The Chile earthquake of 2010 killed more than 500 people. It had a huge
impact on the country’s tourism, fishing, forestry and wine industries.
Damages to seaports caused a short-term market loss where it became
tough to balance supply and demand.
Depreciation of the currency and
inflation, followed by low demand for exports, weakened the country’s
economy badly. The government rebuilt 500,000 homes and repaired a
million. This rebuilding triggered a growth in the cement industry.
Chile was back to economic recovery within a few years.
In contrast, the Haiti quake killed more than 200,000 people, left 10
million homeless and destroyed thousands of homes, schools and hospitals
as well as the UN headquarters and the main prison. Nineteen out of 20
ministries collapsed. The Haiti quake was even more destructive because
it was also followed by an outbreak of cholera that spread across the
country, killing thousands.
Nevertheless, restaurants, hotels, hardware stores, construction and
security businesses obtained billions of dollars in aid. The large
number of donations made towards the health sector made NGOs much more
active than government organizations. This had a positive impact on the
health sector.
The large amount of basic requirements brought in by NGOs raised the
sale of domestic products. The large number of foreign workers had a
positive impact on the housing market increasing rent prices. In short,
Haiti welcomed in new businesses.
Although an estimated $9 billion went into relief funds after the
quake, the country still faces problems like lack of employment, lack of
proper education and lack of proper access to running water. Indeed
people are still living under tents. The lack of proper coordination
between funded organizations and the government, and suspected
corruption is regarded as Haiti’s major failings.
The Gujarat earthquake on the other hand made around 500,000 people
unemployed destroying more than 60 banks. The death toll exceeded
17,000. The Indian state lost around 23 billion dollars of its GDP at
that time. In the aftermath of the earthquake credit worth US $800
million was arranged with the Asian Development Bank and the World Bank.
The Gujarat government was allowed to float tax free earthquake bonds.
Gradually things got better and today Gujarat is no longer a backward
state in India.
The 2011 earthquake in Japan brought a global economic slump. Despite
the fact that this quake affected Japan’s own economy, it also had
notable effects on the global market. The disruption in the regular
supply of automotive and steel parts resulted in high demand from other
areas of the world. Toyota and Nissan halted their production for some
time. Two out of three of Hondas plants were closed. Japan, as an export
country, had to face a large budget deficit. However, it did not take
very long for Japan to recover and bounce back.
The 2015 Nepal earthquake, which killed more than 8000, damaged
highways and roads, hydropower plants and hospitals, media houses and
banks, historical monuments and educational establishments. 80% of the
houses are reported to be affected in the capital. Preliminary reports
have stated that around 720,000 houses must be reconstructed. This is
likely to displace millions of people and will increase demand for
rental properties in the capital.
The two major sources contributing to the national GDP, agriculture and
the service sector have been heavily impacted. The service sector,
mainly based in the capital, seems to be affected badly, as many workers
are back home and the buildings not safe to stay in. Roads and highways
are obstructed. Nepal is still counting the cost of the earthquake in
economic and human terms, with the financial loss estimated to be in the
billions of dollars.
The earthquake has a number of assorted threats that can bring a huge
downturn to the national economy. Tourism is almost at a standstill. A
large number of people’s livelihoods depend on tourism. With historical
monuments damaged or destroyed and mountains unsafe to climb the impact
on tourism is huge. Nepal Tourism Board has come up with certain plans
to help continue tourism. Their success remains to be seen. Also a
decrease in farming with many farmers focusing on finding shelter will
likely increase imports creating a budget deficit.
Education in Kathmandu will see a setback with families afraid to send
their children to school in the capital. However, this can lead to more
students studying in other major cities like Biratnagar, Ithari,
Janakpur, Birgunj, Hetauda, Butwal, Bhairawaha, Nepalgunj. Nearly all
the schools in Sindhupalchowk and Dolakha are severally damaged, putting
the future of the students there in doubt.
The government has halted the construction of new buildings but
reconstruction work will keep the demand for bricks, mortar and cement
high. Labour will also be in high demand. However, a failure to maintain
a proper supply may inflate prices. Migration is another thing that has
huge possibilities in the days to come. Pharmacists and civil engineers
will also be in demand across the affected areas of the country.
Other areas like insurance, real estate have huge possibilities of also
being badly affected. A major loss to the country’s economy will come
if young people already working in the country decide to go abroad.
The best measures the government can take at this time are to lower
taxes and increase public expenditure so that the money keeps on flowing
into the market. Promoting entrepreneurship and reducing red tape will
encourage Nepalis living abroad to invest in Nepal, thus contributing to
the GDP generating employment. This has to be done at the strategic
level.
Although Haiti was able to bring in international investment, it took
some time. Foreign investment must be highly promoted. This will help in
many ways. Therefore, every barrier must be removed in order to welcome
foreign investment into Nepal. Agreements like BIPPA should be strictly
drilled, and stimulated. Any Bandhas could have a negative impact on
foreign investors. Youth empowerment has to be properly focused.
The large amount of money in the Prime Minister’s Relief fund has to be
properly utilized as should the huge loans currently being offered by
the country’s banks.
Nepal can be Haiti; Nepal can also be Japan or Chile. The choice is ours.
Published in New Business Age of June Issue 2015.
You can also go through it via,
http://newbusinessage.com/issuedetail/1217
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