AI is like a tiger, will it eat us up or can we ride it? The Cassandras say that it will make humans obsolete, while the Polyannas say what’s wrong with that if it saves people from mundane work so they can devote time to more creative pursuits. Even if AI solves major problems, might it lead to mass unemployment or exacerbate wealth inequality? Will artificial intelligence help solve the crises that the planet faces, or will it make everything more dangerous? Some of these issues are addressed in the United Nations Development Programme (UNDP) annual Human Development Report for 2025. Titled A Matter of Choice: People and Possibilities in the Age of Artificial Intelligence, it reasons that rather than assuming AI will run wild and result in either utopian or dystopian outcomes, AI will reflect the values of those shaping it. Some may view this as overly optimistic or naive, especially given the seemingly exponential rate at which AI is gaining capabilities. Yet, there are no major cases, yet, of AI models going rogue, and they do tend to reflect the biases of their training data. UNDP’s choice of the word ‘choice’ in the title of its 2025 report acknowledges the reality that AI is no longer science fiction or under development, but a tangible presence. It is perhaps the most powerful and disruptive technology humanity has created, with consequences rivaling those of electricity, computers, or the internet. Some utopian online communities, such as ‘e/acc’ (effective acceleration), believe AI will solve humanity’s problems and enhance its future. They advocate for rapid advancements with minimal, if any, regulation.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025061606068_1139c7c719c17cf731a6fe99c51afccca36c2500bc3c33f865fef81a4ce33d73.png" data-media-id="editor_0" data-image-id="2025061606068_1139c7c719c17cf731a6fe99c51afccca36c2500bc3c33f865fef81a4ce33d73" data-rendition-name="original" width="1600" height="1118" loading="lazy" alt="Nepal needs to be more intelligent about AI NT"></figure>  The UNDP report addresses these concerns, emphasising that AI should augment human work rather than replace it, that it will not magically solve poverty or climate change, and that it must be accessible to marginalised groups to prevent further exclusion. It also raises concerns that there is only a small group controlling AI development, treating AI as a vital resource and a fundamental right. While Nepal may lack cutting-edge AI talent and hardware, the country’s potential to maximise hydropower generation could supply the vast energy required to train AI models. Teams in India and China might even consider building data centers here. At the policy level, the Ministry of Communication and Information Technology released an ambitious ‘Draft of National AI Policy 2081’ in February 2025 which covers extensive ground, it remains very much a draft -- a wish list rather than a concrete strategy. The only detailed section outlines the composition of a future regulatory body, mentions building ‘international-standard data centers’ and deploying ‘5G and beyond’, despite limited broadband access across the country, and leaves funding details to ‘regular budgets’ and ‘international donors.’ Nepal’s IT sector could be a key player. Global companies have long outsourced coding to Nepal, where skilled, English-speaking programmers work at competitive rates, even by South Asian standards. As AI improves at generating standardised, reusable ‘boilerplate’ code, junior coders may face job losses. However, the ability to quickly produce code could spark a boom in coding jobs, much like the loom initially displaced weavers but ultimately created more jobs and affordable clothing.