<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111124/636cd1dc9c7e80680e08f8dcjpeg.jpg" alt="" width="2560" height="1440"/><figcaption>Photo: UPASANA KHADKA</figcaption></figure>At the close of 2020, the Department of Foreign Employment (DOFE) conducted a  <a href="https://www.nepalitimes.com/here-now/labour-recruiter-netted-in-sting-raid/">sting operation</a> on a recruiting agency that was fleecing workers. The raid of its staff was made possible by migrant workers who turned to the public system for help, and it responded efficiently in their favour.This was not a one-off operation, but the eleventh one in December. It sent a strong message to the industry that every vulnerable migrant that is being cheated could be a potential whistleblower.There was nothing exceptional about the way the recruitment agency was operating—similar transactions, potentially of higher amounts, are a norm. Interestingly, there are also a few exceptions at the other extreme: agencies that practice ethical recruitment.One such agency is International Manpower (IMR), a recruiter that does not charge migrants any fees. As one of the largest recruiters in Nepal engaged with over a dozen employers in Malaysia and now diversifying to the Gulf, it has sent over 6,000 workers without charging them any fees.But it is an uphill battle, says Y B Rai from IMR. “We have been around for 17 years but have been practicing ethical recruitment only since 2016. For a couple of years, we adopted a hybrid model before we transitioned to ethical recruitment,” says Rai, adding that there is a steep learning curve.https://www.youtube.com/watch?v=jki4KlFImHo&amp;feature=youtu.beTo be sure, the path IMR has chosen is fraught with challenges. Employers who want to source ethically, audit closely before partnering with agents and run a thorough check on their background and operation module.In the past four years of operation, IMR has often turned down employers unwilling to pay service fees, even though it comes at a cost of foregoing easy money. The act of turning down business opportunities comes as a surprise to many employers who are used to getting kickbacks for job quotas.And migrants are in disbelief when IMR staff counsel them on not paying a single rupee for the jobs, because migrants when seeking jobs, tend to associate recruitment costs positively with 'job quality'.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111124/636cd1df9c7e80680e08f8ddjpeg.jpg" alt="" width="1298" height="1236"><figcaption> </figcaption></figure>At Kathmandu airport last week, Kishori Mahara (pictured left) was headed to the UAE through IMR’s support. He said that till the last moment he still could not believe that he had not paid any fees for his job. He had paid agents in the past for jobs in Qatar and Saudi Arabia.IMR staff admit that they are an anomaly in the industry, and they have to forego easy and profitable offers. “To be able to hand over this business to our children with pride is a dream,” says Pranay Rai of IMR, who says the long-term economic gain of building a clean reputation is more important.The experience with both IMR and Manaslu (the agency raided in December) underscores important learning points. Employers are best placed to influence recruiter behaviour, but a big share of employers hiring Nepalis would prefer sourcing Nepali workers through recruiters like Manaslu rather than those with ethical standards.The Ethics Practitioners Association of Nepal (EPAN), an umbrella organisation of recruiters committed to ethical recruitment, has not been able to attract a single employer. Job offers by HR departments of employers are often allocated based on kickbacks received. Employer HR visits to Kathmandu for interviews are often sponsored by recruiters who go overboard to lock in future demand and pass on <a href="https://www.nepalitimes.com/latest/the-theory-and-practice-of-zero-cost-migration/">the costs</a> to the worker.This unhealthy competition extends beyond borders to thousands of recruiters from the Subcontinent. The extent of unethical practices in the migrant labour industry was exposed <a href="https://www.nepalitimes.com/here-now/nepali-workers-stuck-in-no-mans-land/">during Covid-19</a> pandemic.The <a href="https://www.reuters.com/article/us-health-coronavirus-malaysia-gloves-idUSKBN29208C">Malaysian Government</a> has been raiding its glove companies and exposing incidences of human rights abuse after the companies came to the global spotlight amid soaring profits during the pandemic. But pressure from third countries is still a rarity, while labour law enforcement in destination countries remains lax.There are a number of examples of pressure from third countries that have led to improved working conditions, but it is also a reminder that obtaining a secure working environments is a tall order. Unless recruiters are seen as part of a larger transnational ecosystem involving multiple profit-motivated players engaged in unethical practices, Nepalis will have to continue to be content with the existing provisions.Raids like <a href="https://www.youtube.com/watch?v=tABYP0wlToQ&amp;feature=emb_logo" target="_blank" rel="noopener noreferrer">the sting operation last month</a>, are necessary but not sufficient for systemic changes. Embassies that have the proximity advantage with the destination country players need to be further strengthened. Labour agreements that could form the basis for influencing how migrants are treated abroad need to be implemented.Ethical recruiters like IMR and members of EPAN have received no support from the government. As DOFE ramps up raids and suspends operations of fraudulent agents, it should also emphasise the good examples.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111124/636cd1e29c7e80680e08f8dejpeg.jpg" alt="" width="2560" height="1440"><figcaption> </figcaption></figure>EPAN and IMR’s experience shows that pivoting to the ethical track requires additional resources and could entail short-term financial losses. Policies that make the system rewarding for ethical agents should be a government priority, and international organisations like the ILO (International Labour Organisation) and IOM (International Organisation for Migration) that have expertise in this area and the global reach need to be leveraged.The ILO, for instance, has piloted a project promoting ethical recruitment of Nepali workers in Jordanian garment factories.With vested interest groups, political interference, regulatory loopholes and profits at the cost of the needy, it is difficult to picture professionalism and ethical beheaviour. But crossborder intermediation services will remain in demand given the attraction for <a href="https://www.nepalitimes.com/editorial/the-year-of-migrant-workers/">overseas jobs</a>, since 90% of recruitment is driven by recruiters.Perhaps the disproportionate focus on just the recruitment costs in Nepal’s migration governance is because it is often the root to subsequent vulnerabilities faced by migrants, and there is some semblance of control as the transaction takes place within Nepal’s jurisdiction. But salaries, associated benefits, and how they are treated all affect the wellbeing of a migrant worker.Sting operations are good examples to help curb fraudulent activities, particularly as the shrinkage in job opportunities due to Covid-19 heightens the risks of unethical practices. Lack of employment opportunities has spurred unhealthier competition among recruiters and more desperate migrants. But a government reward system that recognises and supports pioneer recruiters opting the ethical route is also needed.The migrants at the airport last week said they learnt about IMR through word of mouth and Facebook. They were lucky to land these jobs without paying fees because all overseas vacancies in Nepal are posted as ‘no cost’ in the public domain.The good players in the industry need to be publicly recognised, provided training opportunities and other incentives that will help them attract both employers and migrants. Only then can they distinguish themselves from the lot, build credibility and lead the way.Upasana Khadka writes this column Labour Mobility every month in Nepali Times analysing trends affecting Nepal’s workers abroad.

