Come Election season, our political parties, which seem to hire experts who have received fake degrees from across the border, come up with their outlandish manifestos promising us the moon.
Two decades ago, our great comrade Prachanda aka Noida Natwarlal aka RAW vegetables, promised us that his party would make Nepal, the largest economy in the region. I guess he forgot that there is a bigger one across the border. He promised us 10,000 MW of batti, and US$10,000 GDP per capita, which in calculator terms makes us a US$ 300 billion economy. And he said he could do it in 10 years.
Almost two decades gone and we are still stuck with less than US$1,400 per capita, and I think our power generation stands at around 3,800 MW. The only accomplishment our governments since 2008 can boast about is opening labor destinations in more than 100+ countries and exporting our labor for exploitative wages and inhumane living conditions. We have 5 million folks working overseas, many who have gone through illegal channels, working hard to take care of their families and keeping our economy afloat.
This election season, the promises are still whack, but not impossible, but not possible in the next five years. How on Earth can you promise 500,000 new jobs in 5 years, and what kind of jobs do these buffoons have in mind? 90% of folks in this country who do find employment here barely make more than Rs 15,000 a month. It is enough to pay for a small room, eat dal bhat, and buy data for TikTok binge sessions. And that's it.
If our young folks could get paid Rs 30 to Rs 40,000 a month, they wouldn't be leaving in droves, paying manpower agencies, education consultancies and shady agents to get out of this country so that they can at least make a few extra Dinars and Ringgits or lucky ones will make Dollars and Yen or something.
The government announces a minimum monthly salary every year. I think it is a little less than Rs 20,000 now, but the private sector cannot afford it. The only place where an entry-level person makes Rs 30,000+ in salary and benefits is in the public sector. A peon in our government office makes that, and so do police constables but a salesgirl at Bhatbhateni will make 50% less. So even if Bhatbhateni hires 100,000 employees in the next 10 years, they cannot pay them 30 grand a month because as a business, it has to make sure it has enough cash flow to pay the loans, salaries and then face extortion from political parties and even tax officials. It is tough doing business in Nepal.
We export not even a billion dollars worth of stuff if we minus the Palm Oil scam. We import more than 13 times more and nearly 80% of our trade is with our so-called big brother across the border, not the Dim Sum but the Samosa ones. And where do we get the money to pay for all the stuff? It's the remittance, stupid! If it weren't for our folks abroad, we would have been broke a long time ago.
So how do we become a US$ 100 billion economy? Now that is the question. I think our current GDP is around US$45 billion. If we double up in 5 years, our GDP per capita will be around US$ 3,000 and then Prachanda can finally boast that we are number #1 in the SAARC region in terms of GDP per capita. We will talk about SAARC some other day. Now we can call it South Asian region maybe.
Our tax revenues barely cover the salaries and perks of our government employees and those in power. We borrow a few billion dollars every year to balance the books and act like we are spending something on development projects which take decades to complete. We are almost US$ 20 billion in debt. In 5 years, each we will reach US$ 30 billion and then maybe we can proudly claim that each one of us have US$ 1,000 debt on our heads!
The government can easily manage the few billion dollar shortfall if they do their job right when it comes to collecting taxes be it VAT, Income, Custom and Excise duties and even rental taxes. We lose more than 2.2 billion dollars a year due to smuggling and under-invoicing of goods at the border. Where did I come up with that figure? I also have a PhD in Economics from MIT (Mirzapur Institute of Technology).
But at the same time, an ordinary Nepali will be choked, put on a head lock or pushed to the ground by our APF and NP folks just because they brought 5 kg more sugar or 5 extra kurtas from across the border. Ordinary citizens will have to pay custom duties on small stuff while smuggling syndicates seem to pass hundreds of trucks without any interference due to all mili-juli among government officials, security personnel and even local political party dons.
When it comes to rental taxes, 80% of landlords in Kathmandu, especially the ones renting small rooms do not pay rental taxes. If they did then the municipality could have some surplus funds to do more for the people. And 80% of the landlords who do pay the rental taxes do not pay the right figure. Ask the 80% of the landlords in New Road and Durbar Marg.
When it comes to big business houses, they are forced to pay the tax officials even if their books are right. They are forced to pay political donations and at the the end of the day, I guess these reasons also force them to evade taxes. When will we realize that those in power have destroyed us all, be it our business people or us, the ordinary folks barely making Rs 15,000 per month?
Once again, we come to the question... How do we become a US$100 billion economy? and the funny thing is I really don't have any answer. We will have to ask our politicians who tell us that in 5 years, they will create 100,000 IT jobs as if they are the ones who have bagged some outsourcing contract from Google.
We are still not getting the core issue right. Forget tourism for a second. All this wishful thinking of 5 million high-spending tourists showing up here someday and generating 5 to 10 billion USD per year is like Elon Musk promising the world that he will colonize Mars someday. Yes, maybe when that happens, then we will hit our 5 million tourist mark!
The real issue, it seems, is that we have not focused on exports in the past 35 years, except exporting our folks as cheap labor mostly in the Middle East. Let us stop blaming our major political parties for the mess. They came from stone-pelting, hawa-taari guff giving training schools. They memorized all socialist and communist guffs, all theory but zero practical knowledge on how to make the country better.
Let us move forward and work on how we can reduce the trade deficit. It is not that difficult for us to export US$ 10 billion worth of goods in the next 10 years, and maybe then we will not have to rely completely on remittance, or we will have no remittance if folks can make the same pay here that they receive in the Middle East. 80% of our remittance comes from the region and add Malaysia to the math as well.
