Pradeep Jung Pandey recently took over as the President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Chairman and MD of one of the leading pharma company of Nepal Lomus Pharmaceuticals, Pandey is engaged in numerous other businesses including cement manufacturing, banking, hydropower, data record company, and trade. He spoke to Siromani Dhungana of New Business Age about his vision for his term at the helm of umbrella organization of Nepal’s business community. Excerpts:

 

Your slogan during the canvassing for FNCCI elections was “Prosperity and Unity: Necessity of Private Sector”. Could you please explain what it means practically? 

I had given importance to unity among private sector players. FNCCI is an organization with larger network throughout the country and business community has been facing similar problems regardless of the business.  It has already been 17 years since local elections were held in the country. The private sector has been facing many challenges at the local level. For instance the government has not been able to open revenue office in more than 22 districts and political parties are divided at the local level, which often creates tension in business sector too. We have 93 chambers all over the country. My intention is to make this network more effective in the days ahead. I think that we can make this organization more effective through unity. The private sector should unite to take the country to the next level of development. 

 

Are you satisfied with what Nepal’s private sector has been doing in the country? 

The private sector should take the lead in achieving economic prosperity. Unfortunately, Nepal government has been doing business and operating both companies and corporations. The government entities have been incurring loss though they get enough privileges from the government including tax subsidies and special privileges at customs points. This clearly shows that the government cannot run any businesses effectively. 

 

Similarly, consecutive governments have been failing to meet the capital expenditure target. It indicates that the government even does not have the capacity to spend money properly. In such a situation, private sector has to be the backbone of the economy. The private sector has emerged in a way that competitive businesses have become possible in many areas such as airlines, medicine, infrastructure, tourism, education among others. I do not deny that there are many areas where private sector has to improve its conduct. 

 

But Nepal’s private sector has been neglected and the government has not shown seriousness to address its challenges. 

 

Despite private sector’s significant contribution to the economy, it has not received enough facilities from the government. The country lacks peace and stability. Businesses cannot grow without policy stability. It is sad that the private sector contributes tax but investors are yet to get protection from the government. Furthermore, the private sector is deprived from basic facilities. Due to lack of sufficient electricity supply companies are forced to invest in alternative sources of energy, which is resulting in high productivity charges. 

 

There is lack of environment for investment and initiating business. Be it investment in hydropower sector or cement industries, the hurdles arise from government’s mechanism. And sometimes, even locals are the impediment in executing business plans. There is lack of a government body that seriously deals with these problems faced by the private sector. 

 

In this backdrop, I really appreciate what the private sector is doing. It has struggled and contributed to the country even during a decade long armed conflict. The government has to recognize this fact. We do not want to blame the government solely but we want the government to facilitate the business environment. 

 

What are your plans to execute for the betterment of private sector during your tenure?

My first plan is to achieve better economic growth via greater engagement of private sector in economic activities. Private sector needs to be sincere and the government should be more responsible and accountable to open new avenues for the development. We should go hand in hand with the government to create an environment conducive for investment. As the president of umbrella organization of Nepal’s private sector, my responsibility is to  inform the government about existing bottlenecks that the country’s economy has been facing and put pressure on the government to remove them. For example, load shedding is the biggest challenge the country’s private sector has been facing. The government and the private sector should work together to make the country free from load shedding. The government should sincerely put effort to complete all hydro projects, which are in pipeline. FNCCI has reached an agreement with the government that ensures no strike in the hydro sector. The agreement should be sincerely implemented. Similarly, the government should take initiative to construct national transmission line. Besides, the government should strictly follow the provision of VAT exemption in hydro projects being provided to private sector. This will help complete the project within the stipulated time to make the country a power surplus one.  

 

Second, I want the government to bring necessary policies to support private sector’s business initiatives. I have already initiated talks with government to bring new Industrial Enterprise Act and regulation for Special Economic Zone (SEZ). Regulation alone is not sufficient. Thus, we should have new act in place to ensure industrial climate. We need some more policies such as Anti Dumping Act, Contract Farming Act that are necessary to ensure an environment conducive for the investment in industrial sector. 

 

Third, the government should facilitate the private sector to enhance its efficiency and capacity. 

 

Having said these, I do not say that the private sector does not have any role to play. I will encourage private sector to play more constructive role to uplift the country’s economy. Private sector should bring more investment in some sectors such as tourism and agriculture. Our common agenda should be achieving around 7 percent economic growth and reducing whopping trade deficit, among others. 

 

Further, I will focus on making district chambers more powerful during my tenure. It is high time that the industries be opened in all districts of the country. It is necessary to generate more employment opportunities at the local level. Employment opportunities will ultimately ensure economic prosperity. 

