‘Malaysia NPR 400,000. Dubai, Qatar NPR 200,000-250,000.’ These are prevailing under-the-table market rates listed for Nepalis to secure overseas jobs.&nbsp;
Low paid workers pay <a href="https://nepalitimes.com/news/the-theory-and-practice-of-zero-cost-migration">high recruitment fees</a> equivalent to months of wages, while higher paid professionals get relocation and other benefits.&nbsp;
Yet, ongoing research by Migration Lab and International Manpower Recruitment (IMR) with ethically hired workers shows that aspirants and their communities still regard the employer-pays recruitment model with deep skepticism and disbelief.&nbsp;
And why would they believe it? Even when workers pay hefty fees, it is never guaranteed that they will land the promised job, or not be stranded abroad. Jobs that require zero payment are even considered scams, with concerns about the quality of the job, wage deductions or about being duped.&nbsp;
Some workers do not apply for jobs at all, or are dissuaded by their families. The good news is that perceptions change.&nbsp;
And all it takes is one successful migrant worker in a village to change perceptions. One worker who did not have to pay recruitment fees told us: “People from my village do not believe me.” Another said: “Four or five from my village have already migrated for free, so people believe it.”
Some workers passed up job offers requiring fees, waiting instead for ethical employers from whom close friends or family members had benefited.
Because not all aspirants know about workers who did not have to pay recruitment fees, social media <a href="https://www.tiktok.com/@migrationlab/video/7418580695485795617">messaging</a> is critical. Online <a href="https://www.tiktok.com/@migrationlab/video/7421150186598190369">testimonies</a> from workers who got jobs through ethical channels are helpful, but are also met with skepticism because it is widely known that workers are frequently coerced by fraudulent recruiters into speaking on camera about not paying fees despite having paid significant amounts.
<a href="https://nepalitimes.com/opinion/labour-mobility/a-few-good-agents">Ethical recruiters like IMR</a> conduct village campaigns to screen workers. This reduces the reliance on middlemen, and broadens the understanding of how ethical recruitment drives work.
Prior to departure, IMR wins the trust of workers and creates a safe space to admit if they have paid anyone fees. Middlemen can often mislead workers to believe that they have a say in influencing interview outcomes and charge workers.&nbsp;
The biggest obstacle is to assure workers that admitting they have paid will not cost them their job and that the recruiter will work with concerned authorities to ensure the agent returns the money and does not harass them or their families. Although Nepal’s laws consider such subagents illegal, ‘agents’ are often family members, villagers and friends.&nbsp;
These practical home-grown innovations in recruitment are products of testing to address years of exploitation and distrust in the system and the labour mobility industry. They also bring a nuanced understanding of the often complex aspects of the employer-pays principle.
<a href="https://www.ilo.org/sites/default/files/wcmsp5/groups/public/@ed_norm/@ipec/documents/publication/wcms_727143.pdf">Research</a> shows that when workers do not have to pay recruitment fees, it has positive impact on their productivity and well-being. Responsible recruitment also allows innovation to make migration a transformational development tool to uplift the poorest.&nbsp;
Ethical Examples
IMR and Migration Lab recently connected 70 youth from the Musahar community in Mahottari and survivors of the Jajarkot earthquake last year with factory jobs in Malaysia for which they did not have to pay anything.&nbsp;
Accessing overseas jobs, including those with <a href="https://nepalitimes.com/opinion/why-has-zero-cost-migration-not-happened">high fees</a>, is a challenge in these communities. Finding responsible recruitment opportunities is even more difficult. Good migration has the power to push families out of intergenerational poverty and discrimination as seen in the case of many migrant workers in the <a href="https://nepalitimes.com/editorial/50-diaspora-diaries-in-nepali-times">Diaspora Diaries series</a>.&nbsp;
For <a href="https://www.youtube.com/watch?app=desktop&amp;v=-mh1uk3fvQc">Jajarkot earthquake survivors</a>, fee-free recruitment can also complement patchy post-disaster recovery efforts by the government. Even without an earthquake, emigration from far-flung areas like Jajarkot is complex because of financial, information and network access issues.&nbsp;
It takes at least two days to travel to Kathmandu, costs are high, and workers may not even pass employer interviews after all the time and money invested.
