Enabling environment key to development

An enabling business environment is key to a country's development, according to a Japanese economist.

"An enabling business environment — that includes political stability, policy stability, domestic savings channelled to investment besides grants and foreign investment, investment in human capital, and collaboration among stakeholders — could help a country move ahead in the development path," said Prof Ryokichi Hirono of the Seiki University.

"Political and policy stability are key for investors, whereas the savings of the people is a must as only foreign aid will not be enough to help any country develop," he said, adding that investment in human capital will help create a human resource pool to support economic development.

But collaboration among the five stakeholders — government, business people, labour, consumer society, and academia — is also key in monitoring policy implementation, said the professor. "The private sector could play a good role by insisting on policy stability to create an investment friendly environment."

The domestic private sector had tried to boost the morale of the business community by proposing the Investment Year, said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya.

"The campaign will not only help boost the morale of domestic investors, but also foreign investors," he said, adding that the private sector is planning a slew of visits to attract investments from various countries once the Investment Board comes up with concrete projects in a couple of months. "Investments will help generate employment in the country," added Vaidya.

As more Nepalis are going abroad for employment, the country needs to create more employment back home, said Prof Hirono, adding that the remittance from migrant workers should also be utilised in production.

He also urged for the creation of an investment fund from the remittance received. "The major chunk of remittance has been used for consumption that has increased imports," said Hirono, who is leading the Japanese Overseas Development Assistance (ODA) evaluation team to Kathmandu currently.

Japan was the second largest bilateral donor after the United Kingdom in Nepal in fiscal year 2010-11, according to the Finance Ministry.

United Kingdom ($92.1 million) was followed by Japan ($58.7 million), India ($50.7 million), the US ($48.5 million) and Norway ($32.8 million) in fiscal year 2010-11, the Donor Cooperation Report of the ministry revealed.

Japan with 5.4 per cent stood fifth — after the World Bank, Asian Development Bank (ADB), United Nations (UN), and United Kingdom (UK) — among the sources of aid disbursement in Nepal in fiscal year 2010-11, when the country received a total of $1.08 billion aid disbursement from donors.

However, Hirono suggested that the effective utilisation of aid by the government, private sector, and non-governmental organisations, might increase ODA from Japan. "Accountability and transparency will help increase ODA," he added.

Japanese ambassador to Nepal Kunio Takahashi, on the occasion, said that there has not yet been any official decision on the increment of ODA, but both sides should simultaneously increase cooperation with each other.

 

Nepal-Japan bilateral trade

Fiscal Year — Export — Import

2006-07 — Rs 559.45 million— Rs 3,228.97 million

2007-08 — Rs 488.05 million — Rs 6,148.08 million

2008-09 — Rs 572.65 million — Rs 6,111.18 million

2009-10 — Rs 554.15 million — Rs 6,267.57 million

2010-11 — Rs 652.35 million — Rs 3,957.91 million

(Source: Trade and Export Promotion Centre)