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A Deviated Path of Nepali Private Sector

Nepal’s private sector, as evidences show, is shying away from its major responsibilities and becoming much like NGOs. The current situation is such that the private sector is acting like nonprofits or as a project implementing body. Popular perception is that our private sector lacks innovative approaches and entrepreneurial mindset.
Recently, me and my friend Siromani Dhungana did a story on the recent trend of private sector engaging in appeasing donors for projects instead of being involved in businesses. I want the news to speak and help you readers make a judgment about our private sector:
Donor Dependency 

Aid orientation has been the evident among Nepal’s private sector organizations as they are hell bent on bagging projects from donor agencies to carry out activities for their own welfare and day to day activities. Sometimes, their horse race of getting projects appears to be ‘unhealthy’.

Here are some examples:

1.     USAID Nepal Economic, Agriculture and Trade (NEAT) activity provided grant to Confederation of Nepalese Industries (CNI) to conduct Public Private Dialogue (PPD) on draft of Foreign Investment and Technology Transfer Act (FITTA) in the last year. The draft was prepared by Institute of Policy Research and Development (IPRAD). CNI’s rival Federation of Nepalese Chambers of Commerce and Industry (FNCCI) started to oppose the activities being carried out by CNI. Dispute became visible when the FNCCI formally organized a program to challenge the some provisions, e.g. allow Nepali investors to invest abroad, of draft and blamed that the draft was totally in favor of some businessmen belong to CNI. Due to controversy, the Ministry of Industry could not table the bill in the cabinet. Officials secretly say the conflict behind clash between FNCCI and CNI was nothing more than USAID NEAT’s grant.
2.     European Union tentatively agreed, according to FNCCI source, to provide a five-million euro grant to FNCCI for promotion of NTIS listed products to European market. Later, the project was bagged by CNI in the name of "Go International". In informal discussion, FNCCI officials still blame CNI for using all kinds of its power and means to get the project. In this case, even employees at EU were dragged into controversy. Now, the project has been handling by CNI instead of FNCCI.
3.     Let’s talk about SAARC Trade Promotion Network (SAARC TPN), a regional trade facilitation project, supported by German International Cooperation (GIZ). There was a big hue and cry on which organization should represent on behalf of Nepal’s private sector in this project as the project seeks participation from all SAARC countries. Both FNCCI and CNI were at loggerheads over the participation. Later, the GIZ decided to include all umbrella organization creating different sub committees to settle the dispute. The third organization, Federation of Nepal Cottage and Small Industries (FNCSI), also became a part of the project due to dispute between two big organizations.
4.     Businessmen affiliated with Nepal Chamber of Commerce (NCC) started a new initiative National Business Initiatives (NBI) with grants from International Alert and GIZ. Many believe it as NCC’s attempt of luring projects from donor agencies.

Foreign Aid: A Meeting Agenda

According to some members of CNI and FNCCI, members of both umbrella organizations involve in heated debate over foreign aid during board meeting.

Some members directly blame the leadership to be inefficient if rival organization gets the projects, a member at FNCCI told The Corporate under the condition of anonymity.

“It is shame that our businessmen openly ask for project during talks with donor representatives,” a member at CNI said. “The issue of talk should, instead, be bilateral trade or expanding Nepali business abroad or even inviting foreign investors.”  “We can say that there is a learned dependency among our businessmen and they are slowly being project managers instead of entrepreneurs.”

Making Umbrella Organizations a Begging Bowl

Why our private sector is making their respective umbrella organization a begging bowl? It is tough question. It is no surprise as our private sector has ‘feudal mindset’ and they are hell bent on amassing profit, ethically or unethically, says Deependra Bahadur Kshetry, former vice chairman at National Planning Commission.

It is shameful that they are also dependent on the government to carry out their activities. But they scold the government wherever they get chance just to cover their weaknesses, he blamed.

Nepal’s private sector lack innovative approach, he opined. “Their creativity is utilized just to get profit from the policy lapses. For instance, they amassed billions from multi-billion VAT scam. Problems such as under and over-invoicing, income splitting and transfer pricing are rampant.”

Instead of making the organization a begging bowl, private sector should have utilized their income source to become self-reliant, he said. Major umbrella organizations – FNCCI, CNI and NCC – are member-based organizations and they should run from their members contributions, a businessman suggested. Besides, FNCCI, CNI and NCC earned millions by issuing Certificate of Origin. But the problem is they are never transparent, he blamed.

Dependency to what Extent?
It may sound ridiculous but it is fact. Nepal’s private sector seeks help from the government not only for promotional activities but also to get opportunity in foreign trips and organizing events such as seminars, summits and conferences.

They promotes their businesses in abroad but asks the government to provide air-fare and other essential cost, an official said. All their working style suggests that Nepal’s private sector is completely dependent and inefficient, Kshetry claimed. “Many evidences show excluding some genuine firms, we can categorize our private sector just as a household.”

They Get Aid From:

FNCCI
FNCCI has been actively cooperating also with various foreign / international organizations such as UNDP, USAID, DFID, UNIDO, UNCTAD/GATT/ITC, THE WORLD BANK, ILO, PPPUE, SEQUA-GTZ Private Sector Promotion Project, UNFPA, Asia-Invest, JICA, IOE, NIKKEIREN, APO, JETRO, SAARC Secretariat, ICIMOD, AOTS etc. in carrying out various activities for the promotion of business and industry.
(Source: FNCCI)

CNI
USAID, European Union, GIZ, DFID, IFC, AOTS etc.

Nepal Chamber of Commerce
Nepal Chamber of Commerce is representing Nepal as a national focal point for Regional Investment Information and Promotion Services (RIIPS) of UN\ESCAP. The Chamber has been conducting seminar and training, related to business and economy, with the help of International organizations, such as International Trade Centre – ITC (UNCTAD – WTO) and the Asian Pacific Centre for Transfer of Technology (APCTT).
(Source: NCC)

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