Doing Business 2012: South Asia and Nepal edition

The latest Doing Business 2012: Doing Business in a More Transparent World report lists Singapore as the top economy to do business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark. The report ranks economies based on performance in ten indicators: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. 

The report’s data cover regulations measured from June 2010 through May 2011 in 183 economies.This year rankings on ease of doing business have expanded to include indicators on getting electricity.The report finds that getting an electrical connection is most efficient in Iceland; Germany; Taiwan, China; Hong Kong SAR, China; and Singapore.

The Republic of Korea was a new entrant to the top 10. The 12 economies that have improved the ease of doing business the most across several areas of regulation as measured by the report are Morocco, Moldova, the former Yugoslav Republic of Macedonia, São Tomé and Príncipe, Latvia, Cape Verde, Sierra Leone, Burundi, the Solomon Islands, the Republic of Korea, Armenia, and Colombia. Two-thirds are low- or lower-middle-income economies.

The report shows that governments in 125 out of 183 economies implemented a total of 245 business regulatory reforms—13 percent more reforms than in the previous year. In Sub-Saharan Africa, a record 36 out of 46 economies improved business regulations this year. Over the past six years, 163 economies have made their regulatory environment more business-friendly. China, India, and the Russian Federation are among the 30 economies that improved the most over time.

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South Asia

• In South Asia, Maldives ranked 79, followed by Sri Lanka (89), Pakistan (105), Nepal (107), Bangladesh (122), India (132), Bhutan (142) and Afghanistan (160). The regional average (in rank) is 117.
• Sri Lanka implemented the most reforms of any of the eight economies in South Asia, helping to create a better environment for entrepreneurs.
• Sri Lanka rose nine places in the global ranking to 89, partly by strengthening investor protections and reducing taxes on business. India, the region’s second top performer in the global survey, climbed seven places to 132. Recently implemented mandatory electronic filing and payment for value-added tax made paying taxes easier for Indian firms.
• Bhutan, rising four places to 142, recently launched a public credit registry and streamlined business start-up while Afghanistan, ranked 160, made it easier for local businesses to get an electrical connection.
• Over the past six years, all eight economies in South Asia have made their regulatory environment more business-friendly.

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Nepal

In terms of ease of doing business, Nepal ranked 107 out of 183 countries. Last year, Nepal’s ranking was 110 (non adjusted figure was 116). It is quite an improvement in terms of easing doing business in the country. Most of the push is contributed by making property registration easy, by enacting measures to protect investors and by improving enforcement of contracts.The Finance Act 2008 has reduced the fee for transferring a property from 6 percent to 4.5 percent of the property’s value.In 2011 Nepal improved oversight and monitoring in the court, speeding up the process for filing claims. This is the only reform enacted in terms of easing procedures to do business this year.

Here is how Nepal compares with the regional average:

• Best regional performance in registering property -- ranked 24 overall (regional average is 123). In Nepal, you need 3 procedures, takes 5 days and costs 5% of property value to get a property registered. The corresponding figures for the region are 6, 103, and 7.3.
• In terms of protecting investors, Nepal’s performance in the region was the best -- ease of shareholder suits index (0-10) is 9 (regional average is 6).
• In terms of enforcing contracts, Nepal’s performance was the best in the region -- 39 procedures to enforce a contract (regional average is 43)
• Lowest regional performance in cost of starting a business -- 37.4 % of income per capita (regional average is 21.6% of income per capita)
• In the ten indicators, ranking climbed up in four of them (when compared to previous year): dealing with construction permits, getting electricity, paying taxes, and resolving insolvency.

