Biratnagar Jute Mill resumes operation

The oldest mill of the country – Biratnagar Jute Mill – has resumed its operation from today after remaining closed for the last four years.

The government has leased out the factory to Winsome International from India for the next 25 years on Rs 13.5 million annual charges.

Winsome International invested Rs 100 million to resume its operation. In the preliminary phase, the factory will produce around 14 tonnes of jute products every day.

Biratnagar Jute Mill’s manage Shyam Poudel said, adding that the mill has a capacity to produce 30 tonnes of jute per day. “The mill is operating the machines only for two shifts a day currently as they are under maintenance.”
The factory currently employs 500 but more manpower will be hired to operate the mill at its full capacity.

Established in 1937 Biratnagar Jute Mill was earlier handed over to Arihant Multi-Fibre of Golchha Organisation in 2002 by the government. But Arihant Multi-Fibre failed to run the factory due to political bickering and labour troubles.

The government had shut down the mill and paid off Rs 550 million to its 2,000 employees.

There is a huge potential for jute products exports to India. According to the central bank’s data, the country has exported Rs 4.10 billion worth jute goods, including Rs 3.67 billion jute sackings, in the last fiscal year 2012-13, Rs 0.04 billion more than a fiscal year ago’s Rs 4.06 billion worth jute goods to India. Along with Biratnagar Jute Mill, there are nine other jute mills in Eastern Nepal.

Winsome International to manage Biratnagar Jute Mills

India’s Kolkata-based Winsome International — a manufacturer of Jute goods and switching systems like Gunny Bags, Hessian Cloth and Twine — has bagged the contract of managing Biratnagar Jute Mills for five years in the free competition.
“The company has bid the highest at Rs 13.5 million among the bidders,” according to the chairman of Biratnagar Jute Mills Ashoke Pokharel. “Some three domestic and Indian companies bid for the management of the oldest jute mill of the country,” he said, adding that the highest bidder Winsome International bagged the contract to manage the mills that was closed for last four years.
There is a huge demand of the jute products in the domestic as well as neighbouring Indian market but the government has repeatedly failed to operate the mills.
The caretaker prime minister Dr Baburam Bhattarai had last week promised to start operations of the closed government entities that have been bearing losses since long. Letting the private sector manage the productive public enterprises is the best option for the government as it will generate employment and revenue both without government’s added liability.

Nepal's tryst with FDI

(This book has become the first Nepali book to be nominated for an International award. It was nominated in ‘Colleagues Choice Award 2007’ of International Convention of Asia Scholars (ICAS). It was the only Nepali Book out of more than 25 book nominees.)
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Nepal formally welcomed Foreign Direct Investment (FDI) in the later half of '80s. However, history has it that the first foreign investment began with the establishment of Biratnagar Jute Mill in 1936.
Post-1990, market liberalisation has played a vital role in attracting foreign investment. But the trend, unfortunately could not continue, as the post-1990 governments did not realise that the free market economy could not survive only on political foundation. Without social foundation, it became meaningless.
'Foreign Direct Investment in Nepal' is a book by Raghu Bir Bista, who has been researching on foreign direct investment, globalisation, and poverty in Nepal for a long time now.
The book is an outcome of several years research work on FDI, according to the author. And the book is related to socio-economic impacts of FDI in macro-and micro-level. It also analyses trends, size, growth and structure of FDI and investment climate in Nepal.
Foreign Direct Investment refers to a cross-country investment as a component of globalisation and a supplementary potential alternative resource substituting foreign debt. It helps in transferring capital, management and new technologies form a developed country to a lesser developed one.
This book deals with the impacts of FDI at macro and micro levels with analysis of its trend, structure and policy environment. This book is comprised of three parts such as preliminary, main body and annexes.
The book begins with an introduction on FDI, the concept of FDI with its historical background, rationale, features, form and reality. It also tries to give an overview on the progress and scope of foreign direct investment in Nepal so far, investment climate, priority, opportunity and condition, and the policy environment.
According to a survey by the global consulting firm AT Kearney, India has emerged as the second best destination for foreign direct investment (FDI) after China. FDI contributes a lot to the economic and overall development of these countries.
Nepal could take lessons from its neighbours and try to attract more FDI. But to lure more FDI, Nepal must address issues related to its infrastructure, logistics and regulatory barriers.
The author needs more research on international and South Asian trends of FDI and its structure. He has not mentioned how FDI in small and land-locked economies like ours have fared so far and how it opens possibilities of hurting local business severely.

