Government should strengthen the rule of law and strictly enforce it: Khetan
Rajendra Khetan is a renowned industrialist. He has been leading a major business group of Nepal, the Khetan Group, which is involved in the industrial and financial sector. Apart from business, he is the honorary consulate general of Portugal and Chairperson of Nepal Britain Chamber of Commerce and Industry. He earlier served as first vice-chairperson of FNCCI, Chairperson of Young Entrepreneurs Forum and Vice President of the Confederation of Nepalese Industries. He also served as the member of the Constituent Assembly to draft Nepal’s New Constitution. However, these days he is seen less in public forums. Nepalekhabar talked with him about different aspects of Nepal’s economy. Here are the excerpts:
How do you analyze current economic situation of the country?
There is greater economic gain in the last four to five years. In the past there was ‘hold’ of some people in the national economy but in the last five to ten years the economy has spread to the general people. Earlier, only some people were wealthy but if you see the last 10 years, there is economic prosperity. This is also due to expansion of banking system as the banks have opened branches in rural areas and increased people’s access to finance as people got access to capital to start their ventures. With competition in the banking sector, banks expanded to remote areas and provided services to people. Banks have started giving loan based on collateral. Remittance also provided support during that period. Although many people have benefitted, it is below 10 percent, so, we should extend it to more people.
The change is very positive which helped to overcome the vicious cycle of poverty. In other countries, the economy is dependent in specific sectors but the good thing about our economy is that it is not dependent on a few sectors and it will not have severe impact in the economy if some sectors collapse. We are moving towards positive change.
How do you see the business environment of the country and what should be the focus of our national economy?
In terms of business interest, three things have increased i.e.; political intervention, policy corruption and general financial corruption. However national economy has been moving towards positive direction.
Although the economy is moving towards positive direction, we are not doing well in industrial sector. We are moving in a positive direction towards service industry. We are moving in a positive direction in the areas of comparative advantage. In the industrial sector, we have been doing well only in the areas of domestic consumption and industries based on domestic raw materials. I think the contribution of industrial sector will be less than 5 percent in overall GDP, while the contribution of service and other sectors are increasing.
Our major priority sector should be remittance, agriculture, water resources, service sector and tourism.
Most of the Nepali workers have been working in low paid jobs, so, it is said that the foreign employment sector may collapse if there is problem in this sector; how do you see it?
If there is problem in foreign employment, we could not be able to absorb them in the domestic labor market. However, as the economy is doing well, we will be able to feed them. We do not have sufficient market for absorbing the human resources as we don’t have big industries which can employ many people. This sector needs to be prioritized and we should attempt to send our human resources with necessary skills for earning more money. Similarly, at the national level, we need to focus on opening industries to consume more laborers.
How do you see the prospect of national economy in coming five years?
I am not optimistic in terms of corruption as corruption has increased massively. For example if you go to any offices, you have to bribe for your work to be done in 70 percent of the places. In the past there used to be corruption to open new industry or get industry registered but these days you need to bribe them to prevent hindrance in your business and to run the business smoothly. The corruption has reached to this level, so, I am not optimistic on it. However, there is a way for removing it which is automatization of the system. If you break the channel and systematize it, it will help to reduce corruption. If the system works there is no scope of corruption. It is being exercised in Hong Kong and Singapore. However, the question is are we ready for it? In the past there used to be two major parties but these days there are many political parties, which has divided every sector and also increased corruption.
Most of the political parties say that they are prioritizing Economic Agenda, do you think they are abiding by their commitment?
None of the political parties are serious about economic issues. Some people like Gokarna Bista and Lal Babu Pundit have started some initiatives but their efforts are not sufficient. Their initiatives have positive impact in the people and in the society. However, the major leaders and political parties started to divide the community and they have also divided all sectors. The leaders are doing anything for the sake of power and their commitment to the economy is just lip service. Economy should be left out of politics. If it was left alone to move independently and without interference from Singhdurbar and BICC, it will progress. So, we must focus on delivering the results and not only talk about what we are not able to do.
Why has the business communities failed to sensitize political parties on economic issues?
The leaders of major political parties do not listen to the voices of t
heir own senior leaders and majority of their party. In this context, how can they listen to the voice of the business community? Don’t you think the leaders are aware about the problems faced by people like no electricity and water and the problems faced by business communities? But they are not sensitive towards it. Let’s take an example of earthquake affected people. The political parties have been talking about it but they were forced to spend almost two years under open skies which shows the commitment of the political parties.