Doing Business 2012: Nepal
DB rank 2011	110
DB rank 2012	107
Improvement in ranking (position)	3
Topic ranking
Topics	DB 2012 Rank	DB 2011 Rank	Change in Rank
Starting a Business	100	95	-5
Dealing with Construction Permits	140	161	21
Getting Electricity	99	102	3
Registering Property	24	23	-1
Getting Credit	67	64	-3
Protecting Investors	79	74	-5
Paying Taxes	86	90	4
Trading Across Borders	162	161	-1
Enforcing Contracts	137	137	No change
Resolving Insolvency	112	113	1

[All Doing Business 2011 rankings have been recalculated to reflect changes to the methodology. For paying taxes, economies that have total tax rates below 32.5% in Doing Business 2012 are assigned a total tax rate of 32.5% for the purpose of calculating the rankings. For Doing Business 2011, the total tax rate is 32.7%.]

Nepal’s economic agenda for PM Bhattarai’s India visit

[This piece was published in Republica, October 18, 2011. p.7]

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PM Bhattarai’s India visit

What’s Nepal’s economic agenda?

Prime Minister Dr. Baburam Bhattarai is scheduled to visit India starting next week. While his team is consulting with a range of stakeholders to shortlist viable agenda for the visit, commentators and talking heads have flooded the market with suggestions and recommendations ranging from historical to political to economic issues without even knowing the nature of the upcoming visit by our prime minister. Some have even gone to the extent of arguing that political agenda, chiefly repealing ages old treaties inked since 1950, should supersede any other “minor” agenda such as those related to economics.

While the ages old treaties might deserve review or repeal, of which I have insufficient knowledge to make a definite judgment, what is certain is that not all the outstanding issues can be resolved in a single visit. There are many challenges and opportunities emerging as a result of our close historical, cultural and economic ties with India. As a sovereign nation that aspires to rise along with the rapid progress made by our neighbors, we should be looking at and thinking over ways to neutralize challenges and take advantage of opportunities keeping in mind our national interests and immediate priorities. As of now, given the domestic constraints to growth and development, our immediate priorities are not political, but economic issues such as importing electricity, increasing investment, promoting exports, collaborating on R&D, and sharing best practices on rural development.

Whatever Nepalis say or feel about India, the fact is that it is increasingly being recognized as economic and democratic emerging powerhouse with tremendous potential in a number of fronts, thanks to the astounding economic growth rate, which might overtake China’s growth by 2013 due to two main factors, namely demography and democracy. The Indian economy is projected to be the third largest (in PPP terms) by 2050 and is expected to grow at over 6 percent until 2050. The booming Indian middle class together with its market potential and human resources have been closely followed by investors worldwide. Meanwhile, Indian investors are spreading their wings deep into Africa and Latin America. Currently, India is the shining star of the wave of globalization that swept the globe after 1990. It is increasingly reckoned as an indispensable economic, military, political and democratic force. And, in its backyard lies Nepal, one of the poorest countries in Asia struggling to grow above 4 percent, which is battered by numerous non-economic constraints that have forced investors to rescind investment plans.

The growing power of India at the global level and our excessive dependence on its markets for most of the things we consume in a daily basis make any high level visit by Nepali authorities a significant and worthy issue for discussion. Given the nature of our constraints and those that can potentially be resolved now, it will be pragmatic if PM Bhattarai and his team take up economic issues only with India. The economic issues should hinge on addressing the most binding constraints in the short term, which means all agenda should aim at securing high growth rate, investment and employment.

First, the country will experience power cuts of at least 14 hours a day in the coming months. Since the domestic demand is far higher than supply of electricity, there is no possibility of lighting our bulbs or operating refrigerator all day unless we depend on alternative sources of energy, which as of now also seems hopeless. Despite having a huge potential in hydroelectricity we are still continuously importing about 50 MW from India. Now, swallowing whatever pride we have in our running waters, we will have to request India to increase the supply of electricity by at least 200 MW with an aim to reduce the scheduled hours of load shedding. We cannot afford closure of more firms and further erosion of investors’ confidence, which are costing us both revenue and jobs.

Second, enticing new Indian investment and securing existing ones should be high on the agenda. Several Indian MNCs have closed down operation in Nepal due to political instability, power outage, labor dispute, and lack of investment guarantee, among other factors. PM Bhattarai should commit, and rightly honor, to provide full security to foreign investment in Nepal. It might encourage Indian investors, our major source of FDI, to reconsider investing in Nepal. If this does not happen, then there is no reason to believe that investors outside of India would even consider investing sizably in our economy. We are in a dire need of investment in infrastructures (hydro and transport networks), the most binding constraint to economic activities.