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BOOK REVIEW
Book: Foreign Direct Investment in Nepal
Author: Raghu Bir Bista
Published by: Center for Integrated Development Studies Nepal (CIDS)
Price: Rs 350

Industrialisation fails to take-off in Nepal

Even after seven decades since Biratnagar Jute Mills, the first industry to be established in Nepal in 1993 BS, industrialisation has gone nowhere in Nepal. This is the primary posit in Nepalma Audyogikaranka Samasya (Challenges of industrialisation in Nepal) written by Bharat Mohan Adhikari, former finance minister and central committee member of the Nepal Communist party, United Marxist-Leninist (CPN-UML).
One of the main causes behind the lack of industrialisation in Nepal is the private sector’s indifference towards industrialisation. Private sector’s involvement in manufacturing has been negligible, he writes. “Those, who were interested in industry, could also not sustain in the long run. They were infected by the ‘Open by day and fly by night’ syndrome,” claims Adhikari. He, however, fails to give adequate reasons behind this accusation.
The book begins with a run on of the Five-year Plans, from the first Five-year Plan (2013-2018 BS) to the current tenth Five-year Plan and their focus on industrialisation.
He writes, “In the fifth Five-year Plan (2032- 2037 BS), industrial production has recorded an increment by 6.5 per cent and in the sixth Five-year Plan (2037- 2042 BS) it recorded a 10 to 30 per cent increment.” However, the growth trend did not continue.
The reason behind the growth in industrial production during those years might have been state protectionism. “From the second to seventh Five-year Plan, the industrial policy was more protectionist. After the movement in 2046 BS, Nepal embraced the open market economic policy,” Adhikari writes.
“However, the open market policy could not drive the growth of manufacturing industries upwards,” Adhikari adds, “Though it helped industries like education and health, and the financial sector including banking, financial institutes and transport to grow.”
In the ninth Five-year Plan (2054-2059 BS), the production of export-oriented industries declined. “From the industrialisation point of view, the ninth five-year plan was a complete failure,” writes the author.
The book describes how once Nepal was almost self-sufficient in sugar. But now, 30 per cent of the total sugar demand is being met by imports. The author tries to explore the reasons behind the many failures of the privatisation process in Nepal.
Almost all privatised companies are either on the verge of collapse or have already collapsed, further fuelling unemployment. "There is an urgent need for individual case-studies of privatised companies, if privatisation has to be continued successfully."
He emphasises on small-scale industries instead of big industries. "The best thing Nepal can do and should do is commercialisation of agriculture and promotion of industries like tea, coffee, jute, sugar, cigarette, dairy, leather-based, herbs. Building competitiveness in these sectors can increase export and displace import, the author suggests.
Adhikari has given due space to industrialists’ complaints also in the book. In some places he sounds more like an industrialist than an economist.
Lack of basic infrastructures like road network and communication has impeded growth. High cost of electricity, red-tape, government policies, lack of market diversification and bandhs are some of the hurdles that have hit industrialisation in Nepal, he claims.
There is no doubt that the book could be a good source material for scholars. "If it could encourage students, I will be more than happy," the author himself claims.
The book further delves into the emerging relations between industrialisation in Nepal and global trade and regional organisations like WTO, SAFTA, BIMSTEC.
Nepal has to follow the current global trend of industrialisation, but not blindly, Adhikari suggest. Economic diplomacy is as important tool in today’s open, global market. Unless a country is economically independent, it cannot survive as a sovereign country. “Sooner or later we have to come to a national consensus on industrialisation and the economic agenda. And there is no better time than today," he says.

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BOOK REVIEW
Book: Nepalma Audyogikaranka Samasya (Challenges of industrialisation in Nepal)
Author: Bharat Mohan Adhikari
Publisher: Ratna Pustak Bhandar
Price: Rs 295
Pages: 269