सिंहदरबार संवाददाता
Industrialists known as representatives of big business families in Nepal are #Shashikant Agrawal#. Agrawal has large investments in banking, insurance, hotels, spinning, sugar industry, etc. Agrawal, who has a bold nature, does not hesitate to stand up for what he believes in. Recently, the government has brought about half a dozen ordinances to please the private sector, which the private sector is also welcoming.
A conversation on the ‘Bank and Enterprise’ program on investment security in the country, the environment for additional investment, the enthusiasm of the ordinance, the benefits and disadvantages of low interest rates, etc.
You are a businessman who has invested in many sectors in Nepal. You have also invested in banks, insurance, hotels, and the sugar industry. You also have investments in industries that provide a lot of employment and export in the country. But at this time, the belief is being established that investor confidence in Nepal is decreasing. What is your understanding as a big investor?
What you said is right. The industrialization that should have happened in Nepal has not happened. Because even now, Nepal is a ‘virgin land.’ If you look at the composition of our economy and industry, we are still in the initial stage of industrialization. In fact, the growth rate of our economy should have been in double digits continuously. But that is not happening, so we are in the initial stage of industrialization. However, some industries may have done well.
Some of my industries have also done well. But overall, industrial production in Nepal is very low. And I have not seen such production increasing rapidly. I am not seeing much enthusiasm among industrialists and businessmen either. Currently, the environment of economic relaxation is at its peak.
From the Biratnagar jute mill to today, we have seen many ups and downs. But it seems that those who started industries are migrating and focusing on expanding and expanding business. Even those who say that they earn money by doing business are viewed differently by society, saying that they are businessmen. Hasn’t this idea generally discouraged investors more?
In almost all countries of the world, industrialists and businessmen are highly respected. That is the respect of taxpayers, the respect of employers, which encourages them to invest more. But in Nepal, those who invest, provide employment, and pay taxes are looked down upon.
A businessman is respected anywhere in the world. If you look at this, you will notice. The American President, the Prime Minister of India or the British, when giving speeches, keep the private sector aside. They call the state’s money ‘This is American taxpayers’ money. This is British taxpayers’ money’.
They have given such a great position to taxpayers, they have given recognition. We are running politics with that taxpayers’ money. That is why employees are running. There is talk of development in the country. That is why the state should accept businessmen and entrepreneurs as jewels. That is a big problem in Nepal.
This is the bad side of our country that industrialists and businessmen are not viewed in a good light. Seeing them as those who create jobs and contribute to revenue, the state seems to have somewhat isolated us businessmen, let’s say, as competitors.
Elon Musk has come to the administration of the newly elected President of the United States, Donald Trump, with an important responsibility. If we were, we would have chased him, right?
Yes. We would be happy if the same thing happened in Nepal.
If the economy is good, politics ‘sustains’ it, stability comes. Politics and economy are taken together wherever they are. That country has developed. We have not yet been able to accept it.
The government brought ordinances some time ago. There are also controversies in some exceptions. After that ordinance, the private sector seemed to be very excited. In the initial days, there was a sentiment that the investment environment would be created. But then again, it became a situation where people wondered what would happen. Why?
In any case, after the ordinance, any government felt the need to pay some attention to industry, trade and the economy. For that, we thank the current ruling coalition and the government. The government has taken some risks and tried to work in favor of industrialists and businessmen. But here, whether it does good or bad things, there is a lot of opposition.
The government has started the reform work even through the ordinance, this debate is commendable. But my belief in this is that when they bring any ordinance, they know what they are bringing. If the working procedures had been made before bringing it, it would have been easier to work.
The ordinance came. When will its working procedures be made? In what form will it be made? Will the essence of the ordinance be included in the working procedures or not? In Nepal, governments change quickly. The ordinance that has been brought now is also a law, but it is still a commitment of a political person. If the political person working with him changes, the employees also change. Such an irony.
Therefore, it would have been very relevant if the working procedures were made first and then the ordinance was brought and it came into effect from a certain day.
When a political party is in government, it is positive towards any of your demands. When it reaches the opposition bench, it becomes negative, right?
