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It was a challenge to introduce dig­ital TV—Direct to Home (DTH)—in Nepal 10 years ago. People were then familiar only with analogue TV and it was hard for us to make them understand digital TV. But there has been a huge change, as 95 percent of the system has been digitalized. This means most people now have a good viewing experience. Along with developments in sci­ence and technology, we have a growing scope in digital platforms. As the market grows, we have more opportunities. According to one data, over 3.5 million digital TV setup boxes have been distributed in Nepal. But there is still a large number of households that do not use digital TV services or any kind of digital platform. One reason could be poverty, another could be the penetration of Indian DTH in the Tarai belt.

A major challenge for us is that TV content is costly. Most of the con­tents are from India. The analogue contents used to be cheaper. But when they went digital, rates and taxes shot up. The only solution was to hike the prices of our services. So the overall condition of the industry is somewhat weak.

Another challenge is people’s changing TV habits. These days fewer people are watching TV due to easy availability of smartphones and internet. The number of hours a person spends watching TV has greatly reduced.

At present, we have an issue over ‘clean-feed’ which the govern­ment has decided to implement from October 23. Once it comes into force, the cost of content will rise further. It will also decrease the number of channels and subscrib­ers, threatening the entire digital TV service providers.

With problems in Nepal, Indian DTH may come to dis­place Nepali DTH, at least in the Tarai belt. Although it is illegal, many households in bordering towns have subscribed to Indian DTH. This may impact advertise­ment revenue in Nepal. When the number of viewers go down, why would businesses spend money on TV ads?

We already hear that television stations are losing advertisement revenue. Concerned authorities are mistaken that clean-feed policy will allow for total control over ads. This will not only harm the service oper­ators but also the entire advertising sector. Without ads, no advertising agency can survive.

We have expressed our worries, but have gotten no satisfactory response. Our industry was not consulted even while drafting the Advertisement Regulation Bill. After the implementation of clean-feed, content providers will defi­nitely charge us more. To recover our losses, we will be left with the only option of passing on the additional cost to our subscribers.

Likewise, there are some chan­nels whose business depends entirely on ads. Sports, news, and religious channels will have hard time after the implementa­tion of clean-feed. We may not be able to broadcast them. In my view, even the government is unsure of the motive behind clean-feed.

As defined in the bill, clean-feed is a provision to prevent ads in foreign channels. In global practice, making foreign channels ad-free is uncommon. It is a regres­sive step brought without proper study. Experts from our industry should have been consulted before drafting the provision. If the gov­ernment is serious about clean-feed, it should not be limited to digital TV. Platforms like YouTube and Facebook also include foreign advertisements. What do we do with them?

In order to deal with the clean-feed policy, we have started around 15 channels through our subsidiar­ies. Other service providers have also started doing so. They will be allowed to run local ads. Likewise, we will soon come up with our own internet services. But still, there are challenges.

We appeal to the government to revise the clean-feed policy and introduce a provision for local ads on it, otherwise it will lead to the ruin of the digital TV industry O

The author is MD, Dish Home

(As told to Prasun Sangroula)

 The government has decided to celebrate 2020 as ‘Visit Nepal Year’ with a goal of bringing two million tourists, which is definitely a good thing for the tourism industry. To make this campaign success­ful, a lot of national and interna­tional promotional activities have been taking place. The inaugura­tion program of VNY 2020 was also impressive.It’s good to see such an initiation for the promotion of tourism but it won’t be sufficient. Numerous issues being faced by the tourism industry also need to be addressed.

The very first problem concerns infrastructure. Compared to other countries, our one and only inter­national airport is very small. We immediately need another bigger and more advanced airport. More volunteers at the arrival and depar­ture terminals of the airports to help foreign passengers are also needed.

Flight irregularities create big hur­dles for travelers, foreign or domes­tic. Out domestic flight timings are unreliable.

