Shekhar Golchha: Some 40 percent of the major market remains largely closedThe senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry on challenges the private sector faces in the wake of the pandemic.
Following the government decision to lift the lockdown on July 21, the country has seen an exponential rise in the number of new Covid-19 cases, including in Kathmandu Valley. Given the developing situation, the government is considering a range of restrictions, some of which have already been imposed, be it in the form of targeted lockdowns, issuing prohibitory orders on all non-essential movement and businesses or sealing areas where new Covid-19 cases have been confirmed. The pandemic, needless to say, has been detrimental to the economy, the full impact of which is yet to be assessed. The Post’s Prithvi Shrestha talked to Shekher Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry about the challenges the private sector faces as businesses try to pick up.
What is your reading of the new situation we have in hand as Covid-19 cases continue to spike?
We shouldn’t worry too much about it as the death rate is relatively low in Nepal. It’s a serious disease but our recovery rate has been good, better than the average recovery rate across the world. We have to learn to live with the Covid-19 situation by taking precautionary measures like wearing masks, using sanitisers and maintaining physical-distancing. We have to move forward. But we also need to increase our health capacity by improving hospital infrastructure and their services. Fearing the disease will not help us. Life should move ahead.
Hospitals are already overwhelmed, given the recent spike and those who’ve tested positive have been asked to self-isolate at home. What’s the way forward?
The government should have focused on developing necessary health infrastructure instead of shutting down businesses. This has been my stand right from the beginning. And the government can still invest in health infrastructure. It is the government’s responsibility.
There has been an exponential rise in the number of new Covid-19 cases following the lifting of lockdown. The government even blamed some sectors, especially the service for not implementing safety protocols. Do you think this has contributed to the spike in cases?
We have to assess the comparative risks that comes with opening the economy, given the pandemic. If everything goes back to pre-lockdown days, the risk of infections will obviously increase but there are enormous risks in hand if we do not open the economy. We need to assess the impact of the suspension of economic activities. The restrictions on holding assembly and conferences, closure of schools, colleges and malls, and restriction of movement in certain areas is sufficient for now. The decision to seal areas after confirmation of new cases is also a better option than imposing a blanket ban on opening shops or operating other economic activities. We cannot afford a blanket ban on economic activities. On one hand, there’s a question about life and death and on the other hand, there’s a question about livelihood. We need to strike a balance.
What is the current status of business operation?
Some 40 percent of the major market remains largely closed. Economic activities in major cities like Birgunj, Bhairahawa and Nepalgunj have been subdued due to restrictions in public movement. Business people lament the flow of cash even after the lockdown has been lifted and industries are running at only 40 percent capacity. These are not official figures but offer a gist of our (FNCCI) consultation with some 15 to 20 industries last week. We are also assessing the unemployment situation. Jobs have been cut drastically in the hospitality and automotive sectors.
Banks have reported massive liquidity due to low demand of loans. Is loan available at a cheaper rate now and will businesses be able to utilize this?
The interest rate has decreased by two to three percentage points. Most banks are even ready to extend credit at the interest rate between 8.5 percent and 9.5 percent for businesses. But even if the credit is available at a cheaper rate, the question is whether the business community will take it. Public movement is limited and traders have refrained from delivering new goods in the market. The average credit to core capital and deposit ratio has stood at 70 percent on average which shows that there is less demand for credit.
The private sector and the trade unions reached a consensus on wages to be paid to the workers till Jyestha (till mid-June). The government has also been asked to revive the industries. How has the government response been?
There is a good response. We have agreed on providing cent percent wages to workers who come to work but for those who could not work in Jyestha, they will be provided 50 percent of wages for the month. This agreement has received broader support and the government has paid a portion of the fund, to be borne by workers to the Social Security Fund. While this is good, many workers have not benefited as very few companies are affiliated with the Fund.
How do you see the road to recovery?
It all depends on how long the Covid-19 situation evolves. If the current situation continues or worsens, recovery is going to be difficult. It will have a deep impact if economic activities remain suspended for a long time. I am optimistic that the situation will improve. If pandemic eases out to some extent, I think our economy will recover quickly.