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Feb 21, 2010

Economic Freedom Report 2010; Where does Nepal stand?

Economic Freedom is described as the situation where people of a country are free to trade with others, compete in markets, buy what they want, earn a living in a job they choose, keep what they earn and own things privately.

Among the three kinds of freedom (political, civil and economic) , economic freedom is considered the most crucial factor for the development of a country and the most ignored one. For example , in Nepal's case, we all are aware of our political freedom and civil liberties but not only we are ignorant about our economic freedom rights but in most cases, we tend to think those rights irrelevant and not rights at all.  From a ordinary citizen to policy makers of our country are hostile to foreign investments, free labor markets,consider imports to be harmful for our country and are ambiguous while dealing with taxation policies, private properties, free trade and free competition and government's intervention in Nepalese economy.

The importance of economic freedom can be illustrated by listing down the most free and least free countries in regard to economic freedom:

Most Free

New Zealand
United States of America
United Kingdom

Least Free

North Korea
Republic of Congo
Democratic Republic of Congo

Average Per Capita Income of the freest countries is $ 24,402 whereas average per capita income of least free countries is $ 2,998. Life expectancy of most free countries is 77.8 years whereas that of least free countries is 55 years.

Note the fact that some countries among the freest one are devoid of any natural resources, like HongKong and Singapore whereas most of the countries among the least free ones are considered to be very rich in natural resources, like Nepal, Congo, Venezuela.

Economic Freedom Index is calculated by two institutes separately. Fraser Institute of Canada and Heritage Foundation of USA.  Following is the section about Nepal in Heritage Foundation's Economic Freedom Report 2010.

Economic Freedom Report of Nepal - 2010

Nepal’s economic freedom score is 52.7, making its economy the 130th freest in the 2010 Index. Its score is 0.5 point lower than last year, reflecting declines in five of the 10 economic freedoms. Nepal is ranked 28th out of 41 countries in the Asia–Pacific region, and its score is below the world and regional averages.

Nepal’s economy is characterized by a combination of rapid population growth and inadequate economic growth that has led to widespread, chronic poverty. Overall, weak reform efforts have failed to stimulate broad-based economic growth. The state continues to hamper private-sector development, and political instability weakens the country’s ability to implement economic reform or create a stable environment for development.

Although reforms in Nepal’s trade regime are slowly having an effect, the average tariff rate remains high. Foreign investments must be approved or face licensing requirements. A lack of transparency, corruption, and a burdensome approval process impede much-needed private investment growth. Property rights are undermined by the inefficient judicial system, which is subject to substantial corruption and political influence.

Background: The fall of the nine-month-old Maoist government in May 2009 has led to political uncertainty in Nepal. Maoist leader Pushpa Kamal Dahal resigned from the premiership following a dispute with Nepal’s president over leadership of the army and the fate of some 20,000 Maoist fighters. A 22-party coalition led by Communist Party of Nepal (United Marxist Leninist) leader Madhav Kumar Nepal took power following the fall of the Maoist government but faces continual protests and weakening law and order. The Maoists, who fought a 10-year insurgency that left over 13,000 dead, signed a peace accord in 2006 that allowed for elections that they won in 2008. Economic development has largely stalled. Nepal attracts very little foreign direct investment, and its main industries are agriculture and services.

The overall freedom to start, operate, and close a business is limited under Nepal’s regulatory environment. Starting a business takes an average of 31 days, compared to the world average of 35 days. Obtaining a business license takes almost twice the world average of 218 days. Bankruptcy proceedings are lengthy and complex.

Nepal’s weighted average tariff rate was 13.1 percent in 2007. The government continues to implement reforms, but import bans, services market access barriers, import taxes, import and export licensing, non-transparent regulations, weak enforcement of intellectual property rights, inadequate infrastructure and trade capacity, and customs corruption add to the cost of trade. Fifteen points were deducted from Nepal’s trade freedom score to account for non-tariff barriers.

