Birgunj: Need to improve business environ in Gateway to Nepal 

– This article was originally published by Roopali Bista in the Himalayan Times on the April 14, 2019.

Birgunj Metropolitan City, the ‘Gateway to Nepal’ continues to boast bustling manufacturing and trading industries and is also the largest land port of Nepal. Being the only metropolitan city in Province 2, Birgunj holds significant economic clout in the region. The city has experienced its fair share of economic slowdown, especially due to the political unrests given the Madesh Andolan and the recent devastating storm.  In addition to a large portion of its businesses operating in the shadow economy, enterprises in Birgunj face several challenges but also has immense potential for growth.

Like many cities in Nepal lack of skilled labour, poor infrastructure and public service delivery such as electricity are some of the known hindrances to business operators in the area. Now that the local government, for the first time, has an immense influence over their own jurisdiction in terms of legislative and executive powers. The local government now has the power to design its own plans, programs and policies in order to guide their city to new heights of prosperity. For Birgunj, that could translate to prioritizing the following areas:

Infrastructure

Proper infrastructure is crucial for an industrial city like Birgunj. The absence of appropriate roads has posed significant challenges to the city. Lack of proper transport and road facilities from Piprakoti Bihar to Birgunj, have caused daily losses of millions of rupees. Birgunj is a city of warehouses, so roads and transportation routes have to be properly managed in order to capitalize on it. Currently there are no proper roads connecting the new wards of the metropolitan city or the nearby villages which has made the cost of agricultural products very high. The local government should fulfill its responsibilities by addressing the following: properly managing drainage and waste, ensuring proper traffic and parking management, maintaining and repairing roads and footpaths, providing enough public toilets, installing street lights so people can work smoothly at night as well as to promote nightlife and business in Birgunj and finally, installing CCTVs throughout the city for added security.

Moreover, constructing new leisure parks with security arrangements including CCTVs could help local businesses grow. Such areas would further promote an evening culture in the city and encourage new economic activities in the process through various street food stalls and other services within the park periphery

Electricity

Unreliable power supply is a huge problem with massive cost implications to business owners. Currently, power grids are unable to handle high loads which causes sudden break in electricity supply.  A half hour power cut will lead to a 30% increase in costs for the day in plastic industry and 10-12% increase in costs for iron and steel industries. These costs include the effects of lost time, having to repeat work processes, wasted material as well as back to schedule costs. Sudden power outages are worse than scheduled load shedding because businesses do not have the opportunity prepare and are caught off guard which increases costs by many folds. These outages also affect production timeline and subsequently result in late deliveries which affect the businesses’ image and future order prospects.  Birgunj Municipality should initiate collaborative efforts with the Nepal Electricity Authority (NEA) as soon as possible to investigate the reasons for unreliable power supply in the city. It should also work together with the NEA to ensure uninterrupted electricity so industries, especially manufacturing, will be able to efficiently complete their production process with lesser bottlenecks and costs.

Land related problems

Scarce land resources like in other metropolitan cities, is a pressing problem in Birgunj. This has led to high land and rental prices which continue in an increasing trajectory. This makes the cost of establishing, operating and expanding businesses significantly high. Currently, businesses are not been able to expand their production due to the lack of land near the operating plants. The thousand acres of land of the Sugar Factory in the industrial corridor, which is not in use right now should be put to productive use. The land can be leased out for the purposes of establishing new factories, developing industries or expanding existing businesses. Moreover, the Birgunj municipality should map all public land under its jurisdiction and further identify those that are sizeable enough to be leased out to local businesses.

It is encouraging that in Birgunj the local government has expressed a commitment to address a lot of these problems faced by the city’s business community. It has hosted a number of engagements with key stakeholders to brainstorm ideas for improving business environment at local level. Like always, translating commitments to implementation is the key.