That is right. What I will say one step ahead of that is that when we meet any political leader, be it a minister or a big leader of a political party, we industrialists and businessmen talk more about the overall problems than about our personal ones.
When we meet them, we feel so happy that we say, “Ah!” How good is the minister! A good man. You have listened to so much of our words. You have understood so much.” We return with excitement, wondering why we didn’t come earlier, that our problem would have been solved earlier. But after returning like this, nothing concrete is achieved.
When you talk, you are convinced, but after leaving, when you return to the same place, who plays the role in between? Or do they say yes and yes in front of you and then show a different behavior?
It seems that our matters are not their priority. When the group of industrialists and businessmen comes, they must be forced to meet. But then a commitment is made, but it is not being implemented. I have noted some issues.
We can learn a lot from India. In India, if the Prime Minister says something at a program of the Chamber of Commerce and Industry, it becomes law. It is implemented immediately. His team members take notes and implement it from the next day.
Where do we attend some meetings and ceremonies with big personalities? He makes so many promises. If you listen to the budget speech, no one in the world has a better budget speech than Nepal.
Such a good budget. Everyone from employees at every level to businessmen and entrepreneurs is happy to hear that budget. But it is not implemented.
That is why you are suffering, especially?
This is one of the many reasons. There may be many other reasons besides these.
Politicians only do politics. What is the pain of opening a company, operating an industry, doing business, paying taxes, creating jobs, taking a loan from a bank, being unable to repay the loan or being blacklisted? Maybe they don’t know?
Those political figures don’t have to feel that pain.
But we hear Prime Ministers say publicly that they have not taken loans, should they take loans?
Taking a loan from a bank is a matter of pride. To whom does a bank give loans? A person who is credible. A person who can pay the bank’s installments by taking a loan from a bank, paying interest, providing employment, and paying government taxes. Such a capable person will take a loan.
Maybe, some people may have gone bankrupt after taking loans. They may have even been blacklisted. The percentage of them is not high. But one sad, ironic thing is that let’s not name any sector in Nepal. Maybe the hotel sector. Maybe the iron sector. Maybe paper. Shoes and slippers. In any sector, the production of the industry has decreased. Production has decreased. Then there are the relevant bodies, the ministries, the secretariats. The directors of the departments, the directors-general. They ask why the production of your sector is decreasing? Why is the export decreasing? Why is there no new industry coming? Why is there no new development in it? No one has the same deep interest in it. Even if there is, it is fine, even if it is not, it is fine. And how does development happen?
That is why entrepreneurs also process goods brought from other countries. They are sending them back, right?
That is an easy task, right? They brought goods from other countries, sold them. Some people say that because I am a sugar industrialist. You bring sugar from India and smuggle it and sell it in sacks. A person who has built a sugar factory worth Rs. 1000 crores, me. It is a crime to even imagine such a thing. You should not imagine such a thing.
If something like that has been done, it is happening now. Sugar comes from abroad in sacks in the name of Nepali industry and it is easy to transport it to the local market. There are various state bodies in this too. The bodies that hear it have to improve it. They have to correct it. They have to bring it under the ambit of the law. They have to take action. They are illegally smuggling sugar in the name of our industry and selling it in the local market and are defaming us.
In the process of strengthening the economy, should Nepal manufacture many of its own goods, reduce imports, or manufacture various items and export them with valuation? In the meantime, what should be prioritized?
Both sides of the economy are very important. It is good to be able to manufacture all the small things we need in our economy ourselves. That is why we call those small home industries asemiz, those that produce in our own country.
We also have some traditional items for export. Like carpets. Yesterday, Nepal used to export such a large amount of carpets. Even today, people have not received the 8 percent subsidy that our government promised to give to our exports for 1-2 years. We produce yarn. We have not received that subsidy either. Therefore, since the government has not given the committed subsidy, the carpet workers are also gradually migrating. Tibetans who make carpets in Nepal have migrated to Banaras and other areas. The garment sector itself has been damaged.
