B&R: Means for Nepal's graduation to a middle-income country

By Mahendra Subedi
0 Comment(s)Print E-mail China.org.cn, April 29, 2017
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There's no doubt now that Nepal will join the China-promoted Belt and Road Initiative, despite Indian unhappiness, as a means of escaping its status as a Least Developed Country.

It's now certain Nepal will be signing up to the Belt and Road (B&R) Initiative during an implementation summit to be held in China from May 14.

A high-level Nepali delegation, most probably led by Finance Minister Krishna Bahadur Mahara, will be taking part in the Beijing meeting. Groundwork for a signing took place during Prime Minister Prachanda's recent China visit where he pledged Nepal's participation in the B&R Initiative for gains in economic advancement and better connectivity.

The prime minister reportedly wishes to take advantage of the giant strategic project mainly in terms of road connectivity that would link Nepal with the outside world through a railway coming from Lhasa to Nepal's major towns including Kathmandu, Pokhara and Lumbini – the birthplace of Lord Buddha.

Nepal needs a reliable international forum

Nepal gained WTO membership in 2004, having been an IMF member since 1961. With the beginning of economic liberalization and rapid globalization in recent years, Nepal has received immense international loans and grants, plus other assistance, but has failed to advance as expected due to poor governance and other factors.

Nepal and China have enjoyed an unparalleled relationship for centuries, but this did not stop the present Kathmandu government from being hesitate about the B&R proposal because of India's lukewarm response to the Chinese initiative.

India, in fact, was not happy with other South Asian nations for joining the B&R Initiative and thus becoming detached from Indo-centric policies. Due to its geo-political strategic location between the two giants, Nepal wants India to join the B&R without any inhibitions.

The B&R would offer tremendous opportunities for tourism promotion as Nepal could emerge as a transit country once China and India are connected by good transportation links. It could become a hub for millions of Hindu tourists intending to visit Kailash and Mansarovar and Chinese nationals visiting Lumbini, a key Buddhist site, and north India.

It could also gain from increased income from freight, insurance and banking business as well as cultural tourism. Most importantly, Nepal will get alternative routes via China to central Asia and Europe for exporting its produces to reduce its chronic trade deficit.

Following its participation in the B&R, Nepal would have strong network opportunities for supply of goods and services. Nepal aims to boost its trade and earn foreign currency by exporting ginger, cardamom, soap, noodles, zinc sheets, woolen items, Pashmina, readymade garments, medicinal herbs, Nepali papers, handicrafts in as high as 65 member countries that are along the Belt and Road routes.

In regard to foreign direct investment (FDI), it would welcome big investment in hydropower, hotel and hospitality development, the aviation sector, mining, and so on. The Chinese FDI commitment has now surpassed India for the first time in Nepal's history.

Nepal would join the B&R as a partner of economic development as well as beneficiary of the regional development scheme and is trying to seek some advantages from the mammoth Chinese economic development, especially in improving its dilapidated infrastructure as well as tapping the potential for technology transfer.

The B&R vision document goes well beyond infrastructure, envisioning closer coordination of economic development policies, harmonization of technical standards for infrastructure, removal of investment and trade barriers, establishment of free trade areas, financial cooperation and "people to people bonds" involving cultural and academic exchanges, personnel exchanges and cooperation, media cooperation, youth and women exchanges, and volunteer services.

All these are attractive to Nepal as it seeks to graduate Nepal from being the Least Developed Country and become a middle-income country prior to 2030.

Mahendra Subedi is a Kathmandu-based journalist writing commentaries on international relations, labor migration and few other social issues.

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