Boosting growth

With the formation of this government, we have embarked on a journey of political stability and economic prosperity. I do not want to com­ment on the performance of the government here. Rather, I want to highlight some issues that are essential to spur economic growth and development. First and foremost, we must cre­ate a robust legal framework in order to attract domestic and for­eign investment. Currently, we lack necessary laws to draw investment. Second, we must redress the poor implementation of law. We do have some good laws on paper, but they are not effectively implemented to create a conducive environment for business and industries.

Third, we need to efficiently resolve the myriad practical prob­lems investors face. If there are dis­turbances in development projects at the local level, our police adminis­tration and other government agen­cies should be able to tackle them smartly and promptly.

In this context, I would like to cite an example from the US. A house-owner signed a contract with a person to paint his home. The contract specified the payment date. But when the painter completed the task and approached the owner on that date, he couldn’t find him. He sued the owner for breach of contract and won the case. We need to have such a robust legal contractual system in Nepal if we want to attract more Foreign Direct Investment (FDI).

This government, with a two-thirds majority in the parliament, is trying to attract more FDI, but there has not been a substantial increase in FDI from previous years. For sig­nificant economic growth, we have to attract both domestic and foreign investment and focus on creating lots of jobs. We can ill afford to focus only on spending the annual budget.

We must create a robust legal framework in order to attract domestic and foreign investment

We are talking about attracting investment in the hydropower sec­tor, which is a good idea. But at the same time, we need to have big projects in place so as to make use of the electricity. In the absence of such projects, we cannot utilize the power generated.

Agriculture has always been regarded as a key engine for eco­nomic development. We have to formulate a clear policy on mod­ernizing agriculture. An enhanced agriculture sector would contribute tremendously to our prosperity. Similarly, the government should promote entrepreneurship. It should encourage investors who can create jobs. The media have a vital role to play here. They often bring big investors into the lime­light, without due consideration of how they got rich. As a result, even those who earn money by hook or by crook gain attention, while gen­uine investors go unnoticed. The media should highlight the work of bona fide investors, even if they may not have made it big yet.

Let’s talk about infrastruc­ture development. We obviously need roads and other physical infrastructures, but they should con­tribute to the country’s economic growth. Before we construct roads, we should consider whether and how farmers can use them to sell their products.

Nowadays there is plenty of investment in non-productive sec­tors like the share market and real estate. Neither can create jobs, nor contribute much to the country’s economic development. Increasing the nation’s capital base should be our top priority. The rule of eco­nomics is production and distribu­tion. But we lack clarity on our pro­duction sector. What is our priority? Agriculture? Energy? Or is it some other goods?

Official data show our trade deficit is going up, which does not bode well for the country’s eco­nomic development. To address the problem of our trade deficit, we need to focus on the production of goods. Without an increase in production, we cannot maintain a stable balance of trade.

Surendra Pandey is a federal lawmaker from the ruling NCP and former finance minister