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James T Walsh is a former US Congressman with strong links to Nepal. He represented New York for over 18 years in the US House of Representatives. He served as a Peace Corps volunteer in Nepal in 1970-72, speaks fluent Nepali and maintains his links with this country. Walsh was instrumental in drawing congressional attention to the pro-democracy movement in April 2006 by organizing congressional hearings. He was also closely involved with the Northern Ireland peace process. In this email correspondence with John Narayan Parajuli, Walsh spoke about current US policy towards Nepal, Nepal-India-China relations and the rudderless state of the US State Department.

 How do you see current US policies towards Nepal?

I don’t see any specific activity related to Nepal. Trump is very focused on international trade, but on bilateral deals only. Among countries in the region, China is the big focus. US-China relations are cool. US-India relations, on the other hand, are warm. Our State Department is rudderless right now. I see no significant activities focused on Nepal.

Nepal is also more and more focused on relations with India and China—often seemingly at the expense of relations with other countries. Does that worry you and other friends of Nepal in the US?

China and India are competing, as you know. Relations with these two countries are far more important for Nepal. Nepal’s friends would want you to get the best from each country, but caution about quid pro quo. But we like India better.

With China now asserting its presence, including by using its considerable financial muscle, the power balance in Nepal has truly changed. What kind of rela­tions can the US have with Nepal in such a changed context?

The US at the moment is very inwardly focused. Brexit shows that the UK is too. Same with Russia. China is acting imperialistic. I am worried about where this is all going

Nepal is transitioning from a uni­tary system to a federal system. Are there things that it can learn from the US experience?

It is a delicate balance between the states and the federal govern­ment. An all-powerful federal gov­ernment would be bad. Power likes to consolidate itself at the top, so beware! Our judicial system and the free press are real strengths. There seems to be in the world today a real trend towards strongman govern­ments. Look at Russia, China and the US. That is bad for the world. Smaller countries may want to emulate them, especially if charis­matic leaders are involved. The role of the press is key. Don’t let your government control the press.

A powerful executive isn’t necessarily a bad thing. But with the provision of such a strong president, how does the system of checks and balances between the different branches of govern­ment work in the US?

The legislature needs to control the money, with no opportunity for interference by a republican executive.

Control the money. We call it the power of the purse. Reject any idea of a line-item veto. The exec­utive must accept the budget as voted on by the legislature or he can veto it and possibly be over­ridden. If the executive gets to pick and choose what gets spent, he will have too much control.

Anything you would like to add at the end?

My son was just elected Mayor of Syracuse. He has 3,000 ethnic Nepali Bhutanese as constituents (former Bhutanese refugees). It is wonderful to have Nepali spoken in my hometown. I plan to volunteer for language training and help them with English.

Director at Jyoti Group of Companies and Chairman of Syakar Trading Company, the authorized distributor of Honda bikes and cars in Nepal, Saurabh Jyoti is an avid rider and motorcycle enthusiast. His love for motorcycles becomes evident when you see his garage. The ‘Honda Africa Twin’, ‘CBR Fireblade’, ‘CB1100’, the ‘Ducati Diavel’, ‘Suzuki Hayabusa’, and the ‘Harley Davidson 883 Iron’ are a few of the motorcycles he has in his collection. This year marks 50 years of Honda in Nepal, making it the oldest distributor of the Japanese manufacturers in the world, second only to Vietnam. A considerable feat for a company in the Nepali auto industry, Syakar Trading Company has also held a dominant position in the motorcycling scene of Nepal.

Here are excerpts from our conversation with the man behind the reigns: Saurabh Jyoti, regarding the motorcycling culture in Nepal and a look back at Honda’s milestone products.

Tell us a little about the motorcycling cul­ture in Nepal.

If you look at how far we’ve come from when the first motorcycles came to Nepal, the development is staggering. It has been 50 years since Honda entered the Nepali market and we’ve grown with the motorcycling cul­ture that millions of people have adopted.

This evolution has to do with the fact that Nepal does not have a proper mass transport. Sadly, we don’t have the right planning. In this situation, motorcycles serve the purpose for the public.

Motorcycles are the means of mobility by which the economy runs. It is the fastest way of affordably getting from point A to point B. The word affordable has to be used loosely because of the ridiculous duty levied on vehicles. The quicker the government realizes that motorcycles are a necessity, and not a luxury, the easier it is going to be for the public.

Further, our country is blessed with good weather and destinations. Over the years the eagerness of people to explore our beautiful country has created a new demand for bigger capacity motorcycles.

