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 Mashfee Binte Shams, the Bangladeshi Ambassa­dor to Nepal, is going back to her country after six years in Nepal. As her tenure draws to a close, Biswas Baral and Kamal Dev Bhattarai talk to her about her impres­sions of Nepal, SAARC, geopol­itics and bilateral trade.

 You have been in Nepal for a long time. What has struck you the most about the country?

I have been here during a very important time in Nepal’s political history. You adopted a new consti­tution, and you completed a long political transition from monarchy to democracy. Experiencing this transformation in Nepal has been interesting as an outsider. My sec­ond takeaway from Nepal is that it is a really resilient country. There was the earthquake and there were so many other upheavals but people are still so optimistic and hard-working.

Could you point to some notable commonalities between Nepal and Bangladesh?

We have a shared vision of pros­perity. Over the past decade, Ban­gladesh has made great strides in development. We are today the 39th largest economy in the world, with a per capita income of almost $2,000. We completed in 2018 the required process of graduating from the ranks of the Least Developing Coun­tries (LDC). Our social-economic transformation has been huge. But we can also identify with Nepal, whose social-economic challenges such as women empowerment, liter­acy, health care, and even drinking water are common with Bangladesh. Another new common challenge is climate change or global warming. Both countries are vulnerable to the effects of climate change even though neither is a contributor to global warming or greenhouse gas emissions.

What has been the progress on the much-touted power trading between Nepal and Bangladesh?

The power trade between Nepal and Bangladesh should have start­ed much earlier. You have such a huge potential and we have a huge demand. Even today, Bangladesh produces over 21,000 MW as it is a fast-growing economy with over 8 percent annual growth. So we need a huge amount of electricity, around 34,000 MW by 2030. Right now, we produce energy from coal, thermal, gas and other sources. We want to shift from that to more renewal sources. Hydropower is the greenest and most renewal source and we are thus looking to import power from Nepal. In 2018, the two countries signed a Memorandum of Under­standing on power trade. Under that MoU some mechanisms for regular consultations are in place. Hopefully, something can be worked out soon.

You say the power trading should have happened much earlier. What was the hindrance?

You were unprepared in many ways. Some of your power projects were just coming online. You had a power deficit. Even now, Nepal is importing power from India to meet your domestic demand. In the past, you were not in a position to export power to any country, including Bangladesh. From this monsoon, Nepal is going power surplus, which creates an ideal environment for us to import power from Nepal.

Regarding power cooperation, we need the consent of India via which the transmission lines will run. Has India been cooperative?

There has been a satisfactory pro­cess on this. All impediments have been removed. I think there are no legal barriers to take electricity from Nepal to Bangladesh via India. Of course, the details will have to be worked out. Similarly, on the GMR project of Upper Karnali, Bangla­desh is in the final stage of purchas­ing power. That will build a founda­tion for us to import electricity from other projects in Nepal.

You mean there are no obstacles from the Indian side?

You must have seen all legal acts and regulations, and the problem­atic ones have been amended. Yes, I think all obstacles have now been removed.

Less than 30 km separates Nepal and Bangladesh. Yet the volume of trade between them has been dismal.

I have talked to everyone here. The chambers of commerce, and all the business people, right down to the grassroots. The problem is a lack of interest on both sides. Busi­nesspeople in Bangladesh think of Nepal as a very small and hence an unprofitable export market. They think Nepali markets are dominated by Indian exports. So our business people were not interested. In the case of Nepali people, they think Bangladesh is a poor, starving, pov­erty-ridden country which does not have purchasing power. Many don’t realize that Bangladesh today is not what it was 40 years ago. As I mentioned earlier, our purchasing capacity is more than $2,000. We have a 50-million-strong middle class, which is huge. Only now have some Nepali businessmen started exporting to Bangladesh and they complain about tariff and non-tariff barriers, which I think is encouraging. This means they want to export. Given this, we can work together to remove some of the difficulties.

The President of Bangladesh visited Nepal last year. What role do these high-level visits have on enhancing bilateral ties?