Third priority should be on securing favorable trade and transit facilities for Nepali traders so that our products exported either to India or via India to other countries do not have to incur additional costs, making them uncompetitive in the global market. Indian market absorbs approximately 61 percent of our total exports and it is the source of almost 57 percent of our total imports. Believe it or not, our trade and transit needs are one-sided. With expanding domestic as well as global markets, Nepal is insignificant in terms of market size to the Indian investors and exporters. Cognizant of this reality, we should ask the Indian government to accord special privileges to Nepali exports, and to address a range of non tariff barriers (such as CVD, local duties, double lock system, delay at Calcutta port), that are increasing cost of our exported products. Furthermore, we should try to convince the Indian government to allow for unhindered entry of Nepali exports via India to Banglabanda so that our exporters can use the nearest Bangladeshi port. Overall, the trade and transit agenda should be aimed at securing provisions that will help our exports avoid extra costs in final markets as well as during transportation phase. It would be fantastic if India gives concession like it did in the trade and transit treaties of 1996.

Nepal has always been asking for favors from India. Our politicians and negotiators hardly make an effort to learn best practices in development and employment generation. This is the right time to do so and should be our fourth agenda. Nepal should request India to share its expertise in research and development, especially on IT, education and agriculture. There is a great deal we can learn from India’s success in services industry. Furthermore, we should seek assistance from India to help us commercialize agriculture sector and increase production like it did during the Green Revolution in mid-1970. It will not only help in supporting structural change, stimulating growth and generating employment in rural areas, where still 83 percent of our population resides, but also help reduce food insecurity. We could also ask India to help us establish and invest in special economic zones (SEZs), on which it has an abundance of capital and experience.

Finally, and further to the previous point, we should make an effort to learn how India manages to fairly efficiently run its rural development programs, chief among them being National Rural Employment Guarantee Act (NREGA), which guarantees 100 days of employment to one adult member of a rural household at wage rate equal to that of unskilled laborers in agriculture sector. Our National Planning Commission is considering rolling out a similar kind of program in rural Nepal. We should learn from India’s experience in running rural employment programs like NREGA and, if possible, seek assistance (both investment and capacity building) in other rural development initiatives.

All of these issues are directly linked to stimulating economic growth, generating employment and addressing the most pressing short term challenges of our economy. These doable initiatives in the short term should be the priority instead of the elusive political agenda. Importantly, let us try to learn good growth and development practices from India this time.

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[Published in Republica, October 18, 2011, p.7]

Great Convergence after Great Divergence?

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Greg’s mill was part of a revolution in industry that would profoundly alter the world’s pecking order. The new technologies—labour-saving inventions, factory production, engines powered by fossil fuels—spread to other parts of western Europe and later to America. The early industrialisers (along with a few late developers, such as Japan) were able to lock in and build on their lead in technology and living standards.

The “great divergence” between the West and the rest lasted for two centuries. The mill at Styal, once one of the world’s largest, has become a museum. A few looms, powered by the mill’s water wheel, still produce tea towels for the gift shop, but cotton production has long since moved abroad in search of low wages. Now another historic change is shaking up the global hierarchy. A “great convergence” in living standards is under way as poorer countries speedily adopt the technology, know-how and policies that made the West rich. China and India are the biggest and fastest-growing of the catch-up countries, but the emerging-market boom has spread to embrace Latin America and Africa, too.

[…]Economic catch-up is accelerating. Britain’s economy doubled in size in the 32 years from 1830 to 1862 as increased productivity spread from cotton to other industries. America’s GDP doubled in only 17 years as it overtook Britain in the 1870s. The economies of China and India have doubled within a decade.

