Statement by Dr. Henning Karcher, Resident Representative, UNDP On the occasion of the Consultative Meeting on draft Industrial Development Perspective Plan - Vision 2020

29 Aug 2002

Statement by Dr. Henning Karcher, Resident Representative, UNDP On the occasion of the Consultative Meeting on draft Industrial Development Perspective Plan - Vision 2020
Kathmandu, 29 August 2002

Honorable Member of the National Planning Commission, Dr. Shanker Sharma, NPD and Joint Secretary of Ministry of Industry, Commerce and Supplies, Mr. Govind Prasad Kusum, Distinguished Colleagues from UNIDO, Senior members of HMG/N, Senior Consultants, Colleagues, Ladies and Gentlemen:

It is a great pleasure for me to share with you a few thoughts on the occasion of this important consultation on the Industrial Development Perspective Plan for Nepal – Vision 2020.

While the share of the industrial sector in the economy of the country continues to be relatively small with a contribution of only approximately 9% to the GDP there can be nodoubt in my mind that in the long run the industrial sector will have to play a leading role in moving Nepal out of its LDC status and eventually to the community of developed countries. Virtually no country anywhere in the world has been able to make it to the status of a developed country without a strong industrial sector that was able to compete in the global economy. We, of course, all agree that measures to reduce poverty will have to be taken in the first place in the rural areas where most of the population of Nepal live. Nevertheless in the context of a medium term vision we have to be bold and innovative thinking of longerterm strategies.

I have not had a chance to thoroughly read and review the draft plan and I will, therefore not attempt to provide comprehensive comments. Let me just mention one or two points which could perhaps be further strengthened in the document.

In this day and age of globalization each nation has to find their appropriate place and comparative advantage in the community of nations. Competing on the basis of low wages does not seem to be a promising strategy. Nepal’s potential for hydropower development of certainly one of her greatest assets. Already we know that there is an installed excess capacity of 100 megawatts at the present time. Apart from seeking to sell the excess electricity to India I would think that the development of energy intensive industries could be of great interest for the country. As we all know the potential for further hydropower development is enormous and no other country in the sub-region will ever be able to compete with Nepal in this regards.

Taking advantage of Nepal’s unique climate conditions in comparison to her neighbors represents another area of distinct comparative advantage. UNDP is currently engaged in a project with HMG to exploring the potential of so-called export villages. The marketing potential of products such as vegetable seeds, ginger, mushrooms, natural fibres, honey, herbal medicine, Pashmina products and woolen sweaters have already been established in cooperation with ICT. I would think that investing in the establishment of industrial plants to process and produce such products could be considerable interest to Nepal’s entrepreneurs.

Finally I think that building upon the image of Nepal as a Shangri-La in the high Himalayas could offer considerable potential for products requiring clan air, clean water, organic soil and an unspoiled environment without toxic substances. Already the producers of some medical plants and drugs are benefiting from this potential. However, so far we have only tapped the surface.

Creating and enabling a policy environment for investment is evidently of critical importance. The draft report touches on this subject. Let me just mention that UNDP is supporting the Ministry of Law and Justice and the Supreme Court in reforming the judiciary and formulating new civil and criminal codes. Foreign investors will only be prepared to transfer significant resources to Nepal if they can be confident that the judicial system will make it possible for them to enforce contracts.

UNDP is also engaged in a separate project with UNCTAD that carries out a thorough review of Nepal’s investment policies and will formulate a comprehensive set of related recommendations.

In closing I would like to express my appreciation and gratitude to Dr. Shankar Sharma, Honourable Member of National Planning Commission for having agreed to lead the planning and visioning exercise. I would also like to thank the Ministry of Industry and Commerce and the Team from UNIDO for the considerable amount of work they have already done in preparing the first draft of the vision.

We look forward to maintaining a dialogue with all of you to in this important process which I trust will be later remembered as an important building block in Nepal’s efforts to join the global economy.

Thank you.