Neutralised accountability

Nepal has a new Prime Minister, and another unelected one. To say that the political parties’ decision to appoint the initially reluctant Chief Justice as the country’s Prime Minister is unique does not do sufficient justice to its ingenuity. While other countries have often spent decades trying to accomplish the separation of powers between the executive and the judiciary, Nepal has done the opposite and voluntarily merged the two and vested all these powers in the hands of one person.  

That Khil Raj Regmi will not be administering any judicial responsibilities in the course of his tenure as the interim prime minister and the chairman of the Interim Election Council is true, but he still retains the title of Chief Justice and will assume his responsibilities again following the elections to a constituent assembly.  

His appointment gives rise to several questions: What is the accountability of this unelected government? What is to say this government will be effective? With this government’s only real mandate being the conducting of elections within three months, what will become of the economy and other development initiatives? The appointment of this makeshift cabinet is likely to lead to policy paralysis on all fronts besides the conducting of elections.  

The chief reason behind appointing the Chief Justice as Prime Minister is noble. The 63-year-old Regmi is widely respected, is not affiliated to any political party, and is viewed as being nonpartisan. However, being nonpartisan is only reassuring to the extent that he is unlikely to influence the elections as he is not affiliated to any political party. This neutrality does not preclude the possibility – however little – of Regmi deciding to continue in his new avatar of Prime Minister. 

As a result of this decision of the political parties, Nepal finds itself in a rather tricky situation whereby there is no constitutional recourse remaining if the Prime Minister and the Interim Election Council fail to create the right environment for elections. The lack of a functioning constitution means there are no grounds to establish whether any of the Interim Election Council’s decisions are legally permissible or otherwise.  

On the one hand, the Prime Minister’s neutrality can stand the country in good stead because it may lead to elections that are free and fair. On the other, that he is the Chief Justice of the Supreme Court as well can pose problems for the country.

Since the country does not have a finished, functional constitution at this point, it is the Supreme Court that is vested with the authority to provide clear interpretations of any constitutional law that is contested. In the event of any disagreements over the constitution between the political parties and the new Prime Minister, it will the Supreme court that will be expected to provide a verdict on the right interpretation of a law, or the course of action in case elections to a constituent assembly are not held on time. In the event of something like this happening, it is not entirely imprudent to assume that the Supreme Court may be inclined to pass a verdict in favour of its Chief Justice.  

In seeking a solution to the continuing political impasse, one cannot help but think that the four political parties may have dug a hole too deep to get out of, despite good intent.

(This was a column printed in The Himalayan Times on 24 March 2013)

ASEAN: Infrastructure disconnect

Regional economic integration is phrase that’s done the rounds in Southeast Asia for the better part of the last twenty years, but excitement around it has been considerably more palpable over the couple of years only, as the region heads towards its goal of establishing an economic community by the end of 2015.  

The Association of Southeast Asian Nations (ASEAN) has only made slow progress in pretty much all its endeavours over the last four and a half decades, often making it the object of mild ridicule. But frequent comparisons with the European Union notwithstanding, ASEAN has not done too badly. For a region as diverse and disparate as this - with very little in common between member nations except perhaps a love for rice and access to water - ASEAN has actually done well to stand the test of time. 

It now stands on the cusp of its most important development, that of the implementation of the ASEAN Economic Community (AEC) by the end of the year 2015. The formation of this community can have great implications for the region and the world economy as well. If ASEAN today was a single country, for instance, it would be the world’s third most populous with about 600 million people and it would also be among the world’s largest trading powers, behind only the EU, the US, China and Germany. The region had a GDP of $3.31 trillion in purchasing power parity terms in 2011, having more than doubled in the past 15 years.  

ASEAN envisions a single market and production base across the ten member states, which will significantly increase the clout of its economies. This will be done by making ASEAN a region with free movement of goods, services, skilled labour, investments and capital.  

The one major challenge the region faces in meeting these aspirations and then making the most from them is the lack of infrastructure connectivity – physical and mainly institutional. Besides, increased urbanisation and a rapidly growing middle class have only put more pressure on transport, water and power systems in the region.  

Ironically enough, it is the region’s governments that are holding the region back. The biggest obstacle towards greater harmonisation and interconnectivity in ASEAN today is the concept of sovereignty. Southeast Asian governments are reluctant to partake in any initiative that can even be perceived to be an impingement of their sovereignty. Distrust of a regional superstructure is a myopic outlook that could have harsh implications for the region as it attempts to withstand competition from China and India.  

Whilst physical infrastructure has improved significantly across most of ASEAN, the bigger issue relates to harmonisation regulations across borders. ASEAN has a complicated production network with several intermediate goods manufactured in one country often being used in the production of another good in another country. It is a model that has served the region well so far, but as export margins have been squeezed due to the global economic slowdown, these export-oriented economies need to offset falling margins with increased efficiencies. The most obvious way this can be done is by reducing transport costs within the region by improving institutional infrastructure connectivity.  

The cross-border harmonisation of regulations, standards, guidelines and procedures and legal frameworks requires coordination among several stakeholders ranging from government ministries from different member states, multilateral institutions, regional sub-groupings, private stakeholders and donor countries and organisations, making it an extremely challenging and painstaking undertaking.  

It is no easy task. Governments should not make it any harder.

 

(This was a column printed in the Himalayan Times on 17 March 2013)

Troubled road ahead

India’s infrastructure woes are well-documented. Various numbers are bandied about with respect to how many percentage points of economic growth are lost each year as a result insufficient and poor quality infrastructure. Suffice it to say that the country’s economy would be growing substantially faster if India had workable infrastructure. It doesn’t.  

But at least it is trying.  

