Rajendra Khetan is executive director in the Khetan Group, which is involved in producing everything from instant noodles to beer, from insurance to banking. He is also a vice president at the Federation of the Nepalese Chambers of Commerce and Industries (FNCCI) and Honorary Consul of Portugal. We spoke to Khetan to find out what was happening to his mobile telephone project, and also about other issues affecting business in Nepal.
Nepali Times: People are waiting for your mobile service to be launched. What's holding things up?
Rajendra Khetan: We completed all the legal and joint venture procedures in September. We applied to the Nepal Telecommunication Authority for frequency allocation and other such matters on which approval is needed. We are waiting to hear back from the NTA. The project is very much ready, we only need to be given the go ahead.
This delay must be costing you and the exchequer. Does this say something about the government's attitude to privatisation of this sector?
It is definitely costing us heavily. The money we have committed is lying idle in the bank. We have also lined up many people to work on the project, all are waiting for the green signal. The losses on the government's side are for the NTA to tell.
The privatisation of mobile telephony is a test for the government. This will show how serious it is about privatisation of the telecommunication sector. The initiative has opened a new avenue for Nepali business and I am hopeful the government will support the project and see it through. It makes sense in every way-we will generate employment and bring in competition, which is best for the customer, and there is extra revenue to be earned by the state in the form of royalties, taxes, etc. We all stand to gain from this.
If you get your frequency sorted out, how much longer will it take?
After we get all clearances from the Authority, it will take another 12 to 14 weeks for us to launch the mobile service.
What extra services will you provide and what company-specific technology will you use?
We'll provide all the essential components of mobile telephony, such as short messaging (SMS), email, Internet, and maybe new services such as news alerts, weather forecasts and the like. We are also looking at offering the other possibilities in telephony, such as roaming services, and the other data communication facilities possible under the GMS mobile technology. Mobile phones can also be used as a security tool, and we're exploring the possibilities of that too. We will be using the latest technology. We are currently negotiating with a few technology suppliers. Spice Cell has a wide knowledge of the business and their experts are already assessing the different options.
Mobiles can leapfrog the expensive copper wire technology required for rural telephony and to connect the highways. Do you see a market there?
Our plan is to provide the service along the highway and all hubs and markets to make our coverage as wide as possible. Mobiles are definitely a better communication option than wire connections. Like in Bangladesh, we are also eyeing rural markets.
What about affordability?
We will price our product to make it competitive, because in any business volume and reach are crucial. The further we are able to reach, the higher our revenues. I cannot talk about specific pricing at this point.
How is your joint venture incorporated? How much money are you and your partner putting in?
We have tied up with Spice Cell owned by Modis from India. They have 60 percent stock and we have 40 percent equity. The project cost is around $13 million. The debt-equity ratio is still being worked out.
Son a different note, what do you see as the basic problems of doing business in Nepal today?
Government officials do not implement laws and policies in the spirit that an investor would desire. But then, even the laws are very traditional. There are problems with the labour law, which favour labour unions. Revenue officials still have discretionary powers and because the new law has made them more powerful, business remains at their mercy. Businesses are also affected locally by the whims of local administrators. Of course, the major concern at this point is industrial security. We have discussed these issues with the Minister for Commerce and Industry, Purna Bahadur Khadka, who has assured us he will do his best. The newly constituted Board of Investment should also help resolve some of these problems.
What exactly is the problem with the labour law?
We in business think wages should be linked with productivity to enhance competitiveness. People should not be paid simply because they are there. Industries, particularly those concerned with seasonal products and businesses, should be free to use contract labour, that would help us keep production in tune with demand. How can we ensure productivity and discipline when we can't hire and fire workers? We need to re-think the rights of employers and employees, where industrial disputes are concerned. Any disruption at a workplace affects everyone-owners, workers and labourers. Why can't we agree on a minimum code of conduct to ensure that production is not disrupted, whatever the differences.