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025061606068_4e6f7bde438c01a40ca2e9542af0c86c3a9c8879bfc45688a1df0325108c05ef.png" data-media-id="editor_1" data-image-id="2025061606068_4e6f7bde438c01a40ca2e9542af0c86c3a9c8879bfc45688a1df0325108c05ef" data-rendition-name="original" width="1436" height="1534" loading="lazy" alt="Nepal needs to be more intelligent about AI NT"></figure>  The high demand and compensation for software engineers skilled in building AI tools could also encourage Nepal’s sizable IT workforce to pivot in that direction. The UNDP report notes that AI excels at bridging the gap between unskilled and skilled labour for general tasks. With Nepal’s low illiteracy rate, this could be a significant advantage. AI’s potential as a learning tool could also transform the often-criticized Nepali education system. Nepali companies are also taking strides in AI product development, beyond just providing coding services. FuseMachines, for instance, builds AI tools to extract data from documents and detect financial fraud, achieving such success that it went public on NASDAQ in 2024. WiseYak develops healthcare software that uses AI to analyze customer data for insights and diagnoses. Communities like the Nepal Applied Mathematics and Informatics Institute for Research (NAAMII) drive AI innovation through research, hackathons, conferences, workshops, and lectures. Their projects include AI-Assisted Smartphone Microscopy, AI-assisted VIA Screening for Cervical Cancer, and large language models akin to ChatGPT but in Nepali. Students can engage with AI through academic programs. Numerous institutions now offer AI courses at undergraduate and graduate levels. Madan Bhandari University of Science and Technology (UST) in Chitlang, for example, provides a Master’s of Applied Science in Artificial Intelligence and Data Science. In June it announced two PhD spots in Digital Technology (Artificial Intelligence) and will offer AI studies to undergraduates starting in November. The Master’s program is designed as a ‘Master’s by Research,’ with over half of the 50 credit hours dedicated to a thesis project. Given AI’s rapidly evolving nature, there is no fixed syllabus; professors tailor the curriculum. “The university has a set of available projects, and we evaluate a student’s background and capabilities before assigning one,” says Rajiv Subba, Assistant Professor at the UST’s Digital Technology Program.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025061606068_bdf76f4694999bacd1635f57713d58a75229e58a0b478f6b57537b85c2102fb9.png" data-media-id="editor_2" data-image-id="2025061606068_bdf76f4694999bacd1635f57713d58a75229e58a0b478f6b57537b85c2102fb9" data-rendition-name="original" width="1308" height="1684" loading="lazy" alt="Nepal needs to be more intelligent about AI NT"></figure>  While most current Master’s students have computer engineering backgrounds, this is not a prerequisite. Rupesh Aryal, a Master’s student in AI says: “One person in my cohort has a background in agriculture, while another studied medicine and is working on AI for digital imaging.” His thesis focuses on a Nepali large language model. Other projects include early forest fire detection, AI for drug discovery, and models to predict human-wildlife conflict. “We accept students from any science background, provided they have undergraduate-level statistics and programming experience,” says Subba. “We also encourage entrepreneurial skills and policy involvement, so our Master’s students take elective courses in these areas.” Subba believes funding research is critical for AI progress in Nepal, as a successful model can have widespread applications. “The government could allocate 50 lakhs in seed money for research to each university,” he suggests. “The biggest obstacles are funding, limited high-quality data for training models, and a shortage of faculty. Qualified candidates are scarce and often reluctant to work in Chitlang or Nepal.” Retaining students for Master’s programs is a first step toward building a local talent pool, with hopes that some will pursue PhDs and become faculty. “We still learn from world-class AI educators, even if they can’t be here physically,” says Aryal. A recent visitor was Professor Gerald Penn from the University of Toronto, an expert in natural language processing. “We have all the GPUs we need to train models, and students receive scholarships and stipends.” “Most of my peers are committed to staying in Nepal and contributing,” Aryal adds, “while some plan to pursue PhDs abroad and return.” Nepal’s best strategy for thriving in the AI era lies in developing talent through well-designed programs like the one at Madan Bhandari University. “The government’s AI policies currently prioritise control and regulation over fostering growth,” says Subba.

