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Sujeev Shakya is the founder CEO of beed, an international management consulting and financial advisory firm that works in Bhutan, Cambodia, Nepal, Rwanda, and the United States.  He also heads the Nepal Economic Forum, one of Nepal’s leading economic and policy research institutions. Shakya has over 25 years of experience working in diverse sectors, and he has also authored four books and worked as business and policy advisor. ApEx caught up with him to talk about the priorities of the new government, current economic issues, and Nepali private sector. Excerpts: Political parties are currently busy trying to form a new government. What is your expectation from the new government? As more new and young faces have come into the parliament from both existing and new political parties, it would increase the accountability of the government. I expect the new government to be more accountable. For common people, the government is the face that provides citizenship, birth, and death certificates. As a facilitator, the government should improve service delivery. It is one of the challenging parts, as the government is often criticized for not providing effective and efficient services. Digitization of government services, which was expected to ease the process, has in fact created more complications. The new parliamentarians, whether in the government or in the opposition, should regularly question bureaucrats and government institutions. If we look at the victory of Balen Shah and Harka Sampang in the local elections, it was not due to the big agendas. They won the people's confidence by advocating for small things. Consider the migrant workers. All they need is the right documentation, timely passport services and hassles-free services in labor and immigration departments. These aren’t big expectations. They are small things that can make Nepalis happy. There are often discourses about neighboring countries' policies such as Belt and Road Initiative (BRI), and Millennium Challenge Corporation (MCC), but I don't know how these things connect with a layperson. For me, citizen service is the only thing that matters. Among the newly elected parliamentarians, there are businesspersons too. Don't you think it raises the issue of conflict of interest? Individuals from business backgrounds going into politics is not a new thing. It is normal and a global trend. For example, the United States had a big business tycoon becoming the president of the country. What we have to look at is that in a democracy we have to rely on three key pillars: legislature, executive, and judiciary. And within these pillars, a system of accountability is built. As long as we ensure the accountability part is not compromised, it would take its own corrective action. In our previous parliaments and constituent assemblies, we have seen businesspersons not only as MPs but ministers too. Some even headed the parliamentary committees. What we need is think tanks and policy institutions that could help parliamentarians make, amend and implement better laws and policies. So, if we keep the cycle of accountability and fundamentals of democracy intact, I think, we don't have to worry much. Because, when a businessperson becomes a minister, he or she is automatically under public scrutiny, especially in the age of social media. Let's not also forget, whether business people are in the parliament or outside, they have over the past 30 years been able to influence policy making, influence legislation, and budget. You don't have to be in the parliament to influence the government and its decision-making. As we wait for the new government, the country's private sector has upped its ante against the government and the central bank. They say the current environment is not conducive for business because of government policies. Do you agree with them? I don't think so. The private sector in Nepal is used to super profits. And, they are not happy now, as those profits that they are used to are not happening. They want society to continuously consume. But there have been impacts on consumption post-covid and post-Russia-Ukraine war. If a customer is not in a situation to buy a car, a car dealer can't force him to buy one. As far as the interest rate is concerned, everyone in Nepal has invested in bank shares and they expect high dividends from banks. But banks can only distribute high dividends if they can charge high interests. All the businesspeople are bank promoters, who want high profits, and the banks have no option but to up the interest spread rates. Be it multinational banks or low CAMEL-rating banks, all of them charge the same interest rate, what's the difference then? There is no incentive for efficiency in banks. It is basically a syndicated cartelized environment. But who is running the banks? The same businessmen who are in the street protest are also the shareholders and promoters of the banks. Given the mandate of the election, it seems we will have a coalition government in place. Where should the new government focus? The focus has to be on the economy. Everyone is talking about geopolitics, foreign policy and all, but the foremost thing is