Nepal ICT Sector Note March08

ProgressandChallengesofICTDevelopmentinNepal ExecutiveSummary Nepalisachallengingcountryinwhichtoadvancethedevelopmentofinformation communicationtechnology(ICT).ThefirstcomputerwasintroducedtoNepalas lateas1971,anditwasonlyin2004thatasecondmobilephoneoperatorwas licensed.Thegeneralpopulationispoorandwithlimitedliteracy,andspreadover hardtoaccessmountainousterrain.Furthermore,Nepalisinoneofthemore competitiveregionsoftheworldintermsoftheITindustry,withitstwoneighbors, ChinaandIndia,fastestablishingtheirdominanceinhardwareandsoftware exportsrespectively. However,itisfortheseveryreasonsthatICTisreceivingconsiderableattentionin Nepalsdevelopmentefforts.TechnologycanplayakeyroleinlinkingNepalsoften isolatedruralvillagestoeachotherandtheoutsideworld,enablingitscitizensto betteraccessgovernmentservicesandtietheireconomiestomarketopportunities beyondtheirimmediategeography.
Meanwhile,IndiaandChinasITsectorscan alsoofferexcellentpartnershipopportunitiesforNepalsITindustry,offeringa channeltoaccesssomeofthemostsophisticatedcustomersfromacrosstheglobe. Therefore,Nepalhastakenanactiveapproachtoadvancingitseagenda,initially embodiedbyanITPolicyestablishedin2000.Ithasincreasinglyopenedthe infrastructuresectortocompetition,increasedthegovernmentsonlinepresence, builtanITpark,grownITexportsatahealthy20%ayear,andisannually graduatingacadreofwelltrainingICTprofessionalsfromamixofuniversitiesand smallerprivatetraininginstitutions. Aftersomeyearsofprogressthathasseenthelaunchupofanumberofworthwhile ICTinitiatives,somefoundationsareinplaceandgoodexperiencehasbeengained. Muchofwhatcanandshouldbedoneinthefuturehasbeenstarted;however,agap hasalsoopenedupbetweenstatedpolicyandwhathashappenedontheground. Nepalisatthestagewhereitnowneedstoconsolidategainsmade,fixareaswhere executionhasfallenshortofexpectations,andventureintoalimitednumberofnew areasofICTopportunity. ThisreportfocusesonwhattodonexttoconsolidateandgrowNepalsICTsectorin fourareas: Informationinfrastructure/connectivity Egovernment ITindustry ICThumanresources.
Progress and Challenges of ICT Development in Nepal
Eachisreviewedinturn,lookingatkeydevelopmentsinthesubsectoroverthe pasttenyears,highlightingexamplesofsuccesses,andrecommendingkeyareas wheretheGovernmentofNepal,theWorldBankandotherdevelopmentpartners canfocustheirfutureeffortstosupportthedevelopmentandgrowthofICTin Nepal. Therecommendationsfornextstepscombineanextensionofinterventionsstarted earlierwiththelaunchofnewareasofopportunity.Theyaresummarizedinthe tablebelow.

Information Infrastructure RuralStrategy andRollout Taxationand Incentives EGovernment Government Network Development PublicPrivate Partnership Development/E Government Outsourcing ITIndustry Legaland Regulatory Framework ITClusterSupport* ITParkLaunchand Management Support* ICTIncubator Development* CANInstitutional CapacitySupport ICTHuman Resources ICTHuman Resource DevelopmentPolicy andStrategy ICTHuman ResourcesSector Support Organization* Analysis&Strategy
CapacityBuilding
NTACapacity Support
Strategy Implementation BridgingSupport
Institutional Leadership Development
Implementation
Telecommunica tionsSector Governance Continued Liberalization
eProcurement PlatformRevival TBD(Resultof strategy finalization)
ITClusterSupport* ITParkLaunchand Management Support* ICTIncubator Development*
ICTHuman ResourcesSector Support Organization* TBD(Resultof strategy finalization)
*Theseinitiativesbeginwithstrategyorbusinessplanningwork,afterwhich(andbasedonwhich)implementation activitieswillfollow.
TableofContents AcronymsandAbbreviations ...............................................................................................5 Introduction ............................................................................................................................7 Outline.................................................................................................................................8 Scopeandtiming .................................................................................................................9 ConceptualFramework:TheInterrelationoftheFourFocusAreas............................9 InformationInfrastructure .................................................................................................11 Background........................................................................................................................... 11 PolicyandInstitutions......................................................................................................... 13 ProgressandOutstandingChallenges.............................................................................. 14 ProfileofSuccess:SpiceNepal........................................................................................... 17 PotentialAreasforIntervention ........................................................................................ 18 1.TelecommunicationsSectorGovernance .......................................................................18 2.ContinuedLiberalization ...............................................................................................19 3.RuralStrategyandRollout ..........................................................................................19 4.NTACapacitySupport..................................................................................................20 5.TaxationandIncentives.................................................................................................21 EGovernment.......................................................................................................................21 Background........................................................................................................................... 21 PolicyandInstitutions......................................................................................................... 22 ProgressandOutstandingChallenges.............................................................................. 25 ProfileofSuccess:SupremeCourtCaseTrackingSystem............................................. 27 PotentialAreasforIntervention ........................................................................................ 29 1.StrategyImplementationBridgingSupport .................................................................29 2.GovernmentNetworkDevelopment ..............................................................................29 3.PublicPrivatePartnershipDevelopment/EGovernmentOutsourcing.....................30 4.eProcurementPlatformRevival ...................................................................................31 5.TBD(Resultofstrategyfinalization) ............................................................................31 ITIndustry.............................................................................................................................31 Background........................................................................................................................... 31 PolicyandInstitutions......................................................................................................... 33 ProgressandOutstandingChallenges.............................................................................. 33 ProfileofSuccess:MercantileCommunications ............................................................. 36 PotentialAreasforIntervention ........................................................................................ 37 1.LegalandRegulatoryFramework..................................................................................37 2.InstitutionalCapacitySupport......................................................................................38 3.ITClusterSupport.........................................................................................................39 4.ITParkLaunchandManagementSupport...................................................................40 5.ICTIncubatorDevelopment ..........................................................................................41 ICTHumanResources ........................................................................................................42 Background........................................................................................................................... 42 PoliciesandInstitutions ...................................................................................................... 43
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ProgressandOutstandingChallenges.............................................................................. 44 ProfileofSuccess:KathmanduUniversity....................................................................... 45 PotentialAreasforIntervention ........................................................................................ 46 1.ICTHumanResourcePolicyandStrategy ...................................................................46 2.InstitutionalLeadershipDevelopment ..........................................................................47 3.ICTHumanResourcesSectorSupportOrganization...................................................47 4.TBD(Resultofstrategyfinalization) ............................................................................48 Linkages:DevelopingaCoherentICTTransformationProgram ..............................48 AnalysisandStrategyFormulation................................................................................... 49 InstitutionalCapacityBuilding.......................................................................................... 49 ProjectImplementation(Operations)................................................................................ 50 NextSteps..............................................................................................................................51 References..............................................................................................................................54 AnnexI:ListofInterviewees.............................................................................................56 AnnexII:KeyLawsandRegulations...............................................................................57 AnnexII:KeyLawsandRegulations...............................................................................57 AnnexIII:ListofAssessmentsandAnalyses ................................................................58 AnnexIV:SampleICTInitiativesinNepal ...................................................................59
AcronymsandAbbreviations ADB BPO EGMP GoN G2B G2C G2G HLICT KIPA KU ICT IT AsianDevelopmentBank BusinessProcessOutsourcing EGovernmentMasterPlan GovernmentofNepal GovernmenttoBusiness GovernmenttoCitizen GovernmenttoGovernment HighLevelCommissionforInformationTechnology KoreaITIndustryPromotionAgency KathmanduUniversity InformationCommunicationTechnology InformationTechnology InformationTechnologyProfessionalForum InternetServiceProvider MinistryofEducationandSports MinistryofScience,EnvironmentandTechnology MinistryforInformationandCommunication NationalInformationTechnologyCenter NonResidentNepalis NepalTelecom NepalTelecommunicationsAuthority PublicCallOffices
5
ITPF ISP
MoES MoEST MoIC NITC NRNs NT
NTA PCO
PMU RTDF SASEC STM UT
ProjectManagementUnit RuralTelecommunicationsDevelopmentFund SouthAsiaSubregionalEconomicCooperation STMTelecomSanchar UnitedTelecom VillageDevelopmentCenter VoiceOverInternetProtocol VerySmallApertureTerminal
VDC VOIP VSAT
Introduction Nepalisarelativenewcomertotheuseofinformationcommunicationtechnology (ICT):itslocalexchangereached300linesin1955;itsfirstcomputerwasintroduced in1971;anditwasonlyin2004thatitlicenseditssecondmobileoperator.Itisalsoa difficultcountryinwhichtoaggressivelyexpandICT.WithGDPpercapitaat$270 andliteracylevelsat49%,therearefewpeoplewhocaneasilyaffordtouseICTand takeadvantageofthediverseopportunitiesthattechnologyoffers.Furthermore,the populationislargelyrural,dispersedthroughmountainousterrainthatisdifficultto access. However,itisfortheseveryreasonsthatICThasreceivedconsiderableattentionin Nepalsdevelopmentefforts.TechnologycanplayakeyroleinlinkingNepalsoften isolatedruralvillagestoeachotherandtheoutsideworld,enablingitscitizensto betteraccessgovernmentservicesandlinktheireconomiestomarketopportunities beyondtheirimmediategeography.Technologycanalsoenhancethereachand efficiencywithwhichNepalsgovernmentcandeliverkeypublicservices,from educationtohealthcare.Furthermore,throughconnectingNepaltoglobalmarkets inparticularthroughthefastgrowingITindustriesofitstwoneighbors,Indiaand ChinaICTcanprovidegoodopportunitiesforNepaltoovercomesomeofbarriers itfacesbeingalandlockednation. RecognizingtheroleofICTasaspurtodevelopment,theGovernmentofNepals (GoN)TenthFiveYearPlan(20022007)stressestheneedtopromotetheaccessand useofICT,therebygeneratingemploymentopportunities,contributingtoform knowledgebasedsocietiesandpromotingknowledgebasedbusinessesand industries.1ThecountrysITPolicygoesfurther,aimingtoPlaceNepalonthe globalmapofInformationTechnologywithinfiveyears.Aspartofthisprocess, thetelecommunicationssectorhasbeenincreasinglyopeneduptoprivate competition,ruraltelecentershavebeenestablishedacrossthecountrybyarangeof publicandprivateorganizations,andnewinitiatives,suchasestablishinganIT Park,areunderway.Thegovernmenthasalsorecentlylaunchedafarreachinge governmentprogram,designedtostreamlinegovernmentbackofficeoperations andincreasetheavailabilityofonlineservices. However,NepalsICTsectorhasalongwaytogotomaturity.Only8.84%ofthe populationhasaccesstoatelephone(plusthisaveragemasksaheavyconcentration intheKathmanduValley,whichmeansthateffectiveteledensityisactuallyalow 1.71%),whilethetelecommunicationssectorisstilldominatedbytheincumbent
1
WorldBank,2007;DevelopmentandInnovationofICTinNepal.
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publicoperator.Meanwhile,somegoodeffortshavefounderedduringexecution:a telecommunicationssectorregulatoryauthorityhasbeenestablishedbuthasyetto developenoughclouttoensurealevelplayingfieldforprivatecompetition;a governmenteprocurementplatformwasdevelopedbutisseldomused;theITPark registereditsfirsttenant,butthenlostthemwithinsixmonths. Afteryearsofenthusiasmthathasseenthelaunchupofanumberofworthwhile ICTinitiatives,somefoundationsareinplaceandgoodexperiencehasbeengained. Muchofwhatcanandshouldbedoneinthefuturehasbeenstarted;however,agap hasopenedupbetweenstatedpolicyandwhathashappenedontheground.Nepal isatthestagewhereitnowneedstoconsolidategainsmade,fixareaswhere executionhasfallenshortofexpectations,andventureintoalimitednumberofnew areasofICTopportunity. Asthecountryembarksonthisphaseofconsolidationandenhancedgrowth,itwill havemakestrategicchoicesaboutwheretodirectitsefforts,bearinginmindhuman andfinancialresourcelimitationsandtheabsorptivecapacityofbothitslead institutionsandthegeneralpopulation.Thekeytoitssuccesswillbetolimitthe scopeofitsefforts,tobeselectiveinwereitchannelsitsefforts,andthroughdoing somakerealgainsinareasthatmattermost. Outline ThisreportfocusesonwhattodonexttoconsolidateandgrowNepalsICTsectorin fourareas: Informationinfrastructure/connectivity Egovernment ITindustry ICThumanresources.
Eachwillbereviewedinturn,lookingatkeydevelopmentsinthesubsectorover thepasttenyears,highlightingexamplesofsuccesses,andrecommendingkeyareas wheretheGoN,theWorldBankandotherdevelopmentpartnerscanfocustheir futureeffortstosupportthegrowthanddevelopmentofICTinNepal. Onthewhole,therecommendationsfallintotwocategories:domoreofwhatis alreadybeingdone,thoughinsomecasesdoingitbetter;undertakenewinitiatives werethereisunmetorlatentdemand.However,inthecasesoftheITsectorandICT humanresources,thereislimitedknowledgeavailableaboutthenatureofdemand forthesetwosubsectorsservicesandhowbesttomeetit.Thismeansthatmore researchneedstobedoneondemand,basedonwhichaclearstrategyforchange canbedeveloped.
Thereportbeginsbyintroducingaconceptualframeworkforhowthefourfocus areasareinterrelated,tothenlookateachinturn,concludingeachsectionwith recommendationsforkeyactions.Thereportconcludeswithareviewofhowthe individualactionsineachofthemainareasareinterrelated,endingwith suggestionsfornextsteps. Scopeandtiming Thisisprimarilyadeskresearcheffortandisthereforeboundbytheamountand qualityofresearchavailabletodateonNepalsICTsector,aswellasthetime allottedforthework. ThereislimitedinformationavailableonNepalsICTsector,particularlywith regardtoquantitativeandqualitativedataandmoreparticularlywithregardtothe ITsectorandICThumanrecourses.Thismeansthatsomeoftheend recommendationscallformoretargetedresearchbeforespecificguidelinesfora wayforwardcanbeadvanced. AnumberofsubstantialICTrelatedeffortsarealsocurrentlyunderway.These includethenewICTDevelopmentProjectfundedbytheAsianDevelopmentBank (ADB);newguidelinesfortheinterconnectionregimeconductedbytheNepal TelecommunicationsAuthority(NTA);andtheissuingoflicensesforunservedrural areas(alsobyNTA).Theseinitiativesarecentraltotheareasthatthisreport reviews,yetitisstilltooearlytobecertainwhatresultstheywillachieve.This meansthatrecommendationsinanyoftheseareaswilleitherruntheriskofbeing duplicative,orfailtoaddressanareathathasnotbeeneffectivelyaddressedbythe leadagency. ConceptualFramework:TheInterrelationoftheFourFocusAreas Thefourfocusareasofinformationinfrastructure,egovernment,theITindustry andICThumanresourcesarecloselyinterrelated.Informationinfrastructureis foundationallyimportant,formingthebasewithoutwhichNepalcannotseriously considerdevelopingegovernmentapplications,anITsectororthenecessaryICT humanresources.2Makingsurethatthisbaseissecure,primarilythroughensuring apredictableandfairinvestmentenvironmentforprivateparticipation,isoneofthe moreimportantstepsthatNepalcantaketoadvanceICTgrowth.
2Itisconceivabletoadvanceinformationtechnologyusageingovernment,growanITsectorand developtechnologyrelatedskillswithouthighcommunicationscomponentstothemITwithoutthe C.However,thiswouldentailembarkingonasuboptimalstrategyfordevelopmentfromthestart, deliveringonlyafractionofthepotentialbenefitsofinformationtechnologyusage.
Withhighqualityandexpandinginformationinfrastructure,developmentofthe otherthreefocusareascantakeplace.However,growthinegovernment,theIT sectorandICThumanresourceswillrequireunderstandingthenatureandstrength ofdemandforthegoodsandservicesthateachproduce. Supplyanddemandamongthethreesubsectors areinterrelatedandoverlapping.Forexample, theITindustryisasourceofdemandfortheICT humanresourcessector,whileservingasa suppliertothegovernmentofITgoodsand services.ThegovernmentandtheITindustry serveasimportantsourcesofdemandfortheICT humanresourcessector(butnottheonlysource traditionalbusinessesandforeignfirmsalso recruitNepalsICTexperts).ITfirmsandICT learningandtraininginstitutionsarealso consumersofgovernmenteservices.
DEMAND 1.Citizens 2.Businesses 3.Employees 1.Government 2.Businesses Foreign Domestic 1.Government 2.Businesses ICT & tradl. For. & dom.
Demand pull
E-GOVT
IT INDUS.
ICT HR
ICT INFRASTRUCTURE
Ingeneral,demandinNepalforalargeandvariedportfolioofICTproductsand servicesisweak,andlikelytoremainsointhenearfuture.Asof2005,justoverone halfofitspopulationwasilliterate(letaloneeliterate)withpercapitalelectricity consumptionat50%ofBangladeshslevelandmerely15%ofIndias.3Inthis context,theaverageNepalicitizenisstillalongwayofffromdemandingthatthe governmentprovidesthemanarrayofonlineservicestheirdemandsaremore likelytobeforbasicpublicservicessuchasschoolswithteachers,healthfacilities withinreach,androadsthatarepassableyearround. Furthermore,NepalsITsectorislocatedinoneofthemostcompetitiveregionsof theworld.China,itsneighbourononeside,dominatesglobalhardwaretrade,while India,itsneighbourontheother,isfastestablishingitsplaceasthesoftware developmentandbusinessprocessoutsourcing(BPO)capitaloftheworld.Sowith limiteddemandforthegovernmenttobeonline,andanITsectorthatexistsinone ofthemostcompetitiveregionsoftheworld, DEMAND domesticdemandforICThumanresourcesis likewiseboundtobelimited. Despitelowoveralldemandandstiff competitionintheregion,thereare opportunitiesforNepaltousefullyleverage
3
Important other sources of demand
E-GOVT
IT INDUS.
ICT HR
E-Government as a demand anchor
ICT INFRASTRUCTURE
WorldDevelopmentIndicatorsdatabase,datafor2004.
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ICTtoimprovegovernance,findmarketnicheswhereitcanprosperdespiteits neighbouringICTbehemoths(oreveninpartnershipwiththem),anddevelopICT humanresourcestoservebothends. Amongthemostattractivedemandopportunitieslieswithegovernment.E governmentprovidesanexcellentopportunitytopulluptheothertwosectors: increasedgovernmentdemandforgoodsandservicesfromtheITsectorwillfuelits growth;inturn,theITsectorwilldemandmoretrainedprofessionalsfromtheICT humanresourcessector(aswillthegovernmentitself).This,however,puts considerablepressureonthesuccessoftheegovernmentstrategyandthe availabilityofpublicfinancingasakeydemandanchor.Furthermore,littleisknown aboutthenatureandstrengthofdemandforegovernmentfromwithinNepal,ase governmentservicesdeliveredtodatehavebeenrudimentary. Therefore,whileegovernmentcurrentlypresentsagoodsourceofdemandforthe ITindustryandtheICThumanresourcessector(boththroughtheITindustryand moredirectly),othersourcesofdemandparticularlyforeignanddomestic businessdemandforICTproductsandservicesmustalsobeidentifiedand pursuedassourcesofgrowth.Definingthesedemandopportunitieswillrequire additionalresearch,basedonwhichrealisticstrategyformulationcanfollow. Guidedbygoodstrategy,plannedandpersistentimplementationwillofferits rewards. However,importantasegovernmentprogramsareasarelativelyreliable(and domestic)sourceofdemand,manyofthemwillnotachievethesuccesstheyhope forunlesstheinformationinfrastructuresectoronwhichtheydependtodeliver electronicservicesiswelldeveloped.Withoutreliableandcosteffective telecommunicationsservices,effortsinegovernment(andtheothertwoareas)will bedifficultandremaininefficient.4Thismustthereforebethefirstfocusfor developmentand,asisthecaseinNepal,continued,concertedreform. InformationInfrastructure Background TeledensityinNepalhasgrownwelloverthepastfewyears,particularlywiththe openingupofthemobiletelephonysectortoprivatecompetition.Withacombined fixedandmobileteledensityofover8%,Nepalhasbetteredtargetssetsomeyears
4
Inapolicynoteondeployingegovernmentprograms,theWorldBanknotesthat:Governments shouldpromotestrategiesthatpromoteICTinfrastructureasaprerequisitetoegovernment:anI beforeEstrategy.(R.SchwareandA.Deane,2003:DeployingEgovernmentPrograms).

