Nepal as an Off-Sourcing Destination

Many aggressive companies are staying away form Nepal, thanks to poor security situation. The power majors are considering of huge investment in Hydropower sector to export power to the power hungry states of India and China, and this is a good news for Nepal. A country with very high hydro-power potential has one of the costliest energy, which simply is not acceptable. Nepal need to reform the energy sector and prepare the base for development.


While the companies like Samsung, Kodak, LG, Kia etc have entered Nepal, their performance has not been very good in the past. The things are likely to change when Maoist are in the government. Many more companies are likely to follow the investment in this Himalayan country provided the early movers succeed. There are multiple reasons why companies would like to invest in Nepal:


1. Favorable Location:
Nepal is a country bewteen India and China, two fastest growing econonies globally.


2. Power Sufficiency:
Nepal is power rich (hydropower potential is more than enough for any future growth in economy).


3. Pleasent Climate:
Nepal has one of the best climate on the world. The valley cities of Kathmandu, Pokhara, Surkhet and Dang are the front runners for this. Eastern city Dharan and western city Butwal are other places with comfortably moderate climate in the likes of Indian Silicon Valley, Bangalore.


4. Untapped Qualified Manpower:
Nepal has very high unemployed and poorly employed qualified manpower. In terms of salary, the best man power can be got with almost half the amount in India and China. Nepal produces around 10 thousand qualified Engineers and other IT Graduates annually, and due to the lack of opportunity in Nepal most candidates make their way to US, UK, India and Australlia. These candidates can be tapped by the early movers.


5. Extravagant Public:
Nepal is a economy run by remittances. Nepal has poor government (comes in LDC) but the people doesnot seem to be poor. From Pajero to Mercedes, all vehicles are quite common in Nepalese roads. The public of Nepal are so fun loving and extravagent that it has one of the best developed liquor industry.


6. Easy Capital:
Almost all the IPOs have been oversubscribed in Nepal by more than 100 times for last 5 years. It itself justifies the ready cash for the companies looking for expansion. Also, the corporate loan is available at the annual interest rate of 4-5 percent while it cost more than 10 in India. The banks in Nepal are facing excess liquidity while their Indian counterparts are struggling for getting each extra cash as deposit.


7. Hospitable Public:
Nepalese people are regarded as the most hospitable public globally. Due to the emergence as a tourist destination for many decades, the people are Nepal welcome everyone who enter their homeland. They give more love than they charge for the service, the tourist say so. May be you can test it yourself, if you get some leisure before planning next investment project.


8. Everything to enjoy:
Rafting in rivers, boating in lakes, mountaineering in the Himalayas, visiting Buddha's birth place Lumbini or Sita's birth palce Janakpur, having a Helicopter sight-seeing of the Mount Everest, tracking to the Jungles in the National Parks etc., all these are available in Nepal and all these with in a few hundred kilometers. Nepal can just be the home for Nature Lovers to Religion and Culture Scholars.


9. Cheap and Quality High Class Hotels:

Hotels are pretty cheap in Nepal and they have all the facilities that anyone in the World has. From Casino to quality Pubs, from well facilitated rooms to good view, smimming pools to the Billiard boards etc. everything is available in much cheaper rates, thanks to low maintenance cost. The Hotel insiders say they don't have to spend on Air Conditioning (its naturally cool). The occupancy rate is low in Nepal (due to earlier political tension) and the competition is intense, which has too contributed to lower cost.

10. Lower Interest Rate and Flexible Capital Flight Norms:

Nepal has lower tax than China or India, and Nepal government has declared to make the capital flight easier for both National and International companies. This is in discussion in the council of ministry and it is likely to pass soon.

All these calls for the companies to go and invest in Nepal. If they miss, I can only be sorry later.