Shrinking Pie Of PEs September 2011


The cover story of New Business Age (August, 2011) reveals that majority of the Nepali Public Enterprises (PE) are bearing losses. It is true that those in profit are also because of their monopolistic nature of business. If they had to face a tough competitor from the private sector, they too would have been surviving only based on the subsidies provided from the state coffers. A lot of PEs are surviving in such comatose state. How long they expect to survive in such manner and how long will they expect support from the government? After all, they are enterprises for doing business. Shouldn't they be managing their business better if they want to survive in the market? I think the government should consider whether to keep these parasite PEs running or close them down.

In a competitive market, the companies that cannot withstand the competitive forces must be let go. The market should decide whether a PE should survive or close down. If it can't compete with others in the market, especially the private sector counterparts, it should be either handed over to the private sector that can manage and operate well or be dissolved. The state may try to protect it for a while, which is not unnatural. But the question is for how long and why, if it cannot justify its existence and even manage its expenses.

Most of the PEs are business entities. As the state is not meant for doing any form of business, why did the latest budget take a regressive step to go back to a state-controlled economy? Doesn't the government have anything more important to do like ensuring a better astate of the PEs proves that they are not desired in the market. The shrinking share of their pie says it all. If they want their existence, they must compete in the market or should be shut down. That is the only good option. PEs must stop begging from the state and the state must stop funnelling taxpayers money to unproductive but hungry companies.

- Radha Krishna Bhandari

Putalisadak

 

Need for FII

In this era of globalisation, companies are in a race to extend their global outreach. They want to step into as many regions as they can and as long as they see a lucrative return. When this race among the global giants goes on at full throttle, countries like Nepal must be able to open up track for them. These companies don't only bring in investment but also a distinct corporate culture, investment technique, unique way of working and a secret for the development of local economy and market. The much greater impact will be on the capital market, which is the most efficient source of funding after banks and finance companies. They bring in jobs; they bring in money and market development. What they only seek in return is a stable political and economic environment where they can manage their business. Only if they can be assured of the stability, they are ready to make some differences. The large institutional investors not only offer the market development but also provide assurance to small investor protection. India has opened up its door for such investors. Similarly, Nepal must also without any delay open its door to foreign institutional investors. The initiative to allow Non-Resident Nepalis to invest as institutional investors is quite positive. In the days to come, the country must welcome foreign investors in the hydropower sector to the capital market.

- Bijay Neupane

Bhaktapur

 

Creating Brand

Established brands are the first choice for a group of consumers. They do not think beyond a certain brand name usually renowned across the world. A successful branding and advertising of such brands have been able to establish a strong image for the products. Eye-catching advertisements without the product quality would not make those brands successful. Nepali brands too have their own niche market. Despite an array of branded products, consumers prefer foreign brands. Sometimes, advertising makes consumers simply say, Nepali products are not good,without even trying out once. While concentrating on the quality, they must prioritise quality too in the advertisements. An ad cannot be for everyone just like a product. They must be creative and catchy for the targeted group and other groups that may become the potential client. Ads are not only for today but also for tomorrow. This is missing in Nepali brands. Ads are failing to create an image that the product is worthy of use. Rather, they seem to be mocking at the product itself. To gain the attention of brand conscious consumers and retain brand loyalty, advertisement quality along with the product quality has to be up to the mark.

- Suraksha Rayamajhi

Pokhara