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ago.Yetitisstillfarfromoutperformingothercountriesintheregion:Afghanistan andBangladesh,twocountriesthatweredoingpoorlyin2004,haveateledensityof over8%and16%respectively.Internetusageisalsoparticularlylowat4peopleper 1000,comparedto49intheSouthAsiaregionand44forlowincomecountriesin general.5 Mostnetworkcoverageisdominatedbythepublicincumbentoperator,Nepal Telecom(NT),whichprovidesbothfixedandmobiletelephony.Howeverthisis changingasmoreprivateoperatorsareenteringthefield,includingafixedwireless localloopoperatorintheKathmanduValley(UnitedTelecom),anewmobilephone operator(SpiceNepal),andaruraloperatorthatprovidesVSATbasedconnectivity (STMSanchar).6TherearealsoanumberofindependentVSATlinkages,whichthe majorityofinternetserviceproviders(ISPs)over30inallrelyonfortheir connectivity. However,thenetworkbackboneremainsdominatedbyNT,withsomeisolated exceptionsofprivateinstitutions,suchasbanks,buildingprivateVSATnetworks fortheirownuse.NTsdominanceinthisareahasalsoincreasedfurther,asitwas recentlygivenownershipofthepubliclyfunded(withgrantaidfromthe GovernmentofIndia)EastWestfibreopticcablethatrunsacrossNepalslength.NT isfurtherontracktoreceiveownershipofanewfibrelinkfromKathmanduto India,alsopubliclyfunded(bytheSouthAsiaSubregionalEconomicCooperation).
Subscripton by Service Provider
1,800
Service Provision Outside of Katmandu Valley (Percent of VDCs w ith at least one PCO by operator)
100% 80%
Subscribers (thousands)
1,600 1,400 1,200 1,000 800
60% 40%
600 400 200 NT Spice UTL STM (rural) 0% Western Central Eastern M idWestern Far-Western 20%
Fixed
Mobile
STM
NT
Ruralcoverageisdefinedbyaminimumrequirementoftwopublicphonebooths (referredtoaspubliccallofficesorPCOs)ineachvillagedevelopmentcenter(VDC),
5NTAJuly2007data;WorldBank,2007:Aidemmoire:NepalTelecommunicationsSectorReform ProjectImplementationSupportMission,Draft;WorldBank2006,ICTataGlance:Nepal. 6AVerySmallApertureTerminal(VSAT),isatwowaysatellitegroundstationwithadishantenna thatissmallerthan3meterscommonlyusedtotransmitnarrowbandbutalsobroadbanddata.
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ofwhichthereare3,915outsideoftheKathmanduValley.However,ittendstobe trackedbytheexistenceofatleastonePCOineachVDC.7Bythismeasure,very basicaccesstotelecommunicationsisonaverage72%,thoughthisvariesacross regions. Tosupportnetworkcoverageinareaswhereservicescannotbeprofitablyprovided, thegovernmenthasestablishedafundfinancedbyacombinationofWorldBank fundingandaRuralTelecommunicationsDevelopmentFund(RTDF)taxonall serviceprovidersof2%.Todate,RTDFstandsatover$13m,supplementedby$10 mofWorldBankfinancing.Therolloutoftelecommunicationsservicesinthe EasternRegionbySTMhasbeensupportedthroughsubsidiesfromRTDF,asisa newlicenseforcoverageintheWesternregion(forwhichbidsarecurrentlyunder consideration).8Betweenacombinationofinvestmentsubsidyandidentificationby operatorsofgoodprofitopportunities,NTAisconfidentthatcompletecoverageof NepalsVDCswithatleasttwoPCOswillbepossible.Themainbarriernowis logistical,intermsofdevelopingandawardinglicensesandthenrollingout service.9 PolicyandInstitutions Nepalofficiallyopeneditssectortocompetitionwithits1992Communications Policy,andestablishedanindependentregulatoryauthority,theNepal TelecommunicationsAuthority(NTA),withthe1997TelecommunicationsAct.1999 sawfurtheropeningofthetelecommunicationssectorwiththelicensingof independentVSAToperators,whichledtoahugeincreaseinISPsbandwidth.The newmillenniumsawthelaunchingofanambitiousbuthighlevelITPolicy. However,greatertelecommunicationssectoropeningcamewiththe2004 TelecommunicationPolicythataimedtofullyopenthesectortocompetition throughopenlicensingandrestructuringNT,theincumbentpublicoperator,and divestingthegovernmentsownership.Sincetheninternationalvoiceservicehas beenfullyopenedtoprivateparticipation,andthegovernmentisintheprocessof legalizingvoiceoverIP(VOIP)serviceprovision. TheleadpolicyinstitutioninNepalforinformationinfrastructureistheMinistryfor InformationandCommunication(MoIC).Itsmandateistodevelopandexpandthe
Onthegroundthiscantranslateintoasmuchasan8hourwalktothenearestPCO.Operatorsalso reportwaittimesofmanyhourstousePCOsincertainVDCs. 8RTDFsubsidiesareawardedusingaleastcostapproach,wherethecontractandsubsidyis competitivelyawardedtoafirmthatdemandsthelowestsubsidytomeettheservicerequirements setbythegovernment. 9InterviewwithNTAchairman,October2007.
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information&communicationsectoruptotherurallevelintheformof infrastructureforsocialandeconomicdevelopmentthroughwidespread participationoftheprivatesectoraswellwithemphasisonthedisseminationof informationandcommunicationtechnology.Itisthemainpolicymakingbodyfor telecommunicationsinfrastructure,aswellaspostalandbroadcastservices. However,theMoICgoesbeyondpolicymaking,mainlythroughother organizationsthatitoverseesandwhichformallyfallunderit.Keyamongtheseis theincumbentpublicoperator,NT(whichischairedbytheMoICSecretary),and NTA(whoseboardmembersareappointedbytheMoIC).

