drawn flak is on the conditions set to open bank branches in the Kathmandu valley. Critics opine this was brought into effect too late, after existing banks have had enough braches in the valley. The new banks are allowed to have their corporate office and one more branch in the valley. But if they want to have more branches, we want them to serve the remote and the semi-remote areas too. If a new bank opens at least one such branch, it can always come back to open a third one in the valley. <br />
			<br />
			And to facilitate their business transactions, we have allowed them to have multiple branches in the border areas. So the new banks are in a position to open at least ten branches which is a good number. In this context, even the banks have to find new areas of savings mobilisation. I think it should work for the banks to explore virgin areas for the operationalisation of savings and credit. The problem begins when some banks are opening branches without properly accessing the commercial viability of the branches and accessing the capital base.<br />
			<br />
			&nbsp;In that case, it becomes the responsibility of the central bank to intervene. That's why we have stepped in this process to see that the banks branching policies are in the right place. It's certainly not to create bureaucracy. It is simply to ensure that a majority of the population in this country have access to finance.</div>
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			<strong>The central bank has announced to withdraw all notes bearing the image of former monarch from the market by the end of 2067 BS. What are the costs and benefi ts of this move? What are the bank's plans to introduce more durable notes?</strong><br />
			<br />
			The withdrawal of the notes in circulation with the former king's image needs to be honoured. We have been delaying because there is a cost involved to it. We want such notes to be naturally phased out in a manner such that the notes that come back to the bank will not be re-circulated. In terms of volume, most notes have already come back to the central bank. We have in circulation notes worth about Rs160 billion outside the central bank out of which only about Rs 4 billion notes are with the former king's image. On the issuance and printing of more durable notes, it has two dimensions. <br />
			<br />
			The short life of the existing notes is because of our culture and habits. We certainly lack the consciousness and responsibility to handle notes. We must understand that this is a national property and spoiling or damaging notes costs money. Any savings from printing notes adds to the government's coffer in the form of dividend. This ultimately goes to the people in different areas like education, health, transportation etc. Habits like culturally colouring, writing and worshiping with water over notes have to change over time. The second point is the quality of the note itself. That would imply shifting away from paper notes to polymer notes. Polymer notes, if properly printed and designed, last longer than paper notes. That is the policy shift we have to make. The polymer notes we had earlier with Rs 10 denomination didn't yield a good result. Although most countries are now already entering the polymer notes scheme, we are still in the process of finalising it. We are looking at better quality polymer notes in circulation and also at raising the people's awareness on handling them properly.<br />
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			<strong>On the one hand, NRB seems convinced that the existing number of banks in Nepal is too high, while on the other you continue to issue new licences. Isn't it a contradiction?</strong><br />
			<br />
			<br />
			Actually, when we gave letters of intent to at least half a dozen banks, we decided that we have to have a moratorium on establishing new banks. When we say no more banks, we don't say that there are already six banks which have been almost approved. My colleagues in the central bank had taken this decision before my appointment as the Governor. They had indeed said ''no to more banks after having approved at least half a dozen of them. That's what has confused people. Since my appointment, I haven't approved a single new commercial bank. The banks that have opened are a result of the decisions made in the past. There are two more banks coming up very soon which are again decisions from the past. Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas. The other dimension is that some banks have asked for upgradation from class C or B to class A. They have been issued letters of intent before or have been given some kind of assurance from us. Now, with our policy of no more commercial banks we need to make decisions on those who have already been given green signal to be graduated. Whatever the internal challenges may be, the main issue is that we have enough commercial banks - 30 of them on the last count. In terms of number, 30 commercial banks are enough but in terms of financial access, services and the capacity of the banks to go into the rural market, we are lagging behind. The total capital of the commercial banks is perhaps between Rs. 50 to 60 billion.<br />
			<br />
			If you are developing a 200 MW power project, you can access the cost but even the entire capital may not be enough. In that sense, this is still a small shallow financial market. So now the challenge is to seek ways to expand the services of the existing banks as well as to enhance the quality of the banks. The reallocation of the resources from less productive to more productive areas and to see that the poor are having some access to capital needs a look-in too.<br />
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			<strong>Banks are reportedly going to face a liquidity crunch again? </strong><br />
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			What are NRB's plans to avert this situation? First, the central bank must guide or warn them about such a scenario. Before Dashain when banks had a lot of cash, apparently they were trying to bring the interest rates down. Publicly, I said that it's too hard to decrease it, perhaps you have to wait and see, and perhaps you should look for new avenues of investment. So that was my concern and that is still valid. I would request the banks to continue with the interest rate that is necessary. The second point is we have seasonal withdrawals. Before Dashain, people want to have new currency notes so they withdraw more money from the banks. They also change old notes with new ones. Usually, the new notes are with the people till Tihar. Once the festivities end, these notes are back in circulation in the market. Thirdly, you must take into account the harvesting season. The new notes can come to the market only when there are certain activities in the agricultural sector. You should have new production which has to be transacted that demands money. Once the notes circulation gains momentum, it enhances liquidity and that brings money back to the banks. That cycle will start when the paddy comes to the market. The other factor is remittance. If there is a high flow of remittance, the money comes to the banks and then gets converted into Nepali currency. Either spending or saving the money is eventually bringing it to the bank. Increased remittance is a trend that starts with the start of the festive season. This money is spent largely during the festivals. The official exchange rate between Indian and Nepali currencies is still fixed at NRs 160 for IRs 100. However, in the market, an IRs 100 note is already being exchanged for NRs 165. Do you think that calls for a devaluation of the Nepali currency vis-a-vis the Indian one? I would not recommend that as we have enough Indian currency with us. The artificial trading of Indian rupee is for some other reason. Why do you think there are people who need Indian rupee in cash and even ready to pay a higher margin? NRB has been giving unlimited amount of Indian currency through the banking channels. So the story is not about the exchange rate, it has to do with governance and its controlling measures. And also about stopping the legal imports to Nepal because the issue is somewhere else than the import exchange market. Why does one need to pay NRs 165 for IRs 100 when the banks can issue cheques, drafts, LCs, and even the ATMs can be used for the purpose? It is about people who indulge in business practices outside the purview of the formal legal system. The solution to this lies with the broader surveillance issue, trade management, customs management etc.</div>
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			<strong>Is that the reason for NRB to cut down the volume of Indian Currency given to the money changers? </strong><br />
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			Yes. We realise that this could put the country at a great risk. Speculation is rife that in the border areas, there might be a lot of illegal activities provoking factors which might pose a threat to the peace process. And still the central bank is liberally distributing cash currency which may not be a wise decision after all. These are times when we are concerned about terrorist financing. While looking at anti-money laundering measures, we want to talk about financial disclosures and encouraging cash transactions in the border areas.<br />
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			<strong>The new monetary policy has provisioned mandatory lending to the deprived sections of the population by fi nancial institutions. But it they are trying to form subsidiary institution of their own which is agian likely to be centred in the urban areas. The actual target population, to a large extent, still lacks access to funds. How do you plan to address this issue?</strong><br />
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			We have been able to address this issue partly. What we have said that you can have some institutional arrangement to retail credit in the urban sector but that cannot be more than 1/3rd of your total volume. The major component must go to the real borrowers through some or the other mechanism. The money going to the deprived sector through any institution cannot be re-deposited in the bank at an interest payment that we have stopped. We have also strengthened our supervision to see that the money marked for the deprived sector should be spent on a daily basis. If the financial institutions fail to do so, we would not count the spending under the deprived sector. We are definitely trying to strengthen the process. We have also asked the banks to have a plan to increase their resources allocation towards the agricultural sector. It should, in part address the issues of the weaker section of society. It's a myth that poor people are not bankable. I think there is more credibility attached to them because they don't have the capacity to become defaulters.<br />
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			<strong>What is your response to the criticism that the new monetary policy could lead towards a more restrictive regime akin to a control of socialist nature?</strong><br />
