1 A PAPER ON: The Privatisation Policy Transfer: A Nepalese Experience By Laxmi Kant Paudel Public Administration Campus Tribhuban University Nepal

2 Research objective It mainly concentrates to demonstrate on whether policy transfer analysis successfully explains privatization policy or not. This research hopes to find out whether policy transfer has occurred, and the causation of policy transfer. Similarly, it also investigates what was transferred, how and why it was transferred.

3 Methodology Documentary research and qualitative data are the main methodological devices

4 Policy Transfer in Political Science Literature­- Variables and Framework Policy transfer - a distinctive process in which policy initiatives are borrowed by elites from one spatiality to another. Lesson Drawing: the intentionality of the politicians (Evans and Davies, 1997) which occurs as a result of the free choices of political agents Variables Wolman (1992) and Rose (1993) policy transfer as an independent variable that explains the causes of transfer. Bennett (1991) suggests policy transfer as an independent variable and the adoption of a new programme is country- specific.

5 3.Privatization Policy in Nepal 3.1 Privatization under the Panchayat Regime Nepal Embarked stabilization in supported by the IMF standby arrangement and structural adjustment programme (SAP) financed by the World Bank Structural Adjustment Credits. The government came up with an ambitious plan to sell off 12 enterprises in 12 months. No a single PE was privatized.

6 3.1 Privatization Under Democratic System in 1990 The democratic movement of 1990 brought a discernible and fundamental transformation in the political system. Dissatisfaction with the political system also reflected in its economic policy. During that period, the Nepalese government introduced a white paper ‘ A Policy Paper on the Privatisation of Public Enterprises 1991’ to provide a balanced approach and access to the private sector.

7 3.1 Privatization Under Democratic System in 1990 (Contd…) The First Phase of Privatisation (1992) The second phase of privatisation Privatisation After 1994 There was blockage in privatisation Process for a short period due to the ideological reasons.

8 4. Privatization Policy Transfer in Nepal 4.1 Why Privatization Occurred in Nepal Internal factors I. Dissatisfaction- voluntary policy transfer With reference to the Nepalese privatization policy, dissatisfaction is attributable to poor economic performance of the existing PEs. But it differs from the panchayati dissatisfaction to the democratic dissatisfaction. The main arguments, which support dissatisfaction, can be classified as: Political: motivation of the political leaders to have efficient economic policy Economic: fed up with the poor economic performance of the public enterprises. Social: change orientation of the society.

9 4. Privatization Policy Transfer in Nepal (Contd…) II. Perception of being left behind The realization that South Asia was far behind the dynamism of their neighbors led to the restructuring and revamping of their economic policies towards a more open and liberal economic framework

10 4. Privatization Policy Transfer in Nepal (Contd…) Externalities a. The Role of the IMF and the World Bank (direct coercive) It is evident that it is necessary to be ‘creditworthy’ in order to obtain loans from the IMF and the World Bank, as the loans are not free. One condition of the loans was the reform of PEs due to heir disappointing performance compared to the investment. b. Functional interdependence If India had not liberalized its economic policy and shown commitment in privatization in the early 90’s, whatever the pressure of international agencies, the Nepali government could get difficulty in pursuing liberalization and privatization in such a radical manner.

11 4. Privatization Policy Transfer in Nepal (Contd…) c. Globalization Globalization and the concept of global village indicate the interdependence between the countries of the world. So it is argued that one of the reasons why privatization policy transferred in Nepal is the global economic trend, which demands that every country be competitive on an international level.

What was transferred what was not transferred? The analysis of governmental documents such as ‘Policy Paper on the Privatization of Public Enterprise 1991’ and ‘Privatization Act 1994”, the following objects seem to have been utilized in developing the Nepalese Privatization Policy. a. Attitudes/beliefs: The principle objects adopted by the Koirala government ( ) into the political system were attitudes and beliefs underpinning the efficiency of the private sector b. Policy goals: The government in the 1990 adopted specific goals to improve the efficiency of PEs. Increase the productivity through the enhancement of efficiency of the state owned enterprises. Reduce the financial and administrative burden of the government. Usher all round economic development of the country, by broadening the participation of private sector (Privatization Act, 1994:1, Policy Paper,1991:4)

13 What was transferred what was not transferred? (Contd…) c. Options/ Processes: Sale of shares of the enterprise to the general public, employees, and persons or company interested in the management of such enterprises; by transferring assets of the enterprise; and by involving private sector in the management of the enterprise.

14 Conclusion It has complex and controversial nature. The privatization in the mid-80s and early 90 and after is explicitly different.

15 Possible Future Avenues More research is needed to decipher the role of international and national actors and factors in adopting new policies through a transfer process. There is a need for a comparative study.