Summary Organizational Chart of the MOIC
MOIC
Departments Information Postal Print
Legal Advisory
Divisions Communications Administration Frequency & Technology Mgt.
MOIC Organizations Nepal Telecommunications Authority Nepal Telecom Gorkhapatra Corporation Radio Broadcasting Development Committee Nepal Television Corporation Rastriya Samachar Samiti (RSS) Film Development Board Press Council
ProgressandOutstandingChallenges ThepicturethatemergesofthetelecommunicationssectorinNepaloverthepast decadeismixed.Mostoftherightpolicymeasureshavebeenputintoplace, beginningasearlyas1992whenitembracedtheideaofcompetitioninthesector. However,thedevelopmentoftheinformationinfrastructuresectorhasbeenheld backbyagapbetweenstatedintentionandactualchangesontheground. Todate,thesectorsgrowthhasbeenhamperedbythemonopolyofapublic provider,NT,shieldedfrommarketpressurestoaggressivelyexpandcoverage, reducecostsandimproveservicequality.ThishasnotbeengoodforNepals consumersofICTservices,bothbusinessesandindividuals. Wherethemarkethasbeenopened,andconsumershavebeenabletoenjoyservice optionsotherthanthoseprovidedbyNT,theresponsehasbeennotable.For example,whenVSATlicensingwasopened,therebyallowingISPstoconnecttothe internetthroughmeansotherthenthoseprovidedbyNT,theresponsefromISPs wasenormous:internationalbandwidthshotupfrom320kbinMay1999toover
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5MBbeforetheendofthesameyear.10Themobiletelecommunicationsmarketis exhibitingsimilarsigns.Itisonlyin2004thatasecondmobileoperatorwaslicensed byNTA.Mobilesubscriptionhasgrownatover240%overthepastyear,compared tofixedlinegrowthofjustunder30%.AndwhilebothNTandSpiceNepal(thenew privateoperator)arefuelingthisgrowth,Spiceaccountsforthemajority,growing almost540%overthepasttwoyears,takingmarketsharefromNTyearonyear.11 Therecordfromademandperspectiveisclear:consumersarevotingwiththeirfeet foranendtoanyformofmonopolyinthetelecommunicationssectorandthe provisionofalternativeserviceproviderstoNTacrossallservices. TheGoNhasformallycommittedtorespondingtothisdemand,andmorethan once.However,solongastheMoICcontinuestositonNTsboard,aconflictof interestexistsbetweenitservingtheroleofafairpolicymakerandbeingtheowner ofthelargestoperatorinthatsector,andonethatisfacingincreasingcompetition fromitsprivaterivals.TheMoICwillfinditdifficulttopushthroughreformthat maybebadforNTasanorganizationbutgoodforthelargerbodyofconsumers(of bothNTsservicesbutalsoothers). ThisconflictofinterestalsoinhibitsNTAfromdoingitsjobofregulatingthesector. ThroughreportingtotheMoIC,NTAistoocloselytiedtooneoperator,NT,over others.ThustheconflictofinterestexperiencedbyMoICspreadstoNTA,which reportstohavecloutoverprivateoperators,butinthecaseofNTcanonly convinceittotaketheactionsthatNTAdeemsnecessary.12Thisinabilityto effectivelyregulatetheincumbentseriouslyunderminesNTAsauthority,which bodesbadlyforthefuturegrowthandstabilityoftheinformationinfrastructure sector. TherelativeweaknessofNTAisleadingtounnecessarytensioninthe telecommunicationssector,particularlywithregardtoestablishingandenforcinga fairinterconnectionregime.13Forexample,oneprivateoperatorclaimedthatthe mostcontentiousproblemisthetendencyoftheincumbentregarding interconnection,whileanothercomplainedthatNTAcanonlysuggest[toNT]; whenithastobeabletodictate.

ITU2000:NepalInternetCountryCaseStudy. NTAdata. 12InterviewwithNTAchairman,October2007. 13Thisregimedeterminesthecoststhatdifferentoperatorspaytoeachotherwhenlinkingtheir respectivenetworks.
10 11
15
Wherethemajorityoftheexistingnetworkwasdevelopedbytheincumbent operatorundermonopolyconditions,asisthecaseinNepal,aninterconnection regimeiscrucialtoallownewoperatorstoenterthemarketandusetheincumbents infrastructure,payingafairusagepriceforthisaccess.Incaseswhereservicesare providedtolargelyruralcommunities(asisthecaseofSTManditsservicesinthe EasternDevelopmentRegion),suchinterconnectionratesmayhavetobedesigned totakeintotheaccountthehigheroperatingcostsoftheruralserviceproviderand differentusagepatternsintheirruralmarkets.14 Asidefrommanagingbusinessrelationshipsbetweenexistingoperators,a transparentandfairinterconnectionregimewillalsoplayakeyroleingoverning theusageofthenewEastWestfibreopticcableandfuturebackboneinfrastructure. NTplanstoprovidefullaccesstothecabletootheroperatorsandISPswithin68 months.Thisisamoveintherightdirection,butismuchoverdue.Progressin providingaccesstothecablehasbeentooslow,andisrightlycauseforcomplaint amongotheroperatorsandISPswho,however,havenorecourse. Solutionstotheseissueslieinacombinationofastrongerregulator,aswellas greatercompetitioninbackboneprovision.Todate,therehasbeenlittleprivate initiativetobuildanalternativenetworktotheincumbents,despiteahighdegree ofdissatisfactionwiththeservicesandpricingofferedbyNT.Thisisanopportunity thatshouldbeexploredfurther,andoneinwhichoperatorshaveexpressedan interest.ThisisalsosomethingwhichNTAisitselflookingtoencourage,andis particularlyinterestedintheprivatesectortakinganownershipstakeintheSASEC fibrelinkfromKathmandutoIndiathatwillbecompleteby2008.Tosupportthis process,NTAisintheprocessofdevelopinganewcategoryoflicenseforanetwork serviceprovider.15 Finally,Nepalimposesamongthehighesttelecommunicationsspecifictaxesinthe region,andisoneofonly16countriesworldwidethatimposetelecommunication specifictaxes.At29%,telecommunicationstaxesinNepalareashighasin Bangladesh(alsoat29%)butmuchmoresothanIndia(at20%).Comparedtoother

Morecallstendtooriginateinurbanareasandterminateinruralareasduetothefactthatrural populationsarecomparativelylesswelloffthantheirurbancounterparts.Thisendsupwithurban operatorstakingalargershareofthecallrevenuethanruraloperators,despitebeingdependenton the(oftenhighercost)networkthatruraloperatorsprovide.Balancingthisrequiresthatagreater shareofthecallrevenuetogototheruralproviderthanwouldbethecaseinacallthatoriginates andterminatesbetweentwooperatorsbothofwhichareinurbanareas. 15InterviewwithNTAchairman,October2007.
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16
regions,telecommunicationstaxesinNepalareamongthehighest(somecountries inEastAfricaalsotaxbetween2030%).16 Suchtaxationlevelsretardtelecommunicationpenetrationand,withpositive correlationbetweentelecommunicationcoverageandGDPgrowth,economic growthingeneral. However,clearlyfewgovernmentsarereluctanttoforfeitsuchimportantrevenue streams,whichinNepalaccountforX%ofthegovernmentrevenues(compared with30%inIndiaand35%inBangladesh).However,whileloweringtaxesmay initiallyleadtoafallingovernmentreceipts,inthemediumtolongtermitwilllead toincreasedrevenuesthroughincreasedpenetration.17Forexample,modelsofthe impactoftaxreductionsinEastAfricashowthat,inthecaseofKenya,a5%cutin telecommunicationsrelatedtaxesmaycauseaninitialdropingovernmentreceipts butleavethecountrywith5%higherreceiptsafter10years(andrevenueneutral within6years).Similarscenariosalsoapplytotheothercountriesintheregion. ProfileofSuccess:SpiceNepal
35%
Indicative Telecommunication-Specific Taxes
SpiceNepalPrivateLtd.,popularly 30% knownunderitsbrandnameMero 25% Mobile(meaningMyMobile),isthe 20% firstprivateGSMmobileoperatorin 15% Nepal.Establishedin2004and 10% commerciallylaunchedinSeptember 5% 2005,ithasexperiencedstrong 0% growth,averagingalmost540% Asia-Pac. M /East Africa L/ Amer. Nepal annuallyoverthepasttwoyears.This hasmeantthatitisincreasinglytaking marketsharefromNT,itsmainrival(thoughSpicestaffprefertoseethisasfilling agapthatNTisunabletoserve).
Taxation percent