Vishad Raj Onta

original

674x448

610x380

500x500

400x266

400x240

400x203

301x200

1250x600

1084x550

thumbnail

viewImage

Nepal needs to be more intelligent about AI

Nepal has seen a dramatic recent growth in its Information Technology (IT) sector with tech companies and freelancers building software products, as well as providing digital services for clients all over the world. Nepal’s IT service export industry in just the first half of 2023 is estimated at $800 million, although some say this is an underestimation. In 2022, an Institute for Integrated Development Studies (IIDS) report valued IT exports at $515 million, a whopping 64.2% growth over the previous year. Annual IT exports now surpasses Nepal’s direct earnings from the tourism industry. Besides assisting in bridging the balance of trade deficit, it also provides jobs to thousands of young engineers who may otherwise have emigrated. Advances in Artificial Intelligence (AI) are already impacting programming and software, however this can also allow Nepal to leapfrog into a new age of innovation by building on its young talent pool. “Nepal slept through the last tech revolution,” says Kiran Bhakta Joshi of <a href="https://www.incessantrain.com">Incessant Rain Studios</a>, referring to the dot-com boom of the internet bubble between the mid 1990s to the early 2000s as everything started going digital and online. “AI provides us the chance to harness cutting-edge technology and shape our future.” The growth of Nepal’s tech industry is happening in parallel with the boom in the global AI market with dozens of new apps coming up every day. Nepal should take advantage of both trends and go all in on AI. The IT sector in Nepal directly and indirectly employs an estimated 1.5 million people already, and by declaring the next 10 years the Decade of Information Technology could give tech exports a boost. Joshi is the founder of Incessant Rain Studios and has worked on some of the most iconic animated movies of all time like The Lion King and Beauty and The Beast. He recalls how, while working at Disney, digital animation replaced traditional drawing methods really rapidly. Learning from this, Nepal’s planners and government should be taking proactive steps to help tech companies here succeed in the AI game. Nepal needs the infrastructure, human resources and foreign investment to take maximum advantage. But, says AI scientist Suresh Manandhar: “Nepal is going to miss the AI surge. It is a policy issue. As long as there are policies strictly regulating what foreign investors can do with their profits, overseas funds in the tech sector will be low.” Read also: <a href="https://nepalitimes.com/news/it-is-it">IT is it</a>, Sahina Shrestha  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2024090519090_1bbad3bb319c0989b10419512f828afd27d0b3f6a15cf5b58dd888861363875b.jpg" data-media-id="editor_2" data-image-id="2024090519090_1bbad3bb319c0989b10419512f828afd27d0b3f6a15cf5b58dd888861363875b" data-rendition-name="original" width="674" height="893" loading="lazy" alt="IT revenue Nepal NT"> </figure>  Besides barriers to more foreign investment in Nepal’s IT sector, there is also a skills gap. The 2022 IIDS report talked to Nepal-based IT companies about problems regarding outsourcing work, and 67% of them cited the lack of skill and competence, and 53% noted a lack of professionalism. And that is an area in which Nepalis cannot get away with blaming politicians. A large part of the appeal of tech careers is the ability to self-learn, and courses, videos and books are free all over the internet. The IIDS report stated that a fifth of all IT sector workers did not have any degree. This means Nepalis must first concentrate on self-learning before they can master machine learning and AI. Tech promoters say that there is not much we can expect from computer institutes or the government.&nbsp; Suresh Manandhar is an AI scientist with over 30 years of experience in research, teaching and startups. Manandhar taught at the University of York for 23 years, heading its Artificial Intelligence Research Group.&nbsp; He is currently head of Artificial Intelligence Research at <a href="https://fusemachines.com">Fusemachines</a> and Honorary Chair in Artificial Intelligence at the Madan Bhandari University of Science and Technology (MBUST) in Chitlang near Kathmandu.&nbsp; Manandhar’s priority for now is with his startup software company, <a href="https://wiseyak.com">Wiseyak</a>, a healthcare initiative that uses AI and machine learning to enhance medical care and treatment. It also provides intelligent chatbots for the Nepalese and International market, and is working on large language models of its own that are more bilingual in Nepali and English, with transcription and conversational capabilities.&nbsp; “We are one of few companies in Nepal working with our own AI models, most companies are using APIs,” Manandhar told us. While Wiseyak trains its own AI models, most other Nepali software companies simply integrate advanced AI tools like ChatGPT into the programs they build.