The earthquake made overseas migration even more difficult in Jajarkot, further affecting access to informal loans, yet increasing the desire to migrate. Many were ready to borrow at 60% interest, while others said they would have migrated to <a href="https://documents1.worldbank.org/curated/en/099439009302442870/pdf/IDU1bade747310f41144991a576183a9a3eb57d4.pdf">India</a>, a cheaper, less-risky alternative with lower returns.
The Musahar community also faced multiple challenges including passport confiscation by middlemen for months without any job placement. Moneylenders also do not trust them to pay back, and are wary of recent restrictions on meter interest lending.
Labour middlemen are strategic about snaring the vulnerable to manipulate and cheat. There are anecdotes about them identifying the most desperate women, including those that are victims of domestic violence or extreme poverty, to send them as domestic workers through irregular channels.&nbsp;
New York University Professor Natasha Iskander’s <a href="https://www.ias.edu/ideas/forging-closed-loop">research</a> documents how companies in Qatar reported targeting candidates from regions experiencing climate breakdown because the educated but newly poor make ideal recruits as they are now willing to accept lower wages.
This narrative can be flipped by good actors through ethical interventions. Sourcing areas can be redefined: not as preying grounds for fraudulent middlemen but where responsible recruiters can reach that last mile with transformative overseas opportunities.
The Musahar and Jajarkot candidates have modest goals: paying for their children’s education, household and medical expenses, buying land, rebuilding houses, and saving to start a small business.&nbsp;
To be sure, migration outcomes are determined by more than just recruitment fees and it will take time to see how they fare. But the likelihood of achieving any goal is certainly higher under debt-free responsible recruitment schemes.&nbsp;
Beyond no costs, workers hired under ethical drives know exactly what jobs they have signed up for and employment terms from the onset, unlike traditional recruitment that is often characterised by false promises and exaggerated benefits.&nbsp;
Workers paying exorbitant fees for jobs will hopefully be an outdated concept one day, but for now the number of ethical recruitment drives is insignificant.&nbsp;
Workers interviewed said their peers paid up to Rs400,000 for comparable jobs, and they too would have been compelled to take the same route if the ethical option was not available. Repeat workers had paid up to $2,259 in fees in earlier migrations.&nbsp;
Highly marginalised communities need even more support to overcome information, finance and networking barriers to connect them with rewarding and safe overseas opportunities.&nbsp;
Systemic disadvantages in education or skills training also limit their ability to secure worthwhile jobs abroad that have wages and better labour protection but higher barriers to entry such as language or skills.&nbsp;
Making ethical migration accessible to the most marginalised Nepalis would have the best impact. Perhaps these issues would come to the fore if we also saw emigration as people chasing their dreams and aspirations, and not just as a compulsion “बाध्यता” that is entrenched in Nepal’s public narrative.
But forced immobility also merits attention. It is an unfulfilled dream for many to also take social media photos at Kathmandu airport with teary-eyed relatives before departing. &nbsp;&nbsp;
<div class="embed-block"><iframe width="560" height="315" src="https://www.youtube.com/embed/GHAOkqHoa7A?si=QtGrL0W8Ffkh4eiy" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></div>
Upasana Khadka heads <a href="https://migration-lab.com/">Migration Lab</a>, a social enterprise aimed at making migration outcomes better for workers and their families. Labour Mobility is her fortnightly column in Nepali Times.

Upasana Khadka

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Fee-free migration is possible

Malaysia is slashing foreign worker intake from end-May, conflicts in West Asia <a href="https://nepalitimes.com/opinion/guest-editorial/the-international-order-is-dying-in-gaza">risk engulfing the region</a>, and fortress Europe is building higher walls for migrants. 