This is cause for optimism. An Indian with a basic college education has access to world-class goods that his parents (who might have saved for decades for a sputtering scooter) could only have dreamed of buying. The recent leap in incomes is visible in Chinese cities, where the cars are new but the bicycles look ancient, and in the futuristic skyline of Shanghai’s financial district.

[…]No country, or group of countries, stays on top forever. History and economic theory suggest that sooner or later others will catch up. But this special report will caution against relying on linear extrapolation from recent growth rates. Instead, it will suggest that the transfer of economic power from rich countries to emerging markets is likely to take longer than generally expected. Rich countries will be cursed indeed if they cannot put on an occasional growth spurt. China, for its part, will be lucky to avoid a bad stumble in the next decade or two. Emerging-market crises have been too quickly forgotten, which only makes them more likely to recur.

[…]The force of economic convergence depends on the income gap between developing and developed countries. Going from poor to less poor is the easy part. The trickier bit is making the jump from middle-income to reasonably rich. Can China and others manage it?

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For more, read The Economist’s special report on catch-up. Dani Rodrik argues that convergence is not automatic and it might not happen altogether any time soon. He argues that convergence depends on bridging the productivity levels/gap. And exploiting it needs sustaining rapid structural change in the direction of tradables such as manufacturing and modern services. But, the policies that successful countries have used to achieve this are hard to emulate.

State of Hunger in South Asia, 2004-2009 (Global Hunger Index 2011)

IFPRI has just published 2011 Global Hunger Index report titled The Challenge of Hunger: Taming Price Spikes and Excessive Food Price Volatility. It calls for action to curtail high and volatile food prices and to protect the poor from rising food prices. Conforming the outcome of other reports by the FAO and other organizations, the new report argues that  the main causes of high and volatile food prices are growing demand for biofuels, extreme weather and climate change, and increased financial activity through commodity futures markets. Worse, these challenges are exacerbated by historically low levels of grain reserves, export markets for staple commodities that are highly concentrated in a few countries, and lack of timely, accurate information on food production, stock levels, and price forecasting, which can lead to overreaction by policymakers and soaring prices.

In order to identify hunger levels and hot spots, the Global Hunger Index scores countries based on three equally weighted indicators: the proportion of people who are undernourished, the proportion of children under five who are underweight, and the child mortality rate. According to the 2011 Index, 26 countries have levels of hunger that are alarming or extremely alarming, and all those with extremely alarming levels—Burundi, Chad, the Democratic Republic of Congo, and Eritrea—are in Sub-Saharan Africa.

To tame food price volatility and protect the poor against future shocks, the report recommends addressing the drivers of food price volatility; tackling global market characteristics affecting volatility, including building up stocks by coordinating international food reserves and sharing information on food markets; and building resilience for the future. Specifically, it recommends to

• curtail biofuels subsidies and mandates
• discourage the use of food crops in biofuels production
• regulate financial activity in food markets
• reduce the incentives for potential excessive speculation in food commodities
• invest in climate change adaptation and mitigation
• safeguard smallholder farmers against extreme weather-related shocks
• strengthen social protection systems
• improve emergency preparedness
• invest in sustainable small-scale agriculture

The 2011GHI reflects data from 2004 to 2009 – the most recent available country-level data on the three GHI components. It is thus a snapshot not of the present, but of the recent past. An increase in a country’s GHI score indicates that the hunger situation is worsening, while a decrease in the score indicates an improvement in the country’s hunger situation.

• The 2011 world GHI fell by 26 percent from the 1990 world GHI, from a score of 19.7 to 14.6.
• From the 1990 GHI to the 2011 GHI, 15 countries reduced their scores by 50 percent or more.
• Between the 1990 GHI and the 2011 GHI, 19 countries moved out of the bottom two categories— “extremely alarming” and alarming.”
• In terms of absolute progress, Angola, Bangladesh, Ethiopia, Mozambique, Nicaragua, Niger, and Vietnam saw the greatest improvements in their scores from the 1990 to 2011 GHI.
• In terms of percentage decrease in GHI scores from the 1990 GHI to the 2011 GHI, the following countries saw the greatest improvements, beginning with the most improved: Kuwait, Turkey, Malaysia, Mexico, Islamic Republic of Iran, Albania, Peru, Nicaragua, Ghana, and Fiji.