But what stuff can we export worth US$ 10 billion dollars? We won't be making iPhones anytime soon or the semiconductor chips. Let us not get stuck with the 90s and still talk about carpets, pashmina and garments and handicrafts. But if these products were super-expensive luxury brands then we could be selling US$10 billion worth of high-end carpets and stuff but then we need a French guy to come to Nepal, open a luxury brand and sell to his buyers while he pays taxes and trains folks make them highly skilled in their fields and pay them very well.
So, the moral of the story is, unless we bring in good foreign investment not in millions but in billions, it is near to impossible to rise up from this economic mess we have been dealing with since the 1990s. And the funny thing is, most of our foreign investment in the past twenty years have not come from real foreign foreign but the corrupt money laundered to tax havens abroad and then brought back in as foreign investment. And we don't even find it funny anymore.
Let us stop dreaming about 40,000 MW of electricty and how we will be rich if we can sell it to our neighbors. You would need more than US$100 billion dollar invesment for that kind of power generation. I think each MW cost around US$1.5 to US$1.8 million and for storage types you might have to increase it 80% ore more. So nobody is going to invest that kind of money in a country where government officials are tha main hindrance for any businesses or development.
We hear about 10,000 MW projects coming soon. There is a vast difference between announcing your mega film project and then finally releasing it in the theaters. And when it comes to the Nepali hydropower scene, it is all about holding the licenses and not doing anything while waiting for potential investors to pay more for everything.
I think the best option for now if we were to be a US$10 billion exporting country is to just bring the Dutch in with their agricultural know-hows because they seem to be exporting US$120 billion+ worth of agricultural products around the world and population and land wise, they are tiny compared to us.
If we can get the Dutch in, ask them to invest billions and export the stuff worldwide, we will then be able to at least generate not a few lakhs but a few million jobs where our folks will finally be able to make decent money, more than they are making in South Korea today. We have yet to fully utilize the fertile lands in the plains and there are many stuff we could grow in the hills as well. If the Dutch come to invest, they will make sure that all our hills and plains are fully productive.
Our so-called nationalists argue that foreigners will then make all the money and exploit our human capital and natural resources. Well, China and India are doing just fine, aren't they? Until we can take care of ourselves, we need foreign help in creating jobs but so far in the past 35 years, the only foreign help we have received has nothing to do with the economy but only to create political choas but we can't always blame RAW, CIA or some guy in the Cayman Islands forever. Instead of reforming all our institutions, our politicians have worked hard to deform and destroy the integrity of all institutions in the nation.
In the past 35 years, our food imports have jumped by more than 10,000% and where did we go wrong? We started the early 90s as a food-exporting nation and ended up today as a major food-importing nation. All thanks to our politicians, bureaucrats and middlemen. Our farmers never get fertilizers on time or have to resort to the black market across the border while the guy who gets the contract is busy bribing every hakims and politicians and makes a killing as well. Farmers don't get paid on time. It's the same with sugar canes or dairy or anything.
We now don't have enough manpower to work in the agriculture sector as most of our able-bodied youth are abroad and if the pay were better, who would want to leave this country to risk their life to make an average Rs 35,000 a month working in the Gulf region? It's only 20% of our 5 million foreign-based Nepalis who make much more, but the rest have to work for peanuts but it is still twice or thrice the average pay than back home.
Our products either rot away or middlemen make 500% profit while farmers have to throw their products every now and then and in the past twenty years, we have not been able to build much needed cold storages across the country. We are eating Kashmiri and Chinese apples while our mountain apples cannot compete with the prices and thanks to our careless governments, we are not able to transport the products across the country due to inadequate infrastructure.
For tourism, we need at least better roads, airports able to handle millions more, better management of our tourist spots and get tourists to spend more while offering the best customer service they will ever receive in their lives. We spend more than US$1 billion a year visiting Thailand and other affordable foreign spots, while annual revenue from foreign tourists is half of that. What can we do to make our domestic tourists spend that money here at home? Well, we have to compete with the hotel and food prices in Bangkok and Bali for starters.
The buzz now is that we are already making US$ 1 billion from IT stuff, but the reality is that the outsourcing companies, which have mostly their HQ back in the West are making the money. A few thousand IT workers here are employed, but they are paid peanuts compared to the ones in the West and it's like not even a cent on the dollar if we actually calculate their wages.
At the end of the day, we need to overhaul the bureaucracy and make it pro-business, pro-investment, and pro-people and not do the same natak they have been doing for the past 35 years. In this digital age, we are still asked to run around 7 rooms to get 8 signatures on our 9 forms to start something in this country. The government makes it very difficult for foreign investors to take their profits back home.
If China could do it from the early 80s and India from the early 90s, then why on Earth did we not work on foreign investment to make our country a US$300 billion economy by now? The answer is that those who came to leadership in the 90s were broke, hungry, type-writer generation who were still stuck in the 60s who had no clue or were only hell-bent on using the state funds to enrich themselves and their cadres.
India today is a US$ 4 trillion economy. China is 50 years ahead of India. If we compare, then we should be at least be a US$120 billion economy by now if we had just followed the 'Indian' foreign investment model word by word in the early 90s. Most of our politicians then were all living in India before they got lucky and were thrust into power by the innocent people who wanted change but our politicians forgot to read the Times of India every day then. At least they would have then learned a thing or two about what India was doing or did when they were faced with a severe financial crisis where they were almost broke in the 90s.
Ours will be a remittance-based economy for another fifty years if we don't start doing our homework soon. Not much will change. It's sad to read about the Middle East conflict. If it prolongs for a month, we will lose a billion dollars in remittance this year, if it extends for even six months, then expect our new government to go broke by the year's end. How? Well, they may brag about having billions of dollars worth of dollars but NRB knows very well that at the end of the day, if remittance is down and folks don't buy the imports then the tax revenue will go down and when that happens, there will not be enough funds to even pay our government employees, leave alone any funds for any extra development works or even servicing our debt.