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Chandra Dhakal: The cost of doing business has gone up significantly

Chandra Dhakal: The cost of doing business has gone up significantly
Chandra Prasad Dhakal is the senior vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Dhakal, who will be elevated to the President of the FNCCI in April 2023, is also the Chairman of IME Group which has interests in banking, remittance, IT, tourism, automobile, energy, insurance, infotainment, and communications sectors. The Annapurna Express caught up with Dhakal to talk about the current business environment, issues being faced by the private sector, and IME Group's investment plans. Excerpts: Nepal’s economy is currently going through a deep slowdown. How is the business of IME Group at present? Nepal's economy began to face external sector pressure and liquidity problems in the aftermath of the Covid-19 pandemic. This pushed both the government and private sector into a big crisis. The current situation is worse than what was experienced during the 2015 earthquake and Covid-19 pandemic. Businesses are not getting enough funds to finance their investments and expand their business, which has directly affected their confidence which is detrimental to the economic growth of the country. In such a situation, the IME Group is performing fairly. Since our investments and businesses are expanded over different sectors, a shock could be cushioned by other businesses. However, this time every sector of business is affected. Yet, our drive to expand the investments and contribute to the local and national economy has continued even during the hard times. Currently, we are expanding our investments to tourism infrastructure projects such as cable cars, resorts, and the manufacturing sector.

How is the Nepali business community facing current macroeconomic challenges? What are the major challenges at present?

The first impact of the current economic challenges is the shortage of funds on the domestic front and various restrictions on imports on the external front. Although macroeconomic indicators like the foreign exchange reserves, the balance of payment, and bank rates are being corrected gradually, challenges like poor government expenditure, higher inflation, external sector pressure, high-interest rates, and financial sector vulnerability persist which are affecting the private sector. Likewise, the guidelines on working capital loans have also created new problems for the private sector. Although some of our demands regarding the guidelines have been addressed, many are yet to be incorporated in the amendment. The cost of doing business has gone up significantly and most industries have stalled their new investment plans while many industries are running at a very limited capacity which also has repercussions on revenue and employment. This situation demands collaborative efforts from the public and private stakeholders whereas the government and regulatory bodies like Nepal Rastra Bank should exhibit flexibility to provide relief to the private sector. What should be the priority of the new government to bring the economy back on track? What are your expectations from the new government? The government should facilitate the private sector by creating a business-friendly environment. It should help promote domestic businesses and facilitate to bring foreign direct investment. One of the biggest maladies of our economic progress is low capital expenditure which has affected the manufacturers of construction materials, contractors, and employees in the sector at the same time. The new government should work to clear all legal and policy-related barriers and bottlenecks to create a business-friendly environment in the country. The country cannot be developed without proper mobilization and development of the private sector, which has more than 75 percent contribution in employment generation and revenue collection. The private sector is the creator and adopter of new technologies, and it is the only one that can supply services at a price that is both reasonable and competitive. Therefore, the government should ensure the active participation of the private sector in all policy-level works and move ahead taking the private sector into confidence. The FNCCI leadership met with the Prime Minister and Finance Minister. How serious are they to resolve the issues being faced by the private sector? I found Prime Minister Pushpa Kamal Dahal and Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel very serious and concerned in terms of addressing the present economic challenges. They are open to listen to the problems that we are facing and discuss possible solutions. As the business community looks up to the government for relief and facilitation during the crisis time, they have duly assured us to bring things back to normal. Meanwhile, there is a need to provide support to the private sector businesses affected by the economic slowdown and increasing interest rates. What long-term policy measures the private sector wants from the new government to make doing business in Nepal easier? There are several issues that the government needs to improve to create an investment-friendly environment in the country. The most pertinent issues are land, labor, infrastructure, resource, tax, and local issues. There are many issues related to these topics. The government should work hand in hand with the private sector to resolve all the issues and create a business environment in the country. The merger of Global IME Bank and Bank of Kathmandu has been completed. Now, how do you see Global IME Bank in the future? The Global IME Bank has become the largest bank in the country. We want to create a strong and resilient financial institution in the country that could not only run everyday banking facilities but also support investors and business persons to finance their business ventures. We recently merged the Bank of Kathmandu with the GIBL which has made the institution stronger. However, it is just a part of our journey. In the future, the bank aims to expand its banking and other services to other countries. We currently have representative offices in Australia, the United Kingdom, and India. We have reached almost the final stage in opening our branch in South Korea. We have given great importance to the digital financial system as promoted by the Nepal Rastra Bank and currently working on infrastructure development for digital security. With the acquisition of two hotels in Kathmandu and Pokhara as well as taking forward two new cable car projects, your group seems to be investing in a big way in the tourism sector. What are the new plans of IME Group in the tourism sector? Yes, you are right. The IME Group wants to test its mettle in the tourism business as well since it is the sector that will boom once the current economic hurdles are resolved. Nepal has a high potential of attracting 2.5 million tourists in the next 3-5 years while the middle and upper middle class in the country has developed a culture of visiting new places in and out of the country. In such a situation, we need to create better and more reliable tourism infrastructure in the current as well as potential destinations. The Chandragiri Hills project has transformed the entire Chandragiri area and is attracting hundreds of thousands of tourists every year. Likewise, another cable car project in Rupandehi connecting a hill station in Palpa, and another in Gaindakot of Nawalparasi East are near completion and will come into operation shortly. Similarly, we have plans to construct cable car projects in all seven provinces of the country. In the next few months, you will be the president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). What plans have you envisioned as the new president of the country's apex business body? I was elected as the senior vice-president in the election of the FNCCI as per the statute of the organization, so I will be elevated to leadership for the next three years after the annual general meeting in April this year. My general priorities would be the promotion of the interest of all members of the FNCCI, the promotion of the private sector and policy lobbying, and maintaining the trust of the government at various levels, political parties, and other stakeholders. Meanwhile, I will try to change the perception towards the private sector since there is still a feeling that the private sector only earns profits and shy away from fulfilling its responsibilities to society. We have long failed to tell people and society about the importance of the private sector as the engine of economic growth and employment. As the president of the FNCCI, I will also coordinate with public and private organizations to boost the economy, create jobs, and increase domestic production. The capacity of the district and municipal chambers will also be enhanced according to their potential and opportunities in the local economy.