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			Critics may say what they like to but nobody is disagreeing on the evaluator economic system or the system of social justice. However, the monetary policy is not designed to address these issues but to direct credit. People must first understand monetary policy vis-a-vis the credit policy. Monetary policy is totally designed towards the macroeconomic strategy, low inflation, better reserves, enabling growth with adequate provision of credit etc. On the other hand, the credit policy could be selective and qualitative in a country like ours whereby access to finance and formal credit for some productive sectors cannot be denied. These sectors include agriculture, tourism, water, and hydroelectricity etc. If this makes us restrictive and socialistic, I would simply accept that. But monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets. What a credit policy does is something that every country does. Look at the overall picture in South Asia. Directed sector credit programmes, productive sector credit programmes in some of the South Asian countries is higher than in Nepal. We cannot challenge Bangladesh, India, Maldives, or Sri Lanka on that account. Their credit policies are stronger than ours. So I would like to ask my good friends to look at these examples in the region.</div>
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			'content' => '<p>
	<span style="font-size:14px;"><strong>We Need To Change Mindset To Think Big</strong></span></p>
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					<strong><img alt="suraj baidya" border="1" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/interview.jpg" style="width: 346px; height: 192px; margin: 10px; padding: 10px;" vspace="5" /></strong><br />
					Suraj Vaidya, the President of Vaidya's Organisation of Industries and Trading Houses (VOITH) is contesting the prestigious position of FNCCI President in an election being held during the FNCCI Annual General Meeting scheduled on 11-12 April 2011. In an interview with Pinaki Roy of <em>New Business Age</em>, Vaidya talked about the upcoming FNCCI elections and presented his views on reviving the ailing national economy. Excerpts:</p>
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				<strong>The FNCCI elections this year come with a twist. The culture of consensus for the Senior Vice President to take over the reins has gone for a toss. Why so?</strong></p>
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				Well, we are going through a democratic system and democracy demands that we have more openness. FNCCI has always been a very open institution. New challenges bring new opportunities and therefore, we see more than just one candidate coming in for this election.</p>
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				<strong>There has been a war of words of late between the CNI and FNCCI. How does it affect the private sector? Do you ever see the prospect of a single umbrella organisation?</strong><br />
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				I really don't think there is any war of words. The leaderships on both sides, at this stage, are looking at the smaller pie instead of a bigger one. We need to understand that the state of the economy is in an extremely fragile situation. With power cuts of over 12-18 hours a day, the interest rates coming up to about 17-18 per cent per annum, liquidity crunch in the market and the increasing demands of the labour, we need to regroup ourselves, re-focus and see the common agenda. We must then take it up in this new world of <em>coopitition</em>. We need to cooperate where we can and compete wherever we need to. If we agree on this basic fundamental, CNI can do what they need to and FNCCI can pursue its own agenda. We need to move forward together. Actually, we were one and so the concept of coming back together is always there. I see great possibility for us to come back. But FNCCI needs to first look at whether we can meet the expectations of our members who are so demanding today. People leave because they feel that they haven't been looked after. It is as simple as that. Therefore, if FNCCI improves its working relations, its services to the members and takes up the economic agenda as a leader of the nation, probably the members will come back and see the benefit of being part of the FNCCI. It's very possible that we can come back together if FNCCI takes the right leadership. That way we would be under a single umbrella one day again.</p>
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				<strong>FNCCI has started sounding like a political organisation lately, trying to broker peace between the government and the opposition parties. Is this the kind of role FNCCI should be pursuing?</strong><br />
				<br />
				I have laid out a few tasks for myself if I get to the post of the FNCCI President. We need to talk economic development of the nation because fundamentally our mandate is to lobby and advocate for friendlier business environment in the country. This is our main agenda and to deviate from any of these issues would not be fruitful for the institution. FNCCI needs to be less active in politics but we need to be interactive with the political parties on economic development issues. Therefore, we will work with the political leadership on economic issues, national development, national budget and planning etc. We need to work with all the political parties as partners. But if it comes to carrying any 'ism', that's something FNCCI needs to stay far away from.</p>
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				<strong>As a prominent business leader, how do you look at the overall state of the present economy? </strong><br />
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				The fundamental problem with the businesses and the industries is that the economic agenda so far has been overshadowed by political agenda. There has been less private sector initiative on taking leadership in this area. One of the things that I have set for myself if I come in as FNCCI President is that within six months, we will have an economic agenda which will talk about a very short term - three to five years-planning. It will give us a sense of direction as to where we think the government needs to lay more emphasis on, to create employment opportunities, to create a better investment environment and to be able to make it more profitable for businesses to operate. Once we have an economic agenda, we will go to the political parties and get their views on it. We will hopefully have a national economic agenda signed and accepted by all political parties to strengthen political understanding between them. So, I think the economic-political agenda led by the private sector is what is required today. And unless that happens, we are going to have a lot of problems. The mess that we have today is because the private sector has not been the engine of growth. It's been politics which is trying to be the engine of growth which is negative for the country. This is where we need to reform and move forward.</p>
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				<strong>There is relative peace in the country, so to speak, after the end of hostilities. Why then are we not seeing any major investments? Where does the problem lie?</strong><br />
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				The example of the problem is very clear. It took us over seven months to find a prime minister. But people have started doubting how long will he be there. Business is a long term game. It's not that you make money today and walk out tomorrow. The fundamental requirement for any investment is sustained peace that helps to understand where the country's really heading to. It worries us when the parliament gets bogged down debating whether to use such words as 'private-public partnership'. When the political parties start showing hatred towards the very word 'private', it makes investments very uncomfortable. It gives an impression that the private sector can never be made a partner in the development programme. This message is reaching not only the Nepali investors but also to the foreign investors whereas FDI is so critically important to this country. If you look at the hydropower projects planned to be developed, a lot of Indian companies are either holding on to the projects or taking longer time to start them because of the inability to view the political-economic side of things. These are very critical issues that Nepal will have to address squarely in the coming days.</p>
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				<strong>How about the possibility of a consensus among the candidates for FNCCI Presidentship? How exactly have you projected yourself for the position with your plan of action and manifesto, to lure the members?</strong><br />
				<br />
				My experience tells me that especially when the institution is going through a very difficult time, you tend to come together. But again there is a Nepali culture, a Nepali way of doing things. Democracy and freedom of association and thinking lead to an intellectual debate on how best we need to move forward. Six months ago, I sat with incumbent FNCCI President Kush Kumar Joshi and urged him to take the leadership in creating an environment where we have no elections right across. And I am not talking about the election for the post of President only but for the entire FNCCI. My concern is simple: if the country's new constitution is promulgated, FNCCI's laws and regulations will change drastically. We are not sure which districts, states and municipalities will fall under what areas once the country turns federal. Therefore, FNCCI's constitution itself will change and this will be a huge change through which we need to remain united. I have been trying to emphasise on this with the incumbent President for a long time now but haven't succeeded for whatever reasons. And now we are little over a month from the election date. Therefore, I find it difficult that there would be any understanding. So I am moving ahead on my own.</p>