Definitively, high-level political exchanges help create goodwill. We keep saying we are good friends and extremely close neighbors. Actually, after India and China, Bangladesh is your closet neighbor. If we do not have exchanges between the political leaders, we lose contact and we become bound by rules and regulations. Only when we have direct discussions can we talk to each other about our problems and issues, and resolve actual problems and clear misperceptions. You have a perception in Nepal Bangladesh is blocking Nepali products, where­as I want to categorically tell you that there is no blockage of Nepali exports as such. Whatever rules and regulations Nepali exporters have to follow also applies to other exporters to Bangladesh. As we are importing from many other coun­tries, why wouldn’t we import from a close friend?

Where does Bangladesh stand on SAARC?

For regional cooperation to work, countries should be ready to sacri­fice or be flexible in areas of possi­ble cooperation. For instance, let’s forget SAARC. We decided that Ban­gladesh, Bhutan, India, and Nepal would get together and sign a motor vehicle agreement. That made sense as these four countries are physi­cally close and have similar prob­lems. It makes sense to cooperate to ensure more economic integration. But where is the BBIN motor vehicle agreement today? It was signed in June 2015 by four countries, but Bhutan could not ratify it. Even the three signatory countries Nepal, India, and Bangladesh should have moved ahead but we have been unable to do so. The eight-country SAARC is a lot more diverse. Without some flexibility from participating countries, no regional organization can function well.

Does Bangladesh support India’s desire to push BIMSTEC instead of SAARC?

The Bay of Bengal Initiative for Multi-Sectoral Technical and Eco­nomic Cooperation is not a replace­ment for SAARC as two regional bodies have different objectives and areas of operations. SAARC brings together the countries of the region that were closely integrated before the British came here and created artificial divisions. Before the Brit­ish arrived, the region had many principalities and kingdoms but we were integrated and there was a lot of internal trade. So SAARC tries to revive that pre-British integration.

Whereas BIMSTEC is about pro­moting trade between the two eco­nomic regions of ASEAN and South Asia. So one cannot replace the other. Bangladesh always backs any sort of regional, sub-regional, or multilateral cooperation. It is our core foreign policy objective to have greater regional integration and promote cooperation as we believe no country can develop in isolation. The region must develop together. A situation of one country going very fast, another country lagging behind would lead to regional insta­bility. Regional cooperation is hence the core foreign policy objective of Bangladesh. It could be achieved through SAARC, BBIN, BIMSTEC or any other organization.

Both Bangladesh and Nepal seem to be having a tough time balanc­ing the interests of big powers like India, China, and the US. Can you tell us a bit about the Bangla­deshi experience?

Bangladesh is very open and we do not see it as balancing one against another. We are open to cooperation with everybody. In 2016, we signed an agreement with China to bring in over $17 billion in investment. India is also a very important trading and investment partner for us. Likewise, the US is our biggest destination for readymade garments. Cooperation with one country does not mean you cannot cooperate with the other. When Bangladesh was born, we had nothing, everything was destroyed. We had no industries, no agricul­ture, no infrastructure. Becoming the 39th largest economy in the world was a massive challenge. By 2030, we will be the 26th largest economy. So we do not want to pick and choose.

Any advice for Nepal on how to maintain a successful balance?

I am not here to offer advice to Nepal. Talking about Bangladesh, we now have self-confidence which allows us to make these decisions more pragmatically. We are not influ­enced by what you call big powers. I think national confidence is very important. For example, in 2013 we planned a bridge across Padma River, in what would be one of the largest infrastructure projects in Bangladesh. The bridge would con­nect Dhaka to South-Eastern Bangla­desh, a detached and deprived area. We went to the World Bank and the Islamic Development Bank and JICA for funding. The World Bank decid­ed not to fund the $3 billion project. Finally, our prime minister said we do not want your money. She said we will do it with our own funds. Now Bangladesh is building this huge infrastructure on its own. That has given confidence. Now, there is national confidence that we can do big things on our own.

As you pointed out, Bangladesh is now growing at above 8 per­cent annually. Any secret sauce Nepal could also use?