you need to create jobs. Around half a million Nepali youths come to market seeking jobs every year, but we are only creating jobs for 50,000-70,000 annually. Everybody else is unemployed and leaving Nepal. Even if they are leaving, we can at least equip them with skills. But that's not happening. For the business environment, there has to be a reform. The parliament has not functioned effectively since July 2019. Fifty-seven legislations are still pending. We need legislation so that Nepalis can invest outside. Today, there are 800 IT companies in the export of IT services. If we allow them to open business development offices in Dubai or in Singapore, they are going to do wonders. So, we need to think from a globalized perspective, attract more foreign investments, and not fall into cartelizing behavior. We also need to ensure that we get some big projects that utilize a lot of electricity. There has to be some large-scale transformational stuff. This is a country where an MoU of $25m is signed, and it becomes the headline news. Nepal is a $40bn economy. So, we need to scale up the size of deals and investments. Our political structure is designed in such a way that foreign investors do not pay anything to the political parties.  So, how do political parties sustain themselves? That is one question. The local and parliamentary elections have given a very interesting indication that you really don't need money to win the election now. Why would people pay political parties? They would rather fund an independent and get him/her into the parliament. How do you see the future of Nepal? I am always optimistic about the future of Nepal in the long run. I had thought that the political transformation that happened in 2022 would only happen in 2027. So, I am happy that it happened five years earlier. If you look at what rides the Nepali economy, the first thing is remittance. Remittance will not decrease because people are leaving. But it’s not like the remittance only comes from Gulf countries. Half a million people in the US, 200,000 in Australia and as many in the UK also contribute to remittance. Countries like Japan, and Israel are also opening up for seasonal workers. Our economy is also based on social spending such as weddings, religious works, festivals, birthdays, anniversaries, and all. I guess our per capita social spending is higher than that of Western countries. Look at the money being spent on weddings, bachelor parties, and wedding photography. They have become a big business. Until these social spendings declines, I don't see our economy going down. Like in other countries, our consumption was not impacted by the Covid-19 pandemic either. Land transactions are also keeping our economy afloat. Nepalis have never stopped buying land. There is a limited supply of land, so the price of property is very high. If someone bought a piece of land 20 years ago, he/she will make more money than from investing in stocks. So, these three drivers have kept the Nepali economy going. And I don't see it changing anytime soon. You have been very vocal against the Nepali private sector, terming them 'rent seekers'. Have they changed their character over the years?  If you look at traditional sectors, then I don't see them changing their character. They are still cartelized. But there are no cartels in the new sectors like ICT. We are seeing some amazing innovations in these sectors. The likes of Burger House have disrupted the eateries sector. They are not a part of cartels and associations. And, we will see more disruption in the future. In the financial services sector, more private equity funds are coming. And these private equity companies would demand a certain set of behavior from their investees. A company like F1 Soft has been able to do so much without being part of any association or cartel. That's where I see the private sector moving. And also, it is a generational transformation, as the newer generation thinks differently than their predecessors. The nexus between business and politics have been more rampant in the last few years. It was more visible in the last one year as the federal budget drafting process was tampered to suit certain business groups and licenses were issued to those close to the power. How dangerous are these trends?  I think it’s a global phenomenon. Large oil companies in the US can make or break the government. If we look at the most efficient democracies, the nexus between power and business is always there. But what is important is that when there is a conflict of interest, the media should bring out the issue. In Nepal, we have seen people very close to power, be it in the royal regime or in the democratic regime, taking advantage. But if they do not reform and become professional, they will not sustain. People and the groups that have misused the power have grown very fast, but also fallen at the same rate. Also, if you are an influential businessperson, politicians will come to you. That's a natural process and it is not a one-way relationship. There should be enough mechanisms in place to curb these issues. There must be community standards on what is the acceptable relationship between politicians and businesspeople.  