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				I have six very simple agenda: First, to provide better service to FNCCI members whereby getting their confidence and be more focused on FNCCI's work and not go beyond its mandate. The focus would be on the economic agenda and if we are able to do that, we would have provided services to the members. The members would mean the people from the districts, the commodity associations and the associate members. The second, to take leadership on the economic plan of this country. I think we have got too much of planning done for this country without real serious inputs from the private sector. FNCCI needs to make an economic vision which will not be a long term one. We are going through a very transitional phase so we need very short and medium term plans. My strategy would be to create an economic vision which would give a rebound to this depressive situation that we have. And hopefully work with the political parties and have the agenda accepted by all political parties whereby it would reflect on government policies for creating a better environment for business. That will be six months from the time I come in. The third agenda is energy. We all talk about the potentials of energy that we have. I am not going to be a politician saying we will bring 5,000 or 10,000 MW of power. But what I would say is that we would lobby and push and do everything possible to make investment in hydropower. We are going to push hard to get approved the electricity bill that has been sitting in the parliament for the last two years. We need laws that are investment friendly. We will urge the government to look at the supply and demand situation. The government needs to look at hydropower development as an area of national priority and give incentives to attract larger investments. The electricity tariff has not been revised for the last 10 years and it needs to be looked at seriously. We need to advise and work with the government on whether it is workable to continue to have NEA responsible for producing, selling as well as managing power. The electricity losses of 18-20 percent are unacceptable to the nation.</p>
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				Number four would be fiscal discipline for which the private sector first needs to be open and transparent in the way we do business. And we will try and encourage that as much as possible. The last three budgets did not come on time and the government has not been able to rescue the country's economy. In fact, the delay in budget is one of the reasons why the interest rate has gone up so high. The funds have not gone to the districts for development expenditure and as a result, we are lagging behind. Fiscal discipline on our side definitely needs to be looked at but we would also lobby and bring to the attention of the Nepali people, the government's long vision or whatever it may be. Number five, I want to go to the trade unions as partners. We need to sit and plan on how we can create a better investment situation in this country. The labour relation is extremely important to build confidence for investors. We need to see if we can retain the Nepali people leaving the country. We want to improve working relations with the trade unions and the two agenda to look at are linking wages with productivity and linking social security with flexibility. If we can work out these two agenda, we can achieve a lot with the trade unions.</p>
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				The last point is that Nepal needs to brand itself as an attractive destination because the existing capital in this country would not be sufficient to rebound the economy. So, we need FDI in this country and need to look at India and China as our primary partners for kick starting our economy. I would be taking a lot of delegations to India and China to market Nepal as a friendly and attractive destination in the areas of hydropower investment and tourism. I think these are areas that would help Nepal come back quickly. Therefore, focusing on India and China as partners for Nepal's development is extremely critical. These are the six primary agenda that I have if I become the next FNCCI president.</p>
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				<strong>Why are you contesting the FNCCI President's post, in the first place? Why are you in the fray at all?</strong><br />
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				I have been with FNCCI for the last 25 years and have been the Vice President thrice. I am now the Senior Vice President and I really need to move up or leave the space for some other friends who want to come in. More importantly, the new leadership of FNCCI from coming April will be directly responsible for what's going to happen in about two months from there. That is the time when new Constitution is expected to be promulgated though we don't know whether the constitution will be really promulgated. Economy and development will be important agenda that time. Therefore, the FNCCI leadership needs to be mature and determined enough to take on those challenges. I am prepared for that. I see several reasons why the economy has not been at the forefront.&nbsp; In the New Nepal, the economy must be in the forefront. I am concerned about the inflation that's up from 8.5 per cent last year to 14.6 per cent now and the slowdown in the industrial output from 4 per cent to 1.8 per cent. These are all extremely worrying symptoms and I feel I can face these challenges and also come up with an amicable result which will enhance FNCCI's image.</p>
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				<strong>The image of the business community has been badly tainted by the fake VAT bills episode. How do you view this? What, according to you, can be the course of correction?</strong><br />
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				I think the private sector has owned it up saying that it is a part of corruption that is going on in the country. But the government and the system itself need to acknowledge that they too are involved in this and therefore, we need to work together to find a solution and get out of this. It's important for us to understand that institutions like FNCCI will stand by the law of the land. If there is any forgery which affects the nation at large, FNCCI needs to take up this issue. By the same token, the government needs to understand that they are also part of it. Such corruption and forgery wouldn't have occurred just by the efforts of only one side. So, the other side too needs to own up and say what they plan to do regarding this.</p>
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				<strong>We have witnessed a shift from manufacturing to service industry in recent times. What could be the possible reasons?</strong></p>
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				Nepal needs to revisit itself and re-understand where our sustainable areas of potential investments are. The industrial growth has declined from 4 per cent to 1.8 per cent mainly because we have power shortage and frequent strikes. There have been labour disputes and political interference in large investment businesses. Therefore there are large projects such as the hydropower projects that are intended but haven't really materialised. What is discouraging investment into these areas is lack of foresightedness. How long is Nepal going to wait for things to really happen and to have a stable government that will last beyond a few months? And until Nepal shows that leadership, I think investment in manufacturing is not going to increase. It is a wishful thinking at best and therefore, service industry is something that is but natural. Nepal needs to look at Singapore, Switzerland and Hong Kong which are very small nations lying between large industrial countries. We need to see if we can imitate their success by providing services to bigger countries whereby we can increase our niche in the market and improve the economic condition of this country. So, the service industry is going to be a very important part of Nepal in times to come.</p>
			<p>
				<strong>How does the FNCCI and the private sector plan to revive the ailing national economy?</strong></p>
			<p>
				We need to be positive and work with the media and the government in saying that Nepal is not a poor country. Nepal has tremendous future and potential so the fundamental thing is to change our mindset from thinking poor to thinking big. This will help us initiate a new beginning. Nepal needs to seriously look at how we can generate investment here to employ the 500-700 Nepali people leaving this country on a daily basis because the youth who would make the future of Nepal and the people who have knowledge are leaving us. The doctors, engineers, scientists and businessman-they are all leaving us. Therefore, we need to create a positive environment in this country to try and retain them. This is going to be critically important in the coming years. Nepal needs to look at its niche strength which is human capital. It needs to look at the growth of India and China. They are going to be the world's largest economies by 2020. Nepal needs to be able to make a strategy on how to benefit from the growth of these economies on the two sides of our country. If we focus on that, we would be able to quickly come out of our problems. We need to have a focused vision and short term plan for revival. We also need to try and create employment and good labour relations. At FNCCI, we need to work with the trade unions as partners - we should be people sitting on the same side of the table, not on the opposite sides. If we are all in this together, it will be critically important for us to move forward.</p>
			<p>
				<strong>Some of the projects initiated by the FNCCI lately have failed miserably. It is operating more like an NGO implementing independent projects. Shouldn't FNCCI be taking the lead to envision what is in the best interest of Nepali economy?</strong><br />
				<br />
				Human resource is extremely critical and I want to link this with the FNCCI running a lot of training schools across the country. I think the reason we have not been able to create a sense of success is because we ourselves haven't really focused on exactly what kind of human resource we need to develop. The fundamental issue is what are we training, who are we training and what is the purpose of that training. FNCCI needs to be active in many areas. The JITCO programme which is sending Nepali people to Japan has not been very successful. It's a Japanese company that comes here, interviews people and recruits them. FNCCI is purely mediating this. It probably needs to be in the forefront and take the leadership. I think unless we take leadership, we should not be involved in any such programme.</p>
			<p>
				<strong>Would you like to add anything as a message? </strong></p>
			<p>
				Yes, a message to the leaders. It's high time they understand that politics is not the primary concern of the Nepali people. We are worried as Nepali citizens because it's being projected that next year, there is going to be a food shortage of 400,000 tonnes in this country. With remittance declining, our economy is going to be badly hit. The kind of queues that we see outside the foreign ministry for passports speaks loudly about the confidence of the Nepali people on the country's leadership. Therefore, it's time for them to get off the political agenda and start working on economy because this is the only thing that is going to get the country back on a sustainable basis in a long term. We should get peace and understanding so we want them to treat economy as the primary agenda and the most important thing to get the country back from the state that we are in.</p>
