The State Has To Come In: Panitchpakdi


April 8, 2011, 5:45 p.m. Published in Magazine Issue: Vol. : 04 No.-20 April 08-2011 (Chaitra 25,2067)

SUPACHAI PANITCHPAKDI, secretary-general of the United Nations Conference on Trade and Development UNCTAD, was recently in Kathmandu to attend a workshop of least developed countries of the Asia Pacific Region. The workshop was organised in Nepal prior to the conference of Least Developed Countries in Istanbul. During his visit here, secretary general Panitchpakdi spoke to KESHAB POUDEL on various issues. Excerpts:

What do you say about this regional workshop?
Although the workshop is a small one with participation of all seven least developed countries of the Asia Pacific Region, this is the best workshop to discuss on the issues and agendas of least developed countries. Participants discussed on the right approach and were more open in terms of trade and industrialization. We want to encourage them to go on. We want the state - the national government- to play a strong role in driving this forward. Don’t be afraid about the people or sometimes the state as meddling so much in these affairs. For instance, in several areas of productive investment, like paving roads, and building hydropowers, the state has to come in and stay before you can get the private investor to come in. So, this is my idea. 

You have been here for some twenty four hours, now what changes do you see in Kathmandu?
The last time I came here was twenty-two years ago. I have seen from Swayambhunath Temple, down below the valley is more congested than I saw then. This comes with prosperity. One thing we are worried in Asia is that the process of urbanization has gone very fast. This will be seen as a new problem because if we fail to develop the rural areas we can see this kind of phenomenon of urbanization. This is what the Shanghai Expo last year in China showed -- the theme was better city, better life. I hope that the government of Nepal will also deal with this issue. 

What do you think Nepal should be doing as an LDC?
First, I would say Nepal, as a coordinator of LDCs conference, should be instrumental in leading the process to determine the kind of agenda that will we be using for the next ten years. This is very crucial. I cannot say how far we can go but what I can say is that Nepal has many takers the process.

How well placed is Nepal to do so?
Nepal, being located in Asia, has been adopting the kind of policies which we will see the LDCs should follow. Which is to try to diversify. I don’t think Nepal has much in terms of commodities. Some of the basic commodities in Nepal are sceneries and environment. What Nepal wants to do is in service areas like tourism and transportation. Nepal has been investing in the transportation sector because it is a landlocked country. I do see that Nepal together with some countries of the Asia and Pacific, is diversifying commodities. This should be important.

What other strategy will be important for Nepal to follow?
The other thing is the policy of openness. I know there is a debate in Nepal and other LDCs as to whether open trading system is good or bad. I would say that the open trading system theoretically is good for the country but on the basis of the assumption that the country must be well prepared for that. You cannot just say that such a stage in open trading system cannot do it. Nepal needs to preparedness and investment in the areas. Nepal needs investment in infrastructure, skills or human resources. The banking system needs to be friendly to provide loans to set up industries, offices and manufacturing firms.

What about FDI?
Nepal needs to have a Foreign Direct Investment policy that should be conducive to attract the investment in such sectors. You need to exploit what you have in your endowment. Nepal needs more assistance.

We want to encourage south-south cooperation. This is in trade, technology transfer and so on. Being close with various countries in Asia, including two big neighbors which are going through a very strong period of growth, everyone wants to be in this part of Asia. A lot of investment is going from Asia. You don’t need to move Nepal anywhere. The thing is that Nepal has to find ways to adopt a policy which links it with other countries. To get to Nepal is a part of international production network. This is going to be a topic for LDCs in the coming meeting.

What are the challenges for landlocked nations?
Nepal is not only an LDC but also a landlocked country. You are blessed but also in a difficult position. Being an LDC and landlocked, it is very difficult. Nepal should discuss trade facilitation issues. This was in Doha agenda which benefits the country like Nepal. UNCTAD and other UN agencies have been calling for this. LDCs should get early harvest of Doha. LDCs cannot wait forever. One of the early harvests of Doha agenda will be the trade facilitation support, that is an agenda that will help. Multi-model transportation agreement can help to reduce costs.

What programmes should Nepal follow now?
It normally sets forth the kind of action program that the both LDCs themselves and the international community have to follow in areas of finance, science and technology and investment. These are the key areas that have been actually dealt with. For this, this LDCs meeting is set forth. The assessment is that after the third decade of development with disparities in LDCs, although some progress has been made in some LDCs and some of them have been doing better than others, we find that most of the LDCs are still vulnerable. Their economy is fragile. Before the recession broke out in 2007-08, LDCs were doing well because prices of commodities had gone up. So, that was the period of five or six years or before 2007. Between 2000 and 2007, LDCs were doing reasonably well in terms of prices of commodities. But growth and export expansion has not been translated in terms of what we like to see as the structural change.  Without structural change, the LDCs will be forever captive to the vicious cycle of poverty.

What do you mean by structural change?
First, it means that the countries must be able to go not only on the basis of single commodity but they must have their own production capacity. This is what we called productive capacity, the first thing we would like to see being established as a major concept. In spite of growth and everything, LDCs must be able to construct to invest in productive capacity like transportation infrastructure, training people, and educating people, investing in port and power plants and industrial projects.

The second structural change that the we are looking at is the issue of diversification. LDCs tend to be too dependent on some commodities and many LDCs are dependent on revenue of one or two commodities and the commodities are going through a positive price increase. Many years went without seeing a price increase. The terms of trade for commodities exporting countries have not always been favorable.

How does Nepal need diversification?
LDCs need to be more diversifying. Along with commodities, you need to go for processing. For the countries like Nepal and Bangladesh, there are other commodities like tourism and textile. For Nepal, tourism is the area where it can diversify. We would like to see international community supporting LDCs efforts. Nepal has tremendous potential for tourism. This will be the second area for which we want to change Nepal.

What role do you see for the state in this process?
The state needs to play a more pronounced role, the role of development governance. We want to see developmental state - a state which does not intervene markets all the time but it can give a guidance in strategic areas of investment and development. For example, in the areas of renewable energy, the government can provide subsidy to encourage private sector to come. We are too dependent on market. Of course, the market needs to be relied upon but the frame work of the market needs to be strengthened by the government. So, we have been talking about completion and consumer production.

What will be the agenda in Istanbul?
An important factor is international commitment. In Istanbul meeting, we will discuss new international development architecture (NIDA). By this we mean to see, for the international community, not only do we need commitment but we need financial support fulfilled. We need not only aid but also need technology transfer. We need investment and advice on how to deal with environmental issues. There is also the need of support for multilateral solutions to deal with Doha agenda.


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