Janamat Party led by CK Raut became a national party after winning six seats in the federal parliament in the Nov 20 election. Raut, who forayed into politics as a radical outsider with his free-Madhes campaign, has tempered his hardline opinion over the years. Now his party has joined mainstream politics and is in the position where it could join the would-be coalition government. Pratik Ghimire of ApEx talks to Raut regarding his political journey and his party.  

You boycotted the 2017 polls and now you are leading a national party in the federal parliament. How has the experience been so far?

We should accept natural changes. At some point, the Nepali Congress also boycotted the elections. The Maoists said that they do not accept the parliamentary system, and now they are in the parliament. This happens in politics.  It was exciting to participate in the election for the first time. I am excited about how this opportunity will be, and how much success we will achieve. But I have always kept in mind that if we fail, the people will not trust us anymore, and we have to accept that. We have no excuse to be like other ordinary parties.

You started off as a free-Madhes campaigner, only to join mainstream politics to the surprise of many. Can we expect other surprises from you and your party?

People may be surprised because they think traditionally. I make important and quick decisions. I can go against what is going on in society and prevail for the better. I don't have big agendas and ambitions at least. I don’t even want to promise anything big. The reason we established this party is to advocate for common people and provide them employment. This country can be made better by creating job opportunities and controlling corruption. For these, I have made all the decisions. These are not surprises, but the need of the hour.

Is this the right time for your party to get involved in government or strengthen the party organization?

We are now a national party and with six MPs in the federal parliament, we are a decent political force. It is necessary to involve and engage the government to meet our demands. We will work to build the internal system of the party, and I'm sure that involvement in the government won’t hamper our party system.

The past governments have failed to honor the agreements reached in favor of Madhes. The people of Madhes don’t seem to be in favor of Madhes-based parties joining the government either. Do you think the government will address the demands of Madhes the agreements this time? 

The governments so far have not been sincere in implementing the agreements. The agreements made by the previous governments with other parties have not been implemented. So, we have been in regular talks with all the parties. We will take the side of the party that is willing to take ownership of our agendas. And I don’t think Madhesi people don’t want us to be in the government. The downfall of other Madhes-based parties was caused due to the path they took for power and personal benefits. Janamat Party is different and it has a clean background. 

How does Janamat Party distinguish itself from other Madhes-based parties?

Janamat Party is not a party that broke off from another party to gain power or opportunity. We have built this party from scratch. Janamat Party is run by the people who do not wish to earn a position of power or money. They joined politics to improve the standard of living of the people. It is a party of people who come from a struggling background. 

The government has lifted the restrictions imposed on the import of vehicles including jeeps, cars, and vans, which has been in place since April 27, starting from Dec 16. However, this announcement has failed to quell the disquiet of automobile importers and dealers who have put forth several demands to the government as well as the central bank.   NADA Automobiles Association of Nepal, the umbrella organization of automobile importers and dealers in Nepal, announced to protest against the government even when the import ban was lifted on Dec 6. NADA office bearers say they will continue their protest until all of their demands are met. ApEx talked to Dhruba Thapa, president of the association in this context. Excerpts: The government has lifted import restrictions on the import of automobiles. Yet, NADA is on the street, continuing the protest. Why has NADA continued the agitation? Though the import restrictions have been lifted, there is no environment in terms of doing business. There has not been any support from the government and departments concerned. The 50 percent margin in opening the letter of credit (LC) for importing vehicles is still in place. That means, we have to deposit millions of rupees in the bank for months without any interest. This should be lifted too.  There is no risk in automobile financing, yet the loan-to-value ratio has been set at 150 percent. Due to this, the banks hesitate in automobile financing. Also, the Nepal Rastra Bank has made it mandatory for financial institutions that they can only look up to 50 percent of the financing in private vehicles. This too should be lifted as it should rely on banks-customers relations and trust. Hence, our protests are still going on.  What do the government and the central bank need to do to stop a further slump in the automobile market? As the automobile business has been severely impacted by the Covid-19 pandemic and the recession, the government should help us to flourish by lifting all restrictions and providing subsidies to auto businesses.  I don’t think NADA has asked for anything impossible. We are flexible in bank interest rate as it is often determined by the market. Our demands are the need of the hour if the concerned authorities want to see this sector boom and help traders, sellers, and customers.   As import restrictions have been lifted, how long would it take for the auto sector to return to its usual business cycle? Even if the government and the central bank immediately meet our demands, I think it will still take at least a year for normalcy to return to the automobile market. The economic slowdown and liquidity crisis coupled with the higher inflation rate and bank interest rate have hampered us a lot as the customers are not in a position to buy vehicles.  What was the impact of the eight-month-long import restrictions on the automobile sector? Many traders and dealers have already left this sector after incurring huge financial losses and many are in the process to leave as soon which of course will lead to thousands of people becoming jobless. Automobile importers and dealers are not only facing the impacts. The government itself had lost a large source of revenue generation as the custom tariff on automobiles is around 250 to 300 percent. And I think, due to this reason too, the government had to lift the import ban.  How much revenue did the government lose due to the import restrictions? In the last fiscal year, we spent around Rs 90bn on customs duties and other expenses. So, I think, the government lost at least Rs 40bn in this period.  With the government lifting the import ban, when will authorized auto dealers start importing new vehicles? When will the consumers get the new models? By completing the process, in around two months, new and demanded models of vehicles will be available in the market.  While the government stopped the import of internal combustion engine (ICE) vehicles, it allowed electric vehicle imports during this period. The government data also shows a huge surge in the imports of electric vehicles. What do you think will be the market for EVs in Nepal? Not only in Nepal, but globally, electric vehicles (EVs) are the future of automobiles. That doesn’t mean electricity will replace petroleum products immediately. But the process has already started.  Nepal has a good and growing market for EVs. I see that we have not been able to meet the demands of customers. But this is a global problem due to the lower production rate. I guess that in the next five years, around 50 percent of the import of cars and two-wheelers will be EVs. 

Every year, thousands of Nepalis fly to foreign countries in search of jobs. Around 90 percent of them end up in Persian Gulf countries. Ideally, a foreign job aspirant is only supposed to pay only for medical, insurance, and pre-departure orientation training, which amounts to around Rs 8,000. But overseas job recruitment agencies, commonly referred to as manpower agencies in Nepal, have been charging an average of Rs 100,000 from each person. They are openly going against the ‘free visa, free ticket’ policy introduced by the government in 2015. Anushka Nepal of ApEx talks to Umakanta Acharya, director general, Department of Foreign Employment on the matter.  Why aren’t job recruitment agencies following the ‘free visa, free ticket’ policy?  When the policy was made public, many agencies showed their dissatisfaction. There were concerns that they might go out of the business. They didn’t like the fact that the government did not consult them before announcing the policy. One reason could be that dissatisfaction. Also, there is an unhealthy competition among manpower agencies on who gets more demand for workers. They are even paying the employers to bump up the worker demand numbers. Some of them are doing this in order not to run out of business, while others are doing it out of greed. As a result, none of the agencies are willing to follow the rules.  The department should receive many complaints regarding this matter. So, What is the department doing?  Yes, we do get several complaints in this matter. But in most cases, there is not enough proof to support the workers’ claims. Manpower agencies do charge exorbitant fees from their clients, but they issue payment receipts for just Rs 10,000. So, without the document of proof to produce it in the court, we cannot pursue the case. The best we could do is to claim for the money people have paid to manpower agencies, and fine those companies if we have some kind of incriminating evidence. There is no legal provision to shut down the agencies, so they go on with their work even if the department has fined them.  Has the department worked on investigating these issues? If so, why has there not been any significant change in favor of the migrant workers?  We do launch investigations into the complaints we get from aspirant migrant workers. The goal of our investigation is to gather enough proof so that the matter could be taken to the court of law. But, like I said before, we rarely find substantial proof of wrongdoing to pursue the case legally. Secondly, a person will drop the case once the recruitment company promises to return their money. This takes away the reason for our investigation. So we haven’t been able to pursue a case thoroughly. There are aspects of money laundering, human rights violation, and also the breach of policy that needs to be looked into, but all of them do not fall under the jurisdiction of the department. One way this could work is if all the associated departments at the ministry were to collaborate while investigating complaints. It is said that manpower agencies enjoy political patronage that stops them from being held accountable. Is this true?  Yes, it is true. Many successful agency owners have a direct or indirect involvement with politics. In Nepal, we all have witnessed how political influence can help an individual get out of a situation no matter how bad. The same goes for manpower agencies. Even when the department is willing to take action, political parties and their leaders protect manpower agencies and their owners. This has given them the confidence to violate regulations and take part in unlawful activities, because they know the authorities cannot touch them. It is a dangerous power they hold, which affects migrant workers the most.  A former labor minister himself owned a manpower agency. Did it not show a conflict of interest?  Obviously, it shows a conflict of interest. The government should not have appointed him in the first place. I cannot say for certain that he had a direct influence in the policy regarding migrant workers and job recruitment agencies. But what I can tell you is that there are many ways, not visible to the public, through which he could have misused the power to help his business interests. He was the minister before I joined the department, but I have heard some of my colleagues say that they felt unsafe during his tenure, that they were hesitant to open an investigation into the malpractices and irregularities reported in foreign job recruitment agencies. When people from the department themselves are scared of doing their jobs, you can imagine which side the minister leaned heavily on.