 

The Constituent Assembly is most likely to adopt a Constitution that is heavily oriented to socialist ideals, thus limiting the freedom of private sector businesses. How will you tackle that?

Free market economy, fair competition and level playing field are basic requirement for the private sector. Similarly, we cannot compromise on the right to property. The government should ensure the right to property to boost investors’ confidence. These are some basic fundamental rights in democracy and we will not accept any situation where any of these rights are denied. I do not think that the government will backtrack from these rights because the existing international scenario does not allow us to be isolated from the global market. 

 

Obviously, the government should address the issue of inclusion. It does not mean that the issue of inclusion should create rift among different communities and caste. Renowned democracy icon Aung San Suu Kyi highlighted the importance of both rights and responsibilities during her recent visit to Nepal. In my opinion, all sides should know that issues like inclusion should also come along with responsibilities. Our leaders should not provoke inclusion issues that can distort investment climate in the country. FNCCI is ready to fulfil its responsibilities. We want development in all districts of the country. This is an inclusive approach from development perspective. The government should give special facilities to investors who want to set up industries in remote parts of the country. That will ultimately contribute to inclusive development. 

 

FNCCI today has a plethora of challenges such as getting private sector agenda in the New Constitution of the country, cleansing the business community of the unfair trade practices and lobbying for important legislations for improving business environment. How have you prioritized the challenges to tackle them? 

FNCCI is a non-political organization. I have openly made it clear that FNCCI does not favour any particular political party or ideology. It is up to individual businessmen to decide whether or not to be involved with a certain political party. We cannot guarantee personal nature of businessmen. We should not generalize exceptional cases and blame the entire private sector of developing nexus with political parties. My clear opinion is that we should have common economic agendas. There may be disagreement in some areas but there can be a common minimum agenda. 

 

Similarly, the entire private sector aspires that the budget should come in time regardless of whichever political party is in the government.  

 

Related to the FDI issue is the debate about whether Nepal should allow outbound FDI. You expressed views in favour of allowing such outbound FDI while institutionally FNCCI has been opposing it for long. How do you plan to convince the FNCCI membership to win them over with your views?

My opinion is little different about outbound FDI compared to my predecessors. FNCCI’s previous leadership was not in favour of allowing outward FDI. I am of the view that businessmen should not be barred from investing abroad. The government should formulate the policies to this end. But there should not be laws that will permit unconditional outward FDI. Businessmen who want to invest abroad in the areas of their expertise should be granted permission by the government. 

 

Despite the restriction, at least eight beer factories have already started business abroad. There is lack of record of abroad investment at present. The government can at least keep track of abroad investment if it legalizes outflow of the capital.  Also, formal provision of outward FDI may force investors to bring back profits to their homeland. Moreover, we can export our human resources and make them more skilled.

 

You have been frequently raising the issue of reform in the Labour Act. What major issues do you want to be addressed? (When the business community says it wants reform in labour laws, it is meant to be Hire & Fire policy and that is understood as the crux of the problem.

I demand two important provisions in the labour Act. The first is the provision of social security and the second one is the ensuring authority of businessmen in recruitment process such as provision of hire and fire. We should not expect more productivity from labours unless social security schemes are ensured. Further, flexibility to the businessmen means the authority to fire unproductive workforce. It does not mean that industrialists/businessmen should be allowed to make haphazard decisions. The law should include clear provisions regarding authority of businessmen to terminate contract of employees.

 

It is also said that the industrialists-labours relations in Nepal have improved very much over the last one year. How is your evaluation? 

The situation has been improved but we still have a long way to go. There are many problems on the part of labours. Many labours are yet to receive social security scheme. Businessmen and industrialists have to ensure social security and other facilities to labours to improve labour-industrialists relation in real sense.

 

You had been advocating for reform in the FNCCI constitution to make the senior vice president automatically the next President. But people have now started doubting whether you will pursue that agenda as the current Senior Vice President happens to be one who won the election from a panel opposed to you? 

We have to change our statute anyway. Even if the statute is amended, the current Senior Vice President will not become the next president as this provision will come into effect only after the next FNCCI election. I will not create obstacle in any agenda that helps strengthen FNCCI.

 

Industrialists have been frequently expressing displeasure that the traders have been sidelining them and dominating FNCCI. What is your view? 

At times, we are blamed of favouring industrialists too. Some traders blame us for favouring only industrialists. I am not biased toward either side. But my opinion is very clear that we should give more importance to industries. I am affiliated with both the industry and banking sector. Industries are the backbone of the economy. Industries help increase trading opportunities automatically. On the contrary, trade does not ensure more industries. Opening up industries and operating them is more challenging than doing trade. Thus, our priority should be industries. All FNCCI members should acknowledge this fact.