June 2, 2015, Kathmandu: To discuss the role of the private sector of the country in reviving the Nepalese economy that Samriddhi, The Prosperity Foundation organized Econ-ity â€œReviving Nepalâ€™s economy: The Role of Private Sectorâ€ on the 2nd of June, 2015, at Hotel Annapurna, Kathmandu.
The session was moderated by Prof. Dr. Bishwambher Pyakuryal, Senior Economist. He started the session by setting expectations from the discourse. He wanted the discourse to lead to identifying and analyzing the ongoing and binding constraints to Nepalese economic growthÂ and the role of private.We need to be careful while devising monetary and fiscal policies to deal with the effects of the earthquake.
Other panelists shared their ideas and opinions:
Mr. Anil K. Shah, VP, Nepal Bankers, Association,Â first talked about the remittance as the major source of income and the prospects of remittance still remain the same. He also expressed his positivism about other economic sectors reviving themselves, shortly. Thus, the recent quake has also made people realize the need of insurance.He then went on to talk about the need of an economic revival committee including members from the government, the central bank and the private sector in order to promote coordination among these different stakeholders in terms of decision making. An example of coordination failure can be seen with the central bankâ€™s decision to provide housing loans at 2% while a word is out that no building permit may be issues, none houses over 2 storey. His main messages:”TOGETHER WE CAN REBUILT NATION”
Mr. Hari Bhakta Sharma, Vice President, CNI opined that the government should announce many other organizations as partner organisationÂ to lead the reconstruction effort, given that the government is not capable to handle the entire reconstruction phase alone. In order to mobilize the private sector, the focus sectors need to be identified where they can already start making contributions. Moreover, he hinted towards provisioning line of credit facilities for non-line insurance companies in Nepal because they have low paid up capital and high immediate claims. This facility will help ease releasing settlement claims, allowing consumers with access to money, and ultimately increasing consumptions.He finally talked about the downtick trend in the demand and production in the economy. Therefore he suggested that the government needs to increase the cash-flow in the economy, increase liquidity in the market by buying bonds (instead of selling them), increase consumption by reducing VAT to (maybe) 10% for the next 2-3 years, reduce income tax for the next 5 years and make all efforts to keeping inflation at check.
Dr. Dabadi talked about the loss in terms of asset loss and production loss and about production loss, despite its potential to hamper the economy the most. “This is not the time for Nepal to be talking about the need to build small houses; instead, NepaI should be talking about how to build secure houses. Insurance companies can use this period as a platform to increase their penetration in the market” Dr. Hemant Dabadi, Senior Fellow, Samriddhi, The Prosperity Foundation added.He further suggested about reforms needed in the capital market regulations to avoid relying solely on banks or private savings for capital and also for reviving the economy. Additionally, new avenues need to be created for venture capitals to flourish. He ended his deliberation by stating that if relocation is being done, the people need to be relocated in areas where there are economic opportunities
Likewise,Mr. Kamalesh K. Agrawal, Secretary General, NCC reflected briefly on the impact of the earthquake which has caused damaged equivalent to 50% of the GDP of the country, and the GDP growth will likely be stuck at 3-3.5% from the expected 5.5%. He further expressed, migrant workers may now come back, imports will increase, exports will go down, revenue collection will go down, and this event has therefore caused a great economic loss to the nation.He then talked about the need to maintain transparency in mobilizing the funds coming in through donors. In the meantime, private sector needs to live by the motto of â€˜Service first, profit second.â€™ Further, there needs to be a concentrated effort towards marketing a safe Nepal in the international arena. Mr. Agrawal then talked about the role of free trade in improving the trade deficit position and to promote exports. He focused upon the need for devise mechanisms to enhance the penetration of insurance.
Another panelist, Mr. Pashupati Murarka, Officiating President, FNCCI talked about financing of the reconstruction phase and suggested that government give cash subsidies, if ever need be. But, he stressed on the need to involve private sector in the reconstruction and rehabilitation. He also talked about the need to allowing and encouraging the NRNs to bring in investment in Nepal. He opined that the government should not introduce any new taxes at this moment. Further, the inflation factor needs to kept at check and made sure that it does not surge out of control.Moreover he said that the banking, insurance, and entire private sector needs to coordinate their efforts with that of the government and the government needs to allow the private sector to make their contribution.
After completing the deliberations by all the panelists with their main theme,comments and discussions took place where the participative and interactive audience further talked about possible avenues to allow the private sector to make contribution to reviving the economy. After that the moderator summarized the whole session based on Reviving Nepal’s Economy. All the corporate personalities, government officials, bankers, Entrepreneurs and all the media person interacted lively during hi tea. In overall the events was very much engaging and productive so it concluded successfully.
Reported by: Sangita Tiwari
Photograph by: Srijan Baral