"Budget Has Become A National Fairytale”


July 29, 2012, 5:45 p.m. Published in Magazine Issue: Vol.: 06 No-. 04 July 27-2012 (Shrawan 12,2069)<br>

RAJENDRA KUMAR KHETAN is a well known industrialist of Nepal. Chairman of Khetan Group, Khetan has keenly watched the economic development of Nepal. Khetan spoke to DEBESH ADHIKARI on various issues regarding the on-going state of the economy. Excerpts:

The government brought partial budget against the demands of the private sector. What are your thoughts on the budget and how should the private sector look at it?

There are no reasons for the private sector not to be happy. We as a private sector should not link ourselves with the budget. In fact, if will you go to the origin of budget, basically it is the income and expenditure of the government and we the private sector will look for stability and should not allow the budget to be more fairytale. Budget hardly affects us and private sector should compete in the market rather than chasing and discussing about the budget. Let budget mainly be the priority of the nation on the development side and sources of the fund by which development could be addressed from revenue, aid and foreign support and other local mobilization. I think budget should be limited to that. It has become a national fairy tale story, which I disagree to.

The recent surveys show that the performance of the manufacturing sector has been declining for some time now and Nepal has to mainly depend on the agriculture for national output. What are the main reasons?

Nepalese economy is not competitive because of lack of market, lack of raw materials, because of the size of the market, because the sea port is very far and the backward-forward linkages are difficult, so we cannot be competitive. Hence we have to diversify into area of comparative advantage and there are differences between competitiveness and comparative advantage sector. Probably if we add value on it, it may grow. But, in the mid-term and long term I don’t see the possibility of the manufacturing industry growing much except for those whose raw materials are locally available or for those there is the size of economy which is the domestic size of the market.

Where is the economy actually heading from here?

It is more heading towards the service industry. Manufacturing will stand still, it won’t seize the opportunity, it will not grow, but whatever the growth will be, it will maintain the pie for which there is the raw materials or the local demands.

Is Khetan group also moving towards service industry?

We have already decided that and we have already started that.

In the context of political instability, how do you see the coming days for the Nepalese economy?

It is going to be very difficult. There is anarchism, the bureaucrats are taking a lot of benefits of these political disturbances and exploiting the private sector and it is getting more and more difficult.

What is the state of labor act and the labor act amendment process?

I don’t blame the labor act. It is more or less within the standard. What we need to understand is the weightage should be linked with productivity and that will enable us to be more competent, by paying and by getting the best out of labors, both sides. More production, more benefit to the service men, and more production, more economic growth to the private sector. I think this is the way and for that probably some social security arrangement should be done, but in case there is a company which is not paying the minimum wages, then the labor department should take action.

Given the present state of labor unrest in Nepal, is there the possibility of getting foreign investment?

Forget about foreign investment, there is difficulty even in getting local investment. Foreign investment is basically discouraged in Nepal because the foreign investors cannot pay bribe and without bribe it is very difficult to work in Nepal so foreign companies are discouraged and the demands for bribe is going up every day. For the next 7-10 years, it is very difficult.

You are the president of Nepal-Britain Chamber of commerce. How is Nepal benefiting from this partnership?

We are trying to convince people, they came as a big delegation last year; we are trying to convince them. We are due to go to London and we will soon be doing that, probably either before or early next year. It is very difficult to convince them, but there is growing interest for Nepal, there is opportunity but there is unrest and the climate is not favorable. 

Being a former member of Constituent Assembly (CA), how do you foresee the political scenario in the coming days?

Everybody wants to become the prime minister and there is only one chair, until these issues are resolved, the political stability is not going to be in a very good form.

You did a lot of work during the tenure of CA. How do you think the documents should be used now?

I think somebody should take the ownership and use it further.  Probably the best way is to have an election for the parliament and that parliament should own that document and make a national consensus on that document. A 601 team cannot do this again. 

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