Some time ago, an amendment related to securities trading was presented in the House of Representatives. During a discussion, I told my colleagues that with a little effort, the securities market could become an institution generating 100 billion rupees in revenue annually. However, these days, despair seems to sell more than ambition, so there was no further discussion on the matter.
The period from 1983-2001 was different. The Panchayat system had taken some lessons from its failures, and even the multiparty democracy showed some enthusiasm to achieve things. French, British, and Arabian banks started opening branches in Nepal. The American Citi Bank also established a contact office. Companies like Dabur, Hindustan Lever, Colgate-Palmolive, Kodak, Pepsi, and Carlsberg opened factories. Insurance companies were established, and airlines and helicopter companies began operations. There was similar growth in industries like carpets, garments, vegetable ghee, sugar, tea, and instant noodles. A giant Finnish company called Enso Oyj (now merged with the Swedish Stora company to form Stora Enso) was ready to enter Nepal.
In 1990-91, Nepal’s exports were worth 1.5 billion rupees, but by 2001-02, they had reached 28.9 billion rupees. During that time, almost half of the total imports were being covered by exports. There was also an expectation that huge revenue could be generated from hydropower and forests. In 1996, a study conducted with the support of the Finnish government reported that if Nepal managed its forests as well as Finland, it could earn 300 million dollars annually. (For comparison, the estimated total revenue for the year 1996-97 was 34 billion rupees, or 590 million dollars). Around the same time, the hydropower sector was opened to private investors.
It was precisely at that time that Nepal gained the confidence that it could become an international financial hub. A study by Collins & Associates from Boston suggested that due to favorable weather and time zones, Kathmandu could become a center for international finance, and this study was presented to the Nepalese government. Amid all this enthusiasm, Nepal passed the International Financial Transactions Act, 1997, from the parliament in 1997. There was hope at that time that Nepal could become like Mauritius or Hong Kong.
Then, the conflict escalated, many factories closed down, new internationally renowned companies did not come, and the kings died. Along with that, our ambitions also came to a halt. I believe that by making comprehensive reforms in the securities market and welcoming investors from Bhutan, Bangladesh, Afghanistan, Thailand, Sri Lanka, and other countries to the Nepalese stock market, we can rise again, even if only by reviving fragments of the old dream.
(Biswo Poudel is a well-known Nepali economist and academic. He has been involved in various roles related to economic policy-making and development in Nepal. Poudel is particularly recognized for his expertise in public finance, economic planning, and policy analysis. He has served as the Vice-Chairman of the National Planning Commission (NPC) of Nepal, where he played a significant role in shaping the country’s development strategies and policies.)