Upasana Khadka

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A few good agents

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636badfa9c7e80680e077fc5jpeg.jpg" alt="" width="597" height="341"/><figcaption>Labour Migration Outflows has Plummeted in 2019/20 Source : Foreign Employment Information Management System (FEIMS)</figcaption></figure>Travel restrictions and the economic fallout of the global pandemic in countries that employ migrant workers have hit <a href="https://archive.nepalitimes.com/article/nation/caught-in-the-middle/migration-agency-exploitation,4003">labour recruiters</a> in Nepal hard.Although the plight of migrant workers gets a lot of media attention and recruitment agencies get blamed much of the time, the truth remains: <a href="https://www.nepalitimes.com/opinion/zero-sum-game-in-zero-cost-migration/">Nepal’s labour migration industry</a> rests on the shoulders of these very recruiters.Labour recruiters have been responsible for 88-92% of Nepali workers mobilised annually since 2015. With their business plummeting because of the <a href="https://www.nepalitimes.com/latest/the-kathmandu-airlift-begins/">COVID-19</a> (see chart), they have been putting pressure on the government to scrap rules that regulate the industry.Last week, the Cabinet waived the legal requirement for recruiters to have mobilised at least 100 workers annually in the last two years to be eligible for license renewal. While this number does not seem high, the placement patterns suggest otherwise.In 2018/19, over half the recruiters deployed less than 100 workers, and the numbers are even lower this year with the pandemic. According to Kumar Dahal, Director of Department of Foreign Employment, the licenses of 536 of the 854 registered recruiters would have been scrapped had the waiver not been given.Recruitment agencies have other demands, including use of escrow deposits of a minimum of Rs5 million in cash and Rs15 million in bank guarantees for companies mobilising up to 3,000 workers. The government dips into this deposit in case workers need compensation, either because of the <a href="https://www.nepalitimes.com/here-now/shared-stories-shattered-dreams/">fraudulent activities</a> that recruiters themselves or the foreign employers engage in.“They should at least let us use the cash deposit temporarily,” says Saroj Pokhrel, a labour recruiter. “The government would still have our bank guarantee to rely on in case of fraudulent activities.”<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636badfb9c7e80680e077fc6jpeg.jpg" alt="" width="347" height="241"><figcaption> </figcaption></figure>Recruiters also want the <a href="https://www.nepalitimes.com/opinion/why-has-zero-cost-migration-not-happened/">free-visa-free-ticket policy scrapped</a>, arguing that it affects their competitiveness in the international market. Instead, they want to be allowed to be charged a month’s salary as fee.Pokhrel says that being allowed to charge a month’s salary like the Philippines will give firms an incentive to look for higher paying jobs, and the government can increase its tax revenue. However, both the <a href="https://archive.nepalitimes.com/article/editorial/doubts-on-zero-cost-migration-deal-coming-into-force,2157">free-visa-free-ticket policy</a> or a cap on a month’s wage are moot because the actual cost paid by workers is significantly higher, the consequences of which is being borne by thousands of workers now.There is a need to go beyond principle-based discussions on zero-cost recruitment. The experience of Ethics Practitioners Association of Nepal (EPAN), an umbrella organisation of recruiters determined to carry out ethical recruitment that includes zero costs to workers, is telling.  In the last few years, the organisation has mobilised zero workers.Rajendra Khadka of EPAN explains: “We have not been able to attract a single ethical employer. We are gaining recognition internationally, but it is still difficult to earn the trust of employers engaged in ethical recruitment which are generally multinational companies and brands. Even workers themselves do not trust us, as they associate recruitment costs to the quality of jobs.”<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636badfd9c7e80680e077fc7jpeg.jpg" alt="" width="316" height="207"><figcaption> </figcaption></figure>Recruiters are embroiled in fierce, unhealthy competition among themselves as they vie for the limited jobs in common destinations, with majority focusing on just a few countries. Even though they are legally allowed to supply workers to 110 countries, Nepali recruiters sent workers to just 28 countries last year, with the majority to just one or two countries (See Chart).For example, over 747 recruiters deployed workers to Qatar in 2018/19 and very few outside the Gulf and Malaysia. (See chart) This over-concentration in a few countries intensifies competition as recruiters tend to outbid one another while fetching