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State of hunger in South Asia:

• South Asia has the highest regional 2011 Global Hunger Index (GHI) score—22.6 (worst than in Sub-Saharan Africa regional score).

• The 2011 GHI score fell by 25 percent in South Asia compared with its 1990 score, and the 2011 GHI score in Southeast Asia decreased by 44 percent.

• The South Asia region reduced its GHI score by more than 6 points between 1990 and 1996—mainly due to a large decline in underweight in children under five, but the fast progress was not maintained. South Asia has lowered its GHI score by only one point since 2001 despite strong economic growth. Social inequality and the low nutritional, educational, and social status of women, which is a major cause of child undernutrition in the region, have impeded improvements in the GHI score.

• In Bangladesh—a country where 25 percent of the population is ultra-poor (living on less than USD $0.50 a day)—only about 7 percent of the population has access to social protection or safety net programs.

• Bangladesh saw large gains in improving their GHI score between the 1990 GHI and the 2011 GHI, reducing its score by 36 percent.

• Bangladesh and India have the highest prevalence—more than 40 percent—of underweight in children under five in South Asia.

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Hunger in South Asia (Increase in GHI score means hunger situation is worsening)
Country	1990               (with data from 1988-92)	1996               (with data from 1994-98)	2001               (with data from 1999-2003)	2011               (with data from 2004-2009)	Rank 2011
Bangladesh	38.1	36.3	27.6	24.5	70
India	30.4	22.9	24.1	23.7	67
Nepal	27.1	24.6	23	19.9	54
Pakistan	25.7	22	21.9	20.7	59
Sri Lanka	20.2	17.8	14.9	14	36

Out of 122 developing countries and countries in transition, Sri Lanka has the best ranking in South Asia (lower ranking is better). Compared to 1990, the state of hunger in 2011 has improved in all South Asian countries for which data is available. However, there has not been much improvement since 2001, i.e. though the score has changed, the state of hunger is pretty much unchanged. Nepal’s and Pakistan’s state of hunger has remained unchanged (“alarming”) since 1990.

Hunger in South Asia
Country	1990	1996	2001	2011
Bangladesh	Extremely alarming	Extremely alarming	Alarming	Alarming
India	Extremely alarming	Alarming	Alarming	Alarming
Nepal	Alarming	Alarming	Alarming	Serious
Pakistan	Alarming	Alarming	Alarming	Alarming
Sri Lanka	Alarming	Serious	Serious	Serious

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Here is a related post on high food prices in South Asia.

UPDATE (2011-11-16): Nepal’s state of hunger in 2011 is updated as serious from alarming. I misread the scale. [<= 4.9 is low; 5-9.9 is moderate; 10-19.9 is serious; 20-29.9 is alarming; and >= 30 is extremely alarming]

Nobel prize in economics to Thomas Sargent and Christopher Sims

This year's the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel  goes to Thomas J. Sargent and Christopher A. Sims "for their empirical research on cause and effect in the macroeconomy". Below is the press release:

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How are GDP and inflation affected by a temporary increase in the interest rate or a tax cut? What happens if a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? This year's Laureates in economic sciences have developed methods for answering these and many of other questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments.

These occurrences are usually two-way relationships – policy affects the economy, but the economy also affects policy. Expectations regarding the future are primary aspects of this interplay. The expectations of the private sector regarding future economic activity and policy influence decisions about wages, saving and investments. Concurrently, economic-policy decisions are influenced by expectations about developments in the private sector. The Laureates' methods can be applied to identify these causal relationships and explain the role of expectations. This makes it possible to ascertain the effects of unexpected policy measures as well as systematic policy shifts.