There was such an economic crisis in Bangladesh. We could have capitalized on it and shifted the Bangladeshi garment industry to Nepal. First it was in India. Later, quotas were imposed, and then it came to Nepal.
If any industry does well, then now we have to think about how to make that good even better. What policies should be made? What facilities should be provided? Policymakers should help by making long-term, short-term, and medium-term policies. We had to keep that in mind so that the industry does not face any problems. Gradually, all the garment industries fled. All of them closed.
I will give you an example. During Covid, smuggled clothes and ready-made garments stopped entering from China and India. As far as I know, 5,000 new readymade garments were produced in Nepal at that time.
The goods did not come due to smuggling. The goods were needed. The domestic industry flourished. But now only 50 out of 5,000 are left, the others have closed.
Does small customs offices cheat or is there a problem in large customs offices too?
The original customs office always comes, the quantity is also manipulated. The quality is also manipulated. They also come from small customs offices. They also come from large customs offices. They also come through customs without customs clearance. Smuggling is happening everywhere.
In Nepal, if we can only stop smuggling through customs, we will achieve a great achievement. Smuggling especially happens through the Chinese border and the Indian border. It only happens in negligible quantities through Tribhuvan Airport. This gold smuggling is very small. It is happening in the form of a mere border. The drama of taking off shoes and belts at the airport when coming from abroad does not happen anywhere in the world. Only in our country is such a disgrace done. When smuggling is stopped, one thing is that revenue increases. Another thing is that if there is no smuggling, the industries here flourish.
The government’s job is not to tighten the border, stop smuggling, and make industry entrepreneurs suffer because the revenue target has not been met, right?
Along with this smuggling, there is another problem in our Nepal. It is called SAFTA. SAFTA is our trade agreement within this SAARC country.
Now some goods made in SAFTA should be brought duty free. They should also be brought duty free from Bangladesh. Nothing is exported from us. We also have a loss there.
Our little export is to India. We are not allowed to charge customs duty on their goods and we are also able to export our goods to India without customs duty. Just like we export our yarn without customs duty. It seemed that all the goods made in SAFTA should be exported to Nepal.
Due to that, revenue is also being lost. And SMEs have not developed here either. That is why we must reconsider this SAFTA. If provisions are to be made in SAFTA, then an anti-dumping act must be brought. We must make our SMEs stronger and MSMEs more promoted.
Do not tighten the customs. Smuggling will remain open and the revenue will not be collected, causing suffering to the industrialists and businessmen. Internal debt will be collected indiscriminately, and salaries will be paid to the employees. Is this how the country is running?
The current situation is that the state has taken loans to pay off the debt. It has taken internal loans to pay the principal and interest. These are not healthy parameters for any country. Such indicators are not good.
We must control smuggling to rise above this. And another important aspect is the number of security agencies, which is probably the highest in the world based on population and GDP.
Let alone the police in a population of 30 million. The number of Army (Nepali Army) and Armed Police Force is about 1.5 lakh here. This is half (0.50) percent of our population. Nepal is a peace-loving country. We neither have to fight with India nor with China. It is absolutely essential for us to reduce the expenditure on that security agency.
If we do not reduce the expenditure on that security agency, our country’s economy will get worse and worse. If we get cancer in our body, we have to save our body even if we have to amputate that part. The government should not go for popularity alone. The government should focus on the sustainability of the country, developing the country, raising the living standards of the people.
Are there any solutions? Do you have any suggestions for reducing it like this?
The security agency is not that difficult. Because every year people retire. Retired army (Nepali army) and armed forces will not be recruited. Retired police officers will be integrated into the army and armed forces. After doing this, this will be fixed to a large extent in 2-3 years.
This is a very unpopular topic, is it being criticized?
Rather than being popular and unpopular, speaking what is right from your heart is for the benefit of the country. That is what I will do. Whether it is popular or unpopular, it does not matter.
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## ##What do you think about the efficiency of personnel administration? Since the salary is low, they do other activities, which has worsened the business environment. Let’s increase the salary. Let’s reduce the number. Is there even a thing like using technology now?