Nepal is known as a mountaineer­ing and trekking destination. But connectivity to the places of moun­taineering and trekking is poor. Irrespective of what our leaders proclaim, seldom does their words translate into action. For example, to go Annapurna region, you need to fly or drive to Pokhara. Either option is not as smooth as it used to be a decade ago. Only people like us from the private sector know the practical difficulties.

As the entry point for interna­tional tourists is Kathmandu, the traffic here should be better man­aged. The current traffic situation is extremely poor. Tourists have a negative impression of the place right from the start.

Twenty years ago, one could visit Bhaktapur, Swayambhu and Boudha in the valley in a day but no longer. Now it may take a day just to go to Bhaktapur from Swaymbhu.

Apart from these, the fares for international flights are higher in Nepal compared to the neighbor­ing India, putting off international travelers.

Even though we may have many problems, it doesn’t mean we can’t solve them with better coordination between the government and the private sector. The government, tourism board, and tourism-related associations should sit together, dis­cuss relevant issues, and find a way to resolve them.

To develop our tourism industry, we need to explore new destina­tions. Till now, Mt. Everest, Pokhara, and Lumbini have been the cus­tomary ones. The NTB and private sector associations should find new travel locations and promote them.

In any foreign country, tourists love night activities. But our markets are closed before 10 pm. If someone goes to the Boudha area at night, there is nothing to do. Places like Thamel that used to be tourists’ favorite have changed their image as well. Going to Thamel is not nice anymore, as it is crowded and unmanaged. Hotel services are dis­appointing and many hotels don’t even meet minimum standards.

To improve Nepali tourism, some policy issues need to be addressed immediately. The whole tourism sector is frustrated with the govern­ment’s taxation policy; it should be revised. Even the porters in moun­tains are asked to provide PAN num­ber, which is impractical. Likewise, some change in visa and immigra­tion laws is needed. Concerned authorities should learn from Thai­land and India in this regard.

On VNY 2020, we should focus on quality of tourists instead of quan­tity. Having two million tourists is not a big deal. But we need tourists who go for trek, spend money in targeted areas, and do not evade taxes. Such tourists help create jobs and lift tourism.

In terms of boosting national economy, no other industry can beat tourism. The best thing about tourism is that it creates all kinds of jobs—jobs suitable for unskilled to highly skilled people. Tourism cre­ates enterprises in far-flung areas, where no other industry can go. Hotels are established in places like Mustang and Manang. Can anybody think of running a cement factory in those places? Because of tourism, hotels are there in those places. It encourages people to go back to their villages and generate income, which is an amazing thing O

The author is a former state min­ister of Culture, Tourism and Civil Aviation and currently a tourism entrepreneur

(As narrated to Prasun Sangroula)

 Although Nepal this year has fared better in Transparency International’s ratings and climbed up its list of least corrupt countries, the country remains in the red zone. By getting 34 out of 100 ranking points, Nepal is 113th among 180 countries. The TI cate­gorizes countries with less than 43 marks as corrupt. The TI’s ‘Corruption Perception Index’ is considered a credible global rating, with foreign investors, consultants, and contractors closely tracking it. Clean companies choose less corrupt countries. Ailing and corrupt ones look for places where they can manipulate politicians and bureaucrats. Commission agents who have good contacts with such unscrupulous contractors and con­sultants come into play.

This corrupt nexus is the rea­son big projects involving foreign consultants and contractors suffer. Their budget keeps rising but works never get done on time. Contractors run away, work is sub-standard, and unscrupulous parties are spared punishment. But the TI ranking does not consider such contractors and consultants.

Be it Kaligandaki or Melam­chi, Middle-Marsyangdi or Sikta, big projects face many crisis. The Kulekhani-3 hydro, which was to be ready within three years, took 11 years for completion. Upper Tama­koshi is already three years behind; it is 98 percent complete, the con­tractor’s wrongdoing stalls the rest of the work. The delay adds a daily cost of Rs 50 million on state coffers.