I strongly believe that we all have our own paths to follow. What worked in Bangladesh may not work in Nepal. There is no way to say that we followed this and you should be doing that. In Ban­gladesh, we have highly motivat­ed entrepreneurs, which helped with the establishment of a robust readymade garment sector. The government brought supportive rules and laws. The government also introduced special incentives in agriculture, as Bangladesh was food-deficient for a long time. Now we are self-sufficient in food. In fact, we are also exporting rice and the government is even giving subsidies in rice export

A. Ciney Gurung. I love the versatility in her voice.

Q. Would you date a fan?

 A. Yes I would. But I wouldn’t call it a date actually. Just a short coffee talk. After all, it’s because of them that we are where we are today.

Q. Your perfect Valentine getaway?

A. Valentine’s Day doesn’t have any special meaning in my life. I would instead prefer a family vacation to Dubai.

Q. If you weren't famous, what would you be up to right now?

A. If I weren’t famous, I would probably be in Japan. I’d gotten a student visa for there in 2004 but didn’t go. I rather pursued music here.

Q. What celebrity would you rate as a perfect 10?

A. Any celebrity dedicated to their profession is a perfect 10 for me.

Q. Do you sing in the shower?

A. Definitely. I am a bathroom singer.

Q. What is one item you could not live without?

A. My motorbike.

Q. Four things you would change about yourself?

A. Waking up late, not being punctual, trusting people easily, and not being conscious about my health.

Q. When was the last time you were late for something?

     A. I missed an international flight a few weeks back as I was late.

 Amid the raging debate on $500 million grant to Nepal under the Millen­nium Challenge Corporation compact, Kamal Dev Bhatta­rai talked to Nepali Congress leader Gagan Kumar Thapa to solicit his views on the debate.

 First, how do you evaluate the federal government’s overall for­eign policy conduct?

The government is confused on foreign policy. Learning from expe­rience and our geopolitics, Nepal should first manage its two giant neighbors. At the same time, we should enhance our relations with multiple powers. We should tread in a cautious and balanced way. Most important, we should not exploit our special geostrategic situation for immediate political gains. In this climate of political stability, there should be delivery in a new way. The dividend of government stability should be reflected in international relations. Our relations with other countries in the past two years have gone from bad to worse. Intra-party rifts and polarizations are unexpect­edly thriving over foreign policy. Irrespective of who is in the govern­ment, all important actors in Nepal should have a clear direction. But we are sliding back and different political factions of the same party have different stands. The issues have been made more and more complicated.

How do you see the current MCC compact debate?

When we talk about foreign loan and grants and relations between two countries, sometimes we are influenced by specific events and emotions prevail. Similarly, we don’t have sufficient debates and discus­sions on bilateral relations.

We have become victims of these two tendencies. The MCC debate started on an emotional footing and we have never seriously discussed it. But there is positive side to it as the parliament could otherwise have endorsed it in a day, without substantial deliberations. The par­liament has passed many bills of public importance without substan­tial debate.

The current debate should be taken in a positive way as it is part of our broader discussion on what should be our approach to foreign loans and grants. When the MCC enters the parlia­ment, we should shun emotional debates. There should rather be informed discussions in parlia­ment. It is also an opportunity for the parliament.

How do you evaluate this gov­ernment’s handling of the MCC compact?

The issue is being presented in the public in different ways. One section says the MCC is everything and we should not miss it. Another sensa­tional definition is that if we accept the MCC, American Army and mis­siles will come to Nepal. This result­ed from the government’s inability to handle it properly. Of course, even if you accept a penny from outsiders, their interests will invari­ably be involved. In international relations, nothing is mutually exclu­sive. We have to tell people why the MCC’s acceptance serves our interests. The government should start an informed debate on it. But that is not how the government is going about it. Instead of address­ing the raised issues, the govern­ment gave an impression that it is in hurry to pass the compact, which does not help.

In the initial stage, the PM pro­moted a conspiracy theory on the MCC. The head of government should have made it clear why the government accepts this grant and that such agreements could also be signed with other countries. Now the government is preparing to bring a house resolution stat­ing that Nepal would not join any military alliance. Government ministers said the MCC was signed during the tenure of the previous government so it was the responsi­bility of the previous government, which was an irresponsible act. There was lack of maturity. The lack of debate culture in Nepal also created problems.

