From one to one too many

For anyone taking a round of Kathmandu Valley these days it would be hard to believe that the first automobile entered Nepal only at the start of this century. The first Hudson motor car — brought from Australia to Bangladesh and from there to Nepal via Delhi — was carried to Kathmandu by labourers on their backs in 1934.
Since then, the growth in number of vehicles has been indicative of increased purchasing capacity of people and their fast changing lifestyle despite a poor road network. Interestingly, of the total vehicles registered throughout the country more than 60 per cent are plying in the Valley alone.
Today, the total number of vehicles plying is around six lakhs, according to the Department of Road and Transportation (DoTM). The geometrical growth of vehicle is attributed to various reasons, like easy availability of finance schemes at competitive rates and increasing consumerism due to rising living standards of Nepalis.
The rapidly changing lifestyle and class-consciousness of people have added a special impetus to this growth pattern. The pace of growth has doubled over the last eight years. From a total of 3,54,955 vehicles registered in 2001-02, the figure has jumped to 6,40,671 till the eighth month of 2007-08. The growth in these eight months of the fiscal year 2007-08 was 9.1 per cent, according to the DoTM.
DoTM figures show there is an impressive increase in the number of new vehicles during the last five years. It clearly shows that the sector is growing exponentially despite poor road infrastructure. Progress in road network expansion and upgradation of existing ones has been however pathetic.
"If the government charges less duty, it can collect more revenue," said Akash Golchha, executive director, Golchha Organisation — the authorised dealer of Daihatsu, Proton and Ssang Yong motors for Nepal. "The revenue should be invested on road infrastructure," he suggested.
Though vehicle tax contributes 1.4 per cent to the total revenue collection, the revenue could not be mobilised it to upgrade or develop the road networks.
Today, you name it and they are all here — Toyota, BMW, Skoda, Geely, and not to forget the myriad Malaysian and Indian brands. "The Nepali market was underestimated in the past," said Prabal Saakha, managing director of Saakha and Universal Automobile Pvt Ltd that sells the Geely brand of Chinese cars.
"People are not only price conscious but they look for diversified brands," he said adding that the people who have money want the best of vehicles. "Global brands and their numerous attractive models have laddered up the sales of vehicles," Saakha added.
"Unlike in the past, the vehicle is not only a means of transportation but also a status symbol," he said.One company may not provide in one vehicle everything that a customer needs. Thus the market is diversified. According to Saakha, the market has been reacting faster as one brand cannot hold sway for long.
On one hand the encouraging trend is that top foreign brands are winning the hearts of Nepali auto-buffs but on the other the new government is rumoured to increase tax on vehicles. If the grapevine is to be believed, customs tax could go up by 25 per cent while excise could be hiked to 40 per cent from the current 35 per cent. Whatever the changes, the end users will suffer if the government increases taxes. "The government should instead encourage and motivate people to pay taxes — by revising the current structure — otherwise, why should people pay tax," an industry insider said.
There is a total of 180 per cent customs tax and a 20 per cent tax on value addition, raising it to roughly 200 per cent the cost of a vehicle. The government should not be conservative in revenue matters. Most policies are idealistic and guided by old principles of raising more money through higher rates of taxes. But the money raised through vehicle tax has to be utilised for the upgradation, upkeep and expansion of road networks.
The country's total road length was 17,982-km till the eleventh month of 2007-08 and the total number of registered vehicles was 6,40,671 till the eighth month of 2007-08. According to the DoTM, by the end of 2006-07 the ratio per kilometre vehicle was 35.
Improvement of road conditions, extensions, development of the Bagmati/Bishnumati corridor, additional flyovers, fuel and air quality policies have to be strictly maintained for the growth of the sector.
Driving regulations and traffic sense also have to be refreshed for commercial vehicle drivers. "Civic sense and stringent traffic rules are vital," Golchha added.
The government's indifference to road network development and upgradation is hindering the growth of the automobile industry that is the bread and butter of over 3,50,000 Nepalis.According to Nepal Automobile Dealers Association (NADA), the number of people indirectly employed could be well up to a million. Today, the sector is one of the largest employment generators as well as revenue provider to the government.
That apart, it is high time that the government brought a time-bound action plan to encourage clean technology and electrical vehicles that will not only help maintain the quality of the environment but also save the country from being a hostage to rising petroleum prices.

Number of vehicles registered at DoTM
2001-02 - 3,05,395
2002-03 - 3,54,955
2003-04 - 3,92,565
2004-05 - 4,32,264
2005-06 - 4,72,795
2006-07 - 5,87,056
2007-08 - 6,40,671 (53,615 added till eight months only)
Source: Department of Transport Management