The initial cost estimate of the Middle-Marsyangdi hydropower was Rs 13.65 billion (174 million euro). The German government had pledged 128 million euros in grant and Nepal government had to pitch in only 46 million euros. Nepal was happy, and the project took off. But then, because of variation order, contractor claims, inflation, exchange rate changes, and added interests due to delays, the cost increased by Rs 14.4 billion. The grant amount did not change but Nepal’s share leaped from 46 million to 190 million euros.

On the other hand, the contractor of Melamchi ran away when the drinking water project was about to be completed. The contractor of Tanahu hydro followed suit.

Most projects meet with similar fate. But nobody seems to question the roles of the political actors and bureaucracy in them. Nobody seems to be concerned about the roles of foreign consultants and contractors. No one ever tries to figure out: “Why do contractors abandon projects in the middle?”

The government has announced ‘zero tolerance’ on corruption, which buttresses the slogan of ‘Pros­perous Nepal and Happy Nepali’. But the government has to con­stantly grapple with multiplying project costs, perennial delays, and inability of state mechanism to spend capital money. Six months into the fiscal year, the government can make only 13 percent capital expenditure. Frequent transfers of project chiefs and accountants due to consultant-contractor ploys and political interest is one big reason.

Despite the government’s liberal policy, spending in productive sec­tors is declining. Factories are clos­ing down. Investors complain of government red-tape, unsupportive attitude of officials, corruption, and bribery. They say they have to ‘buy’ even the rights enshrined in the law. This discourages investors.

Not only does corruption hinder economic development, it also cre­ates unequal societies. Money gets piled up with a handful people, while the poor get poorer. But there is another consequence of it: The money earned through corruption travels abroad. It drains national capital. The trend of accumulating money and taking it abroad started from the time of Rana Prime Minis­ter Bir Shumsher when the rulers used to transfer Nepal’s vast riches to India and Britain. The practice got institutionalized and it continues till date. Businessmen and their allies in high offices siphon off black money to foreign lands via hundi. Black money earned in Nepal is exchanged for money earned abroad by migrant workers, which they keep there.

In 2002, the CIAA started taking action against public officials who lived lavishly but were unable to show a credible source of income. That encouraged corrupt officials to keep properties in the names of family members or to ferry them abroad.

The Transparency International Index shows that the most corrupt countries are also the poorest. Con­trolling corruption is the first con­dition for economic prosperity. For corruption breeds underground and parallel economies. The fate of our development projects, industries, and government-owned enterprises is a good indicator of this.

Nepal suffers from both big and petty corruptions. Big-scale corrup­tion is institutional, and associated with big infrastructure projects, aircraft purchase, project licensing, equipment purchase, leasing out government land, among others. To avoid investigation, these decisions are made by council of ministers. Petty-scale corruption is seen in police and administrative officials, as bribes are sought from service seekers at labor, land revenue, immigration, and transport offices.

This is not something we want. There will be good governance in the country only when it is corrup­tion-free. And only then will Nepal prosper O

The author is the Editor-in-Chief of Annapurna Post and frequently writes on corruption

There is a flawed understanding that fis­cal federalism is applicable only in a federal set up. It can be practiced even in a unitary system. In our context, we had exercised a good deal of fiscal federalism in the past. There are mainly four pillars of fiscal federalism.

The first is function analysis or expenditure assignment. This means allocation of specific responsibilities to federal, provincial and local level governments. Even in the past, we had decentralized some rights and duties through legal arrangements. Our constitution has provided 35 exclusive rights to federal govern­ment, 21 to provincial governments, and 22 to local governments.

There are concerns about different areas related to expenditure assignment. The pro­vision of fiscal transfers and grants is clearly mentioned in the new constitution, paving the way for its immediate implementation. The government has done a praiseworthy job on the management and transfers of civil servant.

The second pillar is revenue assignment. Even in the erstwhile unitary state, munici­palities and rural municipalities were granted some revenue-related rights. The new consti­tution has not provided much revenue-related rights to provinces.