All this means that Nepal’s economy, <a href="https://nepalitimes.com/business/remittances-up-and-up">almost completely dependent on money its workers send home</a>, is as fragile as a house built on sand. Proof of that was the Covid pandemic, which impacted overseas jobs and remittance inflows. 
Malaysia has now capped foreign workers to only 15% of its 17 million strong workforce, and this will mean there will be much fewer jobs for Nepalis in its palm and rubber plantations, construction, manufacturing and service sectors.
Malaysia has instructed companies that no work visas will be issued after May. One saving grace is that the restrictions do not apply to foreign security guards, <a href="https://nepalitimes.com/here-now/close-encounter-with-death">most of whom are Nepalis</a>.
Malaysia’s curb on foreign workers appears to be related to domestic unemployment, as well as an EU decision to phase out the import of palm oil as a renewable biofuel because of rainforest destruction. Malaysia is the world’s second-largest producer of palm oil after Indonesia.
There are an estimated 500,000 Nepalis in Malaysia, some of them undocumented workers. Of the 771,000 Nepalis who got labour permits from the Department of Foreign Employment in the last fiscal year, 259,000 went to Malaysia. 
“The fact that a major labour destination country like Malaysia is reducing the number of Nepali workers is not good news,” says labour migration expert Ganesh Gurung. “It will seriously impact on remittance inflows and the economy. It does not seem like the Nepal government has any concrete plans to deal with this issue.”
Rajendra Bhandari, President of the Nepal Association of Foreign Employment Agencies (NAFEA) agrees that Malaysia’s decision is concerning, especially as the demand for foreign workers in Gulf countries is also decreasing. He adds that unless the Nepal government finds alternatives, the number of Nepalis going abroad illegally and ending up doing dangerous work will increase. This is evidenced by the increasing number of Nepalis<a href="https://nepalitimes.com/here-now/nepalis-play-russian-roulette-in-distant-war"> killed in action while fighting for the Russian Army</a> on the Ukrainian front.
Yet even as Foreign Minister Narayan Kaji Shrestha is demanding that Russia send Nepali soldiers home, Labour Minister Dol Prasad Aryal, <a href="https://nepalitimes.com/editorial/skeletons-in-the-cabinet-k5x6py1v">who is alleged to be involved in recruitment and remittance agencies</a>, reopened labour permits for Russia on Wednesday.
The value of Nepal’s exports is only one-tenth of its imports, and the country pays for imports with remittance income. Latest Nepal Rastra Bank figures show that the country earned $6.35 billion in the last six months of this fiscal year, and foreign exchange reserves hit a record $13.9 billion. 
Ganesh Gurung says that even though Malaysia’s decision might have seemed abrupt, such overwhelming dependence on remittances has always been a risky path for Nepal. Money the diaspora transfers to relatives in Nepal makes up an equivalent of 25% of Nepal’s GDP – one of the highest ratios in the world.
There are an estimated 2 million Nepalis in the Persian Gulf region, and a change in foreign labour policy or a regionwide conflict could jeopardise their jobs and in turn, impact the national economy. 
“This overwhelming reliance on foreign employment has meant that Nepal’s rulers have not been able to implement policy and incentives to create jobs domestically,” says Gurung. “It is inevitable that jobs overseas will dwindle eventually.”
With Malaysia closing, and earnings in the Gulf countries being less than what was promised by recruiters, Nepalis are increasingly <a href="https://nepalitimes.com/opinion/europe-now-favoured-destination-for-nepalis" target="_blank">looking to Europe</a> as an alternative. But while Europe needs cheap foreign labour, it is also becoming more restrictive.
Croatia was a favourite springboard for Nepalis seeking to go to Western Europe, but it joined the Schengen area last year. There are now an estimated 15,000 Nepalis in Romania, and more hope to make it there before the country also joins Schengen on 31 March. 