DataandanalysisfromWorldBank,2007:AnalysisofTaxationofTelecommunicationservicesin Afghanistan;NepaltaxationdatafromNTA. 17Increasedpenetrationleadstohigherreceiptsthrough:higherrevenuesfromtelecommunication operatorsandotheractorsinthevaluechain,andsoincreaseddirecttaxreceiptsoverthemedium andlongterm;higherimportsofhandsetsandnetworkequipmentandsoreceiptsfromimport duties;increasedbenefitstotheoveralleconomyandsothegeneraltaxbase.
16
17
Spicesmainfocushasbeenonprepaidservice,withpostpaidplansaccountingfor lessthan1%ofitssubscriberbase(comparedto13%forNT,thoughthissharetoois goingdownyearly).Theyhavethereforefocusedoncreatinganeffective distributionsystem,describedbyonecustomerasfollows:Whileonecaneasilyget MeroSIMcardsfromanypaanshoportelephonebooth,onewouldhavetogo throughalotofdramatogetoneNTSIMcard. Spicedefinesitskeycompetitiveadvantageintermsofahighqualitynetwork(if anymajorpartofthenetworkgoesdown,alltechnicalheadsaswellastheCEO automaticallyreceiveanSMSnotification)anditsvalueaddedservices,focused particularlyontheyouthmarket. Spicehasalsoputconsiderableemphasisoninternetworkconnection,withformal roamingrelationshipswithoperatorsin21countries.However,connections betweenSpiceandNTnetworksstillremaindifficult,asaresultofwhatSpices techniciansfeelisaninferiorNTnetwork.Spicestechnicalstaffsaythatthe weaknessofNTsnetworkrelativetoitsownreducesthequalityofthecall experience,butcomplainthatfromtheircustomersperspectivethesourceofthe problemisunknown,andmostprobablysimplyattributedtothem.However,this maynotalwaysbethecase,asthefollowingcustomercommentindicates:Youcan sendSMStoNepalSpicephonesfromItalianmobilesSkypeuserswitha SkypeOutaccountcansendanSMStoaMeromobile.OtherwiseMerostruggles eventosend[anSMS]toNT.18 PotentialAreasforIntervention 1.TelecommunicationsSectorGovernance PerhapsmorethantheotherICTfocusareas,thechangeagendaforadvancingthe informationinfrastructuresectorinNepalisclearest.Mostofthisrevolvesaround completingthereformprocessstartedin1992toestablishacompetitive,fairmarket forcommunicationsinfrastructure,inparticularseparatingNTfromtheMoICand eventuallymovingittoclosertowardsprivatization. ThisshouldbeginwithreconstitutingNTsboard,mostimportantlyremovingthe MoICfromit.Thechairmanshipcouldpasstoanothergovernmentofficial,suchas fromtheMinistryofFinance(MoF),ortoanindependentpersonappointedbythe
NTAdata;interviewwithSpiceNepalstaff,October2007;blogsat http://www.nowpublic.com/nepals_corrupt_telecommunications_sectorand http://prax.wordpress.com/2007/02/12/spicenepalwebsitewwwspicenepalcom/.
18
18
government.However,distancingthedominantincumbentfromthepolicymaking bodyiscrucial. TheGoNandNTwilllikelyrequireadvisoryexpertiseonhowtoreconstituteits board,basedonsimilar,successfulcasesfromotherpartsoftheworld.This advisoryworkcanbeextendedtodevelopingatransitionplantowardsgreater privateparticipationinNTsmanagementandownership. 2.ContinuedLiberalization Followingreconstitutionofitsboard,NTcanmovetowardsgreaterprivate ownership,potentiallybeginningwithaprivatemanagementcontract(aswas recommendedbyanindepthreviewconductedthreeyearsago). However,solongasNTmaintainsitsmonopolyonthebackbone,evenasaprivate entity,theinformationinfrastructuresectorwillbeheldback.Increasingprivate sectorinvestmentinNepalsbackbonewillgreatlyhelpincreasecompetitionand improvethequalityandpriceofaccessenjoyedbytelecommunicationsoperators andISPs. Asagoodfirststepinthisdirection,NTAisgoingtocreateandissueanetwork operatorlicense.Thisshouldhappensoonandbewidelypublicized.Thereisarisk, however,thatthismaynotbesufficienttoensureprivateparticipationinbackbone development.DespiteinterestexpressedbyoperatorsininvestinginNepals backboneinfrastructureasaconsortiawithinterestbeingexpressedby telecommunicationsprovidersandISPsalikenoprivateinitiativehasbeen undertakentodate.Thisislikelytobeaproductofacombinationofbothalackof familiaritywiththeinvestmentopportunitiesthatexist,aswellasissuesrelatedto collectiveactionamongpotentiallyfirms(wherebytheleadfirmwouldincurgreater upfrontbusinessdevelopmentcostsinformingaconsortiaofinvestorsthanfirms thatjoinatalaterdate,therebydeterringthemfromtakingthelead). AddressingtheseissuesmayrequireearlystagesupportbyNTAintermsof publicizinginvestmentopportunitiesandformingalinkagerolebetweenpotential consortiaandinvestmentconsultantswhocandevelopthebusinesscaseforkey infrastructureinvestments.ThiscanpotentiallybeginwiththeSASECfinanced KathmanduIndiafibre,overwhichownershiphasnotasyetbeenestablished. 3.RuralStrategyandRollout Withaverageteledensityat8.84%buteffectiveteledensityat1.71%,thereismuch worktobedoneinexpandingruralinformationinfrastructurecoverage.Yetthe considerablefundsoftheRTDFremainundisbursed.
19
AddressingthiswillrequirethatNTAdevelopsanaggressivescheduletoexpand ruralcoverage,increasingbothgeographiccoverageanditsdepth(movingbeyond onePCOperVDCtoatleasttwo,asspecifiedintheTelecommunicationsPolicy). Thiswillhavetotakeintoaccountindependentplansofoperatorstoproviderural services,aswellpositivetrendsofsomeoperatorsrequiringminimaltonosubsidy forruralcoverage. Thisstrategyshouldbeundertakeninclosecoordinationwith(oraspartof) governmentplanstobuilditsownaccesstoinformationinfrastructure,whichisa majorcomponentofitsegovernmentprogram.Thisisparticularlythecaseshould theGoNdependonprivateoperatorsforitsinformationinfrastructureprovision(as isadvisedbelowthatitshould),asthiswillhavebothcapacityandcost implications.Ontheonehand,thegovernmentislikelytohavelargerbandwidth requirementsthanhastraditionallybeenthecaseinruralNepal,requiringrural infrastructuretoeffectivelycarrybothvoiceanddatatraffic.Ontheotherhand,the governmentwillserveasalargeandconsistentcustomerforoperators,improving therevenuepotentialofruralnetworksandthereforeloweringtheirsubsidy requirements. 4.NTACapacitySupport NThasaleadinNepalstelecommunicationssectorthatitwilllikelymaintainforat leastthenextfewyears.Theabilityofotherserviceproviderstoenterthemarket andserveNepalsbusinessesandindividualswillrequireaclearinterconnection regimetobeestablishedandenforced. AddressingthisfallsfirmlywithinNTAsmandate.Newinterconnectionguidelines callforacostbasedinterconnectiontariffstructure.Fortunately,NTAstaffhave recentlyreceivedtraininginconductingsuchcostassessments.Thisisagoodstart; thenextstepliesinenforcingtheseguidelines,beginningwithalloperatorsformally publishingcostbasedinterconnectionrates(withtechnicalsupport,asnecessary, fromNTA).19Atthesametime,anincrementalpenaltysystemfornoncompliance withinterconnectionregulationshouldbedevelopedandincorporatedintothenew guidelines.20Inaddition,NTAshouldconductareviewofqualityofservice standardsacrosstheindustry,developingminimumstandardswithwhichall operatorsmustcomply.
19NTAmayberequiredtooffertechnicalsupporttooperatorsinthisregard,assomemaybeunable toconductthenecessarycostassessments. 20Currentlythemainsanctionsprescribedintheguidelinesaresuspensionofanoperatorslicense.In thecaseoflargeoperators,thiswillbeverydifficulttoenforceandcanonlybeusedincasesofthe worstinfractions.Interimmeasureswillberequired.
20
CreatinggreaterdistancebetweentheMoICfromNTwillhelpNTAsenforcement efforts.Inaddition,NTAwillrequirestrongleadershipandinternaltechnical capacity,theconfidencetosanctiontelecommunicationsoperators,andencourage growthinmarketsthatareundersupplied(i.e.ruralsupplyandprivate participationinbackbonedevelopment). InitialpointsoffocusforNTAcapacitybuildingare: Interconnection,wherebyNTAstaffproactivelymonitorinterconnection agreementsandrelatedqualityofserviceprovisionacrossnetworks,actively imposingsanctionsonnoncompliantoperators. Ruralrollout,wherebyNTArampsupamoreaggressiveruralaccesseffort,in coordinationwiththegovernmentsowninfrastructuredevelopmentefforts. Encourageprivatebackboneinvestment,wherebyNTAactivelypublicizes investmentopportunitiesandfacilitateslinkagesbetweeninvestorsandfinancial consultants.
ThiswillrequireundertakinganinstitutionalauditofNTA,basedonwhichan institutionalchangeandtrainingprogramcanbedeveloped.Thismayrequire developingatransitionplanwherebyexternalexpertsarebroughtintoNTAto supportdiscreteelementsofitsoperationswhilelocalstaffbuildtheirexperience. 5.TaxationandIncentives Thetaxationregimethatgovernsatelecommunicationssectorcanhavean importantimpactonthesectorsgrowth.Bymanyindications,Nepalstaxesmaybe growthretarding,leadingtoanetlossineconomicbenefitaswellaslongterm taxationrevenue. Abriefstudyofthetaxationregimeandhowitcanbeoptimizedfromacombined sectorgrowthandtaxationrevenueperspectiveshouldbeconducted,basedon whichtaxescanberealigned. EGovernment Background TheGoNanditspartnersareintheearlystagesoflaunchinganambitiouse governmentchangeprogram.Thisbeganin2006withthedevelopmentofane governmentmasterplan(eGMP)bytheKoreaITIndustryPromotionAgency (KIPA)inpartnershipwiththeHighLevelCommissionforInformationTechnology
21
(HLICT).Followingthis,attherequestoftheGoN,theAsianDevelopmentBank (ADB)recentlycompletedaprogramplanthatspecifieshowtoimplementthe largerideasandprogramsembodiedintheeGMP.21Basedonthisdocument,itis expectedthattheGoNcanissuevendorsandprivateserviceprovidersrequestsfor proposalstobeginimplementingtheprogramscorecomponents. Theserecenteffortsbuildonabaseofrecentegovernmenteffortsthatwerebegun withthelaunchoftheICTPolicyin2000.22Forthemostpart,thisresultedin differentgovernmentagenciesbuildingtheirwebpresence:establishingagencyweb sitesthatprimarilyprovidebasicinformationoneachagencysstructureandkey activities.Thewebsitesareprimarilyinformationalandnottransactional,withthe closesttransactionalfunctionalityprovidedbeingtheabilitytodownloadandprint formsrequiredforavarietyofgovernmentservices. Howevertherehavebeensomenoteworthyexceptions,including:
TheSupremeCourtallowsuserstotrackonlinetheprogressoftheircases TheInlandRevenueDepartmentallowsforonlinetaxationfiling TheCottage&SmallIndustryOfficeintheKathmanduDistrictallows businessestoregisteronline,processrenewals,andreceiveonlinecounseling Aneprocurementplatformhasalsobeenestablished;however,itremains largelyunused.
PolicyandInstitutions Thepriorityplacedonegovernmentwasinitiatedinthe2000ITPolicy,which statedthatinformationtechnologyshallbeusedtoassistegovernanceandaimed tocomputerizethesysteminallgovernmentofficesandbuildtheirwebsitesforthe flowofinformation.OverallleadershipfortheITPolicyfallstotheHLICT(which wasestablished3yearsafterthePolicy,in2003),andontheNationalInformation TechnologyCenter(NITC)toimplementspecificinitiatives.BothHLCITandNITC, fallundertheMinistryofScience,EnvironmentandTechnology(MoEST).

TheADBreportisformallycalledTheInformationandCommunicationsTechnology DevelopmentProject:ProgramofModernizationforNepal,butisforthemostpartfocusedonthe publicsectorsuseofICT.ThisprogramusestheeGMPasaframeworkbutdoesnotstrictly adheretoalloftheeGMPsrecommendations. 22Othertechnologieswerealreadyinusebyvariousgovernmentdepartments,whichhadinitially beginintheearly1970swiththeintroductionofthefirstcomputerformanagingcensusdata. However,thiswasthefirstattempttointroducecomprehensivechangeinhowthegovernmentused technology,inparticularwebbasedapplications.
21
22
Todate,itappearsthatHLCIThastakentheleadindefiningtheICTagenda, primarilyintermsofcommissioningreportsandmanagingthedevelopmentofthe ITParkatKavre(moreonthisbelow).ThoughitformallyreportstoMoEST,it appearstohavebeenrunningrelativelyindependentlyfromtheministry.The NITC,supposedlythesecretariatoftheHLCIT,inrealityhaslimitedlinkswiththe HLCITandhasyettoclearlydefineitsownorganizationalrole.Sofar,itsmain activitieshaveinvolvedgeneralITtrainingtogovernmentstaff.23TheneweGMP processandfollowonimplementationplandevelopmenthasbeenledbyHLCIT, withMoESTbecomingincreasinglyinvolvedastheplannearsfinalization.

Summary Organizational Chart of the HLCIT
HLCIT
Planning and Management Information Postal Print
IT Park, Kavre
IT Development and Promotion Telecenters Training E-technology promotion E-government
Committees* Nepali Language in Information Technology Information Technology Standardization Rural Tele-centre Co-ordination Information Technology Awareness Information Technology Education, Training and Research
* Committees added based on information from web site
TheinitialeGMPdevelopedbyKIPAput33projectsinsectorscomprisingG2C, G2B,G2Gandinfrastructure.Itstatedthat:AlltheprojectsarevitalforNepal,but thereisalimitationoftime,budget,humanresourceandcapabilityofimplementing suchprojects.Thus,theprioritywasgivenbyconsideringtheavailabilityof technologies,institutionalreadiness,emergencyhandlingcapacityaswellas environmentalimpact.21priorityprojectswillcostabout$500million.24However, atacostof$500million,thelistoftwentyoneprojectswasalsoconsideredtoo ambitious,andsoKIPAfurthernarrowedthelisttoeightpriorityprojects,the majorityfocusedonbackofficeorG2Gsystems.25

InterviewswithleadershipformHLCITandNITC,October2007. KIPA,2006;EGovernmentMasterPlanConsultingReport. 25Thelistofeightare:groupware,governmentportal,nationalidentification,eeducation, communicationnetwork,enterprisearchitecture,publickeyinfrastructureandanintegrateddata center.
23 24
23
TheADBwasaskedbyMoESTandHLCITtosupportthemintransformingthee GMPintoanactionableimplementationplan.Inaddition,theADBteamwent througharevalidationeffort,makingchangeswherenecessarytotheapproachthat KIPArecommended. BelowisasummaryofthemainareaswheretheADBrecommendsthatthe governmentfocusitefforts.IneachareatheADBhasdevelopedanoutlineofthe systemrequirementsthatitsauthorsfeelfromasufficientlyrobustbasisformoving directlytoselectingimplementationpartnersandsigningcontracts.

Key Pillars of the Proposed ADB E-Government Program
Sustainable Information and Services Network
Broadband Infrastructure Village WiFi Govt intranet Enterprise Architecture Integrated Data Center Groupware
Regulations Village VoIP Rural ISPs Price predation Citizenship regs
Needs based Online Services E-health Education Vital registrations Drivers license E-government etc.
OnesubstantialdeviationintheADBsapproachfromthatoftheeGMPislessofan emphasisonbackofficesystems.Consultationswiththegovernmentindicatedthat theegovernmentprogramwouldhavetobalancethedevelopmentofimportant backofficesystemswithdeliveringapplicationsthatoffertangible,moreimmediate benefitstoNepalscitizenry. ImplementationofthecompleteprojectoutlinedbytheADBwasoriginally projectedtocostalittleover$70million.Later,whenthegovernmentdecidednotto takeontheKoreangovernmentloan,ADBworkedwithMoESTandHLCITto reducethescopeoftheproject(byapproximatelyonehalf),prioritizemain activities,andconfirmfundingsourcesforeach.Itisenvisagedthatthe managementoftheprojectwillbeundertakenbyanewprojectmanagementunit (PMU)establishedinthePrimeMinistersoffice.26Thetablebelowpresentsthe initialandrevisedprogramlistandtheirprojectedcosts.

26
HLCITisalsointhePrimeMinstersoffice.HowthisnewPMUwoulddifferfromHLCITisnot certain.
24
ProgressandOutstandingChallenges Nepalhasmadeagoodstartatbuildingitsegovernmentefforts.Mostlead governmentagencieshaveawebpresence,andsomehavemovedbeyondonline informationprovisiontolimitedonlinetransaction.Nepalisnowatthestagewhere itisreadytomovebeyondsuchpilotstodevelopingacomprehensiveegovernment program.Inthisregarditiswellonitsway:theeGMPhasestablishesstrong foundationsforsuchacomprehensiveegovernmentprogram,andthishassince beenelaboratedbytheADBsupportedimplementationplan. ThoughNepalsexperiencewithegovernmentistooyoungformanysubstantial problemstohaveoccurred,thereisthecaseoftheunsuccessfuleprocurement(ore tendering)initiativethatraisescauseforconcern.Anassessmentoftheinitiative conductedbytheWorldBankfoundthatthebasictechnologyproductwasupto standard,butthattheplatformfounderedduetoalackofsufficientleadership support:Nepalsetenderingsystemhasmuchoftherequiredfunctionality,[but] inorderforittobeginoperating,thepoliciesoperatingrules,templates,leadership, resources,supportandtrainingrequiredforittosucceedstillneedtobespecified
25
andputinplace.27Thesameassessmentthereforepresentsaprogramtorevivethe existingprocurementplatform,butthistimeremedyingmanagementandsupport constraintsbyestablishingaformalpublicprocurementmanagementoffice,adding additionaleprocurementfunctionalityontotheoriginalplatformatalaterdate. Therefore,aplantoreviveapotentiallysuccessfulproductisinplace,andreadyto moveforward.28 Finally,aclearrolefortheprivatesectorintheegovernmentprogramneedstobe developed.ThegovernmentofNepalcanplayacrucialroleinthedevelopmentofa domesticITsectorthroughitsegovernmentexpenditures.Thegovernmentwill needtodefinetowhatdegreeitwilldevelopitsITcapacityinhouseandhowmuch itwilldependonprivateserviceproviderstomeetitsegovernmentneeds. Involvementoftheprivatesectorcanbestructuredtogobeyondinitialsystems developmenttoactualservicedelivery,withthegovernmentoutsourcingthedaily managementanddeliveryofcertainegovernmentservicestotheprivatesector. Thiscruciallyappliestoinformationinfrastructure,wherebythegovernmentcan contractprivatenetworkprovidersforitscommunicationsinfrastructureneeds, guaranteeingtheprivatesectorapredictablesupplyofbusinesswhilealsoreducing duplicationininfrastructureinvestment. However,todatethegovernmentappearstobefocusedondevelopingitsown network.Thiscomponentoftheplannedegovernmentprogramalsoappearsto havegainedthemosttractioningovernmentcircles.Yet,manyimportantquestions remainunanswered.Forexample,whethersuchanetworkwouldbeonlyaccessible togovernmentagenciesoralsoopentothepublicisunknown,thoughtheworking assumptionsofaristhatpartsofitwillbemadeavailableforpublicuse.Yet,should thelatteroccur,thismayleadtounfaircompetitiontoprivatenetworkproviders, creatinganewgovernmentoperatorjustasNTisbeingprivatized. Morethought,therefore,hasyettobegiventosuchinvestment,andinparticular therolethattheprivatesectorcanplayinsupportinggovernmentnetworkaccess. Inmanycases,itislikelythatthegovernmentcoulduseexistingprivatenetworks, therebyreducingtheneedfornewinvestment.

