Road To Economic Progress

Amrit P. Shrestha Tuesday May 22, 2007
Source : GORKHAPATRA

What the modern industry needs is better infrastructure. Traditionally, infrastructure services across the world were provided by governments in limited areas like airports, electricity and roads. Today infrastructure must improve in all parameters, which requires immense financing through external and internal channels. Without basic infrastructure development, no sector can achieve any sort of target.

To keep the wheels of the economy running, countries must make enormous progress in attracting private investment in the infrastructure sector, as the government alone cannot invest huge amounts in it. In order to send the right signal to international investors, there is a burgeoning need to create sophisticated infrastructure in selected key cities and projects as seen in Beijing, Shanghai and Kuala Lumpur, which have emerged as the investor's choice in the last three decades.

Infrastructure needs three key inputs - large amounts of money, skilled manpower and selected projects. Governments must realise that the only way to become the nation's doorway to economic zoom is to give new thrust to infrastructure development. Thus, the Essential Facility Doctrine has been recognised by most of the developed and developing countries. Australia, Singapore, South Korea and India have been adopting the doctrine.

Investment requires long-term funds with a long payback profit period. More importantly, Public-Private Partnership (PPP) is a signal to investors in general that the policy framework is sound and environment conducive for investment. Such models have to be initiated in key sectors like roads, airports, power and tourism.

Nepal lacks the necessary physical infrastructure to qualify as an international investment centre. Investments must have easy access, and there should be well-developed infrastructure within acceptable parameters. At present, we must have suitable strategies to convert challenges into opportunities. Better infrastructure helps in alleviating poverty and expanding the industrial base because accessibility to services improves as a result of it.

Currently, GDP's contribution to infrastructure development is less than 4 per cent, which is less than the share of our neighbouring countries. Actions must be accelerated on the following track, to help build trunk infrastructures in the country. First, Modernisation or industrialisation require massive expansion of national highways, airports, electrification and telephones linking every village with the urban areas. Ground water exploration, minor irrigation, water supply and sanitation are other priorities.

Highways form the economic backbone of the country. Likewise, rain water harvesting and human resources management must be developed, which is sorely lacking in the country. Given the size of the country, air travel has become the swiftest mode of transport. Hence, Nepal should take bold steps to expand and upgrade its airport infrastructure.

Second, among the bottlenecks to achieving growth in the country is electricity supply. Power and its allied sector play a crucial role in economic development. Electricity is the lifeline of our lives as its use ranges from mundane applications to complex tasks and operations. Our productivity is affected because of this.

Third, the tourism industry could gather momentum if the government plans innovative promotions. Tourism should introduce new products such as monsoon tourism, helicopter tourism and the like. Such programmes will attract visitors, especially from India and Europe. With Nepal becoming a business hub especially for tourism, regional disparity can be minimised upto a certain extent. Likewise, growth of tourism will help enrich the lives of traditional workers and artistes. Unfortunately, lack of roads, accommodation, safety measures, well established communication systems and hospitality management centres are some of the hurdles in its promotion.

Fourth, building IT Parks in important cities can offer a unique confluence of advantages - robust physical infrastructure, power and data connectivity and trained technical manpower. All this will effectively reduce the operational cost.

Fifth, there is a need to hand over the entire infrastructure development to the private sector with no political interference. There should be no bureaucratic controls over enterprises. They should not be asked to get approval for minor decisions.

Sixth, an act to form an independent Infrastructure Authority, similar to the National Highways Authority in India, Afghanistan, Laos and the Philippines, has to be announced without delay. Meanwhile, a vision paper with priorities and national consensus must be flashed, emphasising on infrastructure development to attract investors and also to make the entire cycle of investment, productivity and wealth creation sustainable.

Seventh, special packages of tax incentives must be introduced as a tool to encouraging private enterprises or an undertaking engaged in the development of infrastructure facilities. This is particularly important for infrastructure developing companies.

Human development
Most importantly, the overall environment needs to be free from prevailing corruption and petty-mindedness. For the common man, good economics is all that he cares. The government should accelerate the process of human development by delivering services in electricity, transport, water and sanitation that the poor need in order to live and participate in economic growth.

A leader of outstanding merits, efficient bureaucrats and a graft-free culture are the invisible infrastructure to race with the modern world. Let us start from a good today to a better tomorrow.
(Shrestha is ex-director of the Department of VAT and a financial management and VAT expert deputed in Tanzania by UNDP)

__________________
Time is like a river.
You cannot touch the same water twice,
because the flow that has passed will never pass again.
Enjoy every moment of life.

I have learnt silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet strange, I am ungrateful to these teachers.