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## Once, when Baburam Bhattarai was the Prime Minister or the Finance Minister, he had put forward the word “a small fee” in the customs. He automatically gave a fixed rate per package to the sub-inspector working there, from the customs chief to the customs chief. Say 1, 2, 5 rupees. That too, raises lakhs a day. That is called a minor matter. In a way, it is an illegal matter.
Baburamji had to stop this minor matter for all the customs people. He added additional incentives to the customs employees so that there was no manipulation of any kind. That incentive is still in effect. The rest of the work that he had done to stop it is continuing unhindered.
This does not mean that this was due to a reduction in salary or insufficient incentives. This work is still ongoing even where there are incentives.
Another thing he said was personnel administration. Personnel administration is not meant to be brought as a trial. What is happening in Nepal now? As he said, a finance secretary had to be made. They make someone the Finance Secretary as a trial. Later, they make him the Industry Secretary. They make him the Tourism Secretary. This is a person with a proven track record who has been refined from the cadre base salary, they should be made the Finance Secretary, the Revenue Secretary.
The state should make a score card every 3-3 months, study it and put it to work. Employees should not be experimented with wherever they find them.
We also expose the personnel system. When it breaks down, we change it. Even if it breaks down for 1 hour, it causes a huge loss to the country. And if he can’t do it, they say, let’s change it again.
Another problem is the ministerial-oriented personnel administration. The minister of the party that comes, they bring employees who fit their philosophy. This is increasing the problems.
Who will become the Finance Secretary in a few years? Who will become the Revenue Secretary? Who will be the Industry Secretary? Who will be the Home Secretary in Security? Should we prepare for that from today, institutionally?
That work should be done 100 percent. They should be made into a cadre base and trained there and made to work as very strong scholars.
Do you feel scared when the minister changes, the secretary changes, the customs and tax chiefs change?
No, it is not a good thing to be scared. Who comes, what difference does it make to us? I personally do not even know. Who is where? There is no need. But this practice is not good. That should be a cadre base. People who have worked in customs for 10, 15, 20 years, who understand the laws, regulations and rules should be brought to customs.
Cadrebase people should become the Director General of Customs. The same should be done in the tax and tourism departments. Here, now, people from the Home Ministry are sent to Customs. People from Customs are sent to Book Khana. People from Book Khana are made wardens of prisons. Not only that. But this is also the reason.
The 20 percent profit cap was always giving you pain. Has that pain ended with the ordinance?
We call this black law. Profit is 20 percent or 40 percent. Sometimes there is a minus 20 percent loss. I am also a sugar industrialist, our factory is currently running. In the current factory, there is a rush to pay our farmers. Let’s pay more, let’s buy sugarcane. Now the price of our sugarcane has decreased a lot. Gradually, after the season ends. The price of sugar increases a little. Now it may be minus 10 percent. Sometimes it may be plus 25 percent. If we take it as an average, 20 percent profit is not possible in any industry or business. We are not used to looking at the average. It went into loss, it didn’t make sense. We couldn’t offset it. Since then, if it is above 20 percent, we resort to black laws. How much is Apple’s costing? But we sell for $1,500. We sell for $2,000. That is our brand, right? We have not forced you to buy my goods at a profit of more than 20 percent to earn a profit of more than 20 percent. This is the price of my goods. If you like it, buy it, otherwise you have to say don’t buy it.
But now the cement industry is said to increase prices by cartelizing. If such a situation does not exist, then there will be benefits, right?
If there is cartelizing, then the state has rules and regulations for it. The state should try to prevent cartelizing. Cartels are not a good practice.
So when the 20 percent cap is removed, it will encourage entrepreneurs to invest in more business?
Not only that. But it did not encourage or discourage. It did not encourage anything by removing it. It discouraged. It only reduced the suffering.
You are an investor in banks, insurance, hotels, and the yarn industry. These days, the state has also set some priorities in the areas of investment. In your eyes, which investment seemed a little safer?
Safe depends on stable policies, which are not available these days. The philosophy of a party is one. A minister from that party comes. He has a philosophy. This policy of the industrialist should be stable for 30 years, 25 years, no matter which minister comes, no matter which government comes. No matter which party forms the government, there should be a guarantee that these things will not change in the fundamentals of the economy.