NAFEA’s Rajendra Bhandari says the hurdles are not just from Schengen states in Europe, but also from the Nepal government. Those seeking work in Europe need a work demand letter from a European country that is verified by a Nepal embassy in that country. But most European countries do not have resident embassies. 
“If the demand letters could be verified in Nepal itself, it would open the door for a lot of Nepali workers to go to Europe,” says Bhandari, adding that although the Labour Ministry is open to the idea, the Foreign Ministry does not think so.
Unlike migrant workers who go to other Asian countries to earn money, send remittance back home, and eventually return, Gurung says, most Nepalis who go to Europe more often than not settle there permanently. 
Overseas migration has been seen as a safety valve for Nepalis, but there are many thousands of domestic migrant workers at construction sites all over Kathmandu. 
Ensuring a basic minimum wage and labour protection for them would open up more <a href="https://nepalitimes.com/here-now/few-jobs-created-by-nepal-employment-drive">meaningful employment</a> within Nepal in semi-skilled jobs, many of which are being given to migrants from India.
Says Gurung: “Continuing to depend on other countries to give Nepalis jobs, instead of providing jobs in Nepal for Nepalis, will mean trouble for us down the line.”

People's Movement

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Nepal is graduating to become a developing country on 24 November 2026 after half-century in the Least Developed Country (LDC) category. By 2030, the country hopes to transition to middle-income status.&nbsp; Everone from Prime Minister K P Oli have boasted that this is a matter of national pride, and will have a multiplier impact on trade and economy.&nbsp; But will it make any difference to the average Nepali? Not unless improved governance <a href="https://nepalitimes.com/news/why-invest-in-nepal">spurs investment and creates jobs</a>.&nbsp; Countries need to meet at least two of the three criteria in two consecutive triennial reviews to be eligible for graduation from LDC. Nepal has consistently met the thresholds for the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI) in 2015, 2018, and 2021. But Nepal was recommended for graduation before meeting the per capita <a href="https://nepalitimes.com/banner/nepals-great-income-divide">Gross National Income (GNI)</a> threshold of $1,306. “A major implication of LDC graduation is the loss of preferential market access available through Generalised System of Preferences (GSP) and other arrangements,” explains economist Sameer Khatiwada. “But over two-thirds of <a href="https://nepalitimes.com/news/nepal-doesnt-produce-its-2-biggest-export-items">Nepal’s exports</a> are to India, and the preferential market access to India is through a bilateral trade agreement. This has nothing to do with our LDC status.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85.jpg" data-media-id="editor_3" data-image-id="20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85" data-rendition-name="original" width="640" height="470" loading="lazy" alt="LDC graduation "> </figure>  Furthermore, a provision under the South Asian Free Trade Area (SAFTA) allows Nepal to export to India duty-free if the items are at least 30% value-added. Nepali traders take advantage of this by re-exporting edible oils without meeting that requirement, falsely boosting Nepal’s exports.“ Following graduation from LDC, the value addition threshold might increase to 40%,” says Kalpana Khanal of the Policy Research Institute. “This is supposed to work to our advantage, because on paper value addition inherently means <a href="https://nepalitimes.com/multimedia/staying-home-to-create-jobs">job creation at home</a>.” But Nepal’s exports to other major destinations will face <a href="https://nepalitimes.com/news/nepal-and-the-us-india-tariff-tiff">tariff increases</a> with the graduation. A South Asia Watch on Trade, Economics and Environment (SWATEE) study shows that while tariff increase in the US market is relatively low (see page 5) it is considerably higher in Europe. The International Trade Centre (ITC) in a 2022 study also estimated that graduation could result in a 4.3% decline in Nepal’s projected exports, but this is excluding the impact of changes in ‘rules of origin’ provisions in preference-granting countries such as the UK and Europe.