Thomas Sargent has shown how structural macroeconometrics can be used to analyze permanent changes in economic policy. This method can be applied to study macroeconomic relationships when households and firms adjust their expectations concurrently with economic developments. Sargent has examined, for instance, the post-World War II era, when many countries initially tended to implement a high-inflation policy, but eventually introduced systematic changes in economic policy and reverted to a lower inflation rate.

Christopher Sims has developed a method based on so-called vector autoregression to analyze how the economy is affected by temporary changes in economic policy and other factors. Sims and other researchers have applied this method to examine, for instance, the effects of an increase in the interest rate set by a central bank. It usually takes one or two years for the inflation rate to decrease, whereas economic growth declines gradually already in the short run and does not revert to its normal development until after a couple of years.

Although Sargent and Sims carried out their research independently, their contributions are complementary in several ways. The laureates' seminal work during the 1970s and 1980s has been adopted by both researchers and policymakers throughout the world. Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis.

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Here (also here) is technical note that further describes the new laureates contribution.

Are Nepali workers underpaid in terms of salary and benefits?

Well, so claim the labor union leaders. That might be true. But it is unfair to ask for similar benefits for workers in Nepal like the workers (even Nepali) in South Korea, Malaysia and the Gulf get. It is fair to ask for a decent working condition, but most of the strikes are hinged on politics and salary hike only. Both the sides (industrialists and unions) are on fault here. That being said, there is no doubt that the unions are more politicized than warranted and this is more problematic than the complain about salary and compensation issue. Is there any cases where unions and industrialists (at central and firm level) sat down together, talked about working condition and productivity, and honestly did the necessary from their part to work on this regard?

Below is a piece by Prem Khanal who looks at both sides of the debate. My take on the issue here, here and here.

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Embroiled in low pay and poor performance dispute

Prem Khanal

It needs no close scrutiny to discover the biggest obstacles to Nepal´s industrialization. Talk to any group of industrialists and you will hear scary accounts of militant extremism of Nepali workers.

Surya Garment, one of the largest apparels producing multinationals with annual turnover of over one billion rupees and providing employment to 700 workers, decided to fold down operations after it was compelled to call for police intervention to free three dozen officials locked for two days without food and water by workers in June. 

Another foreign venture, Fire and Ice, a famous Italian pizza restaurant located in downtown Kathmandu, and employing some 70 youths remained closed for six weeks after workers padlocked the restaurant demanding dismissal of a newly appointed manager. Undoubtedly, the two incidents speak volumes about how workers here have made Nepal an unsavory place for business.

Are the Nepali workers really so undisciplined? Absolutely not. Nepali youths in the Indian and British Armies have earned repute for hard work, bravery and obedience. By winning the best performance award for the two consecutive years in South Korea, Nepali youths have proved that they possess unparalleled qualities.

The South Korean government has announced to increase the quota for Nepali workers to 15,000 from 2012. What´s more, Japanese factories, which employ a large number of South East Asian and Chinese workers, have also started eyeing Nepali workers.

However, it is puzzling that the Nepali workers who are so notorious back home undergo a dramatic behavioral change when they are outside the country.

“It is the attractive incentive -- that is well over ten times -- that brings about this drastic transformation,” says Bishnu Rimal, president of General Federation of Nepalese Trade Unions (GEFONT). “When the monetary incentives you get from your job barely makes your ends meet, not only do commitments falter but even makes the workers hostile to the management,” he says.

On the top of the handsome incentives that Nepali workers enjoy in South Korea, they also get additional reward for hard work. This results in greater commitment to work and increased productivity, says Rimal, who has also authored a book “´Enhancing Decent Work Agenda in Workplace: Trade Unions Efforts through Social Dialogue in Nepal.

Padma Jyoti, former president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Chairman of Jyoti Group of Companies, admits that low incentives instigate unrests. But he blames politicization of labor unions as the biggest obstacles to industrialization in Nepal.

“Frequent strikes in factories that provide good pay are the testimony that trade Unions instead of promoting workers´ welfare have become tools in the hands of political parties. This has posed a big challenge to Nepali industries,” Joyti says. Growing factionalism in political parties and the tendency of dishonoring agreements have made matters worse,” he said.

