At a time when the Nepali business community is facing various difficulties, the election of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), scheduled for April 11, is viewed as being crucial in terms of how meaningfully the new leadership can intervene at the policy level to create a better investment climate in the country. FNCCI’s Vice President Chandra Prasad Dhakal, who has already announced his candidacy for the post of senior vice president says that issues related to doing business in the country will gradually resolve with close cooperation between the government and the private sector. Chairman of the IME Group, Dhakal is credited for the growth of the remittance sector in Nepal. His major business interests are in finance, remittance, tourism, trading, automobile, logistics, energy and entertainment.In the second week of February, he received two prestigious awards -Asian Leadership Award and Commercially Important Person (CIP) Award- for his contributions. In an interview with Sanjeev Sharma of New Business Age, he talked about FNCCI’s upcoming election, difficulties for the business community with the changing political landscape in the country and the post-merger path of Global IME Bank, among other issues. Excerpts:
The election campaign to select a new leadership of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has gathered momentum. What can we expect from this election of the apex body of the Nepali private sector?
It is just a regular process for selecting a new leadership. Certainly, the new executive committeewill have new ideas, vigor and energy.
Fielding as senior vice-president, you and Umesh Lal Shrestha have teamed up for the elections. What will be your agenda?
As a candidate for the post of senior vice president, I don't have a separate agenda. I will extend my full support to the new president of FNCCI in executing his agenda and making the private sector apex body one of the leading actors of the country's economic development. As a member of the new executive committee, my focus will be towards creating an environment conducive to doing business in the country, lobbying to make business and industry related policies private sector friendly and attracting more domestic and foreign investments so as to aid in the country’s rapid economic growth and development. I will devote my sincere efforts into making my tenure a successful one.
FNCCI has not been able to intervene meaningfully in many areasbe it in formulation of policies or easing investment related issues, among others due to the internal disputes and dissents over the last few years. What is needed to be done to re-vitalise FNCCI in this respect?
Sorry, but I cannot agree with you. FNCCI has been playing a vital role in the formulation of policies and creating an investment-friendly environment in the country. It has been closely working with the government to ease business related issues and to safeguard the interests of the business community. We are constantly in talks with the government to create a better investment climate.
However, still many things need to be done. Due to the long political instability in the past, there are huge chunks of issues and problems that have piled up. The business community expects to clear all these problems in no time. However, these issues cannot be resolved immediately. Besides, the people also have big aspirations and hopes following the recent political changes. I think the issues will be addressed gradually.
The general people see the Nepali private sector as a group of people running different cartels involved in taking undue benefits. What plans does FNCCI have to change this image?
This is a very old notion, which I don’t think exists in the present day. Business has become ethical and competitive and people also don't see the private sector in that way anymore.
As the President of the Employers’ Council you were one of the key negotiators from the private sector during the formulation of policies for Social Security Fund (SSF). What do you think are behind the current unwillingness of private sector companies to join the SSF?
The social security policy is beneficial for both the employers and workers. SSF has many attractive schemes for the workers as it attempts to end the uncertainty prevailing in the lives of employees ensuring a safe, dignified and self-esteemed employment. On the other hand, it is also expected to improve the labour relations and slow the worker turnoverrate. It is obvious to have some teething problems in the initial phase of the policy implementation. All three stakeholders - the government, employers and workers -will together find out solutions to the issues. Although it will take some time for both the employers and employees to participate in the scheme, ultimately both parties will come under its criteria. The issues need to be resolved from the side of the government with proper negotiations with the private sector.
How do you observe the current environment for investment in the country? Has the environment become business-friendly as expected after the promulgation of the Federal Constitution in 2015?
With the promulgation of the Constitution in 2015, the country has now a stable government in place. With the political stability, there will be a better environment for business.The new government has introduced several new laws and policies, in close coordination and consultation with the private sector, to ease the hurdles in terms of attracting both foreign and domestic investments in the country.
What factors do you think still obstruct Nepali private sector and foreign investors from investing in Nepal?
Lack of coordination and cooperation among the authorities and duplication of policies in the three-tier government have created confusion in the private sector to invest in the country. However, these issues are being settled gradually.
The federal system of governance has significantly increased the cost of doing business in Nepal with double or even triple taxation being levied for same goods or services. Is it that the federal system has become burdensome economically? What is needed to be done to reduce the cost of doing business?
The governments of all three tiers have levied taxes and dutieson their own. The duplication in taxation has added to our burden increasing the cost of doing business and production to exceedingly high levels. This has really created some kind of confusion for the business sector. However, these issues are settling gradually in some sectors. We have been in close communication with the government and have been raising this issue. The government should end this soon so as to ease the doing business climate.
How is IME Group diversifying its investment portfolio? What new areas are you looking into and how are you expanding your presence in the existing sectors?
Presently, there are no such plans to expand our business in other sectors. We are more focused on existing businesses. We are working to expand our network and to reach more and more people from the existing businesses.
Through merger, Global IME has become the largest commercial bank in the country. What challenges do you observe for the bank in front of it now?
Global IME Bank has become the largest commercial bank in the country in terms of capital and network. With the growing size, the bank has equally bigger opportunities and challenges. Talking about the post-merger management, as you are well aware, we have huge experience in merger and acquisition. That is why, we are pretty sure that there are no big challenges before us. Now, we have consolidated our full efforts into making the Bigger bank better and stronger.
While Global IME has indeed become the biggest banking entity which is its main strength, don’t you think risks have also become bigger for the bank?
Not only the risk, the opportunities are also become bigger for the bank. The bigger bank will have bigger business. It will be more competitive and efficient. As I already said, we will manage the bank to turn it into a better and stronger bank soon.
The growth of remittance inflow in the country has slowed down and experts say that this inflow of money has now reached a point of saturation. How do you think this risk can be mitigated? What new remittance source countries we need to seriously look into?
The inflow of the remittance slowed for a certain time due to the sudden closure of migrant workers recruitment by Malaysia, one of the major labour destinations. However, both countries have reached an agreement and the flow of Nepali migrant workers has resumed.The migrant policy is based on economic growth. So some world economic impacts have impacted the respective economy and the inflow of remittance was affected. Now, there are some new opportunities, particularly in Japan and some European countries as new labour destinations and this might help to fill the gap.