Despite big challenges such as a weak rupee, withdrawal of large sums of foreign institutional investor money, difficult issues relating to land acquisition and a scarcity of capital, there has been near unwavering commitment on the part of the government to remove infrastructure bottlenecks. These challenges are compounded with issues such as the safety of women, corruption and police brutality now having found a place in the public conscience; but the government has at least carried on steadfastly in its pursuit of providing better infrastructure. 

In its XIIth Five Year Plan, India aspires to spend $1 trillion on infrastructure development, and expects about half of it to come from the private sector. Unlike in other aspects of administration, the government is actually proving to be a catalyst for greater private sector participation in the infrastructure sector in India. The use of different kinds of financial instruments is being encouraged in a bid to bridge infrastructure funding gaps. Infrastructure debt funds, for instance, will now be encouraged and the government will allow tax-free bonds up to INR50,000 crore in 2013-14. Additionally, in what can provide a major fillip to infrastructure investment, the Indian government has announced the building of two new industrial corridors between Bangalore and Chennai and between Bangalore and Mumbai.  

That the efforts of the government are paying dividends are evident when one looks at India’s new airports and the vastly improved transport infrastructure in many of its cities, including Tier II ones. The highway networks are significantly better than what they were a decade ago too and India has made substantial progress in connecting its far-flung rural areas with the rest of the country.  

While it is true that infrastructure in India has developed rapidly in pockets, there are several such pockets today. The improvement in infrastructure just south of the border in the Indian state of Bihar is striking. Bihar’s progress should be an eye opener for the Nepalese government, but it will not be.  

Their immense differences notwithstanding, there are things Nepal can learn from how India is going about the task of building new infrastructure. The first step is to have a modicum of humility and to admit there is a problem, something Nepalese politicians have always been unwilling to do.  

Such intangibles aside, the government must decentralise infrastructure development, as has happened in India to a large extent. Today, spending is centralised and while government revenues flow into Kathmandu, key towns such as Biratnagar – which provide much of this revenue – have seen virtually no improvement in infrastructure for the last two decades.  

It is imperative for the government to look beyond Kathmandu, and one way of doing this is to grant district-level administrations greater authority over the management of funds and infrastructure provision. Allowing districts to make their own decisions and permitting them to raise money independently from the private sector should be the way forward.  

With the introduction of a federal structure likely whenever the new constitution comes into effect, this could change, but that would depend on how powers are split between the centre and the states. With Nepal’s infrastructure deficit as it stands today, federalism cannot be based on the premise of political inclusion and representation alone.

(This was a column printed in the Himalayan Times on 10 March 2013)

 

 

Myanmar maneuverings

Eager to make headway into Myanmar as it democratizes and opens its economy to foreign participation, this country has made a commitment of almost $20 billion for Myanmar in the form of debt write-offs, aid and investment over the last year. This whopping sum includes investment into a special economic zone in Thilawa, cheap loans for the building of infrastructure around this area, and lending for a deep sea port and a special economic zone in Dawei, which expected to be the largest industrial project in all of Southeast Asia.  

The country pouring all of this money into Myanmar is Japan. In all its years of isolation, investing in Myanmar was almost the sole preserve of China. Through the sanctions imposed on the country, only China (and to some extent, India) engaged directly and openly with the military junta. But that is fast beginning to change and Japan is at the forefront of economic initiatives being taken in Naypyidaw.  

Japan’s near impeccable reputation as an honest, genuine stakeholder and donor and one with historically warm ties with Myanmar have meant it is one of the countries looked upon most favourably. The Japanese have maintained relations with the junta through Myanmar’s decades of isolation and Japan was never party to economic and financial sanctions imposed on Myanmar as several other Western powers were.  

China has had a first mover advantage and has, by far, been the largest foreign investor in Myanmar over the last two decades. It also exercises significant influence in the country, and it is believed Myanmar’s rulers are wary of relying too much on Chinese assistance and investment for development and fear becoming a satellite state. 

As such, over the last year and a half, Myanmar has begun making steady overtures towards Japan, which in turn has obliged in kind. At a time of rapidly increasing Chinese clout globally, it is not surprising Japan wants to enhance its own presence in what is a key region. Myanmar is of strategic importance as it is sandwiched between China, India and Thailand, key Asian economies. Moreover, it has a long coastline, giving it direct naval access to trade routes. Most importantly, Japan wants to limit China’s sphere of influence.  

Seeking participation in Myanmar’s economy, too, is logical for Japan. The country is well-endowed in metals, gemstone, natural gas and other natural resources. It also has a sizeable population of 48 million, making it a large market for goods as well as a source of cheap labour, important for Japanese companies especially as wages in the rest of the traditional production bases in developing Asia are rising. Hence, the Japanese private sector too is an active stakeholder in the special economic zone in Thilawa.   

Ever since most economic sanctions were lifted following the release of Aung San Suu Kyi in November 2010, countries have flocked to Myanmar to grab a slice of the pie. And as pretty much the last remaining frontier in Asia, the country is seeing oodles of interest from Western and Asian powers alike – something Myanmar’s government is not oblivious to.  

Notwithstanding the ethnic violence against the Muslim Rohingya minority, Myanmar has taken rapid strides towards democratisation and indulged in a gradual dismantling of the massive powers placed in the hands of the military.  

This is a window of opportunity that Myanmar cannot afford to let go of, and the current administration has gone into a PR overdrive to convince potential investors and donors of democratic progress. In the week gone by, President Thein Sein embarked on his first Europe tour for this very purpose.

However, it is likely that any development aid from Western powers will still come with strings attached (and will likely be quite trivial in value), while Asian powers such as China and now Japan do not seem to have such strong moral concerns (and significantly larger cheque books).  It isn’t hard to second guess which way the wind will blow in Myanmar. 

 

(This was a column printed in the Himalayan Times on 3 March 2013)