Stock market has been crashed and business circle is confused. As the news of Maoist victory in the polls come out, the Maoist leadership is trying hard to assure the business community that they are here for capitalism.
For the CPN Maoist, the victorious party in the April 10 CA polls, the campaign hasn’t ended just yet. The party leadership is in full swing to convince the national forces, business world and the international community- at the same time- that they are not radical communist and there will be no cultural revolution in Nepal. Mao has died a long time ago. It seems that the Prachandapath (the path of Prachanda), an ideology propagated by Chairman Prachanda, tells them to have a very good relationship with ‘expansionist’ India and ‘imperialist’ America. Capitalism, they try to convince, is their mantra too. Prachanda says they are for the economy in which capitalists can have profit. Prachanda also says that there will not be a dictatorship of the proletariat. In his address to the business leaders in Kathmandu today the Maoist Chairman announced that the power will not be used tyrannically, reports Kantipur, but in the welfare of the people and the country.
Pointing to the decade-long political revolution and Janaandolan-II as examples of miracles, Maoist supremo Prachanda said an economic revolution is going to be the next miracle. “People will see that as soon as we form the government,” he said. “We will create the buzz of economic reconstruction in every place, every household, and in everyone’s mouth.”
The Maoist Chairman said that his government will adopt the “new transitional economic system” for economic growth stating political development is intertwined with the economy. Pointing to the decade-long political revolution and Janaandolan-II as examples of miracles, Maoist supremo Prachanda said an economic revolution is going to be the next miracle. “People will see that as soon as we form the government,” he said. “We will create the buzz of economic reconstruction in every place, every household, and in everyone’s mouth.”
Prachanda also appealed to the private sector to trust them fully and give them a chance. Elaborating on plans to create a conducive economic environment, he said the government will expand the tax base, eliminate red tape, and end the culture of commissions and corruption. “We will set up an Industrial Security Force in the process of integrating the People’s Liberation Army with the Nepal Army to provide security for industries,” he said.
In response to industrialists’ request to sort out labor disputes, he said they are ready to take necessary and proper steps. “We will welcome foreign investment, and give priority to domestic investment,” he said. Noting that both donors and foreign countries are ready to support the Maoist government, he said he found India ready to take bilateral relations to a new level. “A new ground has been established to make India a part of the cooperation,” he said. He further stressed on new policy for tax system.
In its manifesto for the Constituent Assembly, the former rebels had forwarded a new transitional economic policy with medium level development in the next 10 years, high level growth in 20 years and ultra-high level development in the country in 40 years.
Speaking at the same programme, Maoist second-in-command Dr Babu Ram Bhattarai assured that the government led by the Maoists will move ahead with the Public Private Partnership (PPP) theory.
Have a look at this Q&A with Maoist leader Dr. Baburam Bhattari on economy:
Q: How can you restructure the state and achieve economic growth in a short span of time?
Dr Bhattarai: What we need right now is political stability. We cannot think of rapid economic growth sans political stability. Now the CA results have given some hope for political stability. Secondly, there must be a strong leadership. Above all, we have yet to start restructuring the state. So, how can we think of the economy? The 30-year-long panchayat system promised us that it would deliver the people’s needs, but it could not do so as it was a political system imposed by the royal regime to serve its own interests.
The post-1990 parliamentary system created a sort of anarchy. It neither had any clear political vision nor could it deliver anything. During this interim period, it would be difficult to think of economic prosperity. We can only think of economic growth in the post-CA period. This mandate has just opened the door to a future Nepal. Now the job is to garner the support of all the political parties and maintain political stability. This would be the beginning.
Second, the resources we have include land, water, jungle, herbs and people. I do not think that we run short of resources, but we need external support for technology and skills. We need foreign investments. I am sure if we really work together, we can achieve rapid economic growth in a short span of time.
Q: China has adopted a liberal economic policy. It has achieved remarkable economic growth in the past 30 years. To what extent do you think we can follow China’s model?