WorldBank,2007;NepalElectronicGovernmentProcurement:ReadinessAssessmentand Roadmap. 28ThereportrecommendsestablishingtheeprocurementsystemunderaplannedPublic ProcurementManagementOfficewhichistofallunderthePrimeMinistersoffice.Itthensuggests thatitislatermovedtoanICTfocusedorganization,suchasNITC.
27
26
Opportunitiesforprivateparticipationgobeyondinfrastructuredevelopment,and canapplytoahostofeservicesthatthegovernmentwilloffer.Thereissubstantial precedentforsuchoutsourcing,suchas: CompanyeregistrationanddocumentationcomplianceservicesinIndia;the MinistryofCompanyAffairsandTATAConsultancyServices) TaxationfilingandmanagementintheUnitedStates;theVirginiaDepartmentof TaxationandCGIAMS,anITconsultingandsystemsintegrationcompany OnlinedeliveryoflandtitlesinIndia;theRevenueDepartmentofKarnataka and3iInfotechwithComatTechnologies.29
However,suchopportunitieswillnotcometothesurfaceunlesstheprivatesectoris consultedandincludedinthegovernmentsdecisionmakingprocess.Asonesenior managerofMercantileCommunications,aleadingITfirm,putit:Wealwayshear aboutegovernmentbutwearenotsurewhatitisgoingtocover.Mercantile recentlyrolledoutaprivatenetworkforover40branchesoftheRastriyaBanijya BankaspartofalargerITimplementationproject.Thegovernmentsfailuretonot drawonfirmslikeMercantileandotherprivateactorswhileshapingitsnewe governmentprogramisalargemissedopportunity,notonlyintermsofbeingable toaccessideasandexpertisebutalsopotentialinvestmentpartners. Finally,privatesectorinvolvementinegovernmentisparticularlyimportantwith regardtorecruitingandstaffing.ItislikelythattheGoNwillfacesubstantial problemsattractingandretainingthenecessarycaliberofITprofessionalsforitse governmentinitiativesoncurrentcivilservantwages.Yet,itisunlikelythatthe GoNwillbeabletodevelopadifferentwagescaleforICTrelatedstaff.However, thegovernmentdoeshavemoreflexibilityincontractingservicestoprivate providers,whowillbeabletopaycompetitivewagesandsoattracttherightcaliber talent. ProfileofSuccess:SupremeCourtCaseTrackingSystem InFebruary2006,theSupremeCourtwentlivewithitsowncustombuiltcase trackingsystem.Thesystemallowsthepublictoviewbasicinformationoncases beingheardbythecourtviaitswebsite,showingeachcasesprogressstatus. Usuallywithinamonthafulltranscriptofthecaseisavailableonline.Forthe partiesinvolvedinthecase,ausernameandpasswordenablesthemtoaccessmore
ExamplesfromWorldBank(Bangladesh),2007:CountryAssessmentsforIdentifyingPotential PublicPrivatePartnershipsineGovernment.
29
27
detailedstatusinformation,whiletheChiefJusticehasamonitorinhischambers withacustomizeddashboardofthekeyinformationherequires. Previously,thesystemwaspurelypaperbased,withlawyershavingtopark themselvesalldayatthecourtsfrom10amto5pm,unsurewhentheircasemay comebeforethebench.Nowtheycanloginfromtheirofficestoreviewtheircases statusandtheprogressoftheonesthatprecedeitonthesameday. ThecurrentsystemcoverstheSupremeCourtandsevendistrictcourts,withtwo appellatecourtsabouttocomeonlineshortly.Thepastthreeyearsofcourtcases havebeenuploadedintothesystem,thoughthisisonly20%ofthetotalthatneeds tobeloadedelectronically.TheplanistohaveallcourtsinNepalonlineby2010. However,noneofthiswasachievedeasily.TheCourtsMISDirector,who developedandimplementedthesystem,says,Whenwestarted,computerliteracy wastotallyzero.Thiscalledfordraconianmeasures.Allstaffweregiven6months inwhichtobecomecomputerliterateorriskbeingtransferred.Whilelimitedcash incentiveswerepaidasencouragement,staffwereexpectedtosignupforinhouse trainingduringtheirlunchbreakorafterofficehours,amountingtobetween715 hoursofstafftime.Staffcomplaintsmadeitintothepress,butseniormanagement stucktotheirpolicy.Nowall300courtstaffarebasicallycomputerliterate,and whilethemaindataentryisundertakenbyofficersofthecourt,itisnotuncommon forjudgestothemselvesupdatetheirdailyrecords. Akeyfactorinthesuccessfulrolloutofthesystemwasconsistent,unwavering supportfromthetop.TheCourtsMISDirectoralsobelievesinacertaindegreeof centralization.Previously,allcourtshadtheirownITdepartments,butnowthat functioniscentralizedandmanagedbyhisteam.Hedoesnotbelievethatthis degreeofcentralizationshouldcarrythroughacrossallgovernmentministries,as theyallhaveneedsthataretoodifferentfromeachotheranduniquetothemselves. Butsomeformofcoordinationandstandardizationfromacentralagencyis required,particularlyintermsofsettingbasicstandardsandguidelinesforsystem interoperability.(Forexample,theSupremeCourtplanstolinkitssystemtothe policedatabase,whichinturnwouldneedtobelinkedtothenationalIDsystem). Asidefromexpandingthecoverageoftheexistingsystemtoothercourts,the CourtsMISDirectorplanstoextenditsfunctionality.TheCourtisdevelopinga librarymanagementsystemforitsrecordsandisplanningonaddingatelephonic interfacetoitsmainsystem.Thiswillallowuserstodialintoreceiveanupdateon theircase,receivevoiceinformationonkeydates,progressstatus,thefinaldecision, andasummaryofthejudgesruling.
28
PotentialAreasforIntervention 1.StrategyImplementationBridgingSupport Todatetheleadershiproleinadvancingtheegovernmentagendahasbeen undertakenbyMoESTandHLCIT.Whilebotharewellpositionedtocontinueto playaleadershiprole,itisunlikelythattheyhavethecapacitytocoordinate implementation.ItisforthisreasonthataPMUisplanned,withconsiderable supportfromADB.Yetdespiterecognitionofacapacitygap,thesesameinstitutions arecurrentlyleadingthefinaldefinitionandscopingofthefutureegovernment program,despitemembersoftheirleadershipreadilyadmittingtonothaving sufficientexperienceinmanyoftheareasthattheegovernmentplancoverswhich israthercommonindevelopingcountries. Decisionmakingwithouttherequiredexpertisecanleadtounnecessaryerrors,and therearealreadysomecasualtiesofthisbeginningtosurface(suchasdevelopinga governmentnetworkinisolationoftheprivatesector).Thefinalstageofstrategy formulationandchoicemakingcanbeamongthemostcrucial,duringwhichthe GoNwouldbenefitfromexpertswiththenecessarytechnicalknowledgeand experienceinareaswherethegovernmentplanstofocus.Thesestaffcanalsoplaya roleinmanagingexternalcommunicationwithregardtotheegovernment program,whichhastodatebeenminimal,particularlywithaneyetoincreasing privatesectorinputandideas.Ifnecessary,theymayneedtoaddfurtherdetailto programsthathavebeenadjustedorrescoped.Intime,theirresponsibilitiescanbe takenonbythePMU. 2.GovernmentNetworkDevelopment TheinformationinfrastructuremarketinNepalisahometosomeofthecountrys mostdynamicandwellknowncompanies.WiththeexceptionofNT,mostarenew andallarefastgrowing.MorenewentrantsareontracktoenterthismarketasNTA issuesnewlicensesandasVOIPislegalized.TheGoNhasanopportunitytonot onlysupportthisburgeoningmarket,butalsobenefitfromit.Asaresultofthese privateproviders,considerableinvestmentinunderwayandextensiveexperienceis alreadyincountry.Incontrast,thegovernmentsinvestmentinitsownnetworksto datehasbeenlimited,andsoitsownexperienceinrunningsuchnetworksis minimal. Insteadofinvestinginbuildingitsownnetworktolinkitsofficesandprovide publicservicestoitscitizens,thegovernmentoughttoconsiderusingexisting privatenetworkswheretheyexist,orpartneringwiththeprivatesectortobuild newoneswheretheydonot.ThisisalsoconsistentwithNepals TelecommunicationsPolicy,whichstatesthat,HisMajestysGovernmentshall keepitsbodiesopentousetheserviceofthevariousserviceprovidersonthebasis
29
ofpriceandquality.Italsofollowsprecedentintheregion,wherethegovernment ofAfghanistan,MongoliaandIndia(bothcentralandstategovernments)relyon privatenetworkoperatorsfortheirinformationinfrastructure. Whilegovernmentrepresentativesappearreceptivetothisidea,theyclaimthatthis isalevelofdetailthatwillbeaddressedlater.However,asthegovernmentis currentlyallocatingitsbudgettovariouscomponentsoftheegovernmentprogram, thisisinfactthebesttimetoensureclarityonhowitcanpartnerwiththeprivate sectorforconnectivelyandwhatthiswillrequireintermsofbothinvestmentcapital andrecurringcosts. Thiswillrequireundertakingarapidscopingofthecoverageandbandwidththat thegovernmentrequiresforitsegovernmentefforts,andthenassessingtowhat degreethiscanbesuppliedbytheprivatesectorandunderwhattypeofcontractual framework.Itislikelythatmuchoftheworkcanbedonebyprivatefirms,whoif broughtintotheprocesssoonwillbeabletoquicklyassesshowtheycanservethe government.ThisassessmentshouldalsobeconductedintandemwiththeGoNs planstoincreaseruraltelecommunicationscoveragethroughuseoftheRTDF. Conductingthisprocesseffectivelywillrequirestafftocoordinateprivatesector consultationsaswellasprovidethegovernmentwithtechnicalsupportinscoping itsrequirements,assessingprivateactorsresponses,andgaugingwhethersubsidies willberequiredinhardtoreachruralareas. 3.PublicPrivatePartnershipDevelopment/EGovernmentOutsourcing EgovernmenteffortscanplayavitalroleinstimulatingthegrowthofalocalIT industry.Thiswillrequirethat: Thegovernmentisproactiveinoutsourcingegovernmentinitiativestothe privatesectorwhereverappropriate Thatprobableresistancetotheideaofprivatesectorinvolvementinthebusiness ofgovernmentismanagedandultimatelyovercome.
Thiswillrequiredevelopinganinternalgovernmentcommunicationcampaign aroundtheconceptofegovernmentoutsourcingbasedonsuccessfulcasestudies fromotherpartsoftheworld.Runningintandemwiththis,andaspartofthe strategicchoicemakingprocess,thegovernmentshouldactivelylookathowitse governmentinitiativescanbeoutsourcedtotheprivatesector,potentiallygoing beyondproductdevelopmenttoincludeservicedelivery,suchastaxationfiling, landtitleaccess,companyregistration,andeprocurement.Again,externalexpertise withspecificexperienceinegovernmentoutsourcingmayberequiredtosteersuch efforts.
30
Clearly,noneofthiscanbedonewithouttheactiveparticipationofthedomesticIT sector.However,fewprivatefirmsinNepalhaveextensiveexperiencewithe governmentdelivery.Therefore,theywilllikewiserequireguidancein understandingtheconceptandtheopportunitiesthatitpotentiallyprovidesfor them.(MoreonthissupportisaddressedbelowaspartoftheITindustrysupport recommendations). 4.eProcurementPlatformRevival Thelimiteduseoftheeprocurementplatformisapity.Italsobodesbadlyforthe planned(andmuchmoreextensive)activitiesthatthegovernmentintendstostart. Theassessmentofeprocurementopportunitiesiscomplete,advisingthatthe existingplatformberelaunched,initiallyunderaplannedPublicProcurement ManagementOfficeunderthePrimeMinistersoffice.Thiscanserveasavaluable demonstrationprojectandlearningprocessforarangeofgovernmentagencies.Itis particularityvaluablebecausetheupfrontinvestmentintermsofbuildingthe technologyhasbeenundertaken,thereforeallowingtheimplementationtofocus moreonchangestobusinessprocesses(arguablyoneofmoreimportantelementsof egovernmentledchange). 5.TBD(Resultofstrategyfinalization) Thechoiceofafinalegovernmentinitiativecanbeundertakenoncethefinalization ofthechangeprogrambeingledbyADBiscomplete.Twooptionsexist: Fillingcoveragegapsinprogramsthathavebeenlimitedingeographicscope Undertakinginitiativesthathavebeenaltogethercut.
Inbothinstances,itislikelythattheapproachandcostingwillhavetobereviewed andadjusted.Fromhere,functionalrequirementscanbedevelopedandrequestsfor proposalscirculated. ITIndustry Background NepalsITindustryhasanestimatedturnoverof$42M.Itsgrowthoverthepastfew yearshasaveragedareasonable8%ayear,betteringthenationalaveragebut lacklusterforacomparativelyyoungbusinesssector.30