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<p class="questionsforinterview">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif=""><img align="left" alt="sanjib" border="1" height="167" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/Sanjib Raj Bhandari1.jpg" style="width: 205px; height: 167px;margin:10px;padding:10px;" vspace="5" width="205" /></span></span></span></em></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><em><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span bt="" frnkgothitc="" hv="" lang="EN-GB" sans-serif="">Sanjib Raj Bhandari</span><span lang="EN-GB"> is the CEO of Mercantile Office Systems, the pioneer company in Nepal's IT sector. Having seen the evolution of sorts in IT in the past two decades, Raj Bhandari himself has effected a sea-change in his business, priorities and processes. At the beginning, his company was a computer distributer in the mid-1980s, became an internet service provider in 1990s, produced own brands of computers in the beginning of 2000, and now in 2011, Mercantile is chiefly a software producing company. Mercantile-produced software are extensively used in Nepal, especially in the banking sector. Raj Bhandari foresees Nepal's great future in IT, as well as expresses concern that we are among the “bottom few” in the global IT map. He says Nepal also lags in South Asia behind India, Pakistan, Sri Lanka and Bangladesh. Excerpts:&nbsp;&nbsp; </span><span lang="EN-GB" style="letter-spacing: -0.1pt;"><br />
	</span></span></span></em></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><strong><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company Mercantile has been considered one of the pioneers in Nepal's IT sector. How do you view the growth of the sector over the period of last two decades?</span></span></strong></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The growth has been tremendous over this period. If you look at the very beginning in the early 1990, we had a problem not only with the fact that we were all very new to IT sector, but there were no government policies specially addressing this sector. Computers and its parts were considered luxury items thumbing that the ordinary people do not need them. That psyche was reflected in the government policies. We had a lot of difficulties in doing business not only of hardware but also the software. The policies vis-Ã&nbsp;-vis IT sector were very unfriendly. <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We've come a very-very long way. Today the overall policies are very positive. This transformation has helped both the hardware and software industries to grow. There's been a sea of change not only in the IT development but also on how the government and the people at large perceive the IT now.&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you please elaborate on how Mercantile managed to grow to become the market leader as it is now?</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I run a number of IT companies, of which I run two flagship companies from this building (see picture). The first one is Mercantile Office Systems (MOS), which we started in 1985. It concentrated mainly on distribution of computer and IT related products and software development. We started internet business including email under the MOS in 1992-93. The second one is Mercantile Communications which we started in 1995. We did not know too much when we started internet service under the MOS. It was very much exploring and doing things as you go along. We did not have much technical know-how. Internet was completely new. When we started email service in December 1993, email was not available for the public in India. When we started the internet in 1995, commercial internet had just begun in Singapore. It would not begin in India for another 3 or 4 years. So it was very-very new, we would not know what we were doing, we learnt as we went along, we sought help from a lot of people from outside. Today you can go and hire engineers. In those days, we did not find engineers. We had to actually train our own engineers.&nbsp;&nbsp;&nbsp; <strong><br />
	</strong></span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">You have been selling your own Mercantile brand of computers and office systems. Do you see any need to bring changes in your products or services? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We have been distributing computers since 1985. In the beginning of 2000, we experimented with our own products. We were very successful for two years, but later we could not compete with the international products. The reason was that we needed to be 25 per cent cheaper than the international products and the other products available. In the beginning, we could maintain the difference but later we could not. So, we slowly phased the production out. We don't have the products now. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Your company software are extensively used by Nepali companies. What distinguishes your products and services from the others?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">I think it is the quality. We have from the very beginning emphasised on quality and we have always maintained ourselves and concentrated on niche market. We have seldom gone for mass market. Most of our services are in the gear to corporates. Some of our products like computer notebooks and communication software are now available for mass marketing. Our services like technical, banking and software services have always been very selective. That's how we actually maintain our profile. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Could you tell us where does Nepal stand in the global IT map and what position Nepal has in South Asia? What are the hindrances as well as prospects for the growth of this sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">If there were a global IT map, we would find ourselves in the bottom few. I often say that our proximity with India is only in relation to geography. Our proximity with India is not in development scale, manufacturing and specially IT. In South Asia, India is way-way up, then would come Pakistan or Sri Lanka not necessarily in the order, and we would be close behind Bangladesh but it does not mean too much, as we still have a lot of run to cover.&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Nonetheless, the software industry in Nepal is much bigger than we think it is. We do not have proper statistics. But my guess is that there are over 5,000 people working in the software industry of Nepal. There are maybe 40 to 50 companies that have employed some 30 to 40 people each. There could be as many as 10 companies with over 100 people in each. Many of these companies are involved in software exports. Their figures do not reflect national figures because many of them do not want to come out in the open as it would create far too big problems for them. And, as their customer base is abroad and as they do not need a formal registration in Nepal, they choose not to be in the legal hassles here. This is something the government really needs to address. &nbsp;&nbsp;&nbsp; </span></span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">There are a lot of capabilities within the country to develop software. If you look at the hardware sales, the value addition, in terms services, distribution and warranty the Nepali companies provide, is between 2 to 8 per cent. If you look at the software, the value addition is over 90 per cent. There are some 7-8 companies that are exporting services to where the potential lies.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">How are the government policies impacting on the growth of this sector? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The government role is obviously very-very important here. But, the software industry does not need, does not look for government leadership and does not make their plans and projects relying or looking at the government action. The private sector must lead. If the government can catch up the pace, it's fine. Otherwise, the growth will find its own path. A great example is the trekking business. When the trekking agencies started in the 1970s, they organised themselves without government aid. Later on, the government came in to issue the licenses to them. The government has policies and has made policies in the past too. But execution has been the problem in Nepal. Emphasis really has to be on execution, not so much on formulating and announcing the policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Do you see any possibility of government and private sector working together for the development of IT sector?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Traditionally, we think that the partnership between the government and private sector is fruitful. But, what we have discovered is that the government has very soft corner for IT sector, but still the cooperation has not yielded true fruits. This is not only the fault of the government. I feel the private sector too has not played its part. When you demand so many things from the government, you make your business compatible to the policies and accountable to the country. If you look at any industrial development in Nepal, it has always been private sector led. So the progress has to be made by private sector. If the government assists, it is welcome; if it doesn’t, it need not be bothered.</span> <br />
	</span></span></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">As I previously mentioned, the initiatives has been taken by the private sector. However, if the government and the private sector were to cooperate, the government could obviously help with better and improved policies. The government could also help by buying software and looking for solutions, let's say in electricity or telecom companies. This encourages Nepali IT companies to take part. But right now, the terms, conditions and perks in international standards that the government boasts are rather punitive to Nepali companies. I repeat they are not only discriminatory but also punitive. Those companies put such conditions which Nepali companies simply cannot meet. Or, if they can be met, they could be agents only. This is very humiliating. It is fine if the government entertains the business from international companies in the area where Nepali IT companies cannot compete. But the Nepali government is disqualifying the Nepali companies for many other reasons. To correct this, the government need not do too many things. What it can do is to just encourage, invite and qualify Nepali companies to take part in business bidding to provide service for Nepal government and institutions. There could be many areas like e-commerce, trade, billing boards for telecom and other government bodies – where the Nepali companies too can perform well, given little amendment in service procurement mechanism. Therefore, for now it would be enough to revoke the punitive and discriminatory policies on the part of the government; let alone making fancy policies. <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The Computer Association of Nepal (CAN) and ICT Association of Nepal are holding Info Tech Fairs every year. How do you evaluate the role of these fairs in promoting IT business in the country?