Nepal has moderate tax rates. Both the top income tax rate and the top corporate tax rate are 25 percent. Other taxes include a value-added tax (VAT) and a property tax. In the most recent year, overall tax revenue as a percentage of GDP was 9.6 percent.

Total government expenditures, including consumption and transfer payments, are low. In the most recent year, government spending equaled 16.0 percent of GDP. The state oil company is a drain on the economy.

Inflation has been moderately high, averaging 7.4 percent between 2006 and 2008. Although most price controls have been eliminated, the government regulates the prices of petroleum products and telecommunications services and subsidizes companies in strategic sectors. Five points were deducted from Nepal’s monetary freedom score to account for policies that distort domestic prices.

Nepal is generally open to investment in many sectors, but investments must be approved, and many face licensing requirements. Bureaucracy and regulatory administration
are burdensome, non-transparent, inconsistently implemented, and inefficient. Political instability, pervasive corruption, and inadequate infrastructure and administrative capacity also inhibit investment. Residents may hold foreign exchange accounts in specific instances; most non-residents also may hold such accounts. Convertibility is difficult and not guaranteed. Most payments and transfers are subject to prior approval by the government. There are restrictions on most capital transactions, and all real estate 100   transactions are subject to controls. Foreign investors may most free acquire real estate only for business use.

Nepal’s fragmented financial system is heavily influenced by the government. Financial supervision is insufficient, and anti-fraud efforts are lacking. Regulations are not transparent and fall short of international standards. The banking sector dominates the financial sector, and there are approximately 20 commercial banks operating in the country. The number of other financial intermediaries has increased in recent years, but the high cost of credit and limited access to financing still deter entrepreneurial activity. Nepal’s government-owned banks represent more than 30 percent of total banking assets and account for more than half of total bank branches. The central bank has gradually phased out “priority sector” financing activities whereby banks must lend a certain amount to government-designated projects.

Nepal’s judicial system suffers from corruption and inefficiency. Lower-level courts are vulnerable to political pressure, and bribery of judges and court staff is endemic. Weak protection of intellectual property rights has led to substantial levels of optical media copyright piracy.

Corruption is perceived as widespread. Nepal ranks 121st out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008. Foreign investors have identified corruption as an obstacle to maintaining and expanding direct investment, and there are frequent allegations of official corruption in the distribution of permits and approvals, the procurement of goods and services, and the awarding of contracts. The governmental Commission for the Investigation of the Abuse of Authority, mandated to investigate official acts of corruption, claimed a 75 per-cent success rate concerning corruption cases it filed, but some cases involving politicians were not filed or were defeated in court.

Nepal’s labor regulations are restrictive. The non-salary cost of employing a worker is low, but laying off an employee is difficult.
Isn't it time that we fight for our economic freedom as well??

Feb 19, 2010

टेलिफोन महशुल घटाउदा दूरसन्चार प्राधिकरण को आपत्ति ; दूरसन्चार प्राधिकरण के का लागि ?

समाचार पढ्दा अचम्म लाग्यो ।  दूरसन्चार प्राधिकरण के का लागि ? जनताको सुबिधाको लागि की जनतालाई दु:ख दिनका लागि । तर फेरी सरकारी निति नियम प्राय यस्तै त हुन्छन् नी जनताको सुबिधाको लागि भन्छन् तर आखिरमा जनताले झन बढी दु:ख पौछन ।  

Feb 18, 2010

Nepal: Communist Paradise? Yes , indeed but how long??

In his article "Nepal: Communist Paradise"  which was published in today's Republica, Jainendra Jeevan has rightly argued that Nepal has been a paradise for communism because when took one of its last breaths in Soviet Union and Eastern Europe, changed its form in China and Vietnam, was crushed in Peru,  it was at its prime time in our country in the form of  CPN-UML.
Fortunately CPN-UML's realization that future has less in its portfolio for hard-core communism made it adopt the principles of Multi-party democracy.