30
CANestimates:http://www.can.org.np/SofTech2007/softwaremarket.php;
31
Theindustryisdominatedbyfirmsthatservethelocalmarket.A2004surveyby HLCIToftheITsectorfoundthatfirmsthatfocusonthedomesticeconomytendto focusonhardwaresalesandserviceprovision.Manyaresmall,withannual turnoversintheregionof$37,000.Yetamongthemareanumberofsuccessful ventures,developingsophisticatedproductsforarangeofindustriesfromairlines tothebankingsector.Onefirmdevelopedacomputeraideddesignproductinitially focusedonthelocalcarpetsector,butwhichnowsellsinover15textileproducing countries.However,manyfirmsareincreasinglyfeelingthepinchofinternational competition,astheirclientsareturningtowardscheaperimportedsoftware developedabroad.31 Incomparison,theexportsectorhasestablishedcomparativelymoresuccesses.With ITexportsinregionof$7.2millionandgrowingat20%ayear,theICTproductsand servicesnowrankamongNepalslargerexports(thoughonlyat2%oftotalexports, iftourismiscounted),servingcustomersfromAustraliaandJapan,toSwitzerland andtheUnitedStates.Drivingthisgrowtharefirmsinvolvedinsoftware development,callcenterservices,anddataentry.32OneofNepalsnewestventures, calledIncessantRain,hasrecentlybegunofferingoutsourcedmovieanimation.33 Thesefirmsarealsocomparativelylargerthanonesfocusedonthedomesticmarket: ofthefirmssurveyedbyHLCIT,exportfocusedfirmsformedonly8%ofthetotal respondentgroupbutaccountedforonethirdofthesurveygroupsturnover,with averagefirmsalesofover$223,000sixtimestheaveragedomesticfocusedfirms turnover.34 TheperformanceofNepalsICTexportsisall themoreimpressiveinlightofthefactthat NepalisinaregionwithChinaandIndia, hometoamongtheworldsmostcompetitive hardwareandsoftwareindustriesrespectively. Thesecountriesareclearlyacompetitive threat,intermsofdominatingthedomestic marketwithcheaperimportsandleavingfew profitablenichesininternationalmarketsfor
Industryinterviews,October2007. Combinedexportsfor2006basedonITCdataof$279m;tourismrevenuesfor2006estimatedat $160m(www.gorkhapatra.org.np);ICTexportsin2006extrapolatedfromHLCITdataof$5min 2004ataCAGRof20%. 33HLCIT,2004:DeskandFieldResearchonICTResourcesintheKingdomofNepal,(by MountDigitTechnology)andNepalTimes,Issue371,OctoberNovember2007. 34HLCIT,2004:DeskandFieldResearchonICTResourcesintheKingdomofNepal,(by MountDigitTechnology).
31 32
Top 5 Exports (US$ millions, 2006)

Other, 66 Leather articles, 5 P recio us sto nes, 9 To urism*, 1 60
A pparel, 99
Carpets, 1 06
*To ursim data fro m go rkhapatra.o rg; rest fro m ITC database
32
Nepaltoexploit.However,theyalsoofferopportunities,bothasmarketsforwhich todevelopproductsandbusinesspartnersforpursuinginternationalopportunities. PolicyandInstitutions LeadershipoftheITsectorcomespredominantlyfromaprivatebusiness association,theComputerAssociationofNepal(CAN).CANisanonprofit businessassociationwhosemandateisto: PromotetheuseITinNepal Developcomputerliteracy Supportandprotecttherightsofitsmembers.
OneofCANsflagshipactivitiesistheconveningofanannualITconferenceakey sourceofrevenuefortheorganizationaddedtothisyearbytheholdingofafirst evertradeconference,thatbroughttogethernationalandinternationalsoftware developers/productsundersingleumbrellaforbusinesspromotion,exhibition,and knowledgetransfer.35Inaddition,CANhasalsosupportedoutboundbusiness delegationsparticipationatinternationaltradefairs,andisbeginningtoestablish foreignchapterstobuildlinkageswithnonresidentNepalis(NRNs)andlocal businesses. The2000ITPolicywasaggressiveabouttheprospectsoftheITsector.Itofficially proclaimedittobeaprioritysector,laidouttheregulationsrequiredtosupportthe sectorsgrowth,offeredavarietyofdutyandtaxconcessionsforITfirms,launched anITPark,andplannedtheestablishmentofa$1.5millionventurecapitalfund.The intendedcumulativeresultoftheseandothereffortswastohaveanexportindustry (hardware,servicesandsoftware)of$154millionby2005,whichwouldhavemade itNepalslargestexport,secondonlytotourism. Inaddition,in2004,thegovernmentpassedaCyberLaw(theElectronicTransaction andDigitalSignatureAct),clarifyingthelegalframeworkforconductingofe commerceandegovernment. ProgressandOutstandingChallenges TheITPolicysambitionsfortheITsectorwereprobably,andquitereasonably, caughtupinthedotcomeuphoriaatthetimethatitwaswritten.Againstthese targets,progressseemsinsignificant:theITsectorsexportsby2005wereone thirtiethofwhatthepolicyintended.Underperformanceagainstsuchtargetsis
35
CANwebsite.
33
morelikelytobeaproductofexcessivelyambitioustargetsettingasopposedto poorperformance.Butthishasnotbeenthecaseinallareas. KeyamongtheseistheITParkatKavrewhich,costingover$4m,isamongthe moreexpensiveandhighprofilepublicsupportfunctionsthatthegovernmenthas undertakeninsupportoftheITsector.Theinitiativeitselfiswellconceived. ClusteringanumberofdifferentfirmstogetherinanITParkimprovestheflowof knowledgeandinformationamongthem.Itcreatesopportunitiesformoreintensive andregularinteraction,increasingthe Areas for Improvement of IT Sector chancesofsuccessfulpartnership (based on survey of 317 respondents) 1 20 formationandcollaboration. 1 00 Furthermore,wherepublic 80 60 infrastructureisnotreliable,a 40 businessparkthatensuresaccessto 20 highqualityinfrastructureis 0 particularlyuseful,moresofortheIT sector,whichrequiresfailsafe electricitysupplyandnetwork connectivity. However,theParkremainswithoutanytenants.Itsfirsttenantleftwithinsix months,andnonewapplicationsarebeingacceptedtodate.Amongthetenants complaints,wasalackoffastandreliableenoughbandwidth,unresponsive management,andunreliablephysicalaccess(mainlybecausethehighwayleadingto theparkwasoftenclosedduetosecurityconcerns).Thedistanceoftheparkfrom Kathmanduwasalsohighlightedasanissue;however,thiswasgenerallyfelttobe compensatedforbythesuperiorityoftheworkandnaturalenvironmentofthe Park. AstudybytheWorldBanksinfoDevprogramfoundfourfactorscriticalforsuccess ofITParks:privatemanagementandanchorinvestor;locationoftheParknear airports,largeurbancenters,universities,housingandrecreationalfacilities; qualifiedandskilledmanpower;andavailabilityofangelinvestment,venture capitalandprivateequity36.TheKavreITParkexhibitsfewoftheseelements; however,theycanbeintroduced.Asitstandsnow,theParkpresentsalargemissed opportunitythatcouldberemediedwithouttheneedforsubstantialadditional

36
PriceWaterhouseCoopers,2007(forthcomingpublication):InternationalBestPracticefor EstablishmentofSustainableITParks.
34
resourceoutlays.Thebulkoftheworkhasbeendone,itnowneedstobe completed.37 However,theITParkaloneisnotlikely Areas for Improvement of IT Sector tobeenoughtosecurecontinuedand (based on survey of 317 respondents) 1 20 improvedgrowthfortheITsector.The 1 00 2004surveyshowsthatasidefroman 80 improvedpolicyenvironment,where 60 40 theGoNhasmadesomeprogresssince 20 2004,ITfirmsalsorequiresupportin 0 marketaccess(awarenessbuilding)and marketintelligence(surveys).In general,theindustryfeelsthatits successesareoneoffcasescapturedby afortunatefew,andthatmoreneedsto beknownabouthowtoconsolidateandexpandthem. AsNepalsITsectormatures,itwillneedtobestrategicindecidinghowandwhere tocompeteintheinternationalmarketplace,particularlywithregardtoitstwo neighbors.However,italsohastheadvantageofbeingabletochartitscoursewith littlelegacy.DefininghowNepalsITsectorcancarveoutprofitablenichesinexport marketsandestablishthemeansbywhichtosuccessfullycompeteinthedomestic marketagainstimportscandomuchtoensurethatthesectorcollectivelyexpends itsresourcesinadirectionthatoffersthehighestopportunitiesforsuccess. Thiswillrequireaclearexportstrategy,onethatisbasedonathorough understandingofopportunitiesthatbothdomesticandinternationalmarketshold forNepalsITsector,bothindependentlyandinpartnershipwithcompaniesfrom neighboringcountries.Inparticular,thestrategyshouldfocusontheroleNepalcan playinservingasanalternativeoradditionalbusinessprocessoutsourcing(BPO) destinationtoIndia.Finally,asidefrommarketfocusedsolutions,thestrategy shouldaddressandadvancesolutionstolocalbusinessbarriersfacedbyfirmsin Nepal.Marketinterventionsalonearenotlikelytosucceedunlessupstreambarriers tocompetitivenessarealsoaddressed. Basedonthisstrategy,supportinterventionscanbedeveloped.Itislikelythatthe requiredinterventionswillcoverawiderangeofareas,fromaccesstofinance, throughtooperationsandmarketaccess.Suchsupportmayhavetogodowntoa transactionallevel,forexample,assistingITfirmsinundertakingoftendemanding
37
Industryinterviews.
35
biddingprocessesforinternationalbusiness.Thisexperienceisalsolikelytohave positivespillovereffectsforrespondingtolargelocalcontracts,particularlythose relatedtotheegovernmentprogram.38 ProfileofSuccess:MercantileCommunications MercantileCommunicationsbegansellingtypewritersinNepalinthe1950s.Bythe mid1980sithadbegunhardwaresalesandmaintenance,subsequentlymovinginto software.By1994,ithadlaunchedthatfirstISPinthecountry.MercantilesISPis Nepalssecondlargest,andthefirmdevelopssoftwareforboththedomesticmarket (itrecentlycompletedamultibranchfinancialsoftwareinstallationandnetwork developmentprojectforRastriyaBanijyaBank)andforforeignclients(itisalsopart ofthenewanimationventure,IncessantRain). Mercantileisalsocurrentlyactivelymovingintonetworkdevelopment,buildingon itsexperienceinbuildingprivatenetworksforitsclientsaspartoflargermulti functionprojects.Ithasbeguninvestingintoremoteinternetkiosks,withover20 siteslocatedatarangeofsitessuchascybercafes,schools,healthcentersandhydro electricpowerplants,withplanstoaddanother100sitesoverthenexttwoyears. Alongtheselines,ithasstartedapartnershipwithWinrockInternational,whereby withpartialfinancingfromtheUnitedStatesAgencyforInternationalDevelopment, MercantileandWinrockaredeveloping15ruralICTcenters,withMercantile leadingtheinstallationandconnectivityandWinrockdevelopingthecontent. Mercantilehasrecentlybidforthelicensestoprovidecommunicationsservicesin theWesternandmidWesternregions. Mercantileisanactivefirmandonethatisnotshyofventuringintonewproduct territory.Itispartlyitsabilitytoofferatotalsolution,fromhardwaresupplyand softwaredevelopmenttoinformationinfrastructuredevelopmentandsupport,that definesitscompetitiveposition. However,largeasthefirmis,itisnotlargeenough,particularlywhenitcomesto biddingforgovernmentorpubliccontracts.GoNanddonorprocurementrules requireserviceproviderstohaverevenuethatconsiderablyhigherthanwhat Mercantilesgenerates.ThisobligesMercantiletobidforcontractsinpartnership withlargerforeignfirms,formingjointventuresprimarilytoaddressthisissue
38
Thiswillhelptorespondtoacommonindustryperceptionthatgovernmentcontractsare packagedsuchthatonlyinternationalcorporationscanrealisticallybeexpectedtowin[them] (AsianDevelopmentBank,2007:TheInformationandCommunicationsTechnologyDevelopment Project:ProgramofModernizationforNepal).