Even American officials say the MCC is a part of their Indo-Pacif­ic Strategy. How do you see it?

There has been a lot of discus­sion on the MCC but not on key defense issues. There are joint exercises between Nepal and US armies. The US is providing a lot of assistance to Nepal Army. Similarly, China is also assisting the army. They are giving military assistance directly to the army. There has been no debate on whether the army should accept such assistance. Similarly, there are ques­tions over whether the army should accept mon­ey directly from those countries. We can discuss the merits and demerits of the MCC but it should not be projected as a big issue of national sovereignty and security.

How should the national parlia­ment handle the MCC compact?

In the parliament, we get just three minutes to speak. But even before the discussions in the par­liament, party leaders who have already served as government min­isters are continuously speaking on it. Some parties issued press state­ments on the MCC. All this called for a serious study of the MCC concept. Parties are allowed to take positions but they should be mindful because such positions could have long-term ramifications.

What do you make of the conspir­acy theory that the MCC compact will allow the US army to come to Nepal?

There is conspiracy and disinfor­mation over the MCC. Such conspir­acy began to emerge after Prime Minister KP Sharma Oli linked the MCC with former speaker Krishna Bahadur Mahara. PM Oli’s comment that Mahara did not help with the passage of the MCC through the parliament helped build a conspir­acy theory.

What do you make of the Amer­ican condition of parliamentary approval of the MCC compact?

There are serious questions around us. Let’s take an example. In 2014, then CPN-UML leader Bhim Rawal and I asked in parliament why the power trade agreement with India had bypassed the legislature. We then brought up the power trade agreement in a parliamentary com­mittee and the committee then gave appropriate instructions. The parlia­ment should accept the responsibili­ty for these important issues. In the case of the MCC compact, I think it entered the parliament in line with our own Treaty Act.

What will be your role as an MP when the MCC compact enters the parliament?

We should trust the parliament. There has been no discussion on it in the parliament. The issues raised by citizens will be definite­ly discussed there. If it is against national interest, we won’t accept it. If necessary, the MCC compact could be forwarded to parliamen­tary committees for discussions on technical issues. If these discussions are insufficient, we can form other expert committees. Again, the ruling party should handle the MCC in a mature way.

What kind of foreign help should Nepal ideally accept?

Nepal has a big resource-gap. We want to build big hydro projects, transmission lines, highways and fast-tracks on our own but then we don’t have enough resources. So we have to take out loans and accept grants. As far as possible, we should try to diversify the sources of our loans and grants. This is also a right of the Least Developing Countries. In our climate dialogue, we say that grant is our right. In European and Western countries, there was criti­cism that they were supporting us only in hardware and not in soft­ware. They have to support roads, transmission lines and other sectors too. This is what we are telling them. Perhaps the MCC compact is a reflec­tion of that

 Anil Keshary Shah, the CEO of Nabil Bank, is a known figure in Nepali banking. Excerpts of his interview with Arun Poudel on the prospects of Nepali banks and the national economy.

 Nepali banks are blamed of solely focusing on profits. How do you respond?

That’s the point I have been making for some time. And I really hope some­body will listen. That’s our mool prasna, the main issue. We need clarity on the role of the banks. I think time has come that we sit together—planning commission, finance ministry, Rastra Bank, FNCCI, CNI, develop­ment and commercial bankers’ associations, experts from the World Bank and ADB, and others—and find answer to just one question: “What is the role of the financial sector in Nepal’s economic development?”

On the one hand, we can say banks are like any other industry—you go out, make as much money as you can, and pay taxes. On the other, we can say—“No, the financial sector should be like the government. Forget the money. Like the big government banks, if you are in problem, billions in taxpayer money will be spent on recapitalizing you. Just give service, forget the profit. Under every tree, there should be a bank.”

Should it be either of these? Or should things be somewhere in the middle? Once we have clarity on this, we won’t be con­fused about the banks’ role, and we won’t have to question if we are doing the right thing.

