Nepal’s economy, already weak, takes direct hit

With business coming to a grinding halt globally due to the COVID-19 pandemic, Nepal’s migration and tourism-based economy is being severely impacted.

Global stock markets are in freefall, the US has halted trans-Atlantic flights, Italy is in lockdown, India has stopped issuing tourist visas, schools in Japan are closed, Qatar has banned nationals from 14 countries, Saudi Arabia has halted travel to nine countries, and although the virus has stabilised in next-door China, there is a danger there of reverse infection.

But as the epidemic spreads, Nepal has officially admitted to only one confirmed case of COVID-19. Public health experts say this does not mean there are no infected people, it just means suspected cases have not been tested yet. They say the country is not prepared to deal with an outbreak.

“The situation around the world is getting out of hand, but Nepal has been able to dodge a full-blown health crisis till now,” says Sameer M Dixit, a scientist at the Centre for Molecular Dynamics Nepal. “In an ideal situation the country would be under lockdown, but right now Nepal should stop all direct flights from highly affected countries.”

Even though there are no overt signs of a health crisis, Nepal’s economy has already been hit hard and the impact is expected to worsen in the coming months as tourism collapses and air travel is further curtailed.

The Asian Development Bank’s ‘COVID-19 Economic Impact Assessment Template’ released this week lays out the best- and worst-case scenarios for countries in the region. For Nepal, the bank predicts a loss of up to $322 million.

The tourism sector has been impacted by travel restrictions imposed by Nepal and other countries, and airlines cancelling flights.

The government decision late Thursday, after the print edition of this paper had gone to press, decided to revoke visa on arrival at Kathmandu for nationals of all countries. Visitors will still be allowed to enter Nepal but they will require a visa from a Nepali mission abroad and also a Coronavirus-free health certificate. The visa rule be effective 14 March to 30 April for now.

The move comes one day after China cancelled all expeditions from its side of Mt Everest. The Nepali government has also cancelled all climbing expedition permits including Mt Everest for the spring season.

Read also: Why Nepal must watch Coronavirus, but not panic, Sameer M Dixit

Even before the government called off Visit Nepal Year 2020, the campaign was criticised for lack of international promotion and the money being wasted on domestic extravaganza. Although tourist arrivals saw only a slight drop to 101,400 in February, there was a 80% decrease in visitors from China.

Official figures are not yet available for March and April, but the travel industry is reporting widespread cancellations. Many international conferences and sports events have been postponed. Hotel occupancy rates are dropping at what should have been peak season. Trekking and mountaineering expeditions have gone ahead but there has been a 50% decline in the number of clients. There are also reports of cancellations for April.

“Hotel bookings are down by 60% in the 5-star hotels around Nepal,” Shreejana Rana, President of Hotel Association of Nepal, told Nepali Times. “We had expected a surge in bookings after Chinese New Year and during the spring from American and European tourists but that isn’t the case.”

The first airlines to cancel flights were the ones operating to Chinese destinations: Himalaya Airlines, Sichuan Airlines and Tibet Airlines. Air China, China Southern and China Eastern are still operating flights, but with reduced frequency and smaller aircraft.

“The tourism industry is very sensitive. The smallest problem has widespread impact, and it takes a lot of time to recover from it,” says Deepak Raj Joshi, former CEO of Nepal Tourism Board. “We need to start preparing for the future right away.”

The Tourism Ministry is now repurposing Visit Nepal Year 2020 towards a 2020-2030 ‘Tourism Decade’, and the hotel industry is relying on domestic promotion, encouraging Nepalis to travel to Pokhara and to go trekking during the new-year break in April.

Nepal expects about 250 climbers from 24 expeditions on Mt Everest this spring, even though Korean, Japanese and some western expeditions have cancelled. This is half down from last year, when there was a notorious traffic jam on the summit. On Wednesday, China closed its side of the mountain due to the COVID-19 scare.

“Everest expeditions are starting soon but we are still trying to figure out what to do if the mountaineers catch coronavirus during the trip,” says Sarita Lama of the Trekking Agencies’ Association of Nepal (TAAN). “This is so bad it may take us years to recover from the crisis.” Trek bookings are also at half of last year’s numbers.

Nepal’s main source of foreign exchange, its two million workers abroad, will also be hit. Qatar this week imposed a ban on workers from 14 countries, including Nepal. Nepal is preventing workers from flying to South Korea.

The High-Level Coordination Committee also decided on Thursday to stop issuing labour permits for Nepali migrants seeking to go abroad for work. It is uncertain when the migration ban will be lifted.

Read also: Crossborder virus and Nepali migrant workers, Upasana Khadka

Nepal’s major infrastructure projects all face delays because of the reliance on Chinese contractors and workers. The start of the epidemic in January coincided with Chinese New Year, which meant that workers at new airport projects in Pokhara, Bhairawa and numerous hydropower plants under construction who had gone home could not return.

Even among those who have returned, some have been quarantined, including 70 who work on Pokhara’s new airport. If given the all-clear, they will be released only on 16 March.

“Although work has slowed down these past couple of months, we will work night and day to meet the target completion date of July 2021,” Pokhara airport manager Binesh Munakarmi assured Nepali Times.

Construction at Bhairawa airport, which was scheduled to open later this year, is expected to be delayed.

“Many of our engineers and workers have not been able to come back to Nepal,” says Bhairawa airport project chief Prabesh Adhikari. “There are about 25 Chinese workers on site and we are trying to move construction forward, but we need the rest to return.”

The timely completion of hydropower projects, of which 65 have the involvement of Chinese companies, looks more bleak. Construction at 25 of these under-construction projects have not resumed since Chinese New Year. Workers have not been allowed to travel out of China, and necessary electro-mechanical equipment has also not been dispatched from China to Nepal.

“Even if one Chinese engineer is absent, or if one critical piece of equipment does not arrive from China, work stops,” says the President of the Independent Power Producers’ Association Shailendra Guragain. “If the situation worsens, we may be seeing losses amounting to a billion dollars in our projects.”

Read also: The climate connection to Covid-19, Rastraraj Bhandari