Dr Bhattarai: China eliminated the feudal system during Mao’s regime. It established a solid foundation for economic growth. We could have thought of making rapid economic progress had the country been liberated from the age-old feudal system. When you inject new technology after the foundation for economic growth has been established, you can achieve such development. We don’t have such a foundation now. Once we restructure the state and involve the private sector, it will be possible to achieve rapid economic growth. We would implement a transitional economic policy during such an interim period which involves public and private partnership.
Q: Currently we are seeing a pattern of capital flight. How are you going to halt this?
Dr Bhattarai: We can’t think of developing this country in the absence of domestic and foreign investments. Technological inputs are of equal importance. So, we will follow the policy of attracting domestic and foreign investments. For that to happen, we have to put an end to political instability. From our side, we have to provide security to investors and create a conducive environment for domestic and foreign financiers. And I also think that we will be able to resolve the differences between labor and management. Unless we resolve such issues, we cannot create a better investment atmosphere. In a nutshell, we recognize the legitimacy of management and the participation of labor in management.
Secondly, we have to identify areas for investment and create the necessary infrastructure. We have to focus on productive sectors. We don’t want to encourage assembly industries. Business activities should raise productivity and generate employment.
Q: You mean the state’s involvement in economic activities will increase from now on?
Dr Bhattarai: The state will play the role of facilitator. The state cannot intervene in business activities. It will encourage investors to raise productivity and generate employment opportunities. (more here)
Stock Market Crashed:As it become certain that Maoists will be leading the government the market is reacting in its own way. Share prices fell sharply in yesterday’s trading after the market opened following a closure of nine days for the elections. The trend continued today. Some market watchers said the dip was caused by confusion over the future government’s economic policy while others said the fluctuation was a regular occurrence and also that it was a result of rumor-driven selling. The Nepal Stock Exchange (NEPSE) shed 26.45 points today to close at 720.24. Market capitalization – the market value of a company’s outstanding shares – decreased to end at Rs 232 billion Tuesday. Shares of Standard Chartered Bank saw the greatest fall of Rs 300 a share to close at Rs 5,200. Nabil Bank shares lost Rs 252 per share to finish at Rs 4,300. The volume of trade was also relatively lower. A total of 21,140 shares changed hands on the bourse for a turnover of Rs 21 million.
“After the NEPSE index fell by 20 points, we stopped trading for half an hour. NEPSE regulations require trading to be halted for half an hour if the index moves up or down 20 points,” said a NEPSE official. Navraj Pokharel, president of the Nepal Stock Brokers Association, said experience shows that price trends are normally reversed when the market reopens after a long holiday. “Prior to the opening, the market had been rising continuously,” he said. NEPSE officials said some traders had been spreading rumors about a possible political change and its impact on the economy to bring down prices and take advantage of panic selling.
The Business Leader Suggests Liberal Economy
President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI), Kush Kumar Joshi, has said that the upcoming Maoist-led government should adopt liberal economic policy. In an interview with Nepalnews, Joshi admitted that the private sector was feeling some uneasiness following the victory of Maoists in the Constituent Assembly (CA) although the business community was largely confident that the would-be Maoist government would also give high priority to promotion of private sector. He said that the FNCCI was working to prevent possible capital flight as it has become clear the Maoists are leading the future government.
Referring to Maoist chairman Prachanda’s statement that Nepal has entered into the phase of economic revolution, Joshi said that political leadership must give top priority to economic transformation of the country. Joshi lauded Prachanda’s assurance that the Maoist led government would formulate economic policy as per the suggestion of the private sector. He also stressed the need for making investment friendly environment. “The new government should review the existing labour law in order to make it more investment friendly,” the FNCCI president said. Joshi also said that the misunderstanding between the Maoist-affiliated trade union, All Nepal Trade Union Federation, and the business community was narrowing down which could be bridged soon through discussion.