Nirnaya Bhatta

Synopsis

With the South Asian Association for Regional Cooperation (SAARC) effectively sidelined politically, a number of mechanisms under its purview that were mandated to address cross-border disasters have also taken a hit. Against such a backdrop, this Research Commentary (RC) brings in focus the recurring flooding that seriously disrupt livelihood in South Asia and has claimed the lives of 2000 people on an average in the past 2 decades every year. This RC underlines that there is no way around cross-border infrastructure, or at least a transnational system of regulations on the rivers, with an emphasis on digital infrastructure that allows for information sharing between concerned government. It provides suggestions on what could be done at both the regional and national level and concludes that meaningful action can be made through cross-border digital infrastructure that keeps at the centre a three-layered mapping-approach (described in detail below). 

Introduction

Rivers have nurtured all major civilizations, but they have also brought immense misery to dwellers living along them during floods. Today, millions of farmers along the Ganges basin keenly welcome the monsoons for irrigation every year. But recurring flooding is an inherent feature of this part of the South Asian landscape, which has claimed 2000 people on an average in the past 2 decades every year.

The magnitude of this recurring disaster is informed by both the number of people it affects and the intensity of the damage it brings (paralyzing an entire region). Even though it is anticipated almost every monsoon, governments have failed to address it in any meaningful manner, giving this crisis the distinction of a typical wicked problem.

The Policy Problem- A recurring flood and lack of cross-border mechanism

In August 2017, South Asia witnessed the worst floods in decades, affecting nearly 45 million people. A reported 16 million in urgent need of basic life support were children. This RC documents a cross-border natural disaster that escalated into a humanitarian crisis largely due to the failure of the respective governments to collaborate and respond effectively. Although, it should be acknowledged that, while the floods are usually anticipated, its magnitude is usually unknown.

Source: Office for the Coordination of Humanitarian Affairs (OCHA). As of September 01, 2017 (People affected- in millions)

On September 2, Red Cross announced it was the worst flood facing South Asia in 4 decades, with 1/3rd of Bangladesh submerged. The river and its numerous tributaries that flows from the Himalayas downstream into India and Bangladesh (that has an average elevation of 85 meters above sea level) are forces to reckon with. Further, with destruction of millions of hectares of agricultural lands, while it severely affected food security locally, it also had the potential to disrupt global rice supply chain

The costs on society

In southern Nepal, northern India, and Bangladesh, the floods inundated thousands of villages, natural habitats, hospitals, and schools. As one of the densest and impoverished regions in the world, people were rendered acutely vulnerable immediately. Evidence suggests that recurring natural disasters perpetuate chronic poverty . Take for instance, the head-count ratio of poverty are consistently found to be higher in flood-prone areas in Bangladesh. The floods pose a serious challenge to development efforts, as they have to operate at the face of immense uncertainty. Sure, the world is increasingly uncertain to natural disasters, but the worst crises such as these occur when governments are inefficient to respond, largely due to absence of necessary infrastructure in place. 

Addressing the Crisis

While there is little scope to preventing the floods itself from occurring, the focus of policy can certainly aim to decrease vulnerability of affected population. To be fair, trans-boundary issues are inherently complex, especially when the policy agenda pertains to bringing together massive infrastructural undertaking. With multiple bureaucracies, interest groups, ambiguities in national responsibilities, contradiction between multiple national and international legal frameworks etc. coherent response to trans-national disasters are challenging. The political-economy of water issues is all the more sensitive because rivers not only accrue multitudes of benefits to nations but are also subjected to concerns of national security- associated with food and state stability itself

  1. Regional Level:
a. To have policies that have a cross-border infrastructure component to them:

Traditionally, disaster management has been under the purview of national governments (Water, Ecosystems and Energy in South Asia Making Cross-Border Collaboration Work- ICIMOD). Against a backdrop of political distrust in the South Asian neighborhood between countries, governments find it difficult to collaborate on any issue.

To break this practice of governments working in solos, there needs to be a shift in how each government perceives the shared-ecosystem and disasters emerging from them. For instance, when the scope of one country’s policy with regard to managing rivers is sharply limited right where its own national territory ends, the shift is approaching these issues for policies could change.

Along these lines, the idea of desecuritization of the South Asian rivers looks promising. Researchers are oftentimes denied data in the name of national security. For example, in India, data on Indus, Ganges, and Brahmaputra rivers is considered classified information. Working in silos to manage rivers purely along national-territorial lines will only expose one’s own citizens to disasters.

b. Functional apolitical institution for disaster management

The grounds for effective cross-border responses starts well-before the floods occur. Since the South Asian Association for Regional Cooperation (SAARC) is highly dysfunctional, an apolitical institution exclusively dealing with disaster management could be established. This will open up possibilities for seamless cross-border data and risk sharing mechanisms, early warning systems, and harmonized national and regional planning etc. Clarity of responsibilities pertaining to the management of shared eco-systems will only be achieved through such an institution, which can clearly designate governments their share of duties. 

  1. National Level

Polices based on localized socio-economic and demographic data

It is often argued that crisis after natural disasters is engendered by poor housing planning and land use codes, and inefficient early-warning systems. To accurately target the affected population, inputs for national policies must be based on localized socio-economic and demographic data. The WB suggests a three-layered mapping-approach that can precisely inform policy so it is capable of mitigate vulnerabilities of the affected effectively. Hazard, exposure, and vulnerability mapping are useful information for policy makers and individuals affected. This underscores the need for an integrated a robust digital infrastructure where information between governments are shared transparently.

Inspired from World Bank’s risk identification framework (World Bank 2012)

Policy implications

Due to the inherent landscape of the South Asian region, floods have a deterministic element to them. The magnitude of effect of climate change on recent torrential monsoon is debatable, but rapid retreat of the Himalayan glaciers (referred to as the ‘water tower of Asia’ that feeds 1.3 billion people) can be attributed to rising global temperatures, which will bring more floods in the Ganges basin. If policy is primarily geared towards finding ingenious ways to mitigate vulnerabilities of the distressed during disasters, populations are known to be resilient in the long run to improve their own life outcomes. There may not be a better way to mitigate vulnerabilities than cross-border collaboration with digital infrastructure at the heart to promote better data and risk sharing mechanisms, early warning systems, and harmonized national and regional planning. When the problem at hand is cross-border in nature, it is only logical that South Asian governments avoid working in silos.

References

  1. Acemoglu, Daron, and James A Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity and Poverty. 1st ed. New York: Crown.
  2. Amhed, Farid. 2017. South Asia Faces Fury of Floods. IPS. Retrieved from http://www.ipsnews.net/2017/08/south-asia-faces-fury-floods/
  3. Anwar. 2009. “Impact of Recurring Natural Disasters on Chronic Poverty.” Societies Without Borders, 285-301. Retrieved from https://scholarlycommons.law.case.edu/swb/vol3/iss2/5/
  4. Dasgupta, Amrita. 2007. “Floods and Poverty Traps: Evidence from Bangladesh.” Economic and Political Weekly 42 (No. 30): 3166- 3171.
  5. Gelb, Alan, and Julia Clark. n.d. “Identi cation for Development: The Biometrics Revolution.”
  6. George, Steve. 2017. A third of Bangladesh under water as flood devastation widens. Retrieved from https://edition.cnn.com/2017/09/01/asia/bangladesh-south-asia-floods/index.html
  7. Gettlemanaug, Jeffrey. 2017. More Than 1,000 Died in South Asia Floods This Summer.Retrieved from https://www.nytimes.com/2017/08/29/world/asia/floods-south-asia-india-bangladesh-nepal-houston.html
  8. Iceland, Charles, and Betsy Otto. 2017. What Does Water Have to Do with National Security? Accessed from http://www.wri.org/blog/2017/02/what-does-water-have-do-national-security
  9. Johnson, Gordon. 2016. A changing climate throws water out of balance in Asia and the Pacific. Accessed from http://www.undp.org/content/undp/en/home/blog/2016/11/3/A-changing-climate-throws-water-out-of-balance-in-Asia-and-the-Pacific-.html
  10. Muthayya, Sumithra, and Jonathan Sugimoto. 2014. “An overview of global rice production, supply, trade, and consumption.” ANNALS OF THE NEW YORK ACADEMY OF SCIENCES.
  11. Raj, Suhasini, and Jeffrey Gettleman. 2017. They Thought the Monsoons Were Calm. Then Came the Deadly Floods. Accessed from https://www.nytimes.com/2017/09/07/world/asia/bihar-india-monsoon-floods.html
  12. Surie, M.D. 2014. Desecuritizing Transboundary Water in South Asia. 17 September . Accessed from https://asiafoundation.org/2014/09/17/desecuritizing-transboundary-water-in-south-asia/
  13. UNICEF. 2017. 16 million children affected by massive flooding in South Asia, with millions more at risk. 02 September . Accessed from https://www.unicef.org/infobycountry/media_100719.html
  14. World Bank. 2012. Disaster Risk Management in South Asia: A Regional Overview. The World Bank, South Asia Region Disaster Risk Management and Climate Change Unit. Accessed from http://documents.worldbank.org/curated/en/648281468170977802/Disaster-risk-management-in-South-Asia-regional-overview

Ramesh Kumar Raj

Synopsis

The world is beset with the multifaceted challenges from the rise of authoritarianism, populism, and protectionism. All of these have largely affected the spirit of liberal internationalism which has served well for more than seven decades. The threat lies primarily from its propagator and ultimate protector US and its allies because of their protectionist approach and unpromising view towards the promotion of the current liberal world order. This raises the issue of whether the open and rule-based liberal order will survive the current onslaught from the US?

What is Liberal Internationalism?

With the end of World War I, the era of power politics dominated by realist assumptions of statism, self-help, and survival turned to a more idealist notion of peace and cooperation, as espoused in Woodrow Wilson’s fourteen points’s speech. He gave the practicality to the idealist notion of Kantian democratic peace through liberal institutionalism and internationalism. Though the League of Nations failed, the updated notion of institutionalization and liberal order was established under the US leadership post-WWII. The United States and its partners built a multifaceted international order- organized around economic openness, multilateral institutions, security cooperation, and democratic solidarity. Since then, these economies – mostly Europeans and Japan – participated, benefitted and promoted the liberal democratic, and rule-based world order. They also successfully defended and promoted liberal values against communism exemplified by victory over Socialist Camp during the Cold War and democratization of Eastern Europe, East Asia, and Latin America. 

Crisis of Liberal Internationalism

The end of the Cold War and the victory of the democratic and liberal system led some to argue that history has ended and many to remark that the golden age liberal institutionalism and rule-based order were due. However, with globalization and interdependence, the complex and interlinked issues have emerged as a threat to the current world order.

The threats to the current world order lies from political, economic, security dimension to propaganda, cyber crime and media trails.

