We Need Policy Consistency

Radhes Pant

Chief Executive Officer, Investment Board Nepal

It has been a year since Radhesh Pant took over as the chief executive officer of Investment Board Nepal. Before this he was the chief executive officer of Kumari Bank. In the 1990s, he worked as financial analyst for the US-based Pacific Rim Interface Member Enterprise, and at AMGEN Incorporated in various capacities. But now it is being said that IBN has failed to achieve expected success during the past one year. Janardan Baral caught up with Pant and asked him about his 13 months at IBN and IBN’s priority projects.

Janardan: You quit your banking career and joined the development sector, how has been your experience?
Pant: It’s been 13 months since I joined the board. I found that there are innumerable opportunities in the country. We have not been able to develop the hydropower, infrastructure, agriculture and tourism sectors. There is immense potential in mines and minerals sector. From outside [before joining NIB], I did not have in-depth information about these things. Now I feel I will certainly be able to make a difference. I am excited.

Janardan: Are things same as they look from the outside or they are different?
As the chief of a particular bank, one is involved in the decision-making process of one organization. But here at NIB, the work involves maintaining coordination between various agencies. There are procedural issues one has to be mindful about and a small mistake in policy issue could put the country in difficulty. Since NIB is new, there is a need for running it in fully professional manner. We should be able to compete with other countries in order to bring in foreign investment. We need to understand the problems and priorities of the investors and win their confidence. For this, the decision-making process should be sound and quick.

Janardan: Are you happy with the procedure-ridden bureaucracy?
There is some delay in decision-making but the decision is reliable. Government is a big organization and coordination among various agencies is necessary so it is natural for the decision-making process to take some time.

Janardan: It is said that the bureaucracy has not been supportive. Is that true?
I don’t say that. It takes time for everyone to adjust to change. But many now agree that a body like NIB is necessary. NIB has been set up to deal with long-term projects.

Janardan: But there are some people who say Radhes Pant has not been able to work in coordination with the bureaucracy.

There are several ministries and government agencies but they cannot work alone. All are inter-related. NIB has also been working in coordination with other government bodies whenever necessary. I don’t agree with what is said. We hire experts from the Ministry of Energy and Ministry of Agriculture among other ministries whenever needed. We also need to hire foreign experts while dealing with projects involving huge investments. After successful execution of big projects, we should produce manpower in Nepal itself to handle such projects.

Janardan: How has been the implementation aspect of Investment Year 2012/13?

Much work has been done on the policy and project identification fronts. We have identified 50 projects and sought proposals from the private sector. This is an opportunity for the private sector. We just prepare the package and it is for the private sector to perform. We search for investors inside and outside the country in seven priority areas. But things would be easier if there is constitution, political consensus and political stability in the country.

Janardan: It is said that NIB has been lax of late. What do you say?
Yes to some extent that is true. But the atmosphere should be conducive. NIB also waited in the hope of the atmosphere to be conducive. At present I think we are not in position to be able to make advertisements and spend huge amount of money. But this does not mean that there has not been any progress. There has been major progress in “back office “work including identifying projects and formulating policies. After completing these, we will approach domestic and foreign investors. Last month we organized Invest Mid Nepal in collaboration with the Federation of Nepalese Chambers of Commerce and Industry.

What progress has been made on the NIB plan to identify 50-75 projects and soliciting proposals from investors?
The projects are in the process of selection. It will take some more time to package those projects. We need to look into the feasibility, planning, financing, social and environmental effects, required infrastructure and manpower among other aspects related with the projects. Likewise, we have been working to identify regional projects because Nepal’s special regions have special potentials. We believe that these regional projects will help in proportional development under federal set-up. We started this from Chitwan [last month] where 18 projects related to tourism, infrastructure and agriculture among other things were identified.

Janardan: Isn’t it challenging to attract foreign investors to the country when domestic investors themselves are hesitating to make investment due to the political instability?
Political instability along is not the obstacle. The main problem is policy consistency. And FNCCI is working to resolve the problem. If the political parties are able to identify Nepal’s priority sectors and agree on definitive policies and assure that there won’t be policy change for the next 10-20 years then things could improve.
 

Janardan: It had been said that the project selection process would be completed by October 2012 and those projects would be marketed from 2013. But even the marketing secretariat, which was to be set up under the FNCCI, has not been formed. What do you say?

FNCCI is an important partner of the Investment Year campaign. There is a marketing secretariat in the FNCCI. The cabinet had made a decision to this effect. So FNCCI and NIB jointly work to market the projects inside and outside the country. We want the environment to improve to some extent so that we could go into action.

Janardan: Of the seven priority sectors determined by NIB, only the hydropower and infrastructure sectors are much talked about. Is it that tourism, agriculture and information and communication technology are in low priority?

That is not true. There is around US$ 8-9 billion tied up in five big hydropower projects including West Seti and Upper Karnali. Along with the setting up of NIB, hiring international experts and lawyers to hold PDA [project development agreement] negotiations for these projects was priority so it might have seemed that only the hydropower sector is getting more priority.

Janardan: What is the PDA dispute?

I don’t see much dispute. Any dispute has been resolved through talks with the developer company concerned. We have developed a PDA template. We are in talks with the developer company. Only having a good PDA is not enough, a PDA should ensure security of the investor’s investment.

Janardan: What is the main reason behind the delay in signing PDA with big hydropower developers?

Among the five big projects, we are in the final stages of signing PDA on four projects. We have signed MoU with two. As we need to incorporate the matters mentioned in the MoU in the PDA, it will take some time. We are in constant contact with the China Three Gorges International Corporation, which is the developer of 750 MW West Seti Hydropower Project. They are in the final stages of technical and financial analysis. But patience is key here because progress in some projects is also delayed due to procedural necessity. While PDA on some projects have been delayed due to the difference in understanding the projects.

Janardan: An FDI Working Group under the Nepal Business Forum had been formed with you as co-chair. What has been the progress?
It has been three months since the group was set up and one meeting has been held so far. We are currently working to resolve the problems in four-five issues including repatriation. We are in talks with multinationals including Ncell and Unilever and are taking stock of their problems.

Janardan: Is it that investors might have been discouraged as various international indictors have shown that business and investment atmosphere in Nepal is not favourable?

Foreign investors are certainly aware about such reports. But that is not only the determining factor. India has been ranked behind Nepal in terms of favourable investment climate but still investment is coming to India. The most essential thing is policy consistency. And there is the need to amend impractical rules and regulations. It is important to note that reforms made in company registration process and the taxation system will lift Nepal’s position in the Doing Business ranking.