job offers, and many even pay employers or foreign recruiters for job offers. Desperate Nepalis are willing to pay exorbitant fees, and this distorted arrangement works well for recruiters.The unhealthy competition among recruiters also transcends boundaries. There are, for example, over 1,200 recruiters in Bangladesh, 1,857 in Pakistan and 1,454 in India competing for similar jobs. Regionally, there are 4,346 recruiters audited and registered with Malaysia’s Foreign Workers Centralised Management System to undertake biomedical health examination of prospective migrants to Malaysia. The sheer numbers of recruiters competing for limited jobs indicates how competitive it is.With the pandemic, the contraction in jobs available globally may also be an impetus for fiercer competition which will lead to more workers having to bear recruitment costs. For Nepal to unilaterally declare a free-visa-free-ticket policy therefore may be a populist move, but it will mean under-the-table transactions between workers and recruiters will continue in an unmanaged way.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636badfe9c7e80680e077fc8jpeg.jpg" alt="" width="280" height="239"><figcaption> </figcaption></figure><figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636badff9c7e80680e077fc9jpeg.jpg" alt="" width="537" height="250"><figcaption> </figcaption></figure>Nepal may be pushing a rights-based approach to migration, and while this may be necessary, sticking to just principles may end up being counterproductive.When recruitment costs for workers from Bangladesh and Pakistan are three to four times that of Nepal, our attempts to unilaterally control costs will fall short. International frameworks like the Colombo Process to find a common voice among migrant sending countries do exist, but they have very little to show for.They have not done much to address the common plight of their workers during the pandemic, precisely when such international cooperation was needed the most. Either we need to admit that these loose platforms are not meant to create any tangible difference on the ground, or the Colombo Process needs to be revamped so it is more than just a forum to share experiences.Within Nepal as well, there is no carrot for good-performers and the ‘stick’ is always just for show because the same leaders governing recruiters are also colluding with them behind doors to allow the status quo to remain. As with everything else, as long as corrupt leaders meddle with this industry, there is very little incentive for any real change.Even a conservative estimate of recruitment costs of  $1,000 per worker means that in 2018/19, over Rs28 billion was floating around, a fraction of which can be earmarked to  influence policy decisions and even, who gets to stay a minister.It is just a matter of time before workers will be once more lining up for labour approvals. Nepal’s migrant recruitment industry shares commonalities with the lemon market for used cars, where the whole industry is viewed with suspicion and distrust, given difficulties distinguishing the good ones (peaches) from the frauds (lemons).Clamping down on recruiters is necessary given prevalent malpractices, but it is also important to acknowledge the contribution in matching workers at scale from every corner of Nepal for jobs abroad. The government would not have been able to manage this on its own. Other labour exporting countries <a href="https://scroll.in/article/967466/can-indias-international-labour-recruitment-agencies-bounce-back-from-coronavirus-induced-losses?fbclid=IwAR1kSsxC7aJ3A77fpIe5NbXXPRbNvQX_vLy_yClAtcDMG9wWFgQRHthDNLs">like India are also facing a similar dilemma</a> – how to minimise recruiters’ malpractices while using their contribution during the pandemic.The role of recruitment agencies in driving diversification to new destination countries, and higher skilled sectors will be crucial in the post-pandemic phase if the demand for Nepali workers in the Gulf and Malaysia drops.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141140/636bae009c7e80680e077fcajpeg.jpg" alt="" width="361" height="239"><figcaption> </figcaption></figure>Pokhrel says recruitment can be cleaned up and made more professional with mergers to reduce the number of recruiters, or setting standards and criteria for those competent enough to be in the recruitment business. But for all this, Nepal needs a more coordinated approach between the government and private sector.Upasana Khadka writes this column <a href="https://www.nepalitimes.com/opinion/why-has-zero-cost-migration-not-happened/">Labour Mobility</a> every month in Nepali Times analysing trends affecting Nepal’s workers abroad.

Brokers going for broke

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>.

labour-recruiters

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Visit Nepal in the monsoon

Not poor, but not rich

Nepal’s bubble economy

Flouting rules caused Saurya tragedy