Figure: Top Risks Expected to Rise in 2019 (Source: Global Risk index)

The 14th edition of the Global Risks Report, prepared by the World Economic Forum, examines the global risk perception against the backdrop of worrying geopolitical and geo-economic tensions, which if left unresolved will hinder the global ability to tackle collective challenges. While assessing the report; the risks related to political and economic confrontations, populism and natives agendas, erosion of multilateral trading rules, agreements and human security has high range and these global risks are a threat to the spirit of Liberal Internationalism.

Trump’s Foreign Policy sabotaging Liberal Internationalism 

While the global threats to liberal internationalism continues to rise, the propagator and promoter seems to have turned its back. The 45th US President, Donald Trump, in his Inauguration Speech in 2017 argued reducing U.S. trade deficits, rebalancing burden-sharing within major alliances and becoming more concerned for national Interest. This argument signifies Trump’s lack of interest in the protection of the regime of liberal world order which has been at the heart of US foreign policy for about seventy years. Trump Presidency witnessed more sabotaging of liberal internationalism by withdrawing US from key regional and global treaties and avoiding the American leadership in the making of a more liberal world-order. The protectionist Trump’s Administration has withdrawn from Trans-Pacific-Partnership (TPP), Paris Accord, Iran Nuclear Agreement, and UNHCR, cut off contribution for (NATO), Started a trade war with China, revised NAFTA to United States-Mexico-Canada Agreement (USMCA) claiming unfair to US trade which proves US unpromising way to liberal internationalism. 

 Not only the US but also its Partners

In recent years, not only the US but also its key allies in Europe have witnessed growing sentiments that pose threat to global liberal-order. For example, the United Kingdom’s decision to leave the European Union (EU) was a backlash against globalism and immigration. The uncertainties of Europe and world politics remarked by populist, nationalist, fundamentalist and xenophobic strands have proliferated and backlashing liberal internationalism. Also the rise of  radical right-wing parties since the 2000s is strongly linked to a rise in Euro-scepticism. Similarly, the issues and problems associated with the international migration and the rise of right-wing nationalist and populist parties within Europe have been hostile to democratic and liberal values, not only for economies in EU but also for economies around the globe. Migration has become voters’ number one concern across the bloc and the issue has swayed elections, including elections in France, Germany, Austria, Italy and Hungary. This has led Europe to follow the trend of US protectionist and populist approach in domestic and cross-border politics.

Will Liberal Internationalism Survive? 

For the past few decades, there has been a series of serious debates on the reorganization of the world order and emergence of the post-Western world order but the latter idea still remains obscure. Therefore, a serious query remains unanswered whether the current world order, which is based on free, open and rule-based governance, would continue to govern the 21st century world.

Some label the current crisis as a temporary setback that can be changed with new political leadership. Sometimes failing of leadership models might be seen as a result of a leader’s inadequate knowledge and awareness on local and world economy. That means, there can be some pitfalls of leadership which affect national and global economies and we can not put these blames on respective countries’ entire political system. Therefore, it lies possibility of US future leadership to lead, protect and promote US crafted liberal international idea globally rather limiting its scope within territory.

But most of the argument is also based on the crisis of American hegemonic leadership. They claim that “liberal international order has been tied to American power-its economy, alliance, leadership, and values”. Perhaps it is a phase of ‘transition’, whereby the old US-led political foundation of the liberal order will give way to a new configuration of global power based on a new governance model. Today, the American hegemony challenged by China is not only limited to economic and military issues but also those countries’ growing significant roles in global affairs. President XI’s vision for making China superpower by 2050 and his BRI and “Community of shared future for mankind” approaches can be taken as China’s version of internationalism.  Beside China, “the rise of the rest (other rising powers)” has also challenged unilateral dominance of the west, led by the US. It seems the US-led views and ideas towards world politics (promotion and practice of more democratic values), economy (capitalist economy), social leadership (individual freedom and Human Rights), and governance (International Law) no longer remain fascinating for many of the global economies and as a consequence there is a growing search for alternative models of leadership, most notably Chinese and East Asian development models. 

References

  1. Dunne, T., & McDonald, M. (2012). The politics of liberal internationalism. International Politics, 50(1), 1-17. Retrieved from doi: 10.1057/ip.2012.25
  2. Edmund, F. (2019). Liberalism: The Life of an Idea by Edmund Fawcett review – what is a liberal?. Retrieved from https://www.theguardian.com/books/2016/jan/29/liberalism-life-of-idea-edmund-fawcett-review
  3. Fukuyama, F. (1989). The End of History? The National Interest, (16), 3-18. Retrieved from www.jstor.org/stable/24027184
  4. Ikenberry, G. (2016). American leadership may be in crisis, but the world order is not. Retrieved from https://www.washingtonpost.com/news/in-theory/wp/2016/01/27/american-leadership-is-in-crisis-but-the-world-order-is-not/
  5. Ikenberry, G. (2018). The end of liberal international order?. International Affairs, 94(1), 7-23. Retrieved from doi: 10.1093/ia/iix241
  6. Peters, M. (2015). Challenges to the ‘World Order’ of Liberal Internationalism: What Can We Learn?. Educational Philosophy And Theory, 48(9), 863-871. Retrieved from doi: 10.1080/00131857.2015.1057033
  7. Trump’s Foreign Policy Moments. (2019). Retrieved from https://www.cfr.org/timeline/trumps-foreign-policy-moments
  8. Wolfgang, I. (2019). The World According to Kissinger. Retrieved from https://www.foreignaffairs.com/reviews/2015-03-01/world-according-kissinger
  9. Wyman, O. (2019). Global Risks 2019. Retrieved from https://www.oliverwyman.com/our-expertise/insights/2019/jan/globalrisks2019.html

Sanjay Pokharel

Synopsis

For long, the tourism sector has remained as one of the key components of Nepal’s national economy. With less than two months left before the formal beginning of “Visit Nepal 2020” (VNY2020), key stakeholders within the Government of Nepal and the private sector have been working to make this initiative a success. In this regard, I highlight why it would be wise for these stakeholders to also focus on improving travel options and services for domestic tourists as well while working on those options for the international visitors. I believe, the experiences of local tourists will have significant impacts on travel decisions of the guests from outside Nepal.

Background

Strategically positioned between two of the world’s largest economies – China and India, Nepal has immensely pacing its growth in tourism sector right after opening its door to the world in the 1950s. After the successful campaign to promote tourism in Nepal through “Visit Nepal 1998” and “Nepal Tourism Year 2011”, the government of Nepal has already announced year another ambitious tourism plan – Visit Nepal 2020 (VNY2020). As tourism sector accounts for 7.5 percent of Nepal’s GDP and is forecasted to reach 8.3 percent of GDP in 2027, the country has enough reasons to employ plans and policies to further boost this sector. Also, tourism in general has positive impacts across regions, especially in terms of generating employment, improving socio-economic conditions of local communities, and production and sales of higher local goods and services.

As per the VNY2020 plans, the Government of Nepal targets to bring in 2 million foreign guests into the country. With a catchy slogan of “Lifetime Experience”, Nepal not only plans to bring in more tourists into the country but also plans to establish the country as one of the first choices among global travel enthusiasts. To achieve these targets, the concerned public and private stakeholders have been working to improve existing destinations while also exploring few more new destinations. Nepal believes, with these, the tourists will have more options to travel to and experience Nepal’s most unique experimental and lifetime travel routes.

The VNY2020 is Nepal’s mission to show the world country’s, often undervalued, tourism industry and thus attract more of the high-value tourists by creating the best possible tourism experience. To make the year-long campaign a success, Nepal’s Ministry of Culture, Tourism and Civil Aviation (MoCTCA) has been partnering with Nepal Tourism Board (NTB) and other key public and private stakeholders, most notably Nepal’s Ministry of Foreign Affairs (MoFA), local airlines companies, tour and travel operators and hoteliers. To move forward, an implementation sub-committee chaired by  the MoCTCA Secretary has been formed and tasked with partnering with all stakeholders to make required preparations for the campaign.

Recent Trends in Nepal’s Tourism Sector

In 2018, Nepal hosted 1.17 million international visitors.  China, India, the United Kingdom, the United Kingdom and Sri Lanka were the top five countries of origin for tourists that year. While the numbers of international guests was encouraging, the local tourists accounted for almost half of the total tourists in 2017.

Of the total visitors, more than two-thirds of them arrived for vacation, entertainment or travel. Overall, the entertainment, mountaineering/trekking, religious, and other trips comprised of 60 percent, 16 percent, 14.4 percent and 9.6 percent respectively. In the meantime, considering the recent boom in the quantity of local travelers traveling in Nepal and outside, it gives a clear message to the tourism industry and international market alike that Nepali travelers too could be an important part of the local and global tourism markets.

Preparing for VNY2020

Synergy of efforts along with the private sector, diplomatic missions, Nepali diaspora, the media and other stakeholders can be seen to support the overarching objective of VNY2020. In regards toVNY2020  prospects of domestic tourism in recent years have also been the key areas of interest for tourism stakeholders leading to its steady growth which in turn, is bound to fuel the tourism environment in Nepal. In the span of five years, domestic tourism has increased by almost five-fold with Nepalis have also developed a desire to travel around the country which signifies the booming of the sector. Apart from traditional leisure destinations,  numerous new destinations have drawn domestic adventurers lately which not only promotes domestic movements but also attracts and opens ways for international tourists.

With the Visit Nepal 2020 in sight, the Government of Nepal has allocated a budget of Rs 2.68 billion for FY 2019/20 and 11 special strategies have been identified to develop and promote the tourism industry in the National Tourism Strategy 2016-2025. And,  these allocations and strategies encourage/invite domestic and foreign investment, promoting public-private partnership, improving infrastructure, reforming government policies which pace the growth of tourism industry and numbers of domestic and international tourists. The crucial part is to accomplish the broader objectives of VNY2020 campaign and other tourism strategies where tourism stakeholders needs to immediately consider the five low hanging  interventions proposed by our NIPoRe researcher – Mr. Nirnaya Bhatta. Those interventions that are related to infrastructure, security, better service and experience, payment mode and transportation doesn’t only ensure safe travel for international tourists but also promotes domestic tourism.

In the meantime, the Chinese President Xi Jinping’s State Visit to Nepal in October this year has added a new vigor in the diplomatic relation between Nepal and China. Additionally,, following the visit, the numbers of Chinese tourists here increased. Post State Visit; 15,037 Chinese tourists visited Nepal which is 11.5 percent more than the number of Chinese visitors coming to Nepal in the same period last year. This clearly shows that meaningful diplomatic practices too can help Nepal to work towards achieving major VNY2020 targets.

