Investment worries - Economic growth needs a confident private sector

5 September, Sep 05, 2008 (Asia Pulse Data Source via COMTEX) -- TTM | Quote | Chart | News | PowerRating -- The news that Tata Motors is packing its bags and leaving Singur district in Communist-ruled West Bengal has sent a chill down the spine of India?s corporate world. The Nano project succumbed in the fight for political egos. The corporate world that always takes the word of the political leadership with caution will be shaken by the events that are unfolding in Singur. If Singur lost the opportunity to become a Detroit, the West Bengal government lost a lot of credibility for being unable to defend its land acquisition process.

There are lessons Nepal can learn from the Singur episode. While private sector growth can be facilitated by governments and political parties, without the ?right? involvement of the local communities, processes may be delayed. Government may be relied upon as a facilitator, but only to the extent of the legal structure. It is up to companies or institutions to go beyond and actually see what the communities think.

Countries in the region such as Thailand are experiencing a big rural-urban divide between what urban dwellers and rural folk consider to be acceptable development parameters. Particularly in rural areas that are dependent on agriculture, it is important to find labourers alternative livelihoods when land is no longer available.

The recent CNI economic summit did not introduce any groundbreaking thinking on the role of the private sector, but it was at least possible to hear the new government?s take on economic growth. Finance Minister Baburam Bhattarai has rightly pointed out the four key areas, but we must wait and see if anything actually happens.

* How does a country with fragmented land holdings achieve economies of scale through land reform that causes further fragmentation?

* How does a country with high community expectations implement land acquisition for infrastructure projects?

* How does a country suffering from a decade of deteriorating tourism service quality develop a sustainable tourism industry?

* How does a country attain its health and education targets when private providers have no guarantees and there are n't sufficient resources to pump into the public sector?

* How does a country encourage the private sector when rights to own property and to run businesses are not fully guaranteed?

Globally, it has been observed that private sector development accelerates the pace of economic growth more than anything else. For the private sector, the key is also to embark on action along with the government and other stake holders using the right models of partnership. Public Private Partnerships should not be modelled around party workers forced into work by private enterprises creating unproductive institutions.

The private sector also needs to engage beyond the usual speeches and hobnobbing with the centres of power. The time has come to collectively support an economic policy centre that will both help the private sector to think and also help the government to take action. ?

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