We will review after 30 years. You should invest with confidence. The state should ensure that these facilities, rights, and entitlements given today are facilities given by law for 25, 30 years. Wherever it is in the world. I am not asking for something new.
It is not that new things should be in demand. Wherever it is in the world. And wherever it is, there is development. Where there is party-oriented policy, minister-oriented policy. There is no stability and there is no confidence in the minds of investors. They do not invest openly. And neither do foreign investments come.
We have come here by waiting, enduring, and running, expecting the second phase of economic reform. Now, there is a government that carries the psychology of two-thirds of society, carries the sentiments of two-thirds of society, and represents two-thirds of society in all respects. That courage must be exercised now, right?
That must always be done. No matter how big it is, whether it is two parties, four parties, or six parties. It is necessary to keep the economy as a priority and define it ‘more and more every day’.
Have you received any signs? From the government that it will take further steps towards such reforms? Maybe it is in discussion?
It is difficult for me to say that this is concrete right now. But they too have a bad economy. They have thought of transforming the country economically. They must have thought of everything. This time, for the first time, political parties have shown seriousness about the economy.
Among the areas you have invested in so far, this is the easiest one. Easy in the sense that something is happening there. Have you identified something that you don’t need to take much tension?
Nothing special. We business people have become accustomed to taking tension and sticking to it day and night. That is our karma. It is not good or bad. All the industries I am doing are running well. There is no big problem, but there is not as much growth as there should be.
‘Growth should be more’ because Nepal is still in a very primitive stage for industrial production. The GDP ratio is very low. For example, my spinning mills in Biratnagar have been in operation for about 30 years. 30 years ago, we started with a capacity of 23,000 spinners.
Now, there is a 120-25 thousand spindle in Harhari.
Now, if we look at the calculation of international growth, then I should have had a capacity of 500,000 now. I have also grown from 23,000 to 125,000. It is not that there was no growth, but there was no ‘desired growth’.
You used to bring a kind of raw material. You process it further and export it as a slightly fine raw material. That is, the industry is only running in one cycle in the middle. If all the environment in the country was right, then you could put the product prepared in that way in another machine and make a fine product with value addition and export it and also send it to the domestic market?
That is right. Like we make yarn. We bring fiber from India. Raw material comes from India, Malaysia, Indonesia, Hong Kong. We process it. Our valuation is 30 to 40, 50 percent. Because about 3500 people have been employed in that Reliance. That is also an indicator of valuation.
Our monthly electricity bill alone is 7.75 million. That is why we have good value addition. If that value addition could be increased further, more clothes would be made here. Currently, only 25 percent of our production is consumed in Nepal.
While clothes are the only item in Nepal, which only 7 to 8 percent of our national consumption is made in Nepal.
The rest comes from India and China through legal and illegal channels.
If we developed the textile industry and garment industry in Nepal, we could have made 10 million spinners out of 125,000 and that could have been consumed in Nepal.
But what are the supplies that the garment industry needs? Why hasn’t it been developed? Like, should it be given some incentives? Should it be facilitated for exports? Do we have a study on that?
Nepal Rastra Bank has moved forward with the process of amending the Bafia Act. The Rastra Bank is saying that it will separate bankers and businessmen. What is your position?
There were no restrictions when investing in banks. It is not relevant to suddenly say this today. And now if you have more than 1 percent of your investment in a bank, you are not allowed to take a loan there. What I am saying is that if you have more than 1 percent of your investment in a bank, then you are not allowed to take a loan there. But if you are not in any position of profit, not in any executive position or director position, not in the directorship or committee, why should you not be allowed to take a loan?
The chairman and CEO do not allow a person who has invested 1 percent or 2 percent in that bank to enter the bank. A person who invests one or two percent is a helpless investor. What does he care about taking a loan from there? So what is the intention of differentiating between industrialists and bankers? By what mechanism? It should be clear.