Stakeholders like Nepal Tourism Board (NTB), Nepal Mountaineering Association (NMA), Hotel Association of Nepal (HAN), Federation of Handicraft Association of Nepal, Nepal Association of Tour and Travel Agents and Nepali diaspora are on stage promoting Nepali tourism before formal beginning of VNY2020. These stakeholders have been trying to do global promotion of VNY2020 related plans and activities.

Though using diplomatic relations and collaborations within and across the stakeholders can definitely bring larger outputs, and, while promoting works outside Nepal for related activities, these stakeholders also need to cleverly think of targeting existing major countries of origin of foreign travelers to Nepal and also reaching out to new countries if they wish to establish Nepal as one of the top travel destinations in the world.

As the larger numbers of international travelers is definitely a good idea to boost Nepal’s struggling tourism sector, but still the larger question remains – “Are these stakeholders considering the aspects of domestic tourists”. If stakeholders are strategic enough, they can lure Nepal’s increasing middle-class to spend more time on exploring Nepal’s diverse tourism destinations.

Also, merely a surge in numbers does not add up to significant results unless Nepal can encourage tourists to stay for longer period and expand their daily expenditures. And to do so, these stakeholders also need to have ample diversified tourism packages. A bigger question may arise in this regard, i.e., “How to increase the tourists length of stay and expenditure?” The answer lies within the National Tourism Strategy 2016-2025 that focuses on tourism infrastructures. And, history has shown that without proper coordination and collaboration between tourism stakeholders it’s very difficult to accomplish these goals. For the domestic and international tourists alike what matters is their overall travel experience and that experience, in my view, is what Nepali tourism industry needs to sell which comes when all the stakeholders come together.

Concluding Remarks

Despite having countless travel destinations within the country, in recent years, more and more Nepalis are flocking for destinations outside for recreation and holidays. In my view, though we should not try to (and even if we wish, we won’t be able to) discourage Nepalis from traveling abroad, improving local tourism industry could encourage more Nepalis to stay back and travel across different parts of the country. This act will not only help locals to explore their country but also contribute towards local, regional and national economy.

As the official tagline for VNY2020 is “Lifetime Experiences” and with less than two months left before commencement of the campaign, we seriously need to further evaluate where we are and where our stakeholders are in regards to the campaign. The important aspects in this regard could be – Are we considering domestic tourism as an important aspect in the campaign? If so, what are our strategies that promotes domestic tourism? Thus, if infrastructures, services and experiences improve for domestic tourists, it will inadvertently improve for international tourists, which demonstrates that promoting domestic tourism and expanding the structural and functional priorities for domestic tourism will trigger bigger positive impact on international tourists.

References

  1. Bhatta, N. (October, 2019). Visit Nepal 2020 – Have We Managed to Get Our Priorities Straight?. Nepal Institute for Policy Research (NIPoRe). Retrived from https://nipore.org/nrc0016-visit-nepal-2020-have-we-managed-to-get-our-priorities-straight/
  2. Mahat, J.J. (October, 2019). President Xi Jinping’s State Visits – SAARC Vs ASEAN. Nepal Institute for Policy Research (NIPoRe). Retrieved from https://nipore.org/ndv0004-president-xi-jinpings-state-visits-saarc-vs-asean/
  3. Ministry of Finance, Government of Nepal. (2019). Budget Speech of Fiscal Year 2019/20. Retrieved from https://mof.gov.np/uploads/document/file/budget_speech_website_20190619052055.pdf
  4. Prasain, S. (May 26, 2019). Nepal tourism generated Rs240b and supported 1m jobs last year: Report. The Kathmandu Post. Retrieved from https://kathmandupost.com/money/2019/05/26/nepal-tourism-generated-rs240b-and-supported-1m-jobs-last-year-report
  5. Prasain, S. (July 29, 2016). Nepal tourism sets goal to boost arrivals fivefold. The Kathmandu Post. Retrieved from https://kathmandupost.com/money/2016/07/29/nepal-tourism-sets-goal-to-boost-arrivals-fivefold
  6. The Himalayan Times. (August 30, 2018). Outbound Nepali travellers spent almost Rs 80bn. Retrieved from https://thehimalayantimes.com/business/outbound-nepali-travellers-spent-almost-rs-80bn/
  7. The Himalayan Times. (August 18, 2019). Lack of Proper Systemisation, Infrastructure and Management are Hindrances for the Growth of Internal Tourists in Nepal. Retrieved from https://thehimalayantimes.com/business/perspectives/developing-domestic-tourism/
  8. The Himalayan Times. (November 12, 2019). Chinese Tourists’ Arrival Up. Retrieved from https://thehimalayantimes.com/nepal/chinese-tourists-arrival-up/
  9. The Kathmandu Post. (June 30, 2016). Middle Class Swells to 22pc of population. Retrieved from https://kathmandupost.com/money/2016/06/30/middle-class-swells-to-22pc-of-population
  10. Stynes, D.J. (1997). Economic Impacts of Tourism. Tourism Research Laboratory, University of Illinois at Urbana-Champaign. Retrieved from https://msu.edu/course/prr/840/econimpact/pdf/ecimpvol1.pdf

Prashanta Pradhan

Synopsis

Nepal ranked 94 in the recently published World Bank’s Doing Business Report with an increase in score from 59.7 to 63.2 in just a year. Improvements were reported in scores on dealing with construction permits, trading across borders and enforcing contracts but the highest increase was reported in getting credit with substantial improvement by 25 basis points from 50 to 75. Within various indicators on getting credit, the highest improvement was seen on credit bureau coverage of adults from mere 2.7% in 2018 to 7.3% this year covering 1,301,061 individuals and firms. 

Credit Bureau and Credit Reporting System

Credit reporting systems consist of institutions, individuals, infrastructures and procedures that facilitate the flow of information enabling decisions related to provision on loans. Credit reporting systems aim to address information asymmetries that exist for evaluating whether to extend credit to debtors or not. Credit Bureau is an actor in the credit reporting system whose primary function is to improve the quality and availability of data for creditors to make better informed lending decisions. There are three other main actors – Data Subjects (individuals and businesses whose data are collected), Data Providers (financial institutions and utilities that provide information and data subjects) and Data Users (banks, central banks, and employers who use credit information provided by credit bureau).

The Credit Information Bureau of Nepal was established in 1989. The shareholders of the bureau are central bank along with commercial banks and financial institutions. Nepal Rastra Bank Act 2002 states that NRB will establish or cause to establish one credit information centre for the primary purposes of obtaining information on the flow of credit from commercial banks and financial institutions as well as information on debtors not paying loans on time or misusing the loans.

Non-Performing Loans and SMEs’ Access to Finance 

  • According to Nepal’s Central Bank, between FY 2016/17 and FY 2017/18, the volume of Non-Performing Loans (NPL) of commercial banks increased by 8.14% reaching Rs 29.85 billion. The increase was seen in both public and private banks by 7.93% and 8.27% respectively.  
  • IMF has reported that 70% of total lending is concentrated on real estate sector which may be difficult to avoid due to less developed and less diversified banking system. Moreover, bank’s loans books indicate half of loans as overdraft and working capital loans which rollover continuously with the quality of loans difficult to gauge.
  • As per Nepal Rastra Bank’s 2019 study findings, only 16% of SMEs in Nepal are taking credit from banks and financial institutions as initial capital compared to 33% from family assets and 26% from savings. On average, 50% of SMEs have taken credit from banks and financial institutions.  On average it takes 38 days for SME to access credit. 

Information Asymmetry and Business Environment

Access to finance plays a significant role in improving business environment and economic growth in an economy. However, information asymmetry hinders access to growth in many developing economies, especially for SMEs that contribute a large share of employment. In Nepal, SMEs on average employ 1.7 million people and contribute to 22% of GDP. In developing economies, enforcement of contracts and functioning of legal systems are relatively weak. Hence, the role of information gathering and sharing are important to enhance creditors’ protection. Taking past behavior of borrowers as a reliable predictor of future behavior, crediting reporting systems minimize risks creditors have to bear with borrowers. 

On the one hand, credit reporting system support regulators in supervision and monitoring credit risk whereas on the other hand, financial institutions can enhance access credit to small firms, reduce interest rates and improve borrower discipline. NRB study has indicated collecting information about SMEs and speedier credit approval are among the top ways to enhance access to SME financing. A World Bank study done across 63 countries covering more than 75,000 firms indicated that after the introduction of credit bureau, there were greater possibilities for firms to access finance, lower interest rates, lengthen maturity and increase the share of working capital financed by banks. 

Today, credit bureaus operate in many countries around the world and there is growing emphasis on strengthening them. Some of the drivers of growth of credit bureaus are growth in retail credit, reform stemming from financial crisis, the rise of digital technologies all of which increase need as well as opportunities to expand access to credit information services. 

Alternative Sources of Data to Serve Underserved Segments

While traditional sources of data like commercial banks and financial institutions enable data users to access data and associated analytics on existing borrowers. However, this does not cover new borrowers. Hence, there is also growing need for tapping alternative sources of data, for example, from utilities operators on payment history, telecom companies etc. The ability of a system to tap into these alternative sources of data shall greatly contribute to enhancing access to finance and reducing credit risk of lenders. In general payment data, social media data and behavioural data are considered to be useful to contribute to credit scoring. 

Conclusion

Nepal Rastra Bank’s Monetary Policy 2019 as well as the International Monetary Fund’s Country Report 2019 refer to the need for improving credit reporting in Nepal.  It is crucial for credit reporting agencies to embrace advanced digital technologies and big data analytics to collect and analyse credit and payment data collected from various sources. Moreover, in order to strengthen the financial sustainability of credit bureaus and enhance value creation in the economy, value added services from credit data analytics also needs to be developed which could be relevant for many industries and businesses other than banks and regulators, for example, retail services with high reliance on digital payments, employers who would like to understand credit behavior of their potential applicants or existing applicants. However, regulatory frameworks and data protection procedures should be strongly put in place too.