Rabi Bhakta Shrestha, former FNCCI president, says politicization of labor unions, has sounded death knell for Nepal´s industries. “The productivity of Nepali laborers has shrunk so dangerously in recent years that even the businesses with absolute comparative advantage have become financially unviable,” Shrestha says.

According to a study, the productivity of a Nepali garment worker is currently 9.6 pieces of shirts in an 8-hour shift whereas the same for the Chinese is 25.5, Bangladeshi 18.6 and Indians 16.

“How we can we increase the workers´ incentives in this situation,” questioned Shrestha, adding, “We are ready to double the salaries if the workers bring up their productivity on par with the South Asian average.

However, Rimal, a lawmaker with nearly two-decades of involvement in labor activism, rubbishes the claim that politicization is the only reason for low productivity of Nepali laborers. Apart from the non-labor related factors like power shortage, Rimal blames the industrialists themselves for low productivity of workers.

“How many factories pay enough to ensure workers a decent life, how many factories invest for trainings to enhance workers´ skills, and how many factories have a healthy working environment,” he questions.

Dr Shiva Sharma, General Secretary of National Labor Academy, concurs and attributes low pay scale for poor productivity. “Low pay scale has forced Nepali workers to opt for jobs in Malaysia though they are not very lucrative,” Sharma said.

Sharma also blames factory owners for politicization of labor unions. When workers feel that the employers are indifferent toward their grievances, it is natural for them to seek help from political parties, he said.

Rimal claims that the factories that have addressed workers´ grievances have not suffered strikes for many years. He also blames the factory owners for allowing political clout inside the factories. Instead of making efforts to win workers´ confidence by addressing their genuine concerns through regular dialogues, many factory owners opt for fast track solutions by using political connections to suppress labor unrest.

As a result, the mistrust between the workers and factory management has been widening like never before. Workers see employers as oppressors, whereas owners feel that laborers are least concerned with the growth their workplace.

“The desperation of workers for higher incentives in Nepali factories so high that there is hardly any resistance to calls made by any unions of any political hue to go for strikes,” says Sandeep Gautam, president of Labor Union of Him Electronic Nepal.

Jyoti acknowledged that some employers seek the support of political parties to deal with labor disputes and said such practices have made political leaders the de facto owner of Nepali factories. Shrestha further added that the practice has become so prevalent that an employer needs political connections to bring the workers back to work even after meeting their demands.

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Globalization, Technology and Culture

This picture does a very good job of describing how globalization has pushed our personal and cultural frontiers and technology has been a crucial part of this process.

Source: Ekantipur. The caption reads: “Parents from Kathmandu put Tika to their family members living in Orebro, Sweden via “video call” on Saturday to mark Dashami—the 10th day of Dashain festival. Many Nepali residing abroad received the blessings via computers and internet.”

Notice few interesting stuff in this picture:

• Globalization and technology are pushing our cultural frontiers. Globalization and technology are ever evolving, but culture at the core remains as it is. Economic agents try to strike an equilibrium between the benefits of globalization and their culture. Technology is bridging that gap in some way.
• Cost of communication is way cheaper. It was unimaginable few years back to do video chat or communicate using internet. People had to depend on the good old ISD/STD phone booths, which are evaporating these days. Owning a cell phone in 2004 was a big deal. Now, you can have it and use the 3G technology within minutes. Back in 2000, you had to wait for about two years to get a landline connection. There was a quota system by district. Now, people hardly want to have landline, expect in offices and home (least preferred by people living on rent or in an apartment).
• The digital divide: Look at the internet speed (the red bars). Developing countries still have low internet speed (and reach), which is expanding though, than the developed countries. Is technological convergence (sans innovation) or catch-up happen?
• Culture is one of the few factors that binds people across generations and nations. People adapt this to globalization to the extent possible.
• And, come on ekantipur,  could you please at least redact names of the people in the picture? Readers get the core message without the names as well!