Sadly, almost two decades later, we are standing at the same scenario with UCPN-Maoist  as radical as the then CPN-UML and this time its only worse with a history of a decade long bloody war, 13000 plus casualties, thousands of brain-washed militias seeking enjoyment and so called liberation through violence and what more; they are the largest party in the constituent assembly.

While they are mulling over whether to change like CPN-UML did or revert to a takeover through violent means, I am sure anyone wise enough would choose the former option as it is evident that choosing the second option would mean their complete defeat and further degradation of the country. I guess by now they have noticed that Communism has long been dead already and they might have fooled a chunk of impoverished population through emotions , fooling a whole nation takes more than that. It takes some logic and reasoning. It takes  convincing people about your idea and getting their support VOLUNTARILY. It takes understanding what the world has been doing to prosper so much and acknowledging that there's something more to truth than what Karl Marx said.
I agree with Mr. Jeevan when he says till this date Nepal has been a paradise for communism. On the same note, it has been a paradise for corrupt politicians, corrupt state, unimaginable poverty and despair, manipulation of poor in the name of .liberation. No wonder, Nepal which comes as a fore-runner in case of political awareness and involvement, comes near to the last when it comes to "Economic Freedom".No wonder, Nepal is the poorest country in the world outside Africa.

Finally , the picture of the child in this post speaks a thousand words when it comes to communism in Nepal.

Feb 17, 2010

A culture of extortion

Though it has already days since Maha Shivaratri, a major festival of Hindus has passed; an aspect of it has been itched in my mind till now.  When the adults are busy in the massive marijuana consumption, and hundreds of thousands of them swarm to Lord Shiva’s temple, children amuse themselves with blocking roads with ropes and extorting money from the passersby.  It’s the child’s whim that determines whether even the on foot traveler also gets extorted.

What was supposed to be another merry making aspect of a festival has turned out to be a nuisance for travelers on this day. It’s a formidable task to travel the city roads on Maha Shivaratri day. After every bend you find some children blocking the road with some ropes and it’s very hard and unpleasant to pass without discharging some rupees from your pocket. What bothers me most is the way our culture is acquainting our children with extortion and instilling the thought on them that it’s okay to extort. It’s the way they learn from their childhood that it’s okay to use force or any other means of nuisances to earn money. And I believe when it comes to teaching values to our children, culture cannot be an excuse.

Even sadder is the fact that, in many cases, this little amusements turn into serious tragedies when vehicles try to ignore the blockades by speeding past. If you think, the general environment of Nepal is getting unbearable; revisiting our culture looking for such tell-tale signs might be interesting.

We could have instead taught our children to earn by helping others on such festivals and thus instill on them the fundamentals of civilization and a free society. Would it have been better if we could teach our children to make money on Shivaratri by maybe selling bottled waters, Pooja Samagris on temples or by making them help the devotees during the festival? Wouldn’t such a practice make them learn that in a civilized society a person is supposed to earn by benefitting others and by providing what others need instead of by causing nuisances for others?

But again, if children sell goods or do any productive works its child labor and how dare I talk about promoting child labor, ain’t I?