The Bafia amendment has come that if you are the founder of any bank, you will not be able to take a loan from any other bank, so you will not be able to do business. That will further destroy the economy. The banking system will be destroyed. What is the long-term impact that we have when taking any such decision? What impact will it have on the economy? It is better to take a decision by thinking about the economy, even if it is not about the individual.
Businessmen once said that we needed loans at cheap interest rates. Interest rates became expensive, so we could not invest more. Today, banks are in a position to take as much money as they can. Interest rates have also fallen below single digits. Once again, the economy has not worked. You are an investor who has invested in a bank plus a person who has also invested in industry. What is the reason for this sadness?
After taking a loan from a bank, you have to pay it back. Once upon a time, even paying 11, 12 percent interest from the bank would have benefited the industry, it would have been sustained. Now you get money at 6, 7 percent. But that economic accelerator did not happen. Now, the capacity of any industry is running at 30 percent. Some are running at 40 percent. The existing ones have not been able to operate, there is no question of new industrialists coming. Even if you take a cheap loan from a bank, you have to pay interest. Where will you invest that money? You have to sustain your employees. That is why the economy is in a very serious situation now. The state should talk very seriously and without shame, bring in an international economist and conduct a comprehensive study on the economy.
Let’s talk about Sri Lanka. We heard yesterday that Sri Lanka was almost drowned. Then Sri Lanka’s economy grew rapidly. What kind of economy would such a capable person be like as an economic advisor or what would he design? Which sector should be prioritized? Which sector should be covered more. Which sector should be provided with facilities? Facilities should be provided.
A certain type of people opened a lot of hotels in Nepal. Gradually, hotels had to be opened in a way that other infrastructure could support them. That’s why a lot of money has gone into hotels. In the case of hydropower, we invested in a haphazard manner at the beginning without thinking about the long term. We need to re-think there too. We invested so aggressively in the cement industry that now we have to operate at 30 percent. Why?
In terms of tourism, you opened a hotel. The hotel did well. Now I also wanted to open a hotel, the state cannot give you a license and not let me. I may have a new idea. A new concept. But is what I do right or not?
The bank will look at whether the investment is justified or not. Without banks, such projects do not come up with finance. But now banks have started giving loans based on the face rather than the project. When face lending started, it weakened the banks’ ability to analyze projects.
The bank is big in cement too. He is a person with a good track record. He gave a loan thinking that it would be fine if he did it. But in reality, the bank did not develop the ability to study it. It is not there even now.
Many hotels are now in operation. In January, the average occupancy of star hotels in Kathmandu was 35 percent. In February, it is only 40-50 percent. But what is not here in a country like Nepal that is based on tourism? Tell me. For tourism. But hotels have to operate at 30-40 percent capacity.
Another thing is that destinations in Nepal have become very expensive. Airfares are also expensive. Hotels are cheap. There is a problem with visas. There is no good infrastructure at the airport. Our national flag carrier does not have good aircraft.
I would say that Nepal Air Service Corporation has only 2 and a half planes. Bhutan, a small country with a population of 1 million, flies 10 planes. Nepal should be able to fly at least 25-30 planes.
But since we are not able to do it, we need to find an international partner and create a joint venture to bring another 20 new planes within 1 year. It is not a big deal to find a new destination and bring new planes. If that happens, tourists will come. They will get jobs. Therefore, we should leave our ego behind in national interests and work for the benefit of the people.
But at our airport, we have to wait for the bus for 10 minutes under the plane. And we have to wait for the bus to board the plane from the terminal.
If the effort put into building Pokhara and Bhairawa International Airports was put into Nijgadh together, your hotels would be running at 80 percent instead of 35 percent, right?
You mentioned Bhairawa. You have to take your luggage on a small bench in that aravall. Nor does it have toilet facilities. There were 30 foreigners on a 72-seater plane. They came for Lumbini Darshan. This is the condition of Bhairawa Airport. It couldn’t be like this. Everyone who wants to build a country had to think. Nijgadh Airport had to be built. Fast track had to be completed soon. We all had to build the country together.
प्रतिक्रिया दिनुहोस्