The third pillar is related to grants, which falls under inter-governmental fiscal transfer. In terms of federalism, we are highly decen­tralized. But that applies only to works and duties. Most of the rights are given to pro­vincial and local governments. For instance, local governments have the right to decide on educational matters from primary to the higher secondary levels.

Similarly, provinces have the right to decide on tertiary institutions of education, or univer­sities. Moreover, all functions related to drink­ing water, agriculture and livestock, and 80 percent of the functions related to rural roads are with local governments. But institutions are the same. Expenditure assignment is con­stitutionally highly devolved but the revenue system is highly centralized. Only the roles and responsibilities are given to local levels, but no rights related to revenues.

There could be certain reasons behind centralizing the revenue system. More than 80 percent of the rights related to revenue is retained by the central government, whereas 60 percent work is devolved to the local governments. In principle, there should be a balance between allocation of responsibilities and revenues. Here, it is relevant to discuss the third pillar: inter-governmental transfer of funds.

Though we have centralized the revenue sys­tem, we have decentralized the distributions of revenue through laws. Revenue collection is decentralized as around 96 percent of it is collected from 15 districts. But we have 77 dis­tricts, and the government has a responsibility of looking after all districts and provinces. Again, 50 percent revenue is collected from customs points, which is the major source. Revenue control is centralized, and funds are transferred to the local levels as grants. This forms the third pillar.

Now, provinces and local governments get four types of grants—fiscal equalization, con­ditional, complementary, and special grants. Around 30 percent of the total budget is trans­ferred to local government units. In terms of revenue, we transfer 48 percent revenue to provincial and local governments.

Canada transfers highest amount of fiscal money to its local levels (49 percent), while the US transfers about 35 percent. Compared to those countries that embraced federalism two to three centuries ago, the condition of our fiscal transfer is better.

In our country, 15 districts collect 96 per­cent revenue. The Karnali and Sudur Paschim provinces collect less than one percent. Over 60 percent revenue is collected from Bagmati Province, most of which is sent to provinces as grant. We have a constitutional body called the National Resources and Fiscal Commission which recommends the distribution of reve­nues to all three tiers of government. There is also a constitutional provision that provinces have to transfer fiscal resources to local units.

The fourth pillar of fiscal federalism is the right to take loans. Local and provin­cial governments can take loans from the federal government based on the recom­mendation of the National Resources and Fiscal Commission.

Confusions related to expenditure assign­ment need to be cleared, and calls for our immediate attention. There is an overlap in the functions of the three tiers of government. For instance, all three tiers are involved in road construction. There should be clarity about who does what. The federal govern­ment should remain within constitutional boundaries, which is the biggest challenge of federalism. Local governments say they face obstacles from the provincial and federal gov­ernments. The provincial governments blame the federal government of interfering in its jurisdiction.

Another issue that needs our attention is that institutions have not gone to local levels with due responsibilities and rights. Although the constitution has given them rights related to education and agriculture, local govern­ments complain the federal government is building parallel institutions to interfere with these rights. This is like a parallel government, which should not be there. In terms of reve­nue, provincial and local governments have similar rights, creating confusion over distri­bution of resources.

We could have done much better. The fiscal commission has not been effective. Institutions related to federalism should work smarter. But despite everything, we have made good prog­ress on fiscal management. The bureaucracy has done well even in the absence of political leadership. We have allocated common and separate rights to the three tiers of govern­ment, but it has been the bureaucracy that has carried out most of the work.

Over 60 percent expenditure of sub-national organizations is managed through grants. But the transfer system is opaque. There have been complaints that more budget is allocated to electoral constituencies of political leaders. We also need to look after Karnali and Sudur Paschim provinces. For that purpose, we have to develop a scientific framework and ensure equal distribution of funds 

The author is a fiscal federalism expert

(Based on a discussion with Kamal Dev Bhattarai)