The Himalayan Hope: Nepal

This is no mistake.

I’m not telling this story because I have any investments in Nepal, because I don’t. Rather, it has to be one of the most exciting stories in the frontier market that I have come across.

It’s one that I want the Emerging Frontiers community to know about before it becomes the next hyped Asian market.

For those unfamiliar with the Nepali story:  This small country sandwiched between its giant neighbors, India and China, has experienced years of civil war, instability, and a lack of institutional protections for investors, which left the country off the map. Having been essentially untapped over the preceding decades, the Nepali market now might be primed to experience rapid economic growth.

Nepal has over 80,000 megawatts of hydropower, of which less than 1000 is being utilized. Similarly, the country has significant copper, iron, mica, and limestone deposits.  Nepal’s natural beauty and other tourism-related potential also beckons.

The country’s telecommunications sector only provides cell phone coverage to 20 percent of the population, of which few of whom have 3G coverage. Infrastructure such as a new Kathmandu-Tarai expressway and more east-west country links are critical.

Even with this need, doing business in Nepal isn’t easy. Nepal’s post-civil war democracy has successfully maintained years the peace between the country’s mix of ethnic, geographic, religious and political stripes. However, they are keenly politically engaged at various levels, often creating hurdles for developers. At the national level, Nepal’s democracy can be generously described as “messy”.

Nepal’s political situation might not be able to prevent development now. The country has lost a generation of Nepalis who work as maids and construction workers in Gulf States because of a lack of opportunity in Nepal. The country experiences blackouts lasting 18 hours, and its neighbors are tantalized by Nepal’s natural bounties.  The moment might have arrived where domestic need – the need to create opportunities at home for its people, coupled with the pressure of its neighbors might finally overcome the political barriers preventing Nepal’s development.

The Sushil Koirala-led government has aggressively courted its neighbors to seek opportunities to expand trade ties.  Just in recent days, a second land port has opened between China and Nepal and the two countries have also signed agreements to enhance cooperation to expand tourist ties. A Bilateral Investment Protection and Promotion Agreement (BIPPA) is in the works between Nepal and China, which might be signed in the coming days.  Nepal is also in the midst of negotiating BIPPAs with Turkey and Pakistan as well. With India, the PTA is recognized as a having game changing potential.

Please also check out the podcast related to the article on the Emerging Frontiers website.

Courtesy of Emerging Frontiers

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