Last update - 00:00 04/03/2008
The view from Himalaya*
By Tali Heruti-Sover
KATMANDU - Israel and Nepal do have things in common, if not exactly breathtaking views from icy mountaintops. "You also have political problems, but you do business," says Rajendra K. Khetan.
He's only 37 but he's the chairman of Khetan Group, one of the three corporate giants that rules Nepal's business scene. His group turns over hundreds of millions of dollars a year and engages in areas such as banking, insurance, petrochemicals and food. True, doing business in Nepal "can be tough sometimes," the young tycoon admits. "But just like in any other developing country, Nepal has opportunities that can't be found anywhere else." What it needs is external talent, people to come from the outside and take advantage of the country's unique offerings.
"Can be tough sometimes" is a tad subjective. From his spacious office in the heart of Katmandu, Khetan - scion of one of Nepal's four richest families, and the owner of Lakshmi Bank and Himalaya Insurance Company - seems to be sitting as pretty as it gets. He isn't languishing in one of the endless lines in front of a local gas station. His home isn't left in the dark for dozens of hours at a time because of the brownouts - power cuts initiated by the local power company because of capacity issues. Khetan also doesn't seem to be suffering, like 42% of the population, from underemployment.
But Khetan, serial entrepreneur, president of the local chapter of young Nepalese entrepreneurs and also honorary consul of Portugal, has troubles of his own. For years this gorgeous country has been ridden with internal struggles that sometimes take a bloody turn. The Maoists want their share and fight against the ruling party. The eastern peoples, the Terai, demand autonomy and are willing to battle over it. The king has been neutralized and nobody has any faith in the government's word. Even economic policy can create obstructions, and people have the unfortunate habit of attacking tanker trucks bringing fuel from India, which has the unfortunate result of creating acute gasoline shortages in the capital.
The government is feeble and its budget is a meager $2.6 billion a year. (Israel's, by comparison, is $79 billion a year.) The government can't seem to persuade the people to stop sabotaging their own fuel supply, yet it rules over young entrepreneurs with an iron fist.
"Our government doesn't let Nepalese companies invest abroad, nor does it encourage granting franchises in areas where it can't invest itself," Khetan explains. The government is locked in an outmoded mindset, he says. But private businessmen like himself are urging it to change, and recently, he feels, they've had some success. Projects worth tens of millions of dollars are taking off.
What sort of things might foreigners bring to Nepal? One of the areas most starved for development there is telecommunications, mainly cellular, Khetan says. "Only 2 million people today have cellular phones and they're being served by two private operators. You have to remember that this is a mountainous country, and that access to many places is very difficult. We need wireless technology to overcome the difficulties. I know you Israelis are experts in that area. We have the market. You have the technology. Why don't you come?"
Perhaps because of the difficulties you mentioned.
"Our government, like everywhere else in the world, is responsible for granting licenses in telecommunications, but it understands the need for development in this area," Khetan insists. "A company that would come with innovative products that we need, that would establish a relationship with a strong local partner and prove its commitment, would find a willing ear among private entrepreneurs and the government bureaucrats too."
The Khetan Group has forged alliances with companies from China, India, Denmark and the United Kingdom too, says its chairman. "We would very much like to cooperate with Israeli companies as well."
Visitors to Nepal encounter roadblocks, protests, cars that get stuck because they run out of gas, power cuts, and activists who threaten to overthrow the government.
"And you don't have internal problems, and Palestinians who threaten to blow up?" Khetan rebuts. "And India has no terrorism, yet nobody hesitates to do business with it? Every problem has its solution, this does too. Business must go on. It's our growth driver."
Meanwhile, at least, Nepal isn't even on the map for Israeli businessmen. Danny Stav, Israel's ambassador to Katmandu, suspects that the scent of contempt emanating from our local lions of lucre is based on ignorance. "This isn't India or China. This is a small market, physically remote, without any direct flights (from Israel), which also suffers from bad public relations because of the internal strife and short-term economic policy," he sums up. "Diplomatic relations with Israel were established in the 1960s, yet we never did manage to develop serious trade relations. Unfortunately, even when we suggest good business opportunities to Israeli companies such as Gilat Satellite and ECI Telecom, they sometimes don't even bother to answer."
Israelis perceive Nepal as that far-off resort for kids with backpacks seeking a challenging trek.
Stav: "In contrast to the conventional wisdom, Nepal has a lot of opportunity to offer and there's also someone to do business with. There is a significant echelon of local intellectuals who acquired their education abroad, and businessmen with capital and contacts with whom joint ventures could be forged that would be profitable for both parties."
Stav also begs to stress that in areas that matter to it, the government can relax the red tape.
In what sort of areas do you see Israeli entrepreneurs playing a part?
"Telecommunications is first, of course, mainly because the national phone company Nepal Telecom is being privatized," Stav answers. "A lot of effort is being invested in upgrading cellular infrastructure, satellite communications, and improving the fixed-line communications network. In parallel the Nepalese are upgrading their roads."
Even the upbeat Stav admits that the ground transport systems are terrible. There's no railway and the road system is particularly substandard, partly because of budgetary constraints and because the country is - how shall we put it - mountainous. There's nothing like a glacier-bound Himalayan peak reaching past the clouds to deter a road builder.
Also, the Katmandu airport can't handle more than three flights at a time, Stav says. The government is considering building another airport in Lumbini, the birthplace of the Buddha and one of the most important pilgrimage sites in southern Nepal. If the project goes ahead, it would be done BOT - build, operate, transfer. A private entrepreneur would put up about 80% of the money to build the thing, would then operate it for say 25 years and then transfer the airport to the government for free, taking home its profit from the 25 years of operation.
More ideas? Hey, air force grads: How about the flight schools opening up? They need teachers and investors, Stav says. They need maintenance staff, and more. The local carrier, Yeti Airlines - yes, after the mythological abominable snowman - is doing very well and rose skyward on the wings of Saudi cash. And there are other local Nepalese airlines as well, Stav adds.
Agriculture is another area that might attract Israeli talent, especially as the government is encouraging a transition from traditional farming methods to more modern ones. Israelis can offer hybrid seeds for flowers and vegetables; they can help build state-of-the art cattle breeding facilities and dairy production farms, and so much more.
At the edges of agriculture are desalination and "green" energy. The Nepalese need electricity and the country is flooded with sunshine. But Israelis have to get over themselves. "One of the big Nepalese companies wrote to a big Israeli company about seeds and didn't even get a reply," Stav complains. "You can't do business together like that."
*The insurance company, not the mountain range.