References

  1. IMF. (February, 2019). IMF Country Report No. 19/61. Retrieved from https://www.imf.org/en/Publications/CR/Issues/2019/02/15/Nepal-Selected-Issues-46623
  2. Peria, M. S. M, and Singh, S. (August, 2014). The Impact of Credit Information Sharing Reforms on Firm Financing. World Bank Policy Research Working Paper 7013. Retrieved from https://openknowledge.worldbank.org/bitstream/handle/10986/20348/WPS7013.pdf
  3. Nepal Rastra Bank. (2019). Bank Supervision Report. Retrieved from https://www.nrb.org.np/bsd/reports/Annual_Reports–Annual_Bank_Supervision_Report_2018-new.pdf
  4. Nepal Rastra Bank. (2002). Nepal Rastra Bank ActNepal Rastra Bank Act, 2058 (2002). Retrieved from https://www.nrb.org.np/lgd/acts_ordinances/Nepal%20Rastra%20Bank%20Act,%202002%20(English)2074.12.21.pdf
  5.  Nepal Rastra Bank (2019) SMEs Financing in Nepal. Retrieved from https://www.nrb.org.np/red/publications/study_reports/Study_Reports–नेपालमा_साना_तथा_मझौला_उद्यममा_वित्तीय_साधन_परिचालन_2076-new.pdf
  6. World Bank Group. (2019). Doing Business 2020 – Comparing Business Regulation in 190 Economies. Retrieved from https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf

Santosh Sharma Poudel

Synopsis

President of the People’s Republic of China Xi Jinping visited Nepal on 12-13 October for his first state visit, 23 years after President Jiang Zemin’s state visit to the Himalayan nation in December 1996. The much-anticipated visit by the Chinese President went smoothly but created a ripple in Nepal and immediate neighborhood. Nepal shares a 1400km long border. President Xi’s visit shows the growing presence and significance of Nepal in the international arena. It is also a return to normalcy in Sino-Nepal relations. As of October 2019, President Xi has visited each member of SAARC’s original seven (minus Bhutan with whom China has no official relations) member countries.

Strategic timing? 

The visit by a Chinese President to Nepal was long overdue. The last Chinese President to visit Nepal was Jiang Zemin in December 1996. Both Nepal and China have gone through drastic domestic changes and the region has transformed, thanks primarily to the rise of China (and India). To briefly summarize the domestic changes in Nepal, Nepal has gone through the 10-year Maoist insurgency, successfully entered into the electoral democracy in collaboration with mainstream parties, became a republic (from a constitutional monarchy), had two constituent assembly elections (the latter of which produced the Constitution of Nepal, 2015), and elected a first majority Communist government in 2017. 

During the same time, China has been through the phase of ‘peaceful development’ under Hu Jintao and ‘national rejuvenation’ under President Xi. China has been able to lift up the GDP per capita from USD 981 to almost USD9000 according to World Bank. China embarked on a major effort to root out corruption and removed the two-term limit for the President. China is also striving to achieve two centenary goals (moderately well-off nation by 2021 and strong, democratic, harmonious, civilized and modern socialist country by 2049). Globally, China is a force to be reckoned with, especially after 2008. China has emerged as a global power, and taking initiatives and responsibilities commensurate with its power. President Xi’s Belt and Road Initiative (BRI) and Asian Infrastructure Investment Bank (AIIB) are prime examples. The former transverses more than half of the globe.

After 1996 only Chinese Prime Ministers Zhu Rongji and Wen Jiabao visited Nepal in 2001 and 2012 respectively. Meanwhile, King Gyanendra (2002 and 2005), then incumbent Prime Ministers Pushpa Kamal Dahal (2008), Madhav Kumar Nepal (2009), Sushil Koirala (2014), Khadga Prasad Oli (2016) and Bidhya Devi Bhandari (2019) have visited China during the same period. President Xi’s visit restores the normalcy in the diplomatic exchange between Nepal and China. 

In saying that, the timing of the visit is no coincidence. After the promulgation of the Constitution (2015) and the national and local elections (2017), Nepal has entered a peaceful and stable phase. It also helps that Nepal has a democratically elected majority Communist government, the Nepal Communist Party [named so after the merger between CPN (UML) and CPN (Maoist Center) after the latest elections]. 

At regional level, the competition between China and India for influence in South Asian states has increased in recent decades. China’s active engagement with small coastal and island states in South Asia which India dub as ‘string of pearls’ has raised concerns in New Delhi. Additionally, Beijing’s active promotion of Belt and Road initiative (India has not joined yet) had challenged India’s ‘sphere of influence’. This has thrusted Nepal to the forefront of regional geo-politics. At the same time, it is too simplistic to label India and China as rivals, and President Xi also stated that India and China are partners. The increased trade links between India and China has necessitated further connectivity. In that context, the idea of the role of Nepal as transit state has come to the fore. This has pushed Nepal to the forefront of geo-economics as well. 

 Globally, the competition between China and the US for regional influence has propelled Nepal in the forefront of global geopolitics. The introduction of the Indo-Pacific Strategy by the US, which is perceived by Beijing as an attempt to contain China, has increased strategic significance for/of Nepal. Therefore, serious issues of national, regional and global enduring significance were at stake and Xi’s visit.

Significance of the visit

The visit by the Chinese President is symbolically very important. President Xi’s visit was able to elevate Nepal-China relations. The relations between Nepal and China was upgraded to ‘Strategic Partnership’ of Cooperation Featuring Ever-Lasting Friendship for Development and Prosperity from ‘friendly relations’ or ‘time-tested friendly relations’. This means China sees Nepal as a long-term and stable partner focused on the larger picture of China-Nepal relations. This also comes with the expectation that there will be more foreign policy stability in Nepala. This is also emblematically important in Asian context where ‘status’ is taken very seriously, therefore, the labels used to define relations between states are important by themselves. 

The talks and agreement during Xi’s visit mostly focused on BRI, Trans-Himalayan network and connectivity. The current visit and agreement have provided decisive guidance in that context. It was agreed to conduct feasibility studies for cross-Himalayan railways and China committed to extend cooperation on Kathmandu-Pokhara-Lumbini railways. China would also support the speeding up of upgrading and restoring the existing road networks. This will have immediate impact on connectivity. The number of agreements pertaining to infrastructure (mostly transportation) indicates the importance of connectivity to both Nepal and China. 

President Xi’s visit is also significant domestically. Nepal has a democratically elected communist party in power. Globally, it’s a rarity and anachronistic. On top of that, the Nepal Communist Party (NCP)(named so after the merger) ran on a nationalist rhetoric in the aftermath of Indian blockade. Hence, the visit of President Xi enhances the legitimacy of the current government and provides for a ‘balanced’ relations vis-à-vis China and India. Beijing should be eagerly following the political fate of NCP in Nepal as China experiments with elections at local levels. While Nepal bears no direct resemblance to China’s political structure, the success (or failure) of the Communist party in Nepal could have a bearing on the democratization debate in China. 

This visit also served as an opportunity for China to criticize Nepal (indirectly) on its dismal implementation of previously signed accords. President Xi reminded that China made plans and implemented them which led to success. It was not a subtle reminder to Nepal that agreements alone will not lead to progress without implementation. Hopefully, the message got across to Nepal’s political elites. 

Zero-sum game? 

Many analysts in Nepal, and more so in India, see Nepal’s deepening relations, especially in context to connectivity, with China and Xi’s visit as a counter-balance to Indian influence. Some extremists even view it as Chinese attempt at encircling India. However, nothing could be further from the truth. The connectivity of Nepal with China is both complementary to Nepal’s connectivity with India and India’s connectivity with China. At the same time, the agreements signed with India after Prime Minister Narendra Modi came to power and the ones signed during President Xi’s visit is not competitive in essence. If anything, it’s the opposite. 

The joint statement between Nepal and India during Modi’s visit to Nepal in 2014 underlined the need to further explore ways to enhance sub-regional cooperation, particularly in areas of trade, transit, connectivity and hydropower. Indian and Nepalese Prime Minister directed the finalization and signing of Rail Service Agreement, Letter of Exchanges on Trade and Transit, and ratification of BITTA among others. Even based on these agreements, it is very clear that both China and India are both looking for connectivity, investment in infrastructure, and ease in the investment regime for foreign investors in Nepal. 

Even from Nepalese perspective, for any expensive connectivity network (especially the railways) through the Himalayas to be viable, it inadvertently has to extend beyond Nepal’s Southern borders to India. The trade between Nepal and China (especially exports from Nepal to China) cannot sustain such an expensive connectivity by itself. Therefore, Nepal needs to facilitate trade between India and China, which is close to USD 90 billion, and link Chinese West to Uttar Pradesh and Bihar, the two most populous Indian states which have no direct link to sea port. While India has not joined BRI (but is part of other corridors such as BCIM), India too would be one of the major beneficiaries of connectivity. To borrow Chinese parlance, it’s a win-win cooperation with mutual benefits to all three nations.

Moving forward

President Xi’s visit to Nepal is significant by itself for reasons stated above. While it has implications for Nepal-India relations, it would be foolhardy to see it completely in the context of China and India rivalry. Even Beijing and New Delhi do not see themselves as ‘rivals’. In such a case, it’s prudent for Nepal to move past thinking of China as a card to play against India or vice-versa. Nepal’s relationship with India and China has its own significance, dimensions and merits. The zero-sum mentality will only hold back Nepal’s development and limit the perimeter of Nepalese foreign policy. Instead, we are better for engaging them both in a mutually beneficial relationship. The agreements and statements from President Xi’s visit and PM Modi’s first visit to Nepal are testaments that win-win cooperation is possible.

Endnote

a* This interpretation is based on Prime Minister Wen Jiabao’s explanation of Strategic partnership during his trip to Europein 2004. He described strategic partnership as:

By ‘strategic’, it means that the cooperation should be long-term and stable, bearing on the larger picture of China-EU relations. It transcends the differences in ideology and social system and is not subjected to the impacts of individual events that occur from time to time. By ‘partnership’, it means that the cooperation should be equal-footed, mutually beneficial and win-win. The two sides should base themselves on mutual respect and mutual trust, endeavour to expand converging interests and seek common ground on the major issues while shelving differences on the minor ones.

References

  1. China Daily. (September, 2019). Xi stresses striving for national rejuvenation. Retrieved from https://www.chinadaily.com.cn/a/201909/12/WS5d7a2e49a310cf3e3556b4df.html
  2. Feng, Z. and Huang, J. (2014). China’s Strategic Partnership Diplomacy. European Strategic Partnership Observatory. Retrieved from https://www.files.ethz.ch/isn/181324/China%E2%80%99s%20strategic%20partnership%20diplomacy_%20engaging%20with%20a%20changing%20world%20.pdf
  3. Ministry of Foreign Affairs, Government of Nepal. (October, 2019). Joint Statement between Nepal and PRC. Retrieved from https://mofa.gov.np/joint-statement-between-nepal-and-the-peoples-republic-of-china-2/
  4. Nepal Institute for Policy Research (NIPoRe). (Oct 2019). NDV004 – President Xi Jinping’s state visits – SAARC vs. ASEAN. Retrieved from https://nipore.org/ndv0004-president-xi-jinpings-state-visits-saarc-vs-asean/
  5. Nepal’s Embassy in China. (July, 2013). Joint statement between Nepal and PRC. Retrieved from http://np.china-embassy.org/eng/ChinaNepal/t1057401.htm
  6. PRC White Paper on peaceful development. (2011). Retrieved from http://ph.china-embassy.org/eng/zt/peace/t895028.htm
  7. State Council of the People’s Republic of China. (2019). China and the World in the new era. Retrieved from http://english.www.gov.cn/archive/whitepaper/201909/27/content_WS5d8d80f9c6d0bcf8c4c142ef.html
  8. World Bank. (2019). GDP per capita (current US$). Retrieved from https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_pcap_cd&idim=country:CHN:IND:RUS&hl=en&dl=en
  9. Xinhua Net. (October, 2019). Xi’s article on Nepalese newspapers. Retrieved from  http://news.xinhuanet.com/english/china/2014-07/15/c_133485834.htm [Nepali version of the article is available at: https://ekantipur.com/opinion/2019/10/11/1570759989337122.html]

Nirnaya Bhatta

Synopsis

Understandably, there is a national fixation on undertaking grand infrastructural projects, also reflected in the Joint Statement between Nepal and China released during the Chinese President Xi Jinping’s state visit, in various sectors including those in the tourism sector. Although, basic infrastructure such as street lights, tourist hotlines, decentralized tourist help centres, reliable payment systems, wi-fi access in tourist areas, better safety arrangements for locals and tourists, should not be discounted in making Visit Nepal 2020 (VN2020) a success or a disappointment. Since time of essence to get things right before the year-long campaign commences in less than two months now, this commentary recommends 5 immediate interventions that would improve tourist’s overall experience in Nepal.

