Do not back track from liberal economic regime

Moving back to controlled economic regime will be ironic and self-destructive for Nepal: US envoy


The political leadership has been suggested not to back track from the liberal economic regime as only free market economy can generate economic growth.
"Moving back to controlled economic regime will be ironic and self-destructive for Nepal," said US ambassador to Nepal Scott H DeLisi in a talk on 'Building a New Nepal: Focus on the Economy’ organised by Public Affairs section of US Embassy in association with Society of Economic Journalists-Nepal here today.
He urged that Nepal need to take advantage of being located in between India and China, two of the fastest growing economies in the world. "Just the spillover effects from these two economies should create thousands of jobs and expand trade," he said.
"Nepali tourism sector can gain massively even if just a tiny fraction of the tourists from neighboring China and India started coming to Nepal," the Us envoy said, adding that its effect on the economy would be massive.
"The leaders seem to be less focused on issues about nation’s development strategy, strengthening of the economy, and creation of jobs than they are on their political agenda," he opined. "Even business houses are seeking to avoid paying taxes and maneuver to sneak their money out of the country, bureaucratic red tapes discourage young entrepreneurs, state owned enterprises are draining resources."
Nepali economy has been struggling at anemic growth rate of 3.5 per cent as investors are scared off by the political instability, labour problems, and power shortages, DeLisi said, pointing out the instances like closure of Surya Nepal garment unit that has diminished efforts to convince foreign investors that Nepal is open for business.
The US ambassador also assured that US will keep investing in Nepal and remain focused on economic issues because no matter where the political winds blow, growing economy and creating jobs will remain critical to Nepal’s future.
He also disproved of dependency on remittances comparing it with addictive drug that feels good at present but causes devastation in the long run. "Remittance flows are fuelling increased consumption but are not being channelled into productive investment while Nepal’s competitiveness and productivity continue to decline," he said, adding that policy reforms are required and hard decisions has to be taken about cracking down on corruption and nepotism and raising prices on fuel to attain the desired and sustainable growth.
The ambassador during his talk also highlighted Nepal's huge potential for achieving economic development in the sectors like IT outsourcing, tourism, hydropower and agriculture despite problems.
"Nepal’s unique climate and geography create a comparative advantage in horticulture and high-value agricultural products like coffee, tea, and medicinal herbs, despite the failed potential of hydropower there is still so much more to achieve in the sector," DeLisi added.

Is cooperatives third pillar of economy?
KATHMANDU: US Ambassador to Nepal Scott H DeLisi pointed out policies that would seek to limit the role of private sector are fundamentally misguided referring to Nepali government's characterisation of 'cooperatives' as the third pillar of economy. Though he confessed to be strong proponents of cooperatives, Nepal's recognition of cooperatives as one of the guiding principles has worried him as it could be a code language for expanded government control of the economy. "Cooperatives played a key role in the US rural economy and there are some wonderfully successful cooperatives making a difference here in Nepal too, he added.