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">The CAN and ICT info-tech fair attracts hundreds of thousands of visitors every year. Obviously it plays the central role in awareness, as it educates the public at large. However, it is almost like the flagship event for CAN and ICT. It is important for these organisations to focus and involve in other large events of info-tech. Right now they are perceived as single event institutions. They need to move out of that.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">There are some unused infrastructures on IT, one of them being the IT Park in Banepa, Kavre. Why do you think such utilities are almost defunct? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">In 1992, a high level commission was set up to look at the development of IT and the benefits of IT Park. Ten years down the line, many things have changed, in particular the communication technologies. The IT Park is yet to embrace the changes. That could be the major reason for it being a mess.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">Still, don't you think there is a digital divide prevalent in the country? How do you think such divide can be narrowed down? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Digital divide is alarming. Only one or two per cent of Nepali people have access to internet and IT in general. Increasing the access of people to IT and telecommunications can lower the digital divide as both these sectors are complimentary and intertwined. The number of people having access to IT and telecommunications is increasing. I'm happy with that and hopeful too.&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview" style="text-align: justify;">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB">As a matter of fact, your company operates an online media too. How much do think it has contributed to the growth of online media in Nepal? How economically feasible is it?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">When we established a news portal in 1999, it was definitely not sustainable for the next 5-6 years. But today for the last 3 or 4 years, the portal has been doing fine economically too. We have hired almost 20 people. The portal pays for itself and is also making money. Online media came with more people having access to communication, computer and education. To have access to online media, one must have computer device, must have access to communication and must be educated. In developed markets, the online media has overshadowed the traditional media. I am still doubtful that will happen in Nepal in the foreseeable future. <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">Every successful company stores plans for future as well. What about yours? </span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">We will obviously expand on our communication network. We will expand our institutional network to cover entire country now. In banking software, we expect to grow at least 100 per cent on year basis. We are also looking on international market and we are very hopeful. As of now, over 50 per cent of the banks, over 70 per cent of the development banks and 90 per cent of the finance companies use our software. This covers almost 1000 branches in the country's financial system. Even if you say each branch in average uses this software 20 to 30 times, some 20 to 30 thousand use our software daily.&nbsp;&nbsp;&nbsp;&nbsp; <br />
	</span></span></span></span></p>
<p class="questionsforinterview">
	<span style="font-size:12px;"><strong><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">What could be the way forward?</span></span></span></strong></span></p>
<p class="ANSWER" style="text-align: justify;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span class="MyriadPro"><span lang="EN-GB" style="letter-spacing: -0.1pt;">With the growth of communication and education and population as well, the IT sector can only grow. I see its great future in Nepal.&nbsp;</span><span style="letter-spacing: -0.1pt;"> </span></span></span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span style="background-color: rgb(240, 255, 240);">'I See Prospects in Herbs, Tourism and of course, Carpet'</span></span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	<img alt="" border="1" height="270" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/572699_512919295_905742336_n.jpg" vspace="5" width="180" /><br />
	<br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em>Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview with Nubiz, says his basic priority would be to revive and maintain the old trade surplus figure that Nepal had been enjoying in the past with Germany, now a key member of the European Union. With the nose-diving of carpet and garment exports, Nepal has nothing much to offer to German market. Still, Kakshapati is hopeful that the branding of some of Nepal's food products such as tea and coffee and attracting more German tourists to Nepal can still help get the old trade figures back. Excerpts:</em></span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><em><br />
	</em></span></span></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What is your new vision as the new president of Nepal-German Chamber of Commerce and Industry?</span></span></strong></p>
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I have segregated it into two parts. The chamber is 18 years old. Some of its legacies I have to carry on. I cannot opt out of the regular programmes the Chamber has been doing. For example, the Chamber has been promoting Nepal's tourism in Germany since 1994. It is called CMT Caravan Motor Touristic. It is a very popular fair in Germany. More than one million people visit the fair each year. So, it must continue. Besides, there are some other regular programmes which I will continue. That is the first part of my aim. As for the new vision, I want to expand whatever economic ties exist between Nepal and Germany. If you look at the overall figures for the past one year or two, our overall trade balance has not been in our favour. But Germany is one country with which we have trade surplus. But the margin of that surplus is now decreasing. I want to bring it back at least to the old figures. That is my main aim.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Germans are looking for new products from Nepal. For example, Nepali tea and coffee have entered into the German market but lack effective branding. I would like to brand it as Nepali tea or Nepali coffee. I see a scope there. Likewise, we are always talking about Nepali herbal and similar products. Herbal is one product which a lot of developed countries are eyeing on. Nepal is so rich in herbal resources. If we produce and market it, Germany would be one of the very popular destinations for these products.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Similarly, besides exporting to Germany, I want to work on capacity building in the country to export different products from Nepal. The Chamber has the past history of such works. For example, it organised a tea seminar in Ilam some years ago. We invited experts from Germany one as the market expert and another as the product expert. These experts directly interacted with the tea producers regarding the choice of taste of Germans and market situation there. That proved very effective. I want to do the same for other products also, for example, herbal, as I have mentioned. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal's herbal products are yet to be processed and branded well. In the case of coffee too, we have to enhance our quality. Today, it is soothing to see professionals involved in coffee production. The bottom-line again is that we have to increase the quantity and improve the quality. When we work with a developed country, quality is always the first priority to have an access into their market.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">During my travel to Germany I found that Nepali business community has not been able to explore the existing opportunities in terms of machinery, information, etc. There are only a handful who have done so. I think Nepali businessmen should also go to the expos in the places in Germany so as to learn things and gain expertise. Therefore, I am also in favour of promoting exchange visits of business people between the two countries.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you think the Nepal Germany trade relation can be made favourable to Nepal? <br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">As I said earlier, Germany is one country where Nepal has trade surplus. But we should not be content with whatever trade figure we have. The Chamber in the past has worked with DIHL which is the authority in Germany to expand trade relation between any countries. When I visited their office in Germany, I found that they have given very tiny space to Nepal. They showed me the huge trade volume they had with China. Through the exchange of visits and co-work among various chambers in Germany, I think we may be able to increase the trade prospects of Nepal. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Even the European countries are removing Nepal from the list of “preferential trading partner very shortly. How can your Chamber contribute to retaining Nepal's status as a beneficiary of developing country concession of EU?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Yes, I also heard that. It is an agenda for me to talk with the EU representatives in Nepal first and find out what was the reason behind it. There could be so many reasons, and I will work on how to address the situation. First and the foremost, I must know the reasons. After that, we the Chamber and other organisations like the carpet association, etc can lobby together. I will also work closely with German development institutions like GTZ. We, as individual organisations and with others jointly, will lobby to retain our position in the EU.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Chamber of Commerce and Industry is one the oldest bilateral chambers in Nepal. How do you view its achievements?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think it was the first bi-national chamber in Nepal. The establishment of the Chamber introduced the concept of bi-national chambers in our country. Some 18 years ago, nobody thought of a bi-national chamber could be so important. One of the major achievements of the Chamber is that we have been able to join hands with various German trade bodies and even development agencies like GTZ. The Chamber has enhanced and promoted ties between Nepal and Germany. An example is tourism. The Chamber has been instrumental in the arrival of German tourists in Nepal as well for expanding market of Nepali products such as carpet and garment in Germany. From time and again, we have been taking business delegations to Germany. Such steps are helpful in strengthening trade links.</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