As you have been leading Laxmi Bank, a leading commercial bank; currently some provisions of proposed Bank and Financial Institutions Related Act (BAFIA) have been marred in controversy. What is your take on it?
The provisions of BAFIA are very good and relevant to the present situation. These provisions are incorporated taking into consideration the global practices in support of the World Bank and IMF, so, I support all the provisions of BAFIA. These provisions are incorporated after evaluating the worldwide economic situation. I fully support the provisions and if there is debate in the parliament, I will openly support it. Some bankers have been opposing it as their personal interests are hurt by the provisions of the draft. However, we need to look at the greater interest of the country, banking sector and general public rather than just looking at personal interests. Regarding the term of Board of Directors, after completing two terms as set by the provision, another person will come and give new leadership to the organization. If we do not trust others, how can we develop leadership skills? If Gokarna Bista and Lal Babu were not given the opportunity, they would not have been able to show their caliber.
As we have talked about the current situation and problems the country is facing, what do you think is the solution towards resolving these issues?
If we do five things for the sake of the economy, the economy will do better. These five things are as follows:
i) Take political gains outside of Singhdurbar; ii) Government should play the role of monitoring and supervision for the health of economy and education sectors and allow these sectors to operate freely. If necessary, the government should support to these sectors; iii) Government should facilitate the issues which are beyond the capacity of the private sector, iv) Power, water and security should be ensured to every people and v) Minimum political understanding should be made on economic issues and all parties should remain committed on the economic issues, which allows free movement of people, services, economy, health, among others.
Government should strengthen the rule of law and strictly enforce it. If the government does these things we are capable of giving speed to the economy and we will do it.
We have to look at the comparative and competitive strength and focus on it. Hydro, agriculture, corridor between India and China, decent foreign employment with remittance, service sector and industry with own raw materials and own market should be our priorities, which could lead us towards success. If we focus on these issues, we will be able to improve our economy.
Do you think we are moving towards the right track in the areas of our comparative advantages?
There are many obstacles in this sector, which we need to remove and we have to make a formula considering the rights of people, government authorities and stakeholders. If we can’t do it, it will be very difficult to maintain good progress of economic sector.
We are doing well in the hydropower sector. Currently, we are in deficit of around 600 MW but we are moving towards making good progress. We need to strengthen it. We are moving forward in the tourism sector as well. We need to remove obstacles in it and strengthen it. The sector faced a bit of a problem due to the earthquake and blockade but we are doing well now. We need to be cautious about the pricing as our pricing is high as compared to India and Thailand.
You have been participating in different forums, how do you find the perception of foreigners about Nepal and about bringing FDI?
Most of the people outside Nepal are very intimate with Nepal and Nepali people. They feel Nepal is a country with culture and cultured people. They love the country and they want to do something for the sake of the country and they are keen to support us. Regarding FDI, they are negative due to the existing situation of the country. Corruption and other bureaucratic hurdles remain major obstacles for bringing FDI. We need to create credibility for bringing FDI, but in terms of environment, they are very positive about it.
Do you have any message to the readers?
There is high policy corruption with me also being a victim. Political appointment in the regulating bodies has been adversely affecting these sectors as the people appointed through political process have been misusing their power and demanding huge amounts of money. If you fail to pay the money demanded by them they will create various obstacles to trap you in it. There is high politicization in regulating bodies and taxation bodies. Some people are taking advantage by paying money while some are getting cover through political influence. If we recruit people in regulating bodies through open competition then we will be able to overcome it.
Why have the business communities not been raising these burning issues with relevant government authorities?
The business bodies have been keeping mum on it as they feel they will be targeted by the authorities if they raise the issue. Instable political environment is also the cause for it. They have been not giving priority to this issue as they feel they if they keep quiet, the authorities will not touch them. However, it may affect them at one point of time. Most of the businessmen have been paying bribes rather than raising the issue.
The role of institutions is being diluted so that they will not be able to raise their voices effectively. Other organizations have taken the role of FNCCI and other professional organizations. They should collectively raise the voice without discriminating among themselves.
(Editor’s Note: How do you find the interview? Please send your comment to editor@nepalekhabar.com or editor.nepalekhabar@gmail.com)