36
alone.InthecaseoftheRastriyaBanijyaBankcontract,theywereobligedtopartner withaninternationalfirmdespitethefactthattheywereindependentlywell positionedtoofferalloftheservicesdemanded.Fortheinfrastructurecontractsfor whichtheyhaverecentlybitontheWesternandmidWesternregions,theyhave againbeenobligedtopartnerwithalargeIndiabasedtelecommunications provider,despitethefactthatMercantilewillbealmostfullyresponsiblefor deliveryonthecontract.Thefirmsmanagementfeelsthatthisunnecessarily increasestheircostsofdoingbusiness,forcingthemtoprofitsharewithpartners whobringlittlemorethantheirbalancesheettotheengagement. MercantileislookingtotheGoNforcertainchanges.Atthemostobviouslevel, changesinprocurementguidelinessoastoalignthembetterwithwhatITfirmsin Nepalcanindependentlyrespondto.Theyarealsointerestedinsupportingthe governmentinitsnewegovernmentinitiatives,butarelookingformore informationonwhatthiswillactuallyentail.Finally,Mercantilesmanagersfeelthat thegovernmentcanplayanexpandedroleinprovidingstrategicleadershipand insight,particularlyatasectorallevel.Asoneseniormangerputit:Weneedto knowmoreabouthowtocompeteintheinternationalmarket.ITcanbeabigger revenueearnerthaneventourism.Butthegovernmentshouldtakethelead,lay downplans,andsaythisisthedirection.Thiscanreallyhelptotakethe[IT]sector andthecountryforward.39 PotentialAreasforIntervention 1.LegalandRegulatoryFramework NepalsITindustrywillrequireacomprehensiveandthoroughsetofITrelated regulationsifitistogrowfurther,particularlyifitistofulfillitsambitionof becominganalternativeBPOdestinationtoIndia.Thiswillrequireanunambiguous legalframeworkandequallyreliableenforcementmechanismstoensurethe confidenceoflocalfirmsandforeignpartners,andtheclientsofboth. Recentadvanceshavebeenmade,suchasthepassingofthe2004CyberLaw. Amongotherthings,thelawgiveslegalstatustoelectronictransitions,electronic recordsanddigitalsignatures.Italsomakesanumberofcyberrelatedoffenses illegal,andestablishesacybertribunalandacyberappellatecourt.40

InterviewwithMercantileCommunicationsstaff,October2007. ____,2004:ETransactionActofNepal:AnOrdinanceMadeforProvisionsRelatingtoElectronic Transactions.(Drafttranslation).
39 40
37
However,therehavebeenconcernsthatthelawisnotcomprehensiveenough,and thatenforcementcapacitystillremainsweak,inparticularwithregardtoprotection ofintellectualpropertyrights.41 Addressingthiswillrequireestablishingapublicprivatecommitteethatwillreview thelegalframeworkandidentifybothlegislativeandenforcementcapacitygaps. LeadershipcancomefromCAN,butthegovernmentmustalsobeactivelyinvolved. Thecommitteewillalsorequireassistancefromlegalexpertswhoareabletodraw onbestpracticelegalframeworksfromotherpartsoftheworld. Apublicinformationcampaignaimedatlegislators,judges,attorneys,andindustry membersshouldbeconductedintandemwiththisprocess.Thiswillraisethe profileofkeylegislativeissues,andensureaccesstoawiderrangeofopinions.With thisbase,thenecessarylegislativechangescanbemoreeffectivelypassedintolaw. Inaddition,supportinbuildingjudicialcapacitymayberequired,including ensuringeasyaccesstoalternativedisputeresolutionmechanisms,suchas arbitration. 2.InstitutionalCapacitySupport AstheflagshipinstitutionfortheITindustry,CANshouldplayakeycoordination andimplementationroleinallinterventionsfocusedontheITindustry(withthe exceptionofrevivaloftheITParkwhichmayinsteadfallundertheHLCIT).CAN canleadtheITsectorinupgradingregulation,supportingexportanddomestic marketaccess,providingegovernmentlinkageservices,supportingfirmsin certificationandstandards(suchasISOcertificationorestablishingBPOstandards), creatingNepalsbrandidentity,etc.Throughsuccessfullyundertakingthese activities,CANsvaluepropositiontotheITsectorwillbegreatlyenhanced. However,CANwillhavetobuilditsinternalcapacitybeforeitcanplaythis leadershiprole.Whilemuchoftheheavyliftingfortheaboveinterventionscanbe undertakenbyprofessionalservicesfirmswithexperienceincompetitiveness strategydevelopment,businesslinkage,andthelike,theabilitytomanageand coordinatesuchprojectswillrequireskillsthatCANmaynotcurrentlyhavein house.Furthermore,theremaybecertainservicesthatCANmaywishtodeliver itself,particularlywithregardtobrokerageorlinkageservices,forwhichCANmay requireinitialtechnicalsupportasitsstaffbuildtheirexperienceinnewbusiness
AsiaMedia:http://asiamedia.ucla.edu/article.asp?parentid=14934andITPF,2002:Consultations, Documentation,andAdvocacyRegardingDraftITBillofNepal.
41
38
areas.ThiswillrequireworkingwithCANtodefineitspotentialleadershiprole, andthendevelopabusinessplanthatdefinesitsserviceofferingsandhowits expandedactivitieswillbefinanced. WhileCANislikelytoplayakeyleadershiprolefortheICTsector,theGoNalso hasaroleinsupportingthesectorsgrowth.Therefore,stafffromMoESTshouldbe involvedinmanyofthecapacitybuildinginitiativesofferedtoCAN.Forthis purpose,MoESTmaychosetodevelopaspecificdeskfocusedontheITindustry andsecondstafftoworkatCANonalimitedtimebasis. 3.ITClusterSupport TherearegoodmarketopportunitiesthatNepalsITclusterneedstocapitalizeon, bothexportanddomestic.However,capturingtheadvantagesthattheyofferwill requiresupportintermsofinformationandstrategicinsight,aswellastoaddress businessbarriersfacedbyITfirms. ExportSupport:Asanewbusinesssector,theNepalsITsectorneedstobeableto clearlydefinehowitwillcompeteintheglobalmarket,bothagainstitstwo neighborsandinpartnershipwiththem.TheITindustrywouldbenefitconsiderably fromaclearstrategytoguideitseffortsandinvestmentsinthisarea.Inparticular, NepalneedstofocusontheroleitcanplayinlightoftrendsinIndiatowards establishingITsectorsinsecondtiercitiesandincreasedconstraintsinaccessto humanresourcesfacedbyIndiasBPOindustry. Thestrategyshouldalsodefinekeymarketactivationchannelssoastoensurethat businessescanmovequicklytowardsimplementation,inparticulartakinginto considerationtheroleNRNscanplayinsupportingnewmarketaccess.Theproject canalsoconsiderprovidinginitialmarketaccesssupport,throughsupportingout boundtradefairparticipationandinbounddelegationsofpotentialbusiness partnersandclients. Inadditiontospecifyingmarketopportunities,thestrategywouldalsohighlight specificbusinessbarriersthatexistwithinNepaltogrowingITexports,making concreterecommendationsforchange.Thesemayentailtheneedforcertification andstandards(inparticularwithregardtoBPO),additionallegislationtobuild investorconfidence,ordifferentformsoffinancingmechanismsrequiredtosupport ITfirmstartupandexpansion. DomesticMarketSupport:AstheITsectordefinesnewopportunitiesininternational markets,itcanlikewisefocusonbuildingopportunitiesinthedomesticmarket. DemandforICTinthedomesticmarketismorelatentmanybusinesseshaveto stilldefinehowICTcanbeutilizedtoincreasetheircompetitiveness.Cultivating
39
thisunderstandingcandomuchtostimulatedemandforICTinthedomestic market,tothemutualadvantageITfirmsandtheirclientsalike. Thiswillentailconductingadiagnosticofanumberofhighopportunitysectors (suchasleadingexports,tourism,powersupply,education)anddefiningthetypes ofICTapplicationsthatcanleadtobottomlinegainsforbusinessesinthesesectors. TheprojectcanthenplayasupplydemandlinkageorbrokeragerolebetweenIT firmsthatproviderelevantproductsandtraditionalbusinessesthatarelookingto utilizethem.Inaddition,theprojectmayconsiderthelimiteduseofacostsharing mechanismasademandstimulanttooffsetsomeoftheinitialcostsofpurchasing new,andattimesuntried,ICTservices. OneofthemostimportantdomesticclientsfortheITsectorinNepalwillbethe government,particularlyifthegovernmentproactivelypursuesanegovernment outsourcingapproach.However,whetherthelocalITsectorwillbeabletotake advantageofsuchopportunitiesisquestionable.Manyfirmsaresimplytoosmall, andwould,fromthegovernmentsperspectiveasabuyer,betoohighriska supplier.42Therefore,providinglocalITfirmswithtrainingonhowtoformeffective partnerships(withbothlocalandforeignfirms)andcomplywiththegovernments procurementprocedurescandomuchtoimprovetheirchancesofcapitalizingon thegovernmentseprogram. Thiswillbesimilartothesupplydemandbrokeragethatservestolinktraditional privatefirmswithITservicesproviders,andcanthereforebedevelopedasa componentofit.However,itwillhaveaveryspecificfocusonegovernment. Atthesametime,governmentprocurementproceduresshouldbereviewedto identifypotentiallyoneroussupplierrequirementsthatmaynotbenecessary. 4.ITParkLaunchandManagementSupport TheITParkatKavreisanunderutilizedopportunity.EnsuringthatITfirmscan takeadvantageofitwillnotlikelyrequireconsiderableadditionaleffort.However,a clearlyamanagementbreakdownhasoccurred.
42
Accordingtothe2004survey,theaveragedomesticmarketfocusedITfirmhadanannualturn over$37,000andmanyfacedifficultyincomplyingwithgovernmentbiddingprocedures.Thisisless likelybethecasewiththefewexportorientedfirmsthatservedemandinginternationalclients. However,theyareveryfew(lessthan25accordingtothesamesurvey),whilethebenefitsofthe governmentsexpenditureshouldbeavailabletoawiderbaseoffirms.

40
Fixingthiswillrequireundertakingarapidappraisalofthecurrentbreakdownsoas toaddressflaws.Theremayalsobemorefundamentalinfrastructuralissuestobe addressed.Therefore,beyondresourcesforaninitialassessmentandpotential managerialsupport,capitalmayberequiredforfinalstageinvestment.However, thiswillbekeytoexploitingthesubstantialresourcesthathavealreadybeen invested. MovingKavreforwardtowhereitcanbegintakingintenantswillrequirehiring expertswhohavebuiltand/ormanagedsimilarITparks,whocanrapidlyidentify majorbottlenecksanddevelopaturnaroundplantorelaunchthePark.Should furthercapitalberequired,theyshouldalsoplayaroleinlocatingpotential investors. 5.ICTIncubatorDevelopment Perhapsmorethananyotherbusinesssector,theITsectorrepresentstheideasof entrepreneurshipandindependence.EncouragingthegrowthofITentrepreneurs requiresnotonlyinvestinginthetechnicalskillsofindividuals,butalsosupporting themastheytrytodevelopnewandproductsandservicesandlaunchprofitable businessesaroundthem. SupportingthisprocessthroughanICTfocusedincubatorcanhelptoreducethe risksanduncertaintyfacedbyyoungentrepreneurs,andincreasetheirchancesof businesssuccess. AbusinessplanforamultisectorincubatorinNepalhasalreadybeendevelopedby theITProfessionalForumfortheDepartmentofCottage&SmallIndustry.The incubatoriscurrentlyintheprocessofhiringamanager,afterwhichitisexpectedto launch.43DevelopingabusinessandfinancialplanforanICTspecificincubatorwill berequired.ThisshouldbeconductedinconjunctionwithplanstorevivetheIT ParkatKavre,asthiscanserveasagoodlocationforanICTincubator,providing incubateesopportunitiestolearnfromandpartnerwithestablishedfirms,whilealso providingthemanestablishedbusinessenvironmenttomovetooncetheygraduate fromincubation.44
TheDepartmentofCottage&SmallIndustryfallsundertheMinistryofIndustry,Commerce& Supplies.TheGoNhasrenovatedandequippedapremisesandsetasideanannualbudgetforthe incubator. 44KUhasplanstodevelopamultipurposeincubatorwithinthenextfiveyears.Itslocationnextto theITParkmakeitagoodpotentialpartnerfortheincubator;however,partnershipopportunities withotheruniversitiesshouldalsobedeveloped.
43
41
ICTHumanResources
ICT Tertiary-level Enrollment
Background NepalisalatestarterinICT education.Thefirstsecondaryschool levelcomputercourseswerelaunched inthe1990s,whileKathmandu Universityofferedthefirst undergraduatedegreeincomputer engineeringin1994.
3500 3000 2500 2000 1500 1000 500 0 Purbanchal: 2003 Tribhuvan: 2000 Kathmandu: 1994 Pokhara: 2003 Tot al
No . o f grads by 2004
2004 intake
Today,therearefourdifferent tertiarylevelinstitutionswithfull degreesincomputerscience,includingundergraduate,mastersandPhDlevel courses.Somehavealsodevelopedaffiliationswithinstitutionsfromotherpartsof theworld.Enrollmenthasgrownveryrapidly,withmostofthefouruniversities takinginincreasinglymorestudentsthantheyearbefore.TribhuvanUniversity,for example,admittedalmostthreetimesmorestudentsforICTrelatedcoursesin2004 thanthetotalnumberithadenrolledoverthethreeyearsbeforethat.45 Inaddition,thereareoverathousandprivate Duration of ICT Course Enrollment traininginstitutionsthatofferawidevariety (No. of months, total 39,808 students) >1 2 ofITrelatedcourses,frombasiccomputer 1 1 % literacytomorecomplexsoftware 1 . M S Office 7-1 2 2. Graphics 8% programming.Someofthesearefranchises 3. Web pages . So ftware fromtraininginstitutionsinSingapore,India 1 2. Hardware 3. Netwo rking andtheUnitedKingdom,offering 1 -3 4-6 60% 21 % opportunitiestodofoundationcoursesin Nepalforafewyears(atacomparatively lowercost)tothentransferthecreditstoa partnerinstitutionabroad.Predictably,themajorityoftheseinstitutionsarelocated inKathmandu,thoughnotexclusivelyso. ThereisavarietyofpeoplegettingtrainedinICTforarangeofpurposes.Themost committedareaspiringITprofessionals,enrollingforfulltimeprograms(over12 monthsduration)inICTrelateddisciplinessoastoworkintheITindustry.Ofthis group,theirtopthreefocusareasarehardware,softwareandnetworkengineering.
45
Not e: Dat e indicates start year of courses. Katmandu includes masters and PhD. level enrollment
HLCIT,2004:DeskandFieldResearchonICTResourcesintheKingdomofNepal,by MountDigitTechnology.Itshouldbenotedthat2004wasayearofexceptionalgrowth(potentially excessive),whichwasthenfollowedbycontraction.