The third edition of a year-long tourism campaign  

Visit Nepal 2020 (VN2020) is preceded by ‘Visit Nepal 1998 – A World of its Own’ and Nepal Tourism Year 2011. In 2018, 1,173,072 tourists visited Nepal and the daily average spending per tourist was USD 54. VN2020 aims to bring in 2 million tourists and increase the average spending per tourist per day to over USD 75.

Grand plans call for grand implementation too 

The two following consideration could come handy to guide implementation. First, making sincere efforts to reduce ambiguity related with national plans among entities within the state apparatus. Sure, there is no well-defined path to neither planning nor implementation and governance is usually based on ballpark assumptions. During President Xi’s visit the entire state apparatus worked together to make it a success, and that it would be unfair to acknowledge these efforts. Similarly, given that numerous institutions- government entities and beyond- would be required to be mobilized for successful implementation, a top-down approach should be expected to do poorly.

A simple exercise for logical planning. Stakeholders that are responsible to plan and implement will benefit with the following simple exercise. They can ask themselves, “what are the basic things I would need while visiting a foreign country?” This question could be asked keeping in mind the journey that starts at the international airport through the entire trip.

Tourism infrastructure

What does tourism infrastructure really entail? It includes a “large number of services, necessary to meet the needs of tourists and increase satisfaction during their stay at the destination”. The relation between national infrastructure and tourism development has been clearly established. It is only logical that an improvement in national infrastructure increases the capacity of a country to cater to complex suite of needs that tourists expect to be taken care of.

To further understand what comprises tourism infrastructure, it is useful to refer to the numerous indicators that make up the World Economic Forum’s Travel and Tourism Competitiveness Index (TTCI). The TTCI is a global index that benchmarks the “competitiveness of 140 economies and measures the set of factors and policies that enable the sustainable development of the Travel & Tourism (T&T) sector”. The reason why major stakeholders planning and implementing the VN2020 should refer to the index as it would help them identify specific indicators from a vast range that need to be improved, given that the government has limited attention and resources.

Figure 1- Source (The Travel & Tourism Competitiveness Report 2019) 

Policy considerations – 5 immediate interventions for Visit Nepal 2020

Since time of essence to get things right before the year-long campaign commences, this commentary focuses on 5 immediate interventions aimed at improving the tourist experience in Nepal. These interventions give high benefit-cost value. Meaning, they accrue large benefits when compared to the costs incurred. While the budget for F.Y. 2019/20 allocates NPR 22.68 billion and the National Tourism Strategy 2016-2025 identifies 11 special strategies to develop the tourism industry; it is crucial to immediately consider these five interventions. 

  1. Ensuring a pleasant airport experience:  

Lately, there have been noticeable progress with facilities at the international as well as domestic terminals at Tribhuvan International Airport in Kathmandu. Although, much is yet to be done given that the traffic at the airport is expected to increase. Apart from ensuring that a tourist’s VN2020 experience start with bitter events right after landing at the airport by unnecessary hassle at the immigration desk, mismanaged carriers, luggage claim mechanism, fraudulent transportation, unavailability of money exchange booths (given that it is rare that Nepali currency can be exchanged anywhere else!). It would also be practical to help tourists better understand what the country can offer by providing them with maps, and crucial directions, beyond the airport authorities have limited control over how things unfold. 

  1. Improved security infrastructure for tourists:

Safety is a primary concern that travelers consider while determining their travel destinations. These considerations become more salient when families travel together. The least that the campaign can aim at doing is to make our guests feel secure. The concerned state authorities could run television campaigns on how tourists, and thus the tourism industry, help Nepal’s sagging economy and that it is the responsibility of each Nepali to be as hospitable as they can.  

  1. Tourist hotlines and assistance centres:  

Lately, one will find excellent response from traffic police call centres at 103. Similarly, the government should introduce a 24-hour dedicated tourism hotline. Further, assistance centres can be established in most tourist areas. This information could be announced at the airport itself and advertised all over the international airport areas.  

  1. Transportation:

Car rental services in Nepal is still very immature, even compared with other South Asian countries. Cab drivers charge utterly arbitrary rates, especially if the customer is a foreigner. It is often said that locals don’t get a fair share of pay for service provided. This may be true, but there needs to be a fair arrangement where neither locals nor tourists feel exploited. 

  1. Easier and safe payment mechanisms:  

The recent ATM related scandals do expose the vulnerability of Nepal’s banking sector. Often foreigners are found to be afraid to use their international payment cards with local vendors. It would be a shame if such a mere inconvenience deters tourists from actually spending. It is the lack of basic facilities that either make or break a tourist’s experiences in a foreign country.

Conclusion 

Nepal evokes an exotic imagination among global tourists that few countries do. Although, even a handful of mishaps can dampen Nepal’s image as an attractive tourist destination. In tourism, the intangible element of image plays an instrumental role.

Right before the official commencement of VN2020, this is the right time for an earnest evaluation of our capacity to cater to 2 million tourists. Further, it is useful to not just fixate on the VN2020, given that tourism competitiveness is a function of an overall infrastructural development in the long term. If services actually improve for the locals, it will inadvertently improve for the tourists too. Installing street lights, improving tourism security and the other aforementioned factors may look lesser grand for the government but will prove to be equally important in making VN2020 a success. The tagline of VN2020 is “Lifetime Experiences”. Why let minor inconveniences occurring due to lack of basic facilities translate to a lifetime bad experience to a tourist.

Reference

  1. Calderwood, L. U., & Soshkin, M. (2019). The Travel & Tourism Competitiveness Report 2019 – Travel and Tourism at a Tipping Point. World Economic Forum. Retrieved from https://www.weforum.org/reports/the-travel-tourism-competitiveness-report-2019
  2. Jovanovic, S., & Ilic, I. (2016). Infrastructure As an Important Determinant Of Tourism Development In The Countries Of Southeast Europe. EcoForum. Retrieved from http://www.ecoforumjournal.ro/index.php/eco/article/view/329
  3. Ministry of Finance, Government of Nepal. (May 29, 2019). Budget Speech of Fiscal Year 2019/20. Retrieved from https://mof.gov.np/uploads/document/file/budget_speech_website_20190619052055.pdf
  4. Ministry of Foreign Affairs, Government of Nepal. (Oct 13, 2019). Joint Statement Between Nepal and the People’s Republic of China. Retrieved from https://mofa.gov.np/joint-statement-between-nepal-and-the-peoples-republic-of-china-2/
  5. Prasain, S. (Jul 29, 2016). Nepal tourism sets goal to boost arrivals fivefold. The Kathmandu Post. Retrived from https://kathmandupost.com/money/2016/07/29/nepal-tourism-sets-goal-to-boost-arrivals-fivefold
  6. Pun, S. (March 5, 2019). Nepal Tourism Campaign #VisitNepal2020. The Spotlight Magazine. VOL 12 No.14, March 01, 2019 (Falgun. 17 2075). Retrieved from https://www.spotlightnepal.com/2019/03/05/nepal-tourism-campaign-visitnepal2020/
  7. Visit Nepal Year 2020 Secretariat. (August, 2019). VNY 2020 Update. Retrieved from https://2020.welcomenepal.com/pdf/Tabloid_VNY_Aug2019.pdf

Santosh Sharma Poudel

Synopsis 

In my last Research Commentary, I summarized that Nepali foreign policy moved from ‘special relations’ with India towards diversification in the 1950s and 1960s. This period coincides with the direct rule of King Birendra. In this commentary, I analyze the country’s foreign policy in the 1970s and 1980s via the proposal of Zone of Peace. This period provides a stark reminder of the practical constraints of Nepal’s foreign policy priorities.

Domestic Political Developments

As seen in the previous two decades, domestic politics has been one of the major factors informing Nepal’s foreign policy, if not determining itself. The 1970s and 1980s were relatively stable periods under the then Panchayat System. The Prime Ministers were rotated heavily, but the power always rested with the King. King Birendra ascended the throne in 1972. During his coronation, which was attended by a large number of diplomatic dignitaries, he proposed Nepal to be made a ‘Zone of Peace’. It was a major initiative from the King, and the analysis of the intention and progress of the proposal reflects the foreign policy of Nepal during the period. There was the matter of ‘referendum’ in 1980, but the result was in favor of ‘reformed Panchayat’, and it did not alter the domestic dynamics much. Towards the end of this period, there was ‘Jana Andolan’ in Nepal, led by the Nepali Congress and communist parties, which overthrew the direct rule of the King, established multi-party democracy, and cosigned the King to a constitutional monarchy.

Zone of Peace (ZOP)

King Birendra’s prepared speech during the Non-Aligned Summit in 1973 stated that Nepal ‘wishes to be declared a Zone of Peace’. However, the official announcement of the ZOP by the King was made on 25th February 1975, during the farewell address delivered to the foreign dignitaries present to celebrate his coronation ceremony. His focus was on peace, peace in the country, the region and the world, and believed that ‘Zone of Peace’ will help institutionalize peace. Major points of the proposal included peace, non-alignment and peaceful coexistence, Nepal would not permit any activities on its soil that are hostile to other states supporting the proposal and expect reciprocity, and Nepal will not enter into any military alliance with any other countries among others. Nepal planned to take the proposal to the UN for endorsement.