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	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Most of the economic activities in EU seem to be consolidated under EU umbrella. Do you think the bilateral trade relations of a country like Nepal with individual member countries of EU hold long term importance?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
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	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Though EU has certain umbrella policies, bilateral trade&nbsp;&nbsp; relations too hold importance. There are layer of two policies in EU: one is at macro level, i.e., the umbrella policy, and another at the micro-level, i.e., the individual country's policies. Both policies work together. I don't think the situation will change so drastically in a very short period of time. Our chamber has a direct link to the German trade bodies. Of course, there is a big umbrella called EU but within that big umbrella, there are small umbrellas too. <br />
	</span></span></p>
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	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What do you think are the areas Nepal can benefit in the trade with Germany?</span></span></strong></p>
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	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If we talk about trade from Germany to Nepal, there are so many factors. We have members who have the business of &nbsp;German medical equipments in Nepal. And there is possibility of cooperation in hydroelectricity development. There are so many other sectors like Information Technology, in which Nepal can attract investments. Germany being a highly developed country, Nepal can learn many things from it.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Despite our almost half a century long trade relation, where do you think Nepal lacked taking advantage from the German market?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">I think, what Nepal lacks is its own confidence. The political and social situations, among other factors, are responsible for that. We have not been able to use the potentials that the German cooperation offers to us. A number of joint venture companies have shut down because of our own reasons, such as the lack of security. We have a recent example. One executive member who had been manufacturing garments shifted his office elsewhere from the previous location owing to violence and security lapses. So, there indeed was opportunity which we could not simply tap.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the major export items of Nepal to Germany? <br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">If you look at the old data, 80 per cent of the trade is occupied by carpet and garment. Gradually, food market such as tea and coffee is also coming in. Nepal has very limited products to export. We have to increase their quality. We don't have much choice.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">What are the challenges in Nepal-German trade?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The most pertinent challenges are seen in the tourism sector. If we compare the data of German tourists arrival in Nepal, it was 45 to 55 thousand in 1998. Now it has decreased to 20 to 25 thousand only. It is the biggest challenge why have we not been able to attract German tourists as in the 1990s or the 80s? Second challenge is on retaining the market for our carpet. Its export has now nosedived compared to the previous years.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Do you have German collaboration in your business too?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">My primary business is restaurant and I have investments in a bank, among other sectors. At present, I am working with German companies on new products. So basically I'm a restaurateur. I joined the Chamber in the 1990s, as I was asked to. Earlier, I had a travel agency, so my keen interest is in tourism. So I hope to promote tourism along with other sectors being in the Chamber. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">How do you foresee the Nepal-German economic ties in the longer run?</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);">The relation between two countries is of course fundamentally economic and I think this kind of bi-national chamber always helps to promote trade. As of now, we have 22 or 23 bi-national chambers. Nepali business community should have this kind of platform that helps make an easier access into business-related information and facilitation in the counterpart country.</span></span></p>
<p>
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">&nbsp;</span></span></p>
<p>
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Facts and Figures:</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<ul>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the biggest export markets for Nepal and ranked 4th after India, USA and Bangladesh. During the FY 2009/10, the Nepali export to Germany could maintain favourable trade position but the export volume decreased by Rs 2,391 million, 14.1 per cent less compared to the previous year. <br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Nepal's overall exports declined in FY 2009/10 by 11.1 per cent to Rs 60.9 billion whereas imports continued to increase by 29.1 per cent to Rs 375.6 billion. This development has further widened the overall trade deficit which was about Rs 314.7 billion (+41.5%) in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Due to the decline of exports, the overall Nepal-German foreign trade has also slightly declined in the FY 2009/10. The total bilateral trade fell from Rs 5,029 million to Rs 4,713 million a decline of 6.3 per cent compared to the previous year. Imports from Germany rose by 3.5 per cent compared to FY 2008/09 to Rs 2,322 million.<br />
		</span></span></span></li>
	<li>
		<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Germany is one of the few countries with a positive trade balance for Nepal (after Bangladesh, Bhutan and Canada) although the trade balance came down from a comfortable surplus of Rs 541 million in FY 2008/09 to Rs 69 million in FY 2009/10.<br />
		</span></span></span></li>
	<li>
		<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><span color:="">Exports to Germany In FY 2009/10, the decline of exports to Germany was caused by a decline in Textiles, clothing and accessories (9.6%), Food (19.0%) and Others <br />
		</span></span></span></li>
</ul>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><span color:=""><br />
	</span></span></span></p>
<p>
	<strong><span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Nepal-German Foreign Trade</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">(52.6%). The export of carpets almost 60 per cent of the total exports to Germany further dropped down from Rs 1.53 billion to Rs 1.42 billion. It was a decline of 6.8 per cent. Germany is one of the biggest export markets for Nepalese carpet industry. It ranked second after the USA. The exports of woolen shawls decreased by 39.7 per cent (Rs 242.1 million) while exports of clothing slightly increased by 3.5 per cent (Rs 270.8 million) in comparison to the previous year. The decline in food exports to Germany were caused by decreasing exports of lentils, coffee and spices while the exports of tea (13.3%) and medical plants further increased. Germany, with an export volume of Rs 33.2 million, is the second biggest export market for Nepalese tea mainly the orthodox tea after India. The exports of paintings came down by 69.4 per cent to Rs 75.4 million. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">Imports from Germany In FY 2009/10, the total imports from Germany experienced a slight increase of 3.5 per cent compared to the previous figure of Rs 2.3 billon. The development of the various product categories, however, was quite different. The imports of Machineries and electrical equipments, the major import goods from Germany that stand for more than 50 per cent of the total imports, increased by 7.5 per cent to Rs 1.2 billion. A closer look to this category reveals that Germany is an important supplier for mechanical machineries especially for the packing, printing, food, tobacco and textile sector. The imports of mechanical machineries increased by 2.6 per cent to Rs 932.1 million. And the imports of electrical machineries and equipments increased by 29.7 per cent compared to the FY 2008/09. <br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size:12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);">The imports of vehicles went up from Rs 6.5 million to Rs 80.4 million. The imports of medical devices and laboratory equipments increased by 13.8 per cent to Rs 275.7 million. And the imports of chemical and pharmaceutical substances and plastic rose by 11.4 per cent to Rs 265.7 million.</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><br />
	</span></span></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
	<strong><span style="font-size: 12px;"><span style="color: rgb(0, 0, 0);"><i>(Source: Nepal-German Chamber of Commerce and Industry.)</i></span></span></strong></p>
<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: normal;">
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			'description' => 'Gopal Sunder Lal Kakshapati is the newly elected President of Nepal-German Chamber of Commerce and Industry (NGCCI). Kakshapati, in an interview',
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		'Article' => array(
			'id' => '199',
			'article_category_id' => '46',
			'title' => 'Dr Yubaraj Khatiwada',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size: 14px;"><strong>Banks Should Serve To Remote Areas Too</strong></span></p>
<p>
	<span style="font-size:14px;"><strong><br />
	</strong></span></p>
<p>
	<span style="font-size:14px;"><img alt="yubaraj" border="1" height="321" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/yubarajkatiwada.jpg" vspace="5" width="292" /><br />
	</span></p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
		<div>
			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors. Dr Khatiwada, who started his career with NRB in the early 1980s retired as an Executive Director to serve the National Planning Commission as its Vice- Chairman. He also worked as a consultant for the United Nations Development Programme in Sri Lanka. In a recent interview with Nubiz, he shares his views on the current state of Nepal's economy, the controversial issues in the latest Monetary Policy and the measures he plans to adopt to regulate the banking and financial sector. Excerpts:</strong></div>
		</div>
	</div>
</div>
<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
		<div>
			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px;">
				<strong>We only want the salaries of the CEOs managed as the component of the wider financial governance. The global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives.</strong></div>
		</div>
	</div>
</div>
<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
		<div>
			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas.</strong></div>
		</div>
	</div>
</div>
