BIPPA: a boon in jeopardy

BIPPA: a boon in jeopardy

There have been various criticisms and praises on going for in relation with Prime Minister Bhattarai's move of a Bilateral Investment Promotion and Protection Agreement (BIPPA) with India signed between the two nations on October 21, 2011 during the PM’s visit to India. The criticisms in particular have kept the agreement in jeopardy, making it’s implementation uncertain. The implementation of the agreement is therefore not sure, and the Government which was so excited in signing the contract all of sudden is mum!

I am not associated with any party, nor am I influenced by any ideology. I am simply the student of Business. I therefore feel the BIPPA with India has to be welcomed by the business world. Why should we welcome this? I don't know what Congress has to say, nor do I care what UML explains, and I am no way associated with PM's party either. Nepal is located between two world's greatest markets, and when India shares open border, culture and same class of people, Nepal definitely can make a huge gain from this Agreement.

BIPPA brings the opportunity of Foreign Direct Investment (FDI) in Nepal. Although introduced in 1992, the Maoists insurgency made the investors reluctant, and as a result Nepal could not get their favor. When will Nepal be able to bring such huge capitals, technology and management skills? At least, after welcoming them, it can get its possibility. The painful truth that the economy of Nepal is completely dependent with the remittances makes a clear indication that there are maximum peoples working abroad simply because of unemployment in Nepal. Bringing new investment will welcome new business firms in the country which again will be hel

ping the domestic unemployment problem to the country. People of Nepal will again get to use improved products at the cheap rate. If the manufacturer of Kurkure enters Nepal, Nepalese will get to use of it in the cheaper rate. They will not be compelled to pay forty rupees for the product of thirty two. Let us not forget the excitement shown by Reliance Company to enter into Nepal for business. So, as a consumer I would get qualitative goods at cheaper rate. From societal point of view, there would be employment opportunities. From financial eyes, the Government could collect huge amount of taxes and revenues. And finally, it would create a good image for other countries excited to enter Nepal for business. Maybe I would get a good post someday! A personal benefit though.

When India opens firms in Nepalese territory, they themselves will try to remove the hindrances that Nepalese are today facing in the carriage. Balance of Payment (BEP) will be increasing at this very time. As a whole, Industrial Development will gain a speed in the country.

This has to be clear that India would never come to this stage if British rule have had not been in India at those periods. It is through British's FDI in India; India made the development process easy and effective. Had not there been FDI from British Rule then, India would be in somewhat similar condition to Nepal. It is something foolish to curse our history for the bravery, but we still have the power for it. Nepal was more developed than India during the medieval period, and somewhat had the similar sort of condition during the period before Rana rule in Nepal and British rule in Nepal. The fact of development possibility in India due to FDI must not be ignored.

Parties agitating against the decision are not wrong either. There exists a possibility of loss of Sovereignty in Nepal, but when it is for India, the chances are comparatively low. Another disadvantage mentioned is Intense competition. Kurmure would have the worst time competing with Kurkure. Still, there are simply fewer domestic products that would go such stage.

High Dependency is the third point, but the agreement is for ten years. Nepal has already signed similar agreement with Finland and United Kingdom. The benefit has to be carefully analyzed. Resource outflows could act as disadvantage. As the vision for them is in the hydro power sector, Nepal must be able to make enough demand for itself of hydro power before making export in such cases. The worst part of agreement that has brought the entire controversies is due to the agreement made 'to pay the compensation if the firms shut down due to internal cause of Nepal.'

Nepal had to take certain bold step to welcome them ensuring the investors that the political disturbance would not trouble their investment, and through BIPPA, Bhattarai did it indicating that now even more than one half of Maoists are looking for good relation and trade relation with India which was against their principle earlier.

However, signing the agreement is not a conclusion in it. There are other important things to be noted. There has to be peaceful environment now, and Industrial sector must be declared a peace zone providing enough securities to them. Above and over that, the ongoing controversy of implementation is likely to create a huge negative image for them that would trouble for any such agreements later. Firm decision about creating positive vibes has to be taken by the present Government who inked the agreement itself. Bandas, chakkajams, load sheddings and political disturbance must be stopped immediately and let the industries conduct their activities in peaceful way, for the favorable environment, to ensure that Government will not be at loss as well else the commensuration would not be boom but curse.

Published in The New Paper, March 20, 2012