The successful completion of national elections and the victory of liberal parties have given rise to much-needed optimism in Nepal’s business sector. A deep-seated anxiety about fresh political instability notwithstanding, the economy of the insurgency-ravaged country seems to be on a recovery path after the Nov 19 vote.
The stock market has become bullish, surging past 710 points as of last week, the highest in four years. Daily transactions on the Nepal Stock Exchange also are at record high levels.
“The trend analysis also shows [the index] will be at around 800 points soon and if the constitution is drafted early, then it will easily break the previous record of 1,175 points,” Narendra Raj Sijapati, president of the Stock Brokers’ Association of Nepal, said in an interview with the Nepalese paper The Himalayan Times.
“The current political developments — timely Constituent Assembly elections and the victory of liberal parties — have boosted investor confidence. Fundamentally also, the market has emerged from the crisis and is recovering.”
“The mood is very positive,” Bhawani Rana, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), told Asia Focus by telephone. “There is some kind of restoration in the business climate. ... The worst is possibly over.”
“The stock market is rising, land prices are looking up and investors are coming back to their projects that they had abandoned midway at the height of political crisis,” said Ghanashyam Ojha, communications and political affairs manager at the Investment Board of Nepal.
Nepal’s economy was crippled in the decade-long civil war, known as the People’s War, waged by Maoists against the monarchy in which about 16,000 people were killed. The insurgency ended with the overthrow of the 240-year-old monarchy in 2006. In 2008, the first elections were held for the Constituent Assembly, which was entrusted with the task of drafting a constitution of the nascent republic and finalising the transition from a Hindu monarchy to a secular democracy by May 2010.
But efforts went nowhere amid partisan rancour. In hopes of achieving progress, the Assembly was given four term extensions over two years before it was finally dissolved on May 28, 2012. Six prime ministers in five years and endless political turmoil marked this period with no constitution in sight.
The Nov 19 election was Nepal’s second shot at the peace process. The Maoists, who had won the 2008 vote with a resounding majority after agreeing to lay down arms and join the government, were decisively rejected. In the final tally, including direct votes and proportional representation, the Nepali Congress secured 196 seats, followed by the Communist Party of Nepal (Unified Marxist Leninist) with 175 seats in the 601-member constituent assembly. The Maoists, represented by Unified Communist Party of Nepal (Maoist), came third with a total of 80 seats. They have complained of vote-rigging.
With an alliance of 33 parties led by the Maoist faction (Communist Party of Nepal-Maoists), boycotting the polls and several incidents of violence in the run-up, some questioned whether there could be a successful completion of the election. Not only were the polls conducted as scheduled with a voter turnout of 70%, the liberal parties have now taken centre stage.
“That the people have voted out the Maoists in such a way is a clear indication that the people of the country hold them responsible for the crisis that the country has been in. They are fed up and desperately want development to take place in Nepal,” Ms Rana said.
With no single party holding an absolute majority, uncertainty still lingers as to who will form the government. The parties are in frantic negotiations.
But Mr Ojha is optimistic. “The way the people have voted, they’ve given a clear message to the politicians, ‘enough is enough’,” he said. “I believe the politicians are only too aware of the people’s pressure, especially from young people, and will get their act together this time around,” he added.
The business body FNCCI has been in talks with political parties before and after the elections. “We’ve been meeting the political leaders of all parties and mooting the need for business- and investment-friendly policies,” said Ms Rana. “In our discussions with them, the winning parties have shown their enthusiasm to bring about a change. Let’s wait and watch.”
Mr Ojha pointed out that about 1,500 to 2,000 young people from Nepal migrate to West Asia every day in search of work. Recently, international media reported that dozens of Nepalese slave workers were among those killed while working in abysmal conditions on World Cup projects in Qatar.
“In our visits to the rural areas, we came across villages that had only old men; the young ones had all migrated,” Ms Rana said. “This trend has to stop. It may take time, but if there is political stability and peace, there will be investment and business. Slowly there will be enough jobs here.”
Mr Ojha added that a couple of foreign investors had already expressed interest in doing business in Nepal. “There are some Indian, Norwegian and Chinese companies. There is considerable interest from domestic investors as well. Hydroelectricity and infrastructure are two main areas.”