<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div justify="" style="width: 595px;">
		<div>
			<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; text-align: center;">
				<strong>Monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets.</strong></div>
		</div>
	</div>
</div>
<p>
	 </p>
<p>
	 </p>
<div style="width: 595px;">
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: left;">
		<div>
			<strong>Some say Nepal's economy is on the verge of collapse and Nepal is heading towards becoming a failed economy, while others say it's an exaggeration. What's your view?</strong><br />
			<br />
			I think both are extreme viewpoints. Actually, the Nepali economy is not doing well compared to our neighbouring countries. That doesn't necessarily mean we are going to collapse. We have downward risk such as being overtly dependent on agriculture and remittance. Both of them have either climatic socks or say international market socks. So, we are vulnerable. <br />
			<br />
			The fact is :Nepali economy will run at a very low equilibrium, with low growth, low employment, and low forex reserves. If you have a good economic environment across the political spectrum, we could have high growth and accordingly high employment and high income scenario. People are expecting better results. Perhaps out of frustration, that's why they like to comment on the negative extremes.<br />
			 </div>
	</div>
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: right;">
		<div align="justify">
			<p>
				<strong>Why have people's expectations grown so unrealistically ?</strong></p>
			<p>
				<br />
				China is growing at 9-10 per cent and amidst global recession. India is growing at 8 per cent and Bihar is registering a double digit growth. We raise the people's expectations saying that the new Nepal will have a double digit growth. And then we end up with less than a fraction of that when our per capita income happens to be the lowest in South Asia. If we compare ourselves with Bhutan, it's per capita income is in excess of US $ 2000 and there is pressure building up to upgrade Bhutan from its current LDC status. People are bound to compare and voice their frustration. But we must also look at our own history; we have been growing at 5 per cent on an average for the last 25-30 years and now we are growing at the rate of 4 per cent. The frustration is coming mostly from looking at the progress made by other countries in the region. I would say that we could do much better if we had political stability.</p>
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	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: left;">
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			<strong>Why haven't our macroeconomic indicators improved even after the peace deal? </strong><br />
			<br />
			Well, macroeconomic indicators o inflation, growth, trade and balance of payment etc.help to create an enabling environment for investment. We could not do well in the balance of payment from last year and we had huge deficit during the first six months. We managed to recover in the year end somewhat. We have a double digit inflation making people speculate towards the real assets rather than focussing on the financial side. So, it has created some distortions in the economy but that is not the story behind weak economic performance. Actually, the structural weaknesses like resumption of power outage of the economy are important to address. You cannot grow power intensive manufacturing or power intensive services when you have heavy power shortage. You cannot have labour intensive industry simply because the trade union is stronger and perhaps the political parties themselves don't have control over their own trade unions. You can see the anarchy in the labour market. Everybody is avoiding two types of industries or services--labour and power intensive ones. You are back to being dependent on agriculture which again we are left at the mercy of rain. Only if we could sort out these issues, then we can be hopeful over the state of the economy.</div>
	</div>
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: right;">
		<div>
			<strong>A few months ago, the central bank tried to restrict the banking sector's investment in the real estate and housing. Is the progress as expected of it? </strong><br />
			<br />
			Well, we have not stopped it. We have only set a limits where the investment in the real estate in the true sense of the world, should not exceed 10 per cent of a bank's lending portfolio. If some banks have invested say five percent, they still have room but if a bank has already lent 25per cent in this sector alone, it has to bring down the figure. So, industry wise there is still some space. And now if banks collect more deposits they can create more room for the real estate financing too. Also, we have separated housing from the real estate business. Housing for medium class families or low income group families is a necessity because people need to have shelters. So, we are still encouraging housing. Regarding the result, the speculative moves in the land deals have almost stopped. Coming to the financial repercussion, people have apprehension that the borrowers might not be able to repay the loan. If the banks have some more deposits collected, they can still roll over your credit. So that way we are not even asking everybody to collapse.<br />
			 </div>
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	<div style="clear: both;">
		<br />
		 </div>
</div>
<div style="width: 595px;">
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: left;">
		<div>
			<strong>Why do you think there has been a sort of organised protest against NRB's recent guidelines aimed at limiting the salaries of Bank CEOs? Don't you think it's for a bank to decide the salary for its top executive?</strong><br />
			<br />
			On our part, we only want the salaries of the CEOs managed as the component of the wider financial governance. We have seen that the global financial system collapsed because of the perverse benefit structure that was embedded in the CEOs salaries and incentives. There is no point in the CEOs earning huge incentives by undertaking risky ventures to maximise profits and then leave the industry and move to a different occupation. This has often led to the banks landing in financial troubles. So the system would be at risk if extravagant salaries and incentives are linked to profits which lead to risk taking behaviour. <br />
			<br />
			When somebody is having socially unacceptable benefits at the cost of a wide range of stakeholders such as the depositors, the share holders, and the borrowers, it could create a tension in society and we sense it already. Highly paid executives must be compensated adequately for their productivity but that also needs to be at a socially acceptable range. It is also an issue that is being taken up globally. I do not see any reason for Nepal to be an exception in this matter. We are looking at managing salaries in a transparent way which will be socially acceptable. Besides, it will be sustainable for the institution too.<br />
			<br />
			&nbsp;I guess my friends in the banking sector have understood it differently, and were hence provoked. We have basically focused on setting norms that would guide the salaries and perks of the CEOs, not on limiting it in numeric terms. We are definitely not looking at fixing salaries; it's for the banks themselves to determine salaries for their CEOs. The recent guidelines which have existing laws embedded in them are only the parameters to follow.<br />
			<br />
			 </div>
	</div>
	<div style="border: 1px solid rgb(204, 204, 204); padding: 5px; width: 47%; float: right;">
		<div>
			<strong>There does not seem to be much success in the operationalising of the monetary policy for this fi scal year. How would you evaluate it?</strong><br />
			<br />
			It is premature to judge the output of the monetary policy. On the macro outputs, things are improving, the rate of inflation is decelerating. It has come down to single digit on basis of new calculations. On the built up of reserves, we expect to have Rs 9 billion additional reserves in one year. In the first three months, no additional built up has taken place. As this is the festival season, we Nepalis spend more. The November data will show how we can recover towards that direction. There are a couple of other areas where we needed the compliment of fiscal budget such as for mergers and acquisitions where fiscal incentives are also necessary. This indeed has been addressed by the national budget. Similarly, we need this for some of the developing financing areas where the central bank and the finance ministry have to work together like in hydro-power financing, tourism financing etc.<br />
			<br />
			One issue that has also drawn flak is on the conditions set to open bank branches in the Kathmandu valley. Critics opine this was brought into effect too late, after existing banks have had enough braches in the valley. The new banks are allowed to have their corporate office and one more branch in the valley. But if they want to have more branches, we want them to serve the remote and the semi-remote areas too. If a new bank opens at least one such branch, it can always come back to open a third one in the valley. <br />
			<br />
			And to facilitate their business transactions, we have allowed them to have multiple branches in the border areas. So the new banks are in a position to open at least ten branches which is a good number. In this context, even the banks have to find new areas of savings mobilisation. I think it should work for the banks to explore virgin areas for the operationalisation of savings and credit. The problem begins when some banks are opening branches without properly accessing the commercial viability of the branches and accessing the capital base.<br />
			<br />
			&nbsp;In that case, it becomes the responsibility of the central bank to intervene. That's why we have stepped in this process to see that the banks branching policies are in the right place. It's certainly not to create bureaucracy. It is simply to ensure that a majority of the population in this country have access to finance.</div>
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			<strong>The central bank has announced to withdraw all notes bearing the image of former monarch from the market by the end of 2067 BS. What are the costs and benefi ts of this move? What are the bank's plans to introduce more durable notes?</strong><br />
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			The withdrawal of the notes in circulation with the former king's image needs to be honoured. We have been delaying because there is a cost involved to it. We want such notes to be naturally phased out in a manner such that the notes that come back to the bank will not be re-circulated. In terms of volume, most notes have already come back to the central bank. We have in circulation notes worth about Rs160 billion outside the central bank out of which only about Rs 4 billion notes are with the former king's image. On the issuance and printing of more durable notes, it has two dimensions. <br />