42
However,themajorityofstudents,over60%,areenrolledfor13monthcoursesto buildtheirbasiccomputerskills,mainlyintermsoftheuseofbasicMSOffice(or similar)tools,andgraphicandwebdesignapplications.Thesearelikelytobenon ITprofessionalswhoareinsteadlookingtoupgradetheiruseofITtools. Theresultofthiswiderangeoftrainingoptionsfromformaltertiaryeducationto shortcoursesfromprivatetraininginstitutionsisthatfewITfirmscomplainabout thequalityofIThumanresourcesavailableinNepal.Manyfeelthatthequalityof theITgraduatesfromthecountryslearninginstitutionsishigh,withthisactually beingakeysourceofcompetitiveadvantage(evenpride)amongmanyfirms. However,manyfirmsdocomplainaboutalackofpracticalknowledgeamong recentgraduates,highlightinginsufficientworkplaceexposurepriortograduation. Theythereforeadvocategreaterlinkagebetweenlearninginstitutionsandfuture employers.46 PoliciesandInstitutions The2000ITPolicyisrelativelynoncommittalinitsgoalsforICThumanresource development.Itdefinesthelongtermgoalascomputereducationtoallby2010, implementingthismainlythroughofferingcomputereducationinsomepublic secondaryschoolstobesubsequentlymadeacompulsorysubjectinphases. ThepredominantpolicyfocusseemstobeonschoollevelICThumanresource development,aimingmainlytopreparemiddlelevelmanpowerrequiredforthe informationtechnologysector.Thisdoesnotmeanthattertiaryeducationis neglected.ThepolicyalsoaimstosupportlocaluniversitiesinofferingICTrelated courses,butappearstoleanmoretowardsbuildingawiderbaseofICTliterate peopleuponwhichtolaterbuildacadreofITprofessionals.However,itdoesnot explicitlystatethisaspolicy. ResponsibilityforimplementingICThumanresourcedevelopmentisnotexplicit, nordoesitcomeacrossclearlyininformationmaterialsfromtheMinistryof EducationandSports(MoES)orMoEST.However,HLCITdoesspecifythatthegoal ofcomputereducationforallby2010needsrevisionduetononimplementation, thoughitsleadershipadmitstonothavingbeenactiveinthisareadespiteitbeing withinitsmandate.

46
Industryinterviews,October2007.
43
ProgressandOutstandingChallenges AmajorproblemwithICThumanresourcedevelopmentinNepalisthatitdoesnot haveaninstitutionalchampion.Humanresourcedevelopmentdoesnotfeature prominentlyinHLCITslistofpriorities,whileaGooglesearchwithintheMoES websiteonICTbringsuponehit.47 Todate,oneofthemorecelebratedstoriesofICTuseineducationisthatofMahabir Pun,aschoolteacherwhothroughhisowninitiative,hardworkandsupportofwell wishers,hasmanagedtobringcomputersintohisremoteschoolsclassroomsand therestofthecommunity.Mr.PunscasereflectsontheICThumanresourcessector atlarge:goodprogresshasbeenmade,butmostlythroughprivateinitiativeandthe effortsofindividuals,fromteachersanduniversitydeans,totheentrepreneurial ownersofprivatetraininginstitutions. Thisisbynomeansabadthing.However,thislackofinstitutionalownership meansthatNepaldoesnothaveaclearpolicyorstrategyinplacetoguidesuch effortsanddirectpublicspendingtosupportthem.ShouldtheGoNfocuson buildingalargerbaseofsecondaryleveleliteratestudents,therebyallowingfora greaterpoolofpotentialfutureITprofessionals?Ifso,howwillitovercomeissuesof limitedconnectivelyandcomputersinitssecondaryschools?Orshoulditfocus predominantlyontertiarylevelleveleducation,focusingresourcesonasmallpool ofstudents,buttherebyensuringalimitedbutworldclassgroupofIT professionals?Ifso,shoulditdevelopthecapacityofdomestictertiaryeducation institutionsorrelyonneighboringcountryinstitutionsthatalreadyofferhigh quality,costeffectivetertiaryICTeducation? AnsweringthesetypesofquestionsfromtheoutsetisaprerequisiteforNepalto effectivelybuilditsICThumanresourcebase.Notdoingthisleavesthesector withoutsufficientinformationorguidance.ThedeanofKathmanduUniversitysIT departmentcomplainsthat,Sometimeswearelost.Thereisnoinformationon demand.Productdevelopmentisnotsoeasy.Wehavetomangeonourown.That thesectorhasflourisheddespitesuchalackofguidancegivesanindicationof whereitcouldgowithgreaterleadershipandsupport. Inaddition,thoughNepalhasseenconsiderableadvancesinthegrowthofits universityandprofessionaltraininginstitutions,thesubsectorisexhibitingsignsof strain.Areportin2004notedthatgrowthinthecapacityofcollegesthatofferICT
47
TheMoESsmainfocusisonprimaryandsecondaryeducation,whileuniversitiesarelargely independentlygoverned.
44
relatedcoursesisbeginningtoslowdownbecauseoflessnumberofjobsavailable withinthecountry.48ThishighlightstheimportanceofdemandinfuelingtheICT humanresourcessectorNepalrequiresagrowingITsectortoabsorbnewly trainedICTtalent,orrisklosingthistalent(andinvestment)toothercountries.49 Finally,NepalsICThumanresourcessectorisalsoavictimofitsownsuccess,as manyofthepeoplethatithastrainedtakeupemploymentoutsideofNepal.For example,over70%ofstudentsfromInformatics(aprivatetraininginstitutionwith partnershipswithforeignuniversities)endupworkingabroad,while50%of KathmanduUniversitysgraduatesfromtheITdepartmentworkabroad, considerablyhigherthantheuniversitywideaverageof30%. ProfileofSuccess:KathmanduUniversity KathmanduUniversity(KU)wasstartedin1991.Threeyearslateritlaunchedits firstdegreeprogramincomputerengineering.Theuniversitynowoffersarangeof ICTrelateddegrees,atboththebachelorandmasterslevels.Itsgraduatesare consideredamongthebestinNepal,withsomeITfirmsexpressingaclearbiasin favorofKUgraduatesintheirrecruiting.50 KUsreputationandsuccesshavebeenhardwon.Initiallyitsmainproblemwasnot havingfacultywiththenecessaryqualificationstoteachbachelorlevelcourses.It thereforereliedonvisitingFulbrightfacultyfromabroadtofillcapacitygapsasit builtitsinternalbase.WhileKUhasbeensuccessfulinbuildingitsinternalteaching capacity,heretooitfacedconsiderablechallenges,findingthatteachersthatitsent abroadfortrainingseldomreturnedtoNepal,insteadchoosingtostaywherethey hadaccesstobetterlearningandremunerationopportunities.Meanwhile,plansto conductblendedcourses,withthefirstsemesterconductedonKUscampusby visitingfacultywiththesecondconductedbydistancebyfacultyfromtheUnited States,havenotworkedduetoinsufficientbandwidthonKUscampus. Againsttheseodds,KUcontinuestoincreaseitsintake,offernewcourses,and increaseitsresearchcapabilities.Importantly,itistryingnewmeansbywhichto improveitslinkagestoprivatefirms,andwhiletheuniversitydoesnotaimto deliverreadymadefood(itcannot,saystheITdepartmentsdean,astheprivate sectorsneedsaretoovariedandchanging)itdoeswanttoensurethatitputsall
MoIC,2004:SectorOverviewReport. ThegrowthoftheITsectorisgenerallyimportanttoabsorbtheover300,000youngNepalisthat enterthelabourmarketannually.In2003,over6,000peoplejoinedICTrelatedcompanies, accountingfor2%oftotal. 50Industryinterviews,October2007.
48 49
45
therightingredientsinplace.Tothisend,KUactivelyseeksindustryinputintoits curricula,andencouragesITindustryleaderstoteachcoursesattheuniversity. Recently,theITdepartmenthasincorporateda3monthpracticalimmersionintoits degreeprogram,wherebythefinal3monthsofthe4yearundergraduatedegree programisspentinaninternshipwithanITfirm. Todate,thedeanadmitsthattheyneverreallybotheredwhetherourstudents wouldbeconsumedornot,largelyduetohighdemandforITgraduatesinthe Indianmarket,whichcanabsorbanynumberofgraduatesthatKUcanproduce. However,asKUrefinesitscourseofferings,andmoreactivelydevelopsitsmasters programs,itneedsmoreinformationondemandforICThumanresources.This shouldcomethroughacombinationofformalresearch,butalsothroughgreater interactionwiththebusinesssector,saysitsITdepartmentsdean.Inthisregard,the ITParkatKavre,whichislocatednexttoKUscampus,presentsanexcellent opportunityforKU,oneforwhichthedeanisdesperatelywaiting.51 PotentialAreasforIntervention 1.ICTHumanResourcePolicyandStrategy NepalneedstodevelopaclearerunderstandingofwhatitaimstoachieveinICT humanresourcedevelopmentandhowitshouldgoaboutdoingso.Thiswill requireaskingandansweringsomeofthequestionsaroundwhethertofocus resourcesatthesecondaryortertiaryeducation,andtowhatdegreetodevelop trainingexpertisedomesticallyorwhetherrelyonforeigntraininginstitutions. Asastart,moreneedstobeknownaboutthesupplyanddemanddynamicinthe ICThumanresourcesmarkets.ThetrainingofICTrelatedprofessionalsisrelatively newinNepal,withmosttertiarytrainingstartingupfrom2000onwards.After someyearsofexperience,itisnowtimetotakestockofaccomplishmentsachieved andassessgapsthatremain.52Theassessmentshouldalsofocusonpotentialfuture demandforICThumanresources,therebyenablingtraininginstitutionstoalign theirservicestomeetneedsthatarelikelytoariseintheneartomediumterm.In particular,thisshouldfocusondemandthatwillarisefromupcominge governmentactivities,akeysectorgrowthanchorinthenearterm.
51 52
InterviewwithdeanofComputerEngineeringDepartment,October2007. Whilesomequantitativestudieshavebeenconducted(intermsofnumbersofinstitutions,course offerings,numbersofgraduates),nosubstantialqualitativeanalysishasbeendone(intermsofthe qualityoftheeducation,theemployabilityofICTgraduates).

46
Basedonthisunderstanding,aclearpolicyframeworkandstrategyforchangecan bedeveloped.Thestrategyshouldlayoutlimitedareasoffocus,timeboundplans forhowtomakeprogressagainsteachone,andidentifythefinancialresources requiredtodoso. Thestrategywillhavetotakeintoconsiderationrestraintsintermsofcurrent informationinfrastructurecoverageandresourcelimitationsavailableto educationalinstitutions.Atthesametime,itshouldseektocapitalizeonprivate initiatives,mostobviouslyintheeducationsectorbutalso,forexample,inthe informationinfrastructuresector.Itshouldlayoutmeansbywhichtodevelop publicprivatepartnershipswithnetworkserviceprovidersandISPstolinktheir expansionplanswiththoseoftheeducationsectorsICTrelatedobjectives. 2.InstitutionalLeadershipDevelopment TodatethereisnoclearchampionforICThumanresourcedevelopmentinNepal. Nopublicinstitutionexiststocoordinateandsupporttheactivitiesofthevarietyof publicandprivateinstitutionsinvolvedinICTrelatedhumanresource development.Suchachampioniskeytoprovidelearninginstitutionswiththe marketknowledgetheyrequiretoshapetheirprogramsand,importantly,tolink themwithsourcesofdemandsoastoensurethattheirtrainingremainsrelevant. Unliketheotherinstitutionalstrengtheninginitiatives,whichingeneralcanbegin witharapiddiagnosticofanexistinginstitutionandthendevelopaplantofill capacitygaps,thiswillhavetobeginwithidentifyingtherightframeworkforsuch aninstitutionwhetheritshouldbeastandalonebodyorasubgroupwithinan existinginstitution,suchasMoEST,HLCIT,MoESorCAN.However,regardlessof whereitislocated,itshouldembodythebestofpublicprivatepartnership,bringing togetheracademia,privatetraininginstitutions,ITfirms(bothdomesticand international),businessassociations,standardsorganizations,andthegovernment. ThisinstitutionwillplayaleadershiprolefortheICThumanresourcessectorand subsequentinitiativesthatfollowfromthestrategyprocess. 3.ICTHumanResourcesSectorSupportOrganization NepalhasadynamicICTtrainingmarket,evidencedbythecomparativelyhigher (thoughunfortunate)braindrainofICTgraduatesoverotherdisciplines.However, traininginstitutionsarestrugglingtostayontopofthelatestindustrytrendsandto movebeyondofferingdiplomaandbachelorlevelqualifications. Thesectorwouldthereforebenefitfromapublicprivateorganizationfocusedonthe needsoftraininginstitutions,bothuniversityICTdepartmentsandthelarge numberofindependentprivatetraininginstitutions.Suchanorganizationcan
47
provideteachertraininginindustryleadingtechnologies,aswellascertificationand consultancyservicestothelearninginstitutionsthemselves.Theorganization shouldalsohaveaccesstoseedfinancingtorespondtoandsupportindependent initiativesthatNepalsICTtraininginstitutionsplantoundertake,fromfinancing visitingfacultytoimprovingtheirbasicconnectivity. TheICThumanresourcesstrategycandrivemuchoftheinitialfocusofthis organizationsefforts,andthepublicprivateleadershipbodyadvocatedabove(ora subgroupwithinit)mayusefullyserveasitