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Pushpa Raj Acharya of APEX talked to Bhawani Rana, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Excerpts:

 How would you evaluate the country’s investment climate?

The country has a stable government after a long time. We experienced the decade-long conflict and another 10 years of political stalemate before the constitution’s prom­ulgation. This is an opportune time for the private sector to grow rapidly as the govern­ment has emphasized economic develop­ment with its vision of ‘Prosperous Nepal, Happy Nepali’. Private sector is considered the engine of economic growth as it contrib­utes to 70 percent of total investment in the economy. But the government does not see the private sector as a trusted partner.

Trust deficit between the government and private sector is hindering investment and private sector growth. The private sector had a huge expectation that the govern­ment will join hands to translate its vision of rapid socio-economic development. We had expected economic policy reforms and accelerated infrastructure development to attract fresh investment. But the government focus seems to be more on regulating instead of facilitating the private sector. The busi­ness sector is also terrorized by the arrest of prominent businessmen in cases where the civil code is attracted. On the other hand, enforcement of multiple regulations simulta­neously contributed to a lack of confidence in private players.

A private-sector organization like the FNCCI can approach the highest political level. And you have had several rounds of meetings with it over various regulations. How do you see this engagement?

Earlier, we were facing problems like labor unrest and frequent power cuts. These issues have now been resolved. But the higher lend­ing rates of the Banks and Financial Insti­tutions (BFIs) are yet to be resolved. In the meantime, the government has enforced multiple rules and regulations on the business sector, like the mandatory Permanent Account Number (PAN) bill in transactions above Rs 1,000, vehicle consignment tracking system, abrupt changes in tax policies, enforcement of social security scheme, among others. These compliances add to the cost of operat­ing business. The government does not even consider it necessary to consult the private sector before formulating different bills. The government has been feeding antibiotics to the private sector to make everything perfect, however, the antibiotics are resulting in side effects. The prescribed pills have not been able to treat the ills they are targeting. Based on the size or classification of business, there are multiple categories of business from micro enterprise, small medium enterprises (SMEs), to largescale enterprises. But the government has kept all of them in a single basket.

What should the government do to encour­age the private sector?

The private sector suffered a lot during the conflict and the political transition, and the government should carefully diagnose this suffering. Rather than slapping new taxes and increasing tax rates, the tax net should be expanded to generate more revenue. We are in favor of pleasant taxation. The gov­ernment should collect tax and enrich its treasury slowly by soft and pleasant taxation just like a cub slowly grows on cow milk. The government must accelerate infrastruc­ture development. Development works are slow-moving, which cannot trigger private sector investment. Against this backdrop, private sector investment is key to attracting foreign investment. Unless the government can get domestic investment, it cannot create ground for foreign investment. The domestic private sector investment can play the role of a catalyst. The government is lacking SMEs pol­icy, even though they are the economy’s spine. Even our southern neighbor, India, has a sep­arate ministry, i.e. Ministry of Micro, Small & Medium Enterprises, to facilitate micro, small and medium enterprises. They are crucial in sustaining grassroots growth and are effective in inclusive economic development and pov­erty-alleviation. The government can replicate such policies and best practices to make the investment climate more favorable.

You also mentioned economic reforms. Could you elaborate what sort of reforms you seek?

Nepal saw major economic policy reforms in 1990s, and private investment was opened up in many sectors through economic liberaliza­tion. That expanded the country’s economy, and government tax collection increased sub­stantially. We need similar reform to expand the economic pie now. Almost every economic sector is stagnating, and in need of fresh investment. Investment comes with economic policy reforms. The government together with the private sector should think out of the box to trigger and sustain growth to achieve our targets like being a middle-income country by 2030 and achieving Sustainable Development Goals (SDGs). The government should come up with economic policies that lure invest­ment. We have to reform every sector from agriculture, manufacturing, to services. Low yield in agriculture hinders private invest­ment, and our youths do not want to enter agriculture.

How do we initiate reforms in these sec­tors?

The government can reform agriculture through contract farming policies, irrigation facility, improved seeds and fertilizers along with other extension services, and easier access to credit. Similarly, tourism can be another major sector of competitive and com­parative advantage. Many tourism potentials are still unexplored in the absence of better tourism infrastructure, and such is also the case with manufacturing and services. We can see how private investment triggered hydro­power development after the government announced purchase of electricity generated by independent power producers (IPPs) in take-or-pay contract with the Nepal Electric­ity Authority. This shows the private sector is ready to invest if the government protects it and ensures return of investment. The govern­ment should resolve the economy’s structural constraints in coordination and collaboration with the private sector

Q. Which living person do you most admire the most, and why?
A. I don’t have one person that I admire the most. Different kinds of people that offer varying aspects, traits and personality, are always inspiring me.

Q. Nikon, Canon or something else?
A. Always ‘The Canon Guy.’

Q. What is your favorite cuisine
A. Nepali Thali with some mouthwatering sukuti.

Q. What is the most difficult part of your job?
A. Things that seem to be the worst are the best at the same time, like being independent and self-sufficient or knowing that everyone is a photographer today or at least takes pictures, which makes a difference.

Q. What is the biggest project you’ve been a part of?
A. My biggest projects have been Bryan Adams, Mohit Chauhan and Farhan Akhtar concerts.

Q. If you could wish for one and the only thing, what would it be?
A. Live and work freely without any stress.

Q. What is the strangest thing you’ve ever eaten?
A. Asked for bacon burger but unknowingly ate my friend’s Gordon Ramsay beef
burger

Q. One gadget that’s been in your wish-list?
A. Evo II Pro Drone or Airblock

Q. If you could live anywhere in the world, where would it be?
A. Vienna, Austria or Santorin, Greece

First, an old query. Is the Millennium Challenge Corporation (MCC) part of the Indo-Pacific Strategy (IPS)?

The IPS report was unveiled last June when the Shangri-La Dialogue was underway in Singapore. Unveiled by the US Department of Defense, it included many military components. The document speaks for itself. The same November, the US unveiled its foreign policy which stipulated that the IPS would be a part of the US foreign policy.  

Now, there are debates on whether the MCC is a part of the IPS. When we initiated the process for the MCC, Baburam Bhattarai was the prime minister and Barsha Man Pun the finance minister. They formally requested the US government to make Nepal part of the MCC. On the basis of the request, the American government began to assess if the MCC could be implemented in Nepal. They accessed things like Nepal’s human rights situation, and freedom of speech and expression. In the end, Nepal qualified for the grant.

At the same time, Nepal is in a sensitive place. In terms of both economic and military power, the US and China are competing with each other. We have seen the disputes of South China Sea and Middle East where two countries are competing, and the IPS orientation also demonstrates that competition. China has invested massively in infrastructures of neighboring countries through the BRI.  Therefore, whether we want it or not, whether the Americans accept it or not, the MCC has tried to address the larger geopolitics of this region. That said, the BRI’s objective is to support infrastructure development, and the objective of the MCC is also to help Nepal’s infrastructure development. Therefore, whether it is a part of the IPS should not make huge difference.

Would you say it was an intellectual dishonesty on the part of the US to retrospectively lump the MCC under the IPS?

By denying it is a part of the IPS, the US is becoming too defensive on the MCC. There was no need for that. They are saying that the IPS is their approach in this region. Similarly, the American state minister during his Nepal visit has clearly said that the MCC is a part of the IPS. They have mentioned the IPS as a foreign policy goal of the US government. So there is lack of consistency. They are becoming defensive just to placate public opinion on the MCC in Nepal. They should have clearly said that it is our foreign policy component and the MCC is focused on infrastructure development. From the start, the BRI narrative has been that it is a support for infrastructure development, which has been established as well. The MCC narrative could have been developed in a similar way. 

How do you evaluate the divisions in the ruling party over the MCC grant? Are these divisions based on ideology or have they more to do with intra-party dynamics?

There are two sides to it. Let’s look at our recent political history. Nepali Congress formed majority government in 1990 under Girija Prasad Koirala. For some months, the government ran smoothly but after that a dissatisfied group within the party, under the leadership of Ganesh Man Singh, started protesting against it. The size of the power pie is small and there are limited opportunities for leaders and cadres. More than that, right now, there is a constitutional cap on the number of ministers. In the past, there was a trend of appointing government critics as ministers. PM Oli’s dispensation does not allow for that. Our politics is filled with opportunism over money, power and prestige. Some people outside are always clamoring for their day in the sun.

Next, there could be ideological reasons. NCP leader Bhim Rawal has come up with some points, for instance he has objected to the provision of parliamentary endorsement of the MCC. Like former speaker Krishna Bahadur Mahara, a large group of former Maoists are against it. Among former UML leaders, Rawal has been very vocal. So the current divisions over the MCC are partly a clamor for opportunity, and are partly based on ideology.

Is it the case that PM Oli and Foreign Minister Pradeep Gyawali, as government representatives, feel a kind of pressure from the Americans to endorse the MCC compact?

Successive governments after 2012 have signed to pass the MCC proposal and they all have accepted its conditions.  So if you think responsibly, you cannot backtrack from it. It is also directly related to a superpower. Therefore, we should have had a long and intense discussion before signing it. Yet this discussion is taking place after it has already been signed.  I am saying that this should be seen as one-time exception and be endorsed by the parliament. In the future, if we renew the MCC, there should be renegotiations on some points.

Do you see Chinese pressure behind the opposition to the MCC in Nepal?

I do not think the Chinese have lobbied with the Nepal Communist Party. There is a lot of space to do politics on the MCC. Some are trying to project themselves as nationalists. There is competition inside the party to be seen as nationalists and create space for themselves in politics. But I do not believe that the Chinese have come in a systematic way on this issue.

Coming back to the parliamentary endorsement of the MCC, do you support it?

The most unjustifiable condition of MCC is the parliamentary endorsement. Our constitution clearly lays out two legislative functions of parliament: endorsing bills to make them laws and endorsing treaties and conventions. Either you have to present the MCC accord as bilateral treaty, like the Mahakali Treaty, but it is not a treaty. Now, it is in the form of a bill. There is vast difference between treaties/conventions and bills. In conventions, state party or the government is responsible, but in case of bills, they are applicable to all citizens of Nepal once endorsed.

A safe way for the government is to present it as a treaty and endorse it with two-third votes. There are technical problems and there are big political implications as well. That is why parliamentary endorsement is not right. If we had not signed up for the MCC accord, I would have objected to its parliamentary endorsement. As we have already signed it, we can perhaps renegotiate. But I am not sure the US would be ready to drop parliamentary endorsement.

Would it be right to say that accepting the MCC is tantamount to accepting the IPS? There is also a kind of conspiracy thinking in some quarters that if we endorse the MCC accord, it will allow the Americans to station its army in Nepal.

I am saying that the IPS is a military strategy but the MCC is not. The IPS is part of the US foreign policy, so is the MCC. However, we have already entered the broader US foreign policy umbrella. As far as US military presence is concerned, we need a separate agreement for that. There is no military or security component in the MCC.

What do you make of the rumor that part of the reason Krishna Bahadur Mahara was removed from the speaker’s post was his resistance to the MCC accord?

I am not convinced Mahara stopped the MCC proposal. As finance minister, Mahara was involved in the MCC process. What I say is that there was bargaining inside the ruling party on the MCC issue. There was bargaining on who gets what with the passage of the MCC. Some are using it as a tool to boost their nationalistic credentials and strengthen their political position. On the other hand, they could also jeopardize the country’s relations with the US. Agni Sapkota has publicly said he is against the MCC. If he becomes the new speaker, it will be interesting to see how he behaves. If he passes the MCC bill, we should understand that his opposition was part of his bargaining tactic.

Let’s move to transitional justice. How do you see the appointment of new office-bearers in the two transitional justice bodies?

In April last year, the tenure of previous office bearers ended. The government then formed a committee led by former chief justice Om Prakash Mishra to recommend new names.  In this period, conflict victims and national and international stakeholders continued to argue that previous laws were insufficient, and they should be amended. They said appointments should be made only after the amendment in order to make the process more trustworthy. They were also saying conflict victims should be consulted and have a say in the overall process. Taking conflict victims into confidence was the right idea. But the committee took 11 months to make its recommendations. By the time it made the recommendations, even the tenure of the committee had expired.  

What would you say has been the major failing of our transitional justice process?

A major problem of our transitional justice process is absence of trust. The government takes human rights defenders and civil society members as spoilers of the process. In the eyes of conflict victims, both the civil society and the government work for their own interests. Therefore, until these three forces come together and an environment of trust is built, this process cannot move ahead in a consensual way, which is mandatory to reach to a logical conclusion. So the government should have worked on confidence building measures with all stakeholders. After that the role of commissions should have been defined and the role of conflict victims in the overall process identified. Similarly, there should have been work to segregate judicial and non-judicial components of transitional justice.

Government and opposition parties agreed to form the two commissions amid a climate of mistrust. They just concluded consultations in all provinces. For the same purpose, they had prepared a questionnaire. When victims entered the hall, they were given those questionnaires, which were to be filled within three hours, as if it was a university exam. There were loaded legal and constitutional terms in there. People from rural areas did not understand those terms.  The language of healing that the state was supposed to speak was missing. It is also a national healing process. We have a huge trust deficit and the current working style cannot bridge that gap. 

But haven’t the major parties vowed to amend the laws in line with the recommendation of the Supreme Court and international practices?

To amend the law, you need to build certain confidence. The problem is that the government is yet to recognize conflict victims as stakeholders in this process. For example, a family breadwinner is still declared as disappeared. All properties are under his name. He had taken out a loan on the basis of those properties. The bank has been publishing notices with the photo of the disappeared person, asking him to pay the money back. His wife wants to pay the loan by selling the property but the cabinet has not taken any decision to transfer the property in her name. So she is helpless.

As per existing laws, if a person goes missing for 12 years, family members can declare him or her dead and you can transfer property to the rightful heir.  But allowing this will be tantamount to allowing the issue of disappearance to be diverted. The government wants to reach that point. The government wants the duration of disappearance to cross 12 years so that the family would register the death certificate and claim the property. It will dilute the issue of disappearance. That is why there is still no law to criminalize enforced disappearance. There is still no law to criminalize torture because torture of conflict era cannot be proven as all evidences have gone. This is not a healing language. These are delaying tactics.

Don’t you think the two transitional justice commissions, now that they have office-bearers, will be able to resolve the remaining tasks of transitional justice?

The transitional justice process has three main components: judicial, political, and administrative. The judicial component can be addressed through commissions. The political and administrative components should be addressed by the government of the day. Truth seeking is a judicial component. For example, there are around 40,000 conflict-era cases in my calculation. Each and every one of them should be classified. You have to establish truth in every case. Some cases could be settled through reconciliation, which is a major part of the peace process. Serious human rights violations should be categorized as such and cases filed through the special court. There would be reparation in remaining cases.

Political component entails reconciliation. You can bring local government and provincial government on board in this process.  Additionally, we have a Supreme Court verdict that you can go for reconciliation only after the consent and informed participation of conflict victims. Next, the government has to take decision to transfer the property of disappeared people to their rightful owners, which helps keep the issue of disappearance alive. The government declared the security personnel killed in insurgency martyrs but not others who died back then. Reparation is another political and administrative part of the peace process. There are several issues which need to be addressed by the political leadership as the commissions on their own cannot resolve them.

So you don’t see much hope of timely justice for conflict victims.

Yes, I can say that. I wish for the success of those who got appointed to the two commissions. But do the people appointed to the commissions have any knowledge about transitional justice? Have they worked with conflict victims? Not even one of them, I am afraid. 

Agni Sapkota has been implicated in a war-time murder. Can he become the next speaker?

His murder case is pending at the Supreme Court. Kavre district court has issued an arrest warrant against him. If it is an ethical issue, he cannot be elected the speaker. The main qualification for speakership is having high moral ground.

There is continuation on some issues, while we have made adjust­ments on some other issues. Some fundamentals of foreign policy remain unchanged. For example, given our geopolitical situation, we have to maintain strict neutrality, as advised by our founding father. Non-alignment, UN charter and Panchsheel are issues on which there is continuation. Another important continuation is in not allowing our soil to be used against any country.

But foreign policy priorities also keep changing as per our domes­tic needs. In the past, there was political conflict, so achieving peace and making it sustainable was our priority. We told the international community that our key priority was achieving peace and so they should support us.

After the completion of the major parts of the peace process, consti­tution drafting was our priority. After the promulgation of the new constitution, we formed a strong and stable government. Now, after having institutionalized and con­solidated political gains, we are on the path of economic prosperity. Prosperity is a key government as well as foreign policy agenda. The changes in domestic policy should be clearly reflected in the country’s foreign policy. In this context, we have to know what is happening at the regional and global levels. We have to catch up with the changes in our immediate neighborhood too. Foreign policy is a dynamic field and we have to continuously make adjustments. But at the heart of it, foreign policy is always an extended form of domestic policy.

Diversification seems to be the central theme of the government foreign policy. What does this entail? For one, closer ties with China appear to be the priority.

We are always guided by our national requirements and needs. In this period, two issues drove us towards diversification. First, we were too dependent on outside power, and suffered for it. So we sought to diversify our options. We signed the Transit and Transport Agreement with China in 2016. It was a major breakthrough because before that, third-country trade was possible only via India. But only policy-level decision was not suffi­cient; there was a need to make it workable. We signed subsequent agreements, including protocol, to make the agreements feasible.

Another important aspect is building necessary infrastructure to ensure our access to transit facilities. This could have been difficult 50 years ago but today’s Tibet is largely developed and much changed. Now, there are better road, rail and other infrastructures in Tibet and if we can benefit from them, why not? Inter-independency is a reality in today’s globalizing world. We have to look through the lens of compar­ative advantages. But first you have to be better connected.

What kind of connectivity are you talking about?

We want to be connected through railways, waterways, roads, and other means. In the past, due to the strict electricity guidelines imposed by India, there was confu­sion about our possible electricity markets. We successfully eased the restrictions and now there is a favor­able environment for electricity trading. When it comes to energy cooperation, we have made good progress with Bangladesh. Nepal, Bangladesh and India are close to trilateral electricity coopera­tion. We should always look at the broader context. If there are more options, we can bring more investment and be in a better place in marketing our products.

Nepal government seems intent on building the inter-country railway while China seems to be emphasiz­ing the roads. Is this the right reading?

I humbly request you to follow the official documents. When it comes to railway, the agreement we forged stands. Now we are in the phase of preparing the Detailed Project Report (DPR) for the railway. Apparently China was not too keen on it but then during Chinese President Xi Jin­ping’s Nepal visit, the two coun­tries actually signed an agree­ment on the DPR, and the two sides are now working on pre­paring the DPR. The proposed Raxaul-Kathmandu railway line has also gotten momentum. We need both roads and railway. It is not a question of choosing one over the other. We all know that it takes comparatively less time to build roads than to build railway. We also know that bringing a railway is a difficult task given our difficult geographical terrains. The roads will be completed soon but it does not mean that the railway will not progress for the same reason. Both the projects will move ahead simultaneously.

Another burning issue right now is the Millennium Chal­lenge Corporation (MCC) Nepal compact. Why so much confusion over it?

The process of MCC began in 2011 and we signed it in 2017 September. The incumbent gov­ernment is fully committed to all points of the MCC agreement. This is about continuity of the agreement signed with a coun­try. One month ago, I was in Washington DC and conversed with high-level government offi­cials there, including President Trump’s advisor who follows this region. They categorically told me that Indo-Pacific is not a formal organization. According to them, the basic concept is to name this region Indo-Pacific, and all the activities they carry out in this region fall under this broader concept. But it does not mean that the MCC is under Indo-Pa­cific because there are MCC projects beyond the Indo-Pacific region as well, including in Africa.

We have to be accountable to the document we have signed. We are not responsible for anything beyond that. The US has not come up with any proposal to change the agree­ment we signed in 2017. In a dem­ocratic and open society like ours, issues are raised from different per­spectives and we have to take that in a normal way. Some issues are raised with little knowledge, some with an intent of knowing more, and some on the basis of curiosity. The Nepal Communist Party is a respon­sible party running the government, and Prime Minister Oli has time and again said that whatever agreement we have signed will be honored.

Are you suggesting that it really does not matter if the MCC falls under the Indo-Pacific Strategy?

There is no clarity on the meaning of the Indo-Pacific Strategy. What is Indo-Pacific? What do they want from it? They tell us it is a concept according to which the Indo-Pacific region should be open, free, and where democracies are promoted. It has not taken any organization­al shape. If they broadly explain that whatever they do in this region bilaterally is under Indo-Pacific, what can we do until and unless they come up with an organizational shape? Again, we are responsible for the agreement and nothing else. When we signed the MCC compact in 2017, there was no mention of Indo-Pacific. It is a five-year project and Nepal chose construction of transmission lines and upgrade of roads under the MCC grants.

Lastly, you were a member of Nepali half of the Eminent Per­sons’ Group (EPG). What do you make of India’s delay in receiving the report?

I do not want to comment much on it because right now I am not in the EPG. What I will say is that the EPG process was initiated at the highest political level. A consensual report has been prepared covering all areas of bilateral relations. We agreed to submit the final report to Indian Prime Minister Narendra Modi first. What we didn’t expect was the kind of indifference we now see from India. Still, I am hopeful that the EPG report will be received as soon as possible.