Banks are considered expen­sive for loans, yet we seem to depend almost exclusively on them. Why is that?

In other countries large corporates go directly to the public and raise money by issuing bonds. People trust them. They thus don’t need to go to the banks. But that’s not the case in Nepal. Can our corporates do that? If not, then why? If we think banks are expensive, why not go directly to the public? But our corporates can’t do it, because there is lack of confidence. Do our corporates enjoy the same level of public confidence as the banks?

What opportunities do you see in the national economy?

Let’s first talk of the hurdles. We are already free of three major hurdles that trou­bled our economy for so long: power cuts for up to 18 hours a day, frequently changing governments, and everyday bandas and strikes. Now we don’t have load-shedding. There is a stable government in place. I don’t remember when we last had a banda or strike.

Now the choice is open to us. Let’s not look for three new hurdles and say we can­not take the economy forward. We need to look for areas where we have core com­petencies, through which we can actually develop the economy.

How can banks like Nabil contribute in this?

The financial sector is like the heart of the economy. We pump capital—the economy’s blood—to different parts of the country to make those parts strong. Nabil now has seven provincial divisions. Our provincial managers are constantly in talk with the pro­vincial chief ministers. Prosperity doesn’t come from Singha Durbar alone, but from the economic activities at the provincial levels. We are committed to look at each province separately, and we provide capital to the sectors they think of as appropriate.

You can give big speeches, but prosperity can only come if the government and pri­vate sector work together. And the financial sector works as the bridge between the two.

Where should the banks invest?

I think small to medium-sized enterprises (SMEs) form the economy’s backbone. They generate economic activities and employ­ment at all levels. There are large corporates also, but they are limited both in number and impact compared to SMEs. Suppose one kirana pasal (grocery shop) employs one or two persons. There are hundreds of thousands of kirana pasals all over Nepal. A momo shop may employ 3-4 people. Collec­tively, these small businesses employ more people than the large corporates. We are focusing on these SMEs. And our focus is also that these businesses enter the formal economy—register at PAN or VAT, file taxes— so that they don’t have to go to cooperatives or money lenders.

But it must be difficult to work with the SMEs, when they are still out of the for­mal economy.

It’s a big challenge to bring small busi­nesses into formal economy. But if we try to do too much too fast, it may not be good. We may scare away these businesses. They may be put off by taxes and other provi­sions, and turn to cooperatives and money lenders for loans. They may again descend into the informal economy. That is not good for them, or for the country. I think we need to go phase-wise here. People aren’t used to stringent rules and regulations about taxes. We cannot risk sending them back to the informal economy.

Why are banks investing so much in unproductive sectors like housing and auto?

Let us look at it differently. Most of us work hard to have a quality of life. Nobody wants to work hard only to add value to the economy and pay taxes. Everybody in the world wants to see their quality of life go up. In Nepal, there are certain perceptions about quality of life. We often think—“I would like to have my own house, instead of paying for rents all the time. I would like to take my family out on my own car or motorcycle. That’s my wish, that’s why I work so hard.”

How can you say such a feeling of wellbe­ing is productive or not? If one thinks it is unproductive, why should he or she work? What would they do with the money they earn? Should they just take it to the temple and offer it to the God, or to the govern­ment? If we only talk of productive sector, we can question tourism also. What does tourism actually do? Forget tourism, we should only be producing shoes.

But shouldn’t the focus be on the econo­my’s so-called real sectors?

I think we need to look at our economy’s core competence. Manufacturing is not one of them. We can never compete with India and China in large-scale production. For us, even large-scale producers do not generate as many jobs as the SMEs do. The SMEs directly benefit ordinary citizens, although they may not be employing 300 people all at once.

An indicator of prosperity is the welfare of a large number of people. Our prime minister has the vision of Happy Nepalis along with Prosperous Nepal. Making 10,000 people rich and the rest poor slaves doesn’t serve that objective. Instead of seeing a small group of people be super rich, wouldn’t it be great to raise living standards of a large num­ber of Nepali people? For that, the SMEs are the key. That’s why our bank is committed to serving the SMEs