Cartels against reform

  • Doing away with associations in the private sector would be the first step to restoring its credibility
- Sujeev Shakya
Cartels against reform

Sep 1, 2014-

Last week, stretches of Kathmandu roads were blocked by members of the Transporters Association, protesting against the prohibition of the rampant extraction of sand and stones. Similarly, we have had bottled water cartels in the past issuing diktats to its members to fix prices. Not a day passes without reading of some association or the other issuing a threat to start agitations or calling upon members to do something or the other.

Furthermore, these associations themselves have been plagued with infighting and factionalism. The Nepal Chamber of Commerce, for instance, has had unresolved issues for more than a year. And discussions to resolve conflict between various groups and panels keep liquor and restaurant sales going. In a country where everyone seems to enjoy discussing politics, we seem to have taken politics everywhere. Associations of all sorts have become a hub of political activities where people who aspire to get into politics and people who have been rejected by mainstream politics continue to harbour political ambitions. No wonder, many people in political parties or those who have been nominated or elected to the Constituent Assembly (CA) have all been engaged in politicking within various associations at some time or the other.

Politics everywhere

All of Nepal’s political parties harbour socialist ambitions. They are mostly inspired by pre-1990 models of communism from the former USSR and China along with Indian socialism. While all these countries have undergone radical transformations, we have yet to even believe in one. Our leaders still engage in distributive economics in a quest to bring about equality. They harbour dreams of charging the same price for the same product, similar to buying bread in Soviet-era Moscow. Neither quality nor differentiation is important to them. Differentiation has to be limited to leaders who, with political power, enjoy a much better quality of life.

Some admit that North Korea is still in this stage, where after an eye surgery, people bow before the supreme leader to thank him for their vision. Such political minds always get excited when you tell them that all bottled water in Nepal should be sold at the same price. Quality, packaging or service does not matter. For instance, if a new taxi service which provides clean interiors, air conditioning and other amenities is to begin in Kathmandu for premium pricing, existing cartels would not allow such a business to start.

Governments formed post 1990s have promoted such associations in order to create a sense of patronage and find funding sources for their political parties. Every government committee has nominees from various associations, thereby making positions in those associations coveted. Due to its own laziness, the government used such associations to connect with citizens, rather than reaching out to them directly. Associations then started providing many government services on par with those of the state but by charging fees to fill their private coffers. So when global companies like Qatar Airways wanted to hire Nepalis for different positions in the airlines, various associations made that task virtually impossible without circumventing them. Similarly, meat associations have ensured that restaurants cannot import better quality meat. Associations are omnipresent, from hair dressers to juice vendors to manpower suppliers. Going by the way our associations and the government like to function, if they could do so, some associations would have fixed prices for footwear and told Adidas and Reebok to sell theirs’ at those rates too.

Time for change

The time has come to really look into the utility of these associations. If the government needs suggestions on legal and institutional issues, it should seek the help of policy institutions, not such associations. If businesses in certain areas need a collective voice to lobby with the government or for internal knowledge sharing, then promote voluntary institutions. The fact that lobbying agencies themselves are also nominated by the government to different positions creates a conflict of interest.

Multilateral, bilaterals and other institutions need to also find ways to engage directly with stakeholders, rather than working through these political associations. They need to realise that the millions of dollars that were channeled through such associations have yielded limited results and only created rent-seeking platforms.

Entrepreneurs also need to realise that it is better to focus on their own entrepreneurial zeal rather than political ambitions. For, years later, they might reach the top, only to realise that they climbed the wrong building. Just list the top 20 businesses in Nepal in terms of revenues, assets and taxes and check how many of them actually engage with such associations. Conversely, take the top five or 10 leadership figures in each association across different sectors and areas. Rank them in order of their revenues, assets or contribution in taxes. You will get some great results.

Again, no new law can bring this change. When more people introspect and figure out these things, then people will find more reasons to change. Then, their collective voices will usher change.

If Nepal is to unleash its economic potential and move from managing poverty to managing prosperity, associations will have to find a new role for themselves. Else, it’s better for them to perish rather than hold Nepal’s economic development to ransom.

Published: 02-09-2014 09:28

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