&nbsp; Nepal’s top export to these preference-granting countries is <a href="https://archive.nepalitimes.com/news.php?id=1482">carpets</a>, and will not be impacted, but other items such as textiles and apparel will be heavily affected due to higher cost of production. The impact will felt mostly by small and medium enterprises which represent the largest share of exports to LDC-specific preference-granting countries. As for the service exports, Nepal never really made use of the World Trade Organization’s LDC services waiver anyway, hence the effect will be minimal, if any. There is also concern about Nepal’s graduation at a time when the global economy is topsy-turvy, amidst <a href="https://nepalitimes.com/opinion/turning-point-in-us-india-relations">tariff wars and conflicts</a>. This affects Nepalis abroad directly and may impact <a href="https://nepalitimes.com/news/more-remittance-more-than-remittance">remittances </a>which hit $11 billion in 2024. In comparison, Nepal only received $350 million in foreign loans and grants last year.&nbsp; Tourism arrivals have finally reached pre-pandemic levels, but bad publicity about pollution, poor infrastructure and bureaucratic hurdles hinder further growth. Manufacturing continues to struggle, while hydropower and the IT sector have taken off.&nbsp; “Look at data -- <a href="https://nepalitimes.com/news/tourism-needs-a-new-push">tourism arrivals</a> are up, spending is up, IT exports are up, <a href="https://nepalitimes.com/news/why-nepal-needs-to-restore-ev-tax-subsidy">EV sales </a>are up, Europe still needs 85-90 million skilled workers. We are sitting on $16 billion in cash reserves, our balance of payment, foreign exchange reserve, tax to GDP ratio, credit flow are all positive, we have to build on these factors,” says Sujeev Shakya of the Nepal Economic Forum. He adds: “Our mindset creates negativity to promote rent-seeking behaviour, but this cynicism will go away after 2026 with LDC graduation. We must deal with data, look at trends, and projects which will bring in <a href="https://nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal">international investments</a>.” Khanal agrees that investment is not dependent on<a href="https://archive.nepalitimes.com/regular-columns/backside/Nepal-not-the-least-developed-country,306"> LDC status</a>. The factors that that affect investment are policy stability, a strong legal framework, market potential and ease of doing business. She adds, “That is where our focus needs to be, and we need to retain <a href="https://nepalitimes.com/diaspora-diaries/migrant-worker-returns-to-create-work-at-home?fbclid=IwAR09xJfsClCwn8uRVAmz28CU658vdKpuyDwB_b1sNlvKtAFFnSldnA0JS2g">Nepalis with jobs at home</a> for our sustained growth.” After 2026, financing support from donors and aid agencies could be affected and Nepal will no longer be able to access Least Developed Countries Fund (LDCF) to adapt to the impacts of climate change. But the Global Environment Fund and Green Climate Fund will still be available.“ LDC status does not determine bilateral development aid, that is usually driven by broader <a href="https://nepalitimes.com/here-now/looking-beyond-two-boulders">geopolitical considerations</a>,” says Sameer Khatiwada. “The World Bank and Asian Development Bank, which provide concessional loans to Nepal, it is determined mainly by per capita income, not LDC status.” &nbsp;However, Nepal may lose some concessional terms for loans. Nepal is currently a lower-middle-income country as per the World Bank in the bracket for GNI between $1,036 and $4,045. The country is already receiving more loans than grants and in July the World Bank increased its interest rate on loans by 100% from 0.75 to 1.5%. “All this means that the impact of LDC graduation for Nepal might not be as earth-shattering as some tend to think. Countries that have recently graduated, such as Botswana and the Maldives, have shows that graduation is just a step in a country’s development path,” says Khatiwada. Sujeev Shakya also sees the glass as half full, explaining that LDC graduation is just a stepping stone if Nepal has the right policies in place. He adds, “Nepal’s biggest advantage is our<a href="https://nepalitimes.com/opinion/investing-in-people"> working age population</a> and we have investments coming in. These aided by how adaptive we are as a society are the very foundations on which Nepal will grow.”

Not poor, but not rich

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

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