Feb 16, 2010

केही लिबर्टेरियन भनाइहरु - १

  • जुन सरकारले पिटरसँग लुटेर पौललाई दिन्छ उसले पौलको समर्थनमा सधै भर पर्न मिल्छ । - George Bernard Shaw
  • जो क्षणिक सुरक्षाका लागि आफ्नो आधारभूत स्वतन्त्रता त्याग्न तयार हुन्छन् ती न त स्वतन्त्रताका हकदार हुन्छन् न त सुरक्षाका । - Benjamin Franklin
  • यदि तिमी गलत तथा अनुत्तरदायी तरिकाले रोज्न स्वतन्त्र छैनौं भने तिमी स्वतन्त्र नै छैनौं । -Jacob Hornberger
  • सरकारलाई पैसा र श्ाक्ति दिनु भनेको तन्नेरीहरुलाई विस्की र कारको साँचो दिनु जस्तै हो । -P.J. Rourke
  • राज्य जति भ्रष्ट छ त्यति नै धेरै कानून लाद्न खोज्छ । -Tacitus
  • एउटा बुद्धिमान र मितव्ययी सरकार जसले जनताहरुलाई एकअर्कालाई हानी पुर् याउनबाट रोक्छ र यस बाहेक जनतालाई आफ्ना उद्यम र प्रगतिका लागि काम गर्न स्वतन्त्र छोडिदिन्छ र मजदुरको मुखबाट उसले कमाएको आहारा खोस्दैन । यो नै असल सरकारको व्याख्या हो । -Thomas Jefferson
  • प्रजातन्त्र भन्ने कुरा दुई ब्वासोँ र एक भेडा बीच खाना के खाने भन्ने विषयमा मतदान भएको
  • भन्दा फरक हुनुपर्छ । -James Bovard
  • स्वतन्त्रताको रक्षाका लागि अतिवाद अनैतिक होइन् । न्यायको खोजीको समयमा मध्यमभर्गी सोच नैतिक होइन् । -Barry Goldwater
  • कुनै नागरिकलाई ऊ आफैंबाट बचाउनु न त सरकारको दायित्व हो न त कानूनी प्रणालीकै । -Justice Casey Percell
  • यो देशलाई चाहिएको भनेको अलि बढी बेरोजगार राजनीतिज्ञहरु हो अरु केही होइन । -Edward Langley
  • सरकार गलत भएका बेला आफू सही हुनु खतरनाक हुन्छ । -Voltaire
  • अनावश्यक कानूनले आवश्यक कानूनलाई कमजोर बनाउँछन्। -Montesquieu
  • स्वतन्त्रता भन्दा तानाशाहीपन जहिले पनि बढी संगठित हुन्छ । -Charles Peguy
  • वैदेशिक सहायता धनी देशका गरिब जनताको धन गरिब देशका धनी जनतामा सार्ने माध्यम हो । -Douglas Casey

Feb 4, 2010

Government preparing to ban import of inverters: Another farce of civil rights!

The recent news regarding government’s preparation to ban the import of inverters and other similar electrical equipments citing they are the cause of increased load-shedding entertained the citizens as intended maybe. Most of us pushed the matter aside considering it as another ridiculous policy that thankfully never gets implemented. Many others gave out a sigh and prepared themselves for another silent compliance and a harder life. No wonder, we have learnt to play the way it is meant to be played.

However, what saddens me is the fact that our government always manages to outrun itself in introducing more ridiculous policy. It saddens me to see the numbness of citizens that prevents them from feeling any indignation when the state run company fails to deliver electricity for 11 hours a day (sounds like 1800s , doesn’t it?), and blames the citizens for finding an alternative to reduce their hardships caused by the inefficiency of the state. I am surprised at the ignorance of the citizens who refuse to acknowledge the fact that in most of the countries in the world, private companies vying for customers are providing electricity at cheaper cost and more efficient way. And we would be better off without Nepal Electricity Authority.

If we analyze the recent decision of government to introduce such policy without embarrassment or reproach, we find that the reason for this is our concept of origination of power. As it has always been believed in our society that the power state has is inherent in itself, be it in the name of King or the so called democratically elected government. The power of an individual is thought to be a derivative of the power of the state. And hence, an individual’s right is something granted by the state and thereby can be taken away or awarded at the will of the state. When translated into recent context, it becomes that electricity is something that we don’t naturally have a right to even if we are willing to pay for it but instead it’s a privilege our state has granted us to and if the state thinks it’s not good for us to have electricity we shouldn’t have one. Our state thinks that we should be suffering power cuts of 11 or even 18 hours a day and that we should be doing it because electricity is something we got because we had a energy ministry and all blood suckers in it not because it was a commodity that makes life easier and anyone willing to pay for it naturally entitled to have it.

It wouldn’t be a surprise if someday the government decides to ban freezes, electric bulbs, rechargeable batteries, and our cell phones not for causing load shedding but for the very reason of being designed to run with electricity itself.