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			The short life of the existing notes is because of our culture and habits. We certainly lack the consciousness and responsibility to handle notes. We must understand that this is a national property and spoiling or damaging notes costs money. Any savings from printing notes adds to the government's coffer in the form of dividend. This ultimately goes to the people in different areas like education, health, transportation etc. Habits like culturally colouring, writing and worshiping with water over notes have to change over time. The second point is the quality of the note itself. That would imply shifting away from paper notes to polymer notes. Polymer notes, if properly printed and designed, last longer than paper notes. That is the policy shift we have to make. The polymer notes we had earlier with Rs 10 denomination didn't yield a good result. Although most countries are now already entering the polymer notes scheme, we are still in the process of finalising it. We are looking at better quality polymer notes in circulation and also at raising the people's awareness on handling them properly.<br />
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			<strong>On the one hand, NRB seems convinced that the existing number of banks in Nepal is too high, while on the other you continue to issue new licences. Isn't it a contradiction?</strong><br />
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			Actually, when we gave letters of intent to at least half a dozen banks, we decided that we have to have a moratorium on establishing new banks. When we say no more banks, we don't say that there are already six banks which have been almost approved. My colleagues in the central bank had taken this decision before my appointment as the Governor. They had indeed said ''no to more banks after having approved at least half a dozen of them. That's what has confused people. Since my appointment, I haven't approved a single new commercial bank. The banks that have opened are a result of the decisions made in the past. There are two more banks coming up very soon which are again decisions from the past. Since April 2010, we haven't had any letter of intent issued to open any new bank. After joining the NRB, I have encouraged class D, C and even some B class banks which can operate outside Kathmandu in order to expand financial access to the rural areas. The other dimension is that some banks have asked for upgradation from class C or B to class A. They have been issued letters of intent before or have been given some kind of assurance from us. Now, with our policy of no more commercial banks we need to make decisions on those who have already been given green signal to be graduated. Whatever the internal challenges may be, the main issue is that we have enough commercial banks - 30 of them on the last count. In terms of number, 30 commercial banks are enough but in terms of financial access, services and the capacity of the banks to go into the rural market, we are lagging behind. The total capital of the commercial banks is perhaps between Rs. 50 to 60 billion.<br />
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			If you are developing a 200 MW power project, you can access the cost but even the entire capital may not be enough. In that sense, this is still a small shallow financial market. So now the challenge is to seek ways to expand the services of the existing banks as well as to enhance the quality of the banks. The reallocation of the resources from less productive to more productive areas and to see that the poor are having some access to capital needs a look-in too.<br />
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			<strong>Banks are reportedly going to face a liquidity crunch again? </strong><br />
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			What are NRB's plans to avert this situation? First, the central bank must guide or warn them about such a scenario. Before Dashain when banks had a lot of cash, apparently they were trying to bring the interest rates down. Publicly, I said that it's too hard to decrease it, perhaps you have to wait and see, and perhaps you should look for new avenues of investment. So that was my concern and that is still valid. I would request the banks to continue with the interest rate that is necessary. The second point is we have seasonal withdrawals. Before Dashain, people want to have new currency notes so they withdraw more money from the banks. They also change old notes with new ones. Usually, the new notes are with the people till Tihar. Once the festivities end, these notes are back in circulation in the market. Thirdly, you must take into account the harvesting season. The new notes can come to the market only when there are certain activities in the agricultural sector. You should have new production which has to be transacted that demands money. Once the notes circulation gains momentum, it enhances liquidity and that brings money back to the banks. That cycle will start when the paddy comes to the market. The other factor is remittance. If there is a high flow of remittance, the money comes to the banks and then gets converted into Nepali currency. Either spending or saving the money is eventually bringing it to the bank. Increased remittance is a trend that starts with the start of the festive season. This money is spent largely during the festivals. The official exchange rate between Indian and Nepali currencies is still fixed at NRs 160 for IRs 100. However, in the market, an IRs 100 note is already being exchanged for NRs 165. Do you think that calls for a devaluation of the Nepali currency vis-a-vis the Indian one? I would not recommend that as we have enough Indian currency with us. The artificial trading of Indian rupee is for some other reason. Why do you think there are people who need Indian rupee in cash and even ready to pay a higher margin? NRB has been giving unlimited amount of Indian currency through the banking channels. So the story is not about the exchange rate, it has to do with governance and its controlling measures. And also about stopping the legal imports to Nepal because the issue is somewhere else than the import exchange market. Why does one need to pay NRs 165 for IRs 100 when the banks can issue cheques, drafts, LCs, and even the ATMs can be used for the purpose? It is about people who indulge in business practices outside the purview of the formal legal system. The solution to this lies with the broader surveillance issue, trade management, customs management etc.</div>
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			<strong>Is that the reason for NRB to cut down the volume of Indian Currency given to the money changers? </strong><br />
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			Yes. We realise that this could put the country at a great risk. Speculation is rife that in the border areas, there might be a lot of illegal activities provoking factors which might pose a threat to the peace process. And still the central bank is liberally distributing cash currency which may not be a wise decision after all. These are times when we are concerned about terrorist financing. While looking at anti-money laundering measures, we want to talk about financial disclosures and encouraging cash transactions in the border areas.<br />
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			<strong>The new monetary policy has provisioned mandatory lending to the deprived sections of the population by fi nancial institutions. But it they are trying to form subsidiary institution of their own which is agian likely to be centred in the urban areas. The actual target population, to a large extent, still lacks access to funds. How do you plan to address this issue?</strong><br />
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			We have been able to address this issue partly. What we have said that you can have some institutional arrangement to retail credit in the urban sector but that cannot be more than 1/3rd of your total volume. The major component must go to the real borrowers through some or the other mechanism. The money going to the deprived sector through any institution cannot be re-deposited in the bank at an interest payment that we have stopped. We have also strengthened our supervision to see that the money marked for the deprived sector should be spent on a daily basis. If the financial institutions fail to do so, we would not count the spending under the deprived sector. We are definitely trying to strengthen the process. We have also asked the banks to have a plan to increase their resources allocation towards the agricultural sector. It should, in part address the issues of the weaker section of society. It's a myth that poor people are not bankable. I think there is more credibility attached to them because they don't have the capacity to become defaulters.<br />
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			<strong>What is your response to the criticism that the new monetary policy could lead towards a more restrictive regime akin to a control of socialist nature?</strong><br />
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			Critics may say what they like to but nobody is disagreeing on the evaluator economic system or the system of social justice. However, the monetary policy is not designed to address these issues but to direct credit. People must first understand monetary policy vis-a-vis the credit policy. Monetary policy is totally designed towards the macroeconomic strategy, low inflation, better reserves, enabling growth with adequate provision of credit etc. On the other hand, the credit policy could be selective and qualitative in a country like ours whereby access to finance and formal credit for some productive sectors cannot be denied. These sectors include agriculture, tourism, water, and hydroelectricity etc. If this makes us restrictive and socialistic, I would simply accept that. But monetary policy is the philosophy and is neutral to any ism. In fact, I have never heard of a socialistic monetary policy. A monetary policy is always required for creating markets. What a credit policy does is something that every country does. Look at the overall picture in South Asia. Directed sector credit programmes, productive sector credit programmes in some of the South Asian countries is higher than in Nepal. We cannot challenge Bangladesh, India, Maldives, or Sri Lanka on that account. Their credit policies are stronger than ours. So I would like to ask my good friends to look at these examples in the region.</div>
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			'description' => 'When noted economist Dr Yubaraj Khatiwada was appointed the Governor of the Nepal Rastra Bank (NRB), he clearly faced several challenges in the form of depleting foreign exchange reserves, negative balance of payment, rising inflation, and banking and financial institutions over-exposure to risky sectors.',
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