There were international and domestic reasons for the proposal. Domestically, it was about maintaining stability, as the democratic opposition to the Panchayat regime came from Nepali exiles in India. It was also an opportunity for King Birendra to stamp his authority in Nepal’s foreign policy. Regionally, few issues were of real concern to Nepal. Nepal had a close eye on the political development in Sikkim. Sikkim, an independent state with ethnic Nepali people, was absorbed into the union territory of India in 1975. That was an urgent issue of concern for Nepal, a country that has inferiority complex vis-à-vis India. Many also had concerns that India could attempt a similar policy towards Nepal. Therefore, Nepal needed to ascertain its survival. Similarly, Nepal did not want to insert itself into the regional and global rivalries (such as India-Pakistan, Sino-India, US-USSR), and would rather expend its limited resources for peace and growth. Notwithstanding the justifications of the ZOP, it marked a significant change in the orientation of foreign policy of Nepal compared to a decade earlier. 

 Neutrality, not ‘balance’

The foreign policy of Nepal in the 1950s and 1960s was marked by movement along with the ‘special relations with India’ to ‘diversification in economic, trade, aid and global engagement’. In saying that, the relations with India was still the most important. ‘Zone of Peace’ was an attempt at ‘neutrality’ or ‘equidistance’, doing away with ‘special relations with India’. ZOP would do away with the concept of Nepal as ‘buffer state’, the strategic view that India held since the time of Jawaharlal Nehru. An agreement on such a proposal would also limit the role of India in Nepal’s domestic politics. Firstly, it would have limited the activities and some freedom enjoyed by exiled political leaders in India. Secondly, requests were made for the withdrawal of Indian intelligence posts in Nepal.

Two regional incidents also heightened the insecurity in Nepal vis-à-vis India. First, India played an active role in the breaking up of East Pakistan to form an independent Bangladesh in 1971. China, Pakistan’s all-weather friend, could not do much to change the scenario in which India got a decisive victory. The second was the dissolution of the Kingdom of Sikkim into the Indian union territory in 1975. Within a span of five years, the political map of South Asia changed significantly, thanks to India.  This was bound to have a profound impact on the psyche of another small nation that shared a deeply unequal power relations with India.

Therefore, according to S.K. Upadhyaya, Nepal’s former Permanent Representative to the UN, ZOP,  was the only way to ensure small nation’s (Nepal’s) survival when large powers commit aggression against small powers.

The ZOP was supported by a large number of countries to varying degrees. Major global and regional powers such as China, Pakistan, the US, the USSR, France, and the UK among others supported the proposal (on various dates and to varying degrees). By the mid-1980s, more than 85 countries around the globe had supported the proposal. However, Nepal’s closest neighbor India had major reservations. While the ZOP was not targeted at India, it could not be denied that India was a major target in terms of why the ZOP was proposed and would require to do the most to ensure the proposal was applied if India accepted given the socio-economic, political and geo-strategic linkages. Accepting the ZOP would mean that India’s ‘special’ position vis-à-vis (Nepal) would be diluted. Similarly, Indira Gandhi could not fathom that Nepal-China relations would be equated with Nepal-India relations. Other governments in India and leaders too had various reservations primarily that India has a special security interest in Nepal and ZOP does not address that. 

 The Fate of ZOP and Lessons for Nepal’s Foreign Policy

Despite the support of more than six dozen countries including the major powers, the ZOP died its natural death after the demise of Panchayat in 1990, thanks to the Indian reservation. The relations between the King and India also suffered which ultimately culminated in India’s blockade over Nepal in 1989 (though this was not the direct cause). This offers key lessons for Nepal’s foreign policy priorities. Firstly, the geo-economic rationale (in this context, the over-dependence on India) is a severe constraint to Nepal’s foreign policy. India does not hesitate to use such a constraint to undo Nepali strategies that do not address its national interests. Secondly, Nepal can count on the support of other neighbors and major powers. However, they are no substitute for the Indian influence and presence in Nepal. If Nepal aims at the successful implementation of any major foreign policy, it has to assure India that its legitimate security interests will be addressed and brought into confidence. Finally, as the saga unfolded, a foreign policy based on neutrality or equidistance failed to materialize at best, and backfired at worst.  Nepal needs to engage with each neighbor and other countries, based on Nepal’s and the other partner’s specific interests. Trying to weigh two different neighbors on the same scale is not prudent as both countries have different interests in Nepal and vice-versa. 

References

  1. Poudel, Santosh Sharma. (2019). RC0011 – Nepalese Foreign Policy Practice in the 1950s and 1960s. Nepal Institute for Policy Research (NIPoRe). Kathmandu, Nepal. retrieved from https://nipore.org/nrc0011-nepalese-foreign-policy-practice-in-the-1950s-and-60s-special-relationship-balance-and-diversification/
  2. Upadhyaya, S. K. (1982). Nepal’s Peace Zone Proposal: Many Voices, One concern. Weekly Mirror, Special Issue.
  3. Muni, S.D. (2016). Foreign Policy of Nepal. Adroit Publishers, New Delhi, India.

Kaushal Sapkota

Synopsis

This commentary explores the prospects of individual fundraising in the context of Nepali nonprofit organizations. It attempts to evaluate individual giving in the U.S., other developed countries and in India, through secondary research. While comprehensive research on individual giving in Nepal does not exist, the article identifies favorable patterns and evidence within the social structure, literature, history, and religion of Nepal. Based on my research, I find that Nepali society is built around a giving culture thereby proving that individual giving is not an alien concept for the country. It is not a philosophical challenge, rather a communication exercise for nonprofit organizations to use it for their benefit.

Individual’s Contributions in Nonprofit Funding: Prospects for Nepali Nonprofits

A couple of months ago, I was discussing fundraising with a group of nonprofit leaders in Nepal, trying to explore their thoughts on raising funds from individuals to be sustainable and “somewhat” independent of grants. As a recent graduate of nonprofit management, it was surprising to me that almost everyone believed that individual fundraising is an “alien” concept surviving only in the U.S. or other developed nations because of their “generous” tax benefits and wealthy status. Intrigued by their response, I explored what literature and data had to say about raising funds from individuals. 

Individual Giving in the U.S.

A total of 1.56 million nonprofit organizations registered at the Internal Revenue Service (IRS), contributed an estimated $985.4 billion to the US GDP (5.6 percent) in 2015. In 2016, nearly 12.3 million people worked for nonprofits, accounting for 10.2 percent of the total private-sector employment, as nonprofits became the third-largest sector of US employment that year. The role of nonprofit organizations in the civil society and the US economy is significant. Klein claims that private-sector funding accounts for 13 percent of the total revenue received by nonprofits, while earned income and public funding contribute 55 percent and 32 percent respectively. Analyzing private-sector funding for nonprofit organizations reveal that:

    • Individuals in the U.S. give to charities. In 2017, American individuals, bequests, foundations, and corporations gave $410.02 billion as charitable giving, increasing by 5.2 percent from 2016 and reaching the $400-billion mark for the first time. Out of the total private sector giving, 70 percent was contributed by individuals, 16 percent by foundations, 9 percent by bequests, and only 5 percent by corporate foundations.
    • The demographic distribution of donors debunks myths about individual donations. In 2013, the wealthiest Americans donated 1.3 percent of their income, while the poorest donated 3.2 percent. Seven out of ten individuals donate, and most people who give to nonprofits give to at least five groups. Every year, about 20 percent of the population on some kind of welfare programs give, and 97 percent of the millionaires donate.
    • Religion motivates giving. In Fundraising for Social Change (2016) Kim Klein writes, “the majority of people who give money in describe themselves as religious or spiritual, regardless of their involvement in a formal religious or spiritual community”. In 2014, out of the $358.38 billion contributions made to nonprofit organizations, 32 percent of such donations were made to the religious organizations.

Individual Giving Elsewhere

People give for different reasons like expressing their altruistic self by giving to causes they care, gaining instrumental benefits like tax deductions and network gains, and out of social pressures. The giving trend of the U.S. is replicated in other developed economies around the world. Eight out of ten Canadians give, while in Holland, almost 90 percent of the population donates despite paying high taxes. 64 percent in South Korea and 80 percent in the Philippines give. In the U.K., 60 percent of the population donated in 2017, out of which 25 percent donated monthly and the size of an average donation was £44. In 2016, the Charity Aid Foundation published its findings from a survey on 195,000 people from 153 countries in the form of the Global Giving Index. The index claimed that a fifth of the global population volunteered, a third had given money to charity, while 45 percent helped a stranger.

Although there has not been comprehensive research on individual giving in Nepal, we can withdraw few relatable conclusions from the Everyday Giving in India Report 2019, jointly published by Sattva, Rohini Nilekani Philanthropies and Bill and Melinda Gates Foundation. Defining everyday giver as “individuals (residents, diaspora, global citizens) with an annual income of over INR 2.5 lakhs and a net worth below”, the report valued total everyday giving in India at INR 34,000 crore ($3.1 billion) out of which 90 percent was informal everyday giving and only 10 percent was the formal everyday giving. In the meantime, 10.2 percent of the total charitable giving was made to Social Purpose Organizations (SPOs). India’s everyday givers were motivated by the urgency of cause, the convenience of the process, community influence and impact of giving. 64 percent of the everyday giving was community giving and 26 percent was religious. The report further claims that an increasing propensity to give and an accelerating digital revolution will contribute to larger everyday giving in India in the future. The report accounted for four kinds of giving: money, goods, voice, and time and skills. 

Individual Giving in Nepal

The first poet of Nepali literature, Adikavi Bhanubhakta Acharya (1814-1868), wrote a poem to express his guilt of not giving to the society despite his riches as he compared himself with poor grasscutter who had built a well for travelers:

भर् जन्म घाँसतिर मन दिइ धन् कमायो (Bhara Janma Ghastira Mana Diyi Dhana Kamayo)

नाम क्यै रहोस् पछि भनेर कुवा खनायो (Nama Kei Rahos Pachi Bhanera Kuwa Khanayo)

घाँसी दरिद्रि घरको तर बुद्धि कस्तो (Ghansi Daridra Tara Buddhi Kasto)

म भानुभक्त धनि भै कन आज यस्तो ! (Ma Bhanubhakta Bhai Kana Aja Yesto)

मेरो इनार न त सातल पाटि कै छन् (Mero Inaar Na Ta Satala Paati Kai Chhan)

जे धन र चीज हरु छन् घर भित्र नै छन् (Je Dhana Ra Cheej Haru Chan Ghara Bhitrai Chan)

त्यस घासीले आज कसरी दिएछन् अर्थी (Tyas Ghansile Aaja Kasari Diyechan Arthi)

धिक्कार हो मकन बस्नु नराखी कृति ! (Dhikkar Ho Makana Basnu Narakhi Kriti)

Matri summarizes the poem as: “This grasscutter is poor, but his heart is generous…he has planned to do a noble deed like digging a pond with his meager savings. Whereas, I, Bhanubhakta, though a son of a well-to-do family, do not think of any service to others…My thoughts are centered around me…fie on my life which is devoid of any good work.” 