In your opinion, which are the best places to go on motorcycle road trips?

I have always loved a quick ride to Pokhara and back. It is fun, easy, and Pokhara is a great place to end a long ride. Going to Jomsom is also always fun too.

Lo Manthang and Rara are on my wish list of places to ride to. I had a Lhasa ride planned, but I ended up with this leg injury. I even had the Africa Twin ready with the pannier bags and everything. The bike is more than ready to go. I’m not.

Tell our readers about this initiative of Honda, the Safety Riding School.

Motorcycling in Nepal is challenging. The roads are obstacles in themselves. Then, there is the lack of traffic sense. You have to be careful about other people on the road because not everyone abides by traffic rules. There are many who don’t even abide by com­mon sense. So, safety should be high on your priority when you’re riding your motorcycle. This is why we started the Syakar Safety Riding Training Center.

The riding center has helped riders become more responsible. It has also played a major role in reforming the government’s motorcy­cle riding license test, improving the primitive foundation to a more advanced method of testing a rider’s skills.

What goals do you have for Honda in 2018?

2018 is going to be challenging as the mar­ket isn’t increasing as expected. But we will continue to retain our position as the market leader.

We are proud to celebrate Honda’s 50 years in Nepal, which very few companies can boast of. We may be the second oldest distributor of Honda globally, second only to Vietnam. Cel­ebrations will continue throughout the year.

The Honda CG, XL and XR, Dio and Shine played significant roles for Honda motor­cycles in Nepal. Tell us your opinion on these motorcycles.

The first product from Honda motorcycles to be imported into Nepal was the CT-90. After that the CG 125 came in and it became one of the most loved and reliable motorcycles. It became a benchmark for the motorcycling industry in terms of reliability, quality, and ease of use.

Then we moved on to the “can go anywhere” XL 125 and 185. It was known to be one of the most durable motorcycles back then, and they are still around decades after commanding a very high demand.

Getting to the Dio, well, it was a game changer. In Nepal, out of a population of almost 30 million, 50.49 percent are women. At that time, there wasn’t a good mode of mobility for women. Without women, how can we have prosperity and inclusive growth? While the Dio was a unisex vehicle, it became the symbol of freedom and mobility and helped empower women.

The Shine was the go to machine for the working class. It upgraded things from the 100cc segment to 125cc, enough for Nepal’s roads. Reliable, great mileage and a work steed, the Honda Shine became the premium offering for the average Nepali person.

What can we expect in your garage?

I just got the 2015, 25th anniversary edition of the CBR Fireblade in matte black. It should be here soon.

Nepal is yet again facing a liquid­ity crisis. Banks have cut back on outgoing loans and are also increasing deposit rates to lure more money. As the country’s trade deficit keeps increasing, remittances keep decreasing and as the financial sys­tem is also yet to fully adapt to feder­alism, Nepali banks are struggling to increase their deposits and maintain healthy debit to credit balance. APEX’s Sunny Mahat talks to Bharat Raj Dhakal, President of the Development Bankers Association of Nepal and the CEO of Muktinath Bikash Bank Limited, about the ongoing liquidity crisis and how Nepali financial institutions are coping.

What is your take on the ongoing liquidity crisis?

There are multiple reasons for it. Decrease in remittance is one of the main reasons. Also, when the Nepal Rastra Bank ordered banks to increase their paid up capital, banks started lending aggressively for prof­its, which resulted in an imbalance between deposits and loans.

I also think the use of unregu­lated cash has become rampant after the NRB’s new regulations against money laundering limited cash transactions. People are avoiding banking channels and a lot of Nepali currency has gone unaccounted for.

Nepal’s growing trade deficit is yet another reason for the liquid­ity crunch. All our money is going abroad. Nepalis are spending more on their tours abroad than foreign tourists spend here. The billions we send aboard every year in abroad studies are also not helping.

What can the BFIs realistically do to cope with this crisis?

Banks have to start contributing more to the economy. We should work with the government to increase entrepreneurship skills and resources for the youth.

We have to expand our work beyond borrowing and lending and create a lucrative environment for entrepreneurs. We can also invest in all small, medium and large projects that support the economy. Maybe banks can reduce other expenses and invest more on financial literacy and creating conducive business environment. In the end, as the country’s economy improves, all our investments will also start giving high returns.

Can you tell us what the Muk­tinath Bikash Bank Limited is doing in particular?