&nbsp; Manandhar says that as long as Nepal’s foreign investment policies are restrictive with strict rules on what investors can do with their profits, the flow of overseas funds will be low. “Running Wiseyak has been very difficult, much more than I thought,” he admits. With AI applications getting better at generating deep fake videos, Kiran Joshi at Incessant Rain Studios is aware of its impending impact on animation and his business. After all, his company has done well because Nepali animators are less expensive to hire than ones in Japan or the West. Joshi reckons that given the rapid advances in AI capabilities, the entertainment industry has about two years before AI is able to produce content close to the quality Hollywood requires.&nbsp; Read also: <a href="https://nepalitimes.com/banner/bringing-silicon-valley-to-kathmandu-valley">Bringing Silicon Valley to Kathmandu Valley</a>, Sonia Awale  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2024090519090_7a3f29eb41d6279075d4310ea35738f78a5c111cae22520f93be35f089faefb0.jpg" data-media-id="editor_6" data-image-id="2024090519090_7a3f29eb41d6279075d4310ea35738f78a5c111cae22520f93be35f089faefb0" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="IT company Nepal NT"> <figcaption>Photo: MONIKA DEUPALA/NT ARCHIVE</figcaption> </figure>  But Hollywood is already panicking, with both writers and actors going on strike in 2023 demanding safeguards against losing their jobs to AI. “The landscape is incredibly volatile. You have to lead, and you have to stay very agile,” says Joshi, who is taking as many steps as possible at Incessant Rain in Kathmandu to stay ahead of the curve – to tame AI as a tool, instead of being devoured by it. Joshi’s studio has introduced AI tools into its workflow, and is working with a Hollywood startup to carry out the manual, repetitive parts of animation post-production. Incessant Rain’s artists and animators all dedicate some of their time to learn about AI tools in their departments, and share findings with the large staff. Two years ago, Joshi established an academy to teach the fundamentals of animation and storytelling. Starting October, his team is adding a course that goes over the basics of programming AI. Another successful Nepal-based company that focuses on AI is Fusemachines, founded in 2013 by Sameer Maskey, who has a PhD in AI and Machine Learning from Columbia University, where he now also teaches. Maskey had a prolific research career while also building a startup that is now headquartered in New York, and became the first Nepali company to be listed on the NASDAQ to go public. Fusemachines makes several AI products, including Xtract, which understands and extracts important information from documents. Another is Fraud Detection AI, which identifies and investigates scamming patterns. Yet another application forecasts demand and inventory, promising high precision. The company also runs a fellowship program as part of its pledge to ‘Democratise AI’, which involves a scholarship for a six-month course that aims at ‘producing high-quality AI and data science talent’. For Manandhar and others in Nepal’s IT sector, finding venture capital and other investors to keep their companies running is a major hurdle, and the government so far has not only been no help, but has proven to be a hindrance.&nbsp; Kathmandu University has an AI course, COMP 472, and the syllabus is outdated with vague course objectives promising students will ‘get the full picture of AI easily’ and even adds that if interested they ‘may go on to graduate school for further study’. The government recently released a ‘Concept Paper’ about AI in which it mentioned Alan Turing and the ‘Lmitation Game’ (sic, typo in the report) in its executive summary. The document does identify problems such as a lack of skill and infrastructure and data security concerns. But the government’s foremost priority seems to be to regulate AI, and the second seems to be to make sure developers know the rules and follow them. Increasing research comes third, but with no pathway to reach it. AI is now designed for quality control at factories or used in spotting cancerous tissue, but even before scientists have decided how it will affect jobs and technology, the Nepal government already wants to regulate it. Those resources would be better spent in making computers and the internet more accessible to citizens in underserved schools. “Forget dealing with the bureaucracy, we use redundancy to get around the challenges we face in Nepal,” says Joshi, who has taught himself accounting-for-risk and do-it-yourself lessons running his business in Nepal. The IT business already deals with prolonged power and Internet outages, and as more and more young Nepali engineers leave the country, or are planning to leave, technical staff needs to be replaced with year-round training to deal with the turnover. “People migrate mainly for two reasons. They need money, or their job bores them. So I give my team projects that are interesting to work on,” says Joshi, who saw a lull in business during the Hollywood strike. More successful tech companies means more jobs for Nepalis who prefer to stay home, more revenue for the government, hence more reinvestment in the sector, and a way to break the overwhelming dependence on remittance. &nbsp; Read also: <a href="https://nepalitimes.com/here-now/natural-intelligence">Natural Intelligence</a>, Nepali Times

Self-learning comes before machine learning

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>.

nepali-it-sector

Nepal needs to be more intelligent about AI

Self-learning comes before machine learning

Visit Nepal in the monsoon

Not poor, but not rich

Nepal’s bubble economy

Flouting rules caused Saurya tragedy