Centuries before Bhanubhakta, Nepal developed the “Guthi” System (derived from the Sanskrit “Gosthi” meaning “assembly” or “association”) to preserve the heritage of Kathmandu Valley by generating capital from collective land ownership thereby financing cultural preservation and maintenance communally. The history of Guthi can be traced back to the Lichchavi period; between the 5th and the 9th centuries, and have been used widely in different periods for different purposes. Different types of Guthis serve different missions and their existence is still communal.

Individual giving is also prevalent in the major religions of Nepal. In Hinduism, the Upanishad (religious text) identifies Dana (donation or charity) as one of the three characteristics of a good person. It is also visible in donations during events like Saptaha (week-long worship) or in stone inscriptions outside each temple. The concept of Dana (donation) in Buddhism, Zakat (one of the five principles of Islam asking individuals to donate certain part of their income) and Sadaqa (voluntary donations) in Islam, and charity in Christianity, focus on individual giving.   

Conclusion 

Nepali Society is built around a giving culture. It is evident in the social structure, literature, folklore, history, religion, and noticeably in the post-disaster relief efforts in recent years. Individual giving is not an alien concept for Nepal. Considering the need for diversifying their revenue sources, Nepali nonprofits have to be courageous. I see it as a marketing and communication challenge rather than a philosophical one.

References

  1. Bureau of Labor Statistics, US Department of Labor. (2018). Nonprofits account for 12.3 million jobs, 10.2 percent of private-sector employment in 2016. Retrieved from https://www.bls.gov/opub/ted/2018/nonprofits-account-for-12-3-million-jobs-10-2-percent-of-private-sector-employment-in-2016.htm
  2. Burke, G. A. (n.d.). Charity and the Three Gunas. Light of the Spirit Monastery. New Mexico. USA.
  3. Center for Civil Society Studies, John Hopkins University. (2019). The 2019 Nonprofit Employment Report. Retrieved from http://ccss.jhu.edu/wp-content/uploads/downloads/2019/01/2019-NP-Employment-Report_FINAL_1.8.2019.pdf
  4. Charities Aid Foundation. (2016). World Giving Index 2016
  5. Giving USA. (2018). Giving USA 2018: Americans gave $410.02 billion to charity in 2017, crossing the $400 billion mark for the first time. Retrieved from https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/
  6. Klein, K. (2016). Fundraising for Social Change. 7th edition. pp. 3-11. Wiley.
  7. Maitra, K. S. (1982). The First Poet of Nepali Literature. Indian Literature Vol. 25, No. 5 (September-October 1982). Retrieved from https://www.jstor.org/stable/23331113
  8. Müller-Böker, U. (1988). Spatial Organization of a Caste Society: The Example of the Newar in the Kathmandu Valley, Nepal. Mountain Research and Development, 8(1), 23-31.
  9. National Philanthropic Trust. (2019). Charitable Giving Statistics in the U.K. Retrieved from https://www.nptuk.org/philanthropic-resources/uk-charitable-giving-statistics/
  10. Pradhananga, N., Shrestha, K. K. & Dee, J. (2009). Sustaining Indigenous Heritage: Learning from the Guthi System in Nepal. Retrieved from https://ocoy.org/dharma-for-christians/bhagavad-gita-for-awakening/charity-and-the-three-gunas/
  11. Salamon, L. M. & Newhouse, C. L. (2019). The 2019 Nonprofit Employment Report. John Hopkins
  12. Sattva, Rohini Nilekani Philanthropies and Bill & Melinda Gates Foundation. (2019). Everyday Giving in India Report 2019
  13. Shaha, R. S. (1992). Ancient and medieval Nepal. New Delhi: Manohar Publishers and Distributors.
  14. Urban Institute. (2018). The Nonprofit Sector in Brief 2018. National Center for Charitable Statistics. Retrieved from https://nccs.urban.org/publication/nonprofit-sector-brief-2018#the-nonprofit-sector-in-brief-2018-public-charites-giving-and-volunteering
  15. Weber, E. (2016). Charity of religions with special references to Hinduism, Islam, Christianity: an interreligious perspective. Journal of Religious Culture. No. 213. Retrieved from https://www.researchgate.net/publication/316454842

Jaya Jung Mahat

Synopsis

The last decade saw an unprecedented rise in major social media platforms. There is no doubt that these platforms have enabled people across the globe to (re) connect with their families and friends. However, from the online advertisement perspective, these platforms have given birth to a new form of discrimination based on users’ gender, age, qualification, profession, and nationality among others. This commentary discusses Facebook’s prevalent Advertising Policies and the platform’s key ad optimization tools to check whether ads delivered through Facebook discriminates audiences. It also identifies few unintended consequences of ad optimization works on firms, and on individuals.

Introduction

With the recent developments in information and communication technologies, firms are able to track users’ online preferences and their behaviors. Moreover, available internet and social media tools enable firms to discover people’s personal details and employ online advertising with more precision for the targeted audiences. While this strategy, in general, is extremely beneficial for the firms, it need not yield desired benefits for the consumers. In recent years, Facebook has been at the center of this debate due to the platform’s controversial and ambiguous ad delivery provisions.

The Case of Ad Optimization on Facebook

A study has found Facebook’s proven roles in skewed outcomes from ads (related to the US housing and employment sectors) that run on this platform. The study specifically outlines three key areas in which Facebook is changing the way ads are delivered and thus yielding more skewed outcomes as compared to the traditional media. They include – Facebook does not allow advertisers to purposefully promote ads to a wide and diverse audience, Facebook strictly limits an individual’s ability to see ads that otherwise are not targeted at him/her, and finally Facebook possess sole power to do public interest scrutiny of results of online ads. Furthermore, ProPublica has also exposed earlier on how Facebook allowed advertisers to restrict citizens representing black, Hispanic, and other “ethnic affinities” from seeing ads.

Facebook has revised the platform’s ads policies and tools, time and again (For example, you can refer to Facebook’s 2016 updates and 2017 updates), to minimize Ads optimization options.  In addition, the company has incorporated a separate section (Discriminatory Practices) under its main Advertising Policies document to address some of the controversial issues related to discriminatory ads delivery mechanisms. However, Facebook still allows firms to optimize their Ads unless those contents violate (the) platform’s terms while creating an audience. Many still doubt, and some of them have written about it, if Facebook’s updates are effective at addressing the issues as platform’s existing ad algorithm automatically employes discriminatory practices even when it’s not told to.

Facebook Ad Optimization – How It Works?

One can easily create a Facebook Ad in just a few steps. According to Facebook, one needs to follow seven steps to create an Ad on (the) firm’s online platform –  Choose your objective, select your audience, decide where to run you ad, Set your budget, Pick a format, Place your order, and finally Measure and manage your ad.

Five of these seven steps pose least risks in terms of ad optimization. The two steps that have long been sources of major controversies for Facebook are – Select your audience (Step 2) and decide where to run your ad (Step 3). These two tools allow advertisers to optimize their ads as much as they want and build a desired audience to run their ads for. Out of them, Step 2 is more controversial than the Step 3 as the latter step only allows advertisers to optimize ads in limited ways. In fact, Step 3 allows a firm to decide on where to run its ads – either on Facebook Family’s all platforms or only one or few of them. Moreover, this option also allows the firm to ensure company’s ads run on specific mobile devices only.

For the purpose of this commentary, I created an experimental ad to check through all the major steps that are involved while creating an ad using Facebook’s available online tools.

The first step in this process is to identify appropriate contents as per a firm’s specific objectives. For example, earlier I had the following options to select from for Step 1.

Photo 1: Options for a business page to create and optimize ads for different purposes (Source: Facebook)

As discussed, the Step 2 is the most comprehensive and complex step among all other steps as it helps a firm to optimize the ad delivery mechanism as much as possible. I selected “Promote Your Page” in Step 1. For Step 2, I needed to work on the following contents (to select an audience):

Photo 2: Facebook’s default ad optimization tool for “Promote Your Page” Option (Source: Facebook)

As highlighted in the Photo 2, I could optimize an audience based on geography, age, budget and duration of the ad. In terms of geography, Facebook allows a firm to run its ads across a specific area [either a city or a precise area (within the radius range of 1 – 50 miles)]. For age specifications, a firm can customize an audience by selecting an age range that spans between the age of 13 and 65+ years. The overall duration of the ad would depend on the available budget. Depending upon the budget, an advertiser can choose a convenient ad-run period [range: day(s) – year(s)].

If the advertiser is not happy with the optimization tools available in Photo 2, he/she can choose to create an entirely new audience by setting own criteria using gender, age and geography factors as indicated in Photo 3. Moreover, the firm can either include or exclude an audience by using hundreds of criteria listed under three sections namely user demographics, their interests and behaviors. Each of these sections has sub-sections and sub-categories that conveniently helps the firm to work on further optimization of ads (Photo 4). The key sub-sections under there section are listed below:

  1. Demographics: Education, Financial, Life Events, Parents, Relationship, and Work
  2. Interests: Business and industry, Entertainment, Family and relationships, Fitness and wellness, Food and drink, Hobbies and activities, Shopping and fashion, Sports and outdoors, and Technology
  3. Behaviors: Anniversary, Consumer classification, Digital activities, Expats, Mobile Device user, Mobile Device user/Device use time, Multicultural Affinity, Politics (US), Purchase behavior, Ramadan (Month), Soccer, Travel, and one more category with name “More Categories” that is available for special firms only

Photo 3: Gender, Age and Geography tools for creating an optimized audience for Facebook ads (Source: Facebook)

Photo 4: Additional filters (Human Demographics, Interests and Behaviors) for creating an even better targeted ads (Source: Facebook)

The basic idea of the Step 2 is to work on all available ad optimization tools to design an audience (either a specific or a broad) that best suits the company’s advertising targets. Whether a firm has been able to achieve its audience specifications (with red color indicating more specific audience and the yellow color notifying of more general audience) is indicated by the digital indicator in Photos 3 and 4.

Potential Unintended Consequences of Ad Optimization

During my experiment with the “Experiment Group” (an audience that I have created for the purpose of this commentary) using the Facebook Ad tools, I could either include or exclude an individual from my targeted audience. From my experiment, I can clearly think of a professional (and firm), who has more knowledge of marketing and ad optimization, can deliberately create ads that discriminate against people based on hundreds of criteria. As these criteria not only incorporate people’s geography, gender, age and financial statuses into the Facebook ad optimization tools but also factors that define key human behaviors. From a public policy perspective, I don’t think the frequent and intentional use of these forms of ads would ever support concerned governments in meeting goals of the latter’s major positive discrimination policies and initiatives.

At first, it may seem quite natural and cost-effective for a firm to optimize its ads on Facebook (and on any other online platforms) to ensure that (a) company’s all ad spending yield best results. However, segregation of users using diverse criteria could result in disadvantages too, for the users and advertisers alike – though the overall costs for the firms will be far lesser than those for the consumers.

