The Federal Democratic Republic of Nepal has exotic and mysterious sounding places, like the capital city of Kathmandu and the Himalayan Mountains. Situated between China and India, it is a land of stunning and serene beauty with a rich cultural history. The country has approximately 40 different ethnic/caste groups in a population of over 29 million with a variety of languages and dialects. The country can be divided into three main terrains or geographic zones, the high Himalayas, (which include the tallest mountains in the world), the middle hills and valleys, located in a temperate climate zone, and the southern sub-tropical region. In this rich array of geographies and peoples are found a number of business opportunities for minority business enterprises (MBEs).
Known to many mostly as the location of Mount Everest, the world’s tallest peak, Nepal is not a wealthy country. There are many infrastructure installations and upgrades needed to improve Nepal’s ability to participate in the global markets. However, these needs equate to market opportunities for MBEs.
Nepal is landlocked, with large sections of rugged and nearly inaccessible mountainous terrain. The presence of towering mountains also means there are mountain rivers and streams presenting opportunities for the building of hydroelectric dams. The dams are needed because there is a water shortage when it’s not monsoon season. The flatter terrain offers large amounts of fertile land for agricultural use. Currently, almost 74 percent of the workforce is in agriculture, and agriculture accounts for 34 percent of Nepal’s GDP. This presents yet more opportunities for U.S. businesses interested in selling state-of-the-art agricultural equipment and technology.
Eight of the tallest mountains in the world are located in Nepal. It is a tourist destination for mountain climbers, hikers and river rafters. The Ministry of Tourism reports that 602,867 tourists visited in 2010, which was 92,911 more people than in 2009. The statistics reflect the fact the country is putting its turbulent past behind and foreigners are comfortable visiting and spending extended periods of time. As the tourism industry expands, there are market opportunities for travel agencies to arrange tours and expeditions. In addition, there is a virtually untapped ecotourism market.
Poised for Success
Though the country has a turbulent political history, it has diligently pushed ahead to create a reliable stable government. Now a republic with a duly elected Prime Minister, Babu Ram Bhattarai, many of the issues that were keeping the country in political turmoil are being settled. Nepal’s government is poised to improve its infrastructure and economy, and to attract foreign investment.
Doing business in Nepal can be challenging at times because the bureaucracy has not been fully revamped yet, but ongoing reforms are making it easier to do business now. For example, Nepal recently improved its contract enforcement rules to make oversight, monitoring and claim filing more efficient. The government has also increased transparency and efficiency in the issuance of construction permits.
Foreign companies are registered through the Ministry of Industry, Commerce and Supplies. There is a value added tax (VAT) charged on goods and services and an income tax. Employers are required to match a 10 percent employee payroll deduction for a retirement contribution if there are 10 or more employees.
It’s also possible to obtain an import-export permit. MBEs in the information technology (IT), telecommunications, aviation, and, as mentioned, hydroelectric power industries will find that Nepal’s focus on economic growth will create burgeoning markets in the near future. The telecommunication and IT industries have unlimited growth potential in terms of both infrastructure and product sales as socio-economic development progresses in rural and urban areas.
As the Nepali government seeks to modernize the country, it will need hydroelectric dams, airports and a water/waste water system as well. Foreign investment is being encouraged in these areas, which is yet another indication that Nepal is poised for economic progress. Minority businesses looking for untapped global markets may find them in beautiful Nepal.
Relationship Building Comes First
However, before you can do business in this country, it’s important to understand its culture because that impacts how a company will network and establish connections. One of the first things you learn about the Nepal business culture is that relationship building or networking is essential. It’s necessary to connect with local Nepali representatives to gain entrance into the potentially lucrative markets. A good place to start is by contacting the U.S. Embassy’s Political and Economic Section or the U.S. Department of Commerce.
There are cultural protocols that must be understood and followed to successfully do business in Nepal. One of those protocols is that confrontation is not acceptable. Nepal prides itself on its hospitality to visitors and this graciousness is applicable to business transactions, also. Sometimes this leads to situations where a Nepali may avoid sharing information that is considered distressful. American culture dictates politeness in business, but it also expects directness.
Doing business in Nepal can give your company a foothold in South Asia, which is expected to experience significant economic growth over the next ten years. In fact, the recently elected Maoist Prime Minister is restoring relations with its neighbor China.
Nepal is considered a developing nation and the government has recently created an Investment Board. The CEO, Mr. Radhesh Pant, has a mission – to create a business environment friendly to investors whether domestic or foreign. His goal is to make it easy for businesses to get started and continue operating by streamlining all services like registration and licensing. He wants to attract investments for long term development, increase government transparency and bring Nepal into the global markets. Minority businesses looking for new markets and a way to take advantage of an emerging Southeast Asia may find exactly what they are looking for in Nepal.