Our bank’s ideology is, “the pub­lic does not need to go to banks, banks needs to go to the public”. We are going to people’s homes, teach­ing them about finance and money management and trying to persuade them to join the banking channels.

Our presence is mostly in rural areas and we focus on the deprived sector. But that is the most produc­tive sector in the country today. Our debtors invest in small-income enterprises. Our policy is to keep at least 50 percent of our investments in productive sectors.

What are your expectations from the left alliance government?

The prime minister has said the economy is his priority. With Yubaraj Khatiwada as finance min­ister, we are hopeful that his vast expertise and experience will help the government work out the causes behind repeated liquidity crises.

CPN-UML’s election manifesto promised double-digit economic growth, with primary focus on employment generation and agricul­ture. This has created many expec­tations. But we should understand that things will not change over­night. It is a gradual process and well should all play a responsible part in it.

How are development banks far­ing in this cash crunch?

The developments bank are doing well, I must say, mainly because we have spread our deposits and lending fairly among all income groups. Focusing on microfinance has made our investments safe as most of them are directed at produc­tive sectors.

This has brought about a change in perception of development banks. People assumed development banks gave high interest on deposits and charge even higher interests on loans. But our rates are now at par with commercial banks and in many cases, our loans have become faster to process and cheaper as well.

Is there a long-term fix for our economy, repeatedly hit by trade deficits and liquidity crisis?

All Nepalis should understand how the economy works. We have become too dependent on imports and we are also spending way too much on luxurious items. Also, the government needs to do a better job of spending its revenues. Instead of disbursing them periodically and in order, it is doing so haphazardly at the end of the fiscal year, which in turn obstructs the flow of money into the financial system.

There is also a problem with remittance. Our youths go abroad to work and send back their hard-earned money. But most of that income is being spent on consumer items. We need to teach them how to save. This is why I emphasize the importance of financial literacy. Also, remittance should come via proper banking channels. Illegal hundis take the money away from the financial system.

Finally, there is a need to invest on productive sectors. We have become too dependent on luxury items. A common man’s daily expenses have increased manifold compared to his incomes. He also takes out loans for unproductive use, which puts him in debt while also hampering the economy. We have to try to keep the money in the country

As the country makes the tran­sition to the federal set-up, the financial sector is also trying to come to terms with the new decen­tralized system of government. In this connection, Sunny Mahat talk­ed to Gyanendra P Dhungana, Pres­ident of the Nepal Bankers Associa­tion and CEO of Nepal Bangladesh Bank, on how the country’s com­mercial banks are preparing.

Excerpts:

How are the commercial banks in Nepal adjusting to a federal set-up?

So far there have been no spe­cific directives from the regulator in this matter. Having said that, as the banks already cater to peo­ple from all parts of the country, I think it’s more a question of adjustment than preparation. How­ever, banking sector will have to consolidate its regional capacity to expand business in the states and be ready to cater to customized requirement of each state with their differentiated needs.

Can you talk about specific challenges commercial banks are likely to face?

Nepal has always been a unitary state and federalism is a new con­cept for us. Although the need to implement federalism is fairly evi­dent, its effectiveness and practical­ity is hard to gauge.

Banks have traditionally operated in a national capital centric orien­tation, with our branches reaching some select local markets outside the valley. Now with the ensuing change in governance structure, we will have to change to regional/pro­vincial or statewide setup. This will entail a big expansion of banking manpower to begin with.

Are you taking it as an opportunity for expansion or a liability as your operation costs could increase?

It’s definitely an opportunity in the long run as the local markets might eventually emerge at state level, provided that our state-level political leadership does not waste time again in the name of transition and political development. But in the short run, our costs will surely increase as we expand operations.

Has the Nepal Rastra Bank issued any directives or formulated plans for commercial banks to adapt to federalism? And are they practical?

Like I said, until now there are no such directives from Nepal Rastra Bank. I think they will come when the regulatory authority establishes its decentralized working apparatus in the federal structure. The picture will be clear when the State Lev­el Financial Commissions and the State Level Planning Commissions are formulated and a proper vision and direction for governing financial services then emerges.

Will regional development banks benefit more in a decentralized Nepal?

The efficacy of regional devel­opment banks has already been tested. The consolidation of overall Financial Services Industry has seen many development banks merge with commercial banks or higher level financial institutions. But if there is a network of well-function­ing regional development banks in a given province, say, these regional banks will definitely have an edge as they will be local banks. This can also serve as a platform for the larger commercial banks to move in, by merging with or buying out such development banking networks, thereby increasing banking capacity as well as efficiency.