The only major costs that the advertisers may have to compromise while optimizing ads would be to leave out some of the most genuine beneficiaries from the pool. For example, if a private firm based in Nepal’s Capital City (Kathmandu) optimizes company’s ad on Facebook by targeting ads for people in Kathmandu Valley only may misses all potential consumers from other major cities in Nepal and neighboring urban areas in India and in China. On the contrary, such consequences on users may go far beyond personal levels and can yield unintended outcomes in social, economic and political terms.

References

  1. Ali, M., Sapiezynski, P., Bogen, M., Korolova, A., Mislove, A., & Rieke, A. (2019). Discrimination through optimization: How Facebook’s ad delivery can lead to skewed outcomes. Proceedings of the ACM on Human-Computer Interaction 2019. Retrieved from https://arxiv.org/abs/1904.02095
  2. Andreou, A., Venkatadri, V., Goga, O., Gummadi, K. P., Loiseau, P., & Mislove, A. (2018). Investigating Ad Transparency Mechanisms in Social Media: A Case Study of Facebook’s Explanations. Network and Distributed Systems Security (NDSS) Symposium 2018 18-21 February 2018, San Diego, CA, USA. Retrieved from https://mislove.org/publications/Explanations-NDSS.pdf
  3. Angwin, J. & Parris Jr., T. (October 28, 2016). Facebook Lets Advertisers Exclude Users by Race. ProPublica Inc. Retrieved from www.propublica.org/article/facebook-lets-advertisers-exclude-users-by-race
  4. Facebook. (2019). Advertising Policies. Retrieved from www.facebook.com/policies/ads/
  5. Facebook. (2019). Facebook Ads. Retrieved from https://www.facebook.com/business/ads
  6. Facebook. (February 08, 2017). Improving Enforcement and Promoting Diversity: Updates to Ads Policies and Tools. Retrieved from https://newsroom.fb.com/news/2017/02/improving-enforcement-and-promoting-diversity-updates-to-ads-policies-and-tools/
  7. Facebook. (November 11, 2016). Improving Enforcement and Promoting Diversity: Updates to Ethnic Affinity Marketing. Retrieved from https://newsroom.fb.com/news/2016/11/updates-to-ethnic-affinity-marketing/
  8. Johnson, J. P. (2013). Targeted advertising and advertising avoidance. The RAND Journal of Economics, 44(1), 128–144. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/1756-2171.12014
  9. Speicher, T., Ali, M., Venkatadri, G., Robeiro, F. N., Arvanitakis, G., Benevenuto, F., Gummadi, K. P., Loiseau, P., & Mislove, A. (2018). Potential for Discrimination in Online Targeted Advertising. Proceedings of Machine Learning Research 81:1–15, 2018. Retrieved from http://proceedings.mlr.press/v81/speicher18a/speicher18a.pdf
  10. Stied, M. (April 05, 2019). Facebook’s Ad Algorithm Discriminates Even When It’s Not Told To, Study Finds. New York Magazine. New York Media, LLC. Retrieved from http://nymag.com/intelligencer/2019/04/facebooks-ad-algorithm-is-a-fully-functional-racism-machine.html

Enabling Factors for Public-Private Partnership in Infrastructure in Nepal

 Nirnaya Bhatta

Synopsis

The fanfare with which the Third Nepal Infrastructure Summit was organized during 11-12 September indicates a realization that public infrastructural goods unequivocally contribute to national development. Public-private partnership is gradually being considered as the modality of choice to implement large infrastructure projects in Nepal, as evidenced by the recently passed Public Private Partnership and Investment Act, 2018. Although, it is essential to understand the state of the enabling conditions that in are in place currently that could either contribute or hinder effective public-private partnership in infrastructure in Nepal. The EIU Infrascope Index that measures a country’s capacity to implement PPPs in infrastructure is a good reference point in this regard. This RC draws lessons from common literature on the subject that Nepal could consider in terms of improving its enabling environment to implement PPPs in infrastructure.

PPP in Infrastructure in Nepal

There is an increasing consensus across political parties, the civil service, the private sector and the donor agencies that Nepal needs to urgently make strides in its infrastructure development. Further, to operationalize implementation of infrastructure projects, for the right reasons, Public-private partnership (PPP) is gradually being considered as the right modality to achieve these ends. After all, developing nations such as Brazil, China, India, Malaysia and Indonesia, to name a few, have managed to upgrade national infrastructure through the effective applications of PPP arrangements.

Any development in promoting PPPs in infrastructure in Nepal must be lauded. Consider the direct relationship between investments spending and raise in gross domestic product (GDP). For instance, “the International Monetary Fund estimates that an increase of 1% in investment spending raises gross domestic product (GDP) by approximately 0.4% in the same year and by 1.5% in 4 years after the increase” (IMF, 2014).

The increased importance given to PPP in Nepal is further attested by its importance underlined during the Nepal Infrastructure Summit held last week, which comes after a month of the first India Nepal Logistics Summit. Further, the Federal Parliament passed the Public Private Partnership and Investment Act, 2018, which only demonstrates there is a growing realization among major policy stakeholders that Nepal needs better infrastructure as a start to also support the tourism, education as well as industrialization.

It is useful to closely look at the enabling as well as disabling conditions in Nepal that would affect implementation of PPPs in infrastructure. For instance, how willing is the private sector in Nepal and foreign investors to invest in Nepali infrastructure? And more important, how capacitated is the Nepali public sector to bring relevant parties on board? Considering the low number of PPPs in infrastructure in Nepal, as compared to most of Asia, it does seem like Nepal still needs to get some fundamental factors in place. Although, the new PPPI, 2018 Act that seeks to establish a PPP Unit within the Investment Board, Nepal, is exclusively mandated to oversee PPP infrastructural undertakings.

Infrastructure Ranking of Developing Asian Economies, 2017–2018  

Source: World Economic Forum. 2017. Global Competitiveness Report 2017–2018

Why PPP in infrastructure?

The World Bank defines PPP as “a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance” (World Bank, 2018). There may not be a better way to cover the infrastructure gap than public and private sector working alongside each other. PPPs “have been an effective conduit to channel private capital and funds to address a broader development agenda” (Deep, Kim, & Lee, 2019).

The increasing preference of availing PPP is easily understood, as “Lee et al. (2018) projected that doubling PPP investment from 0.5% of GDP in 2015 to 1% generate additional 0.1 percentage points to GDP growth per capita across Asia and the Pacific” (Deep, Kim, & Lee, 2019).

Further, while the public sector has the capacity to be the guarantor and can mobilize the state apparatus, the private sector provides readily available capital, operational efficiency, innovation in project implementation, and managerial and technical skills. Most importantly, the public sector could afford to consider the welfare implications of projects proposed under PPP.

The Infrascope Index provides an immediate reference point for evaluation:

The Economist Intelligence Unit (EIU) provides a very handy and insightful tool known as the Infrascope Index which Nepali policy makers can immediately consider using as a guide to improve the countries enabling environment. The Infrascope index is a benchmarking tool that assesses a country’s implementation capacity to execute key infrastructure sectors through PPP in transport, electricity, water and solid waste management. Hence, it allows policy makers to quickly identify major hindrances “unlock the power of PPPs and support the broader development agenda”.

Unfortunately, Nepal is not included in the index as of now. Although, on the bright side, the index exclusively studies countries where the American agency Millennium Challenge Corporation (MCC) works in. As Nepal is one of the beneficiaries of MCC, it is likely that Nepal will be considered in this index after MCC’s projects start the construction of “313-kilometre-long 400 kVA high-voltage transmission lines and three high-capacity substations, including building 1,039 transmission line towers across the alignment, and build different road projects with a total length of 305 kilometres.” (The Himalayan Times, 2019)

Does Nepal’s public sector have the capacity to effectively implement PPPs?

While it is useful to explore if the public sector of Nepal is adequately competent to implement effective PPPs, it is also fair to question whether the private sector is. An excellent report by Asian Development Bank, that compares PPP in infrastructure across Asian economies states that, “Among major factors supporting PPP implementation, the following features are critical: coherent policy, public sector capacity to manage PPP appropriately, public sector willingness to have mutual relation with private partners, and leadership” (Deep, Kim, & Lee, 2019). The challenges to apply PPP in a large scale pertains to it is a complex system; requires specific and sufficient knowledge of financing structure, risks allocation, contract management, and disputes resolution; and the transaction process usually takes a long time to conclude” (Zen, 2018).

In Nepal, investments in the infrastructure sector are often misunderstood to mean merely construction. The actual work continues after construction has concluded, including how the infrastructure is managed and maintained, and identifying different collaborative mechanisms that would engage the private and public sector together. This points to the extraordinary role that the public sector needs to play as the private sector could not be expected to take primarily take the role of a custodian.

As per the index, the following indicators can be used to evaluate Nepal’s readiness and capacity to implement PPPs in infrastructure into five components:

  • Enabling laws and regulations
  • The institutional framework
  • Operational maturity
  • Investment and business climate
  • Financing facilities for infrastructure projects

Policy Implications

Considering that the public and private sector have usually functioned in silos in Nepal, an environment of mitigating suspicion between the two needs to be created. While the public sector needs to regard the private sector as an equal partner in any PPP-based project; the private sector needs to take advantage of the fact that the public sector can indeed leverage massive resources, not limited to economic, but also the state apparatus to implement projects run under PPP. Huge profits can thus be generated.

Finally, the public sector should be under no delusion that PPPs will get off the ground by merely passing legal instruments and organizing glamorous summits. Traditionally, the public sector has been reactive in terms of putting relevant policies in place to address any issue, so when it comes to PPPs, it should be at the vanguard of initiating and ensuring all stakeholders are brought together. After all, the mandate to ensure welfare of a country is with the public sector, and not necessarily with the private sector that is not compelled to consider welfare implications.

References

  1. Deep, A., Kim, J., & Lee, M. (2019). Realizing The Potential Of Public–Private Partnerships To Advance Asia’s Infrastructure Development. Manila: Adb.
  2. IMF. (2014). World Economic Outlook: October 2914: Legacies, Clouds, Uncertainties. Washington, DC.
  3. The Himalayan Times. (2019, August 08). MCA-Nepal projects to start from June 2020. Retrieved from The Himalayan Times: https://thehimalayantimes.com/business/mca-nepal-projects-to-start-from-june-2020/
  4. World Bank. (2018, 02 06). What are Public Private Partnerships? Retrieved from Wolrd Bank PPP LRC: https://ppp.worldbank.org/public-private-partnership/overview/what-are-public-private-partnerships
  5. Zen, F. (2018). PUBLIC–PRIVATE PARTNERSHIP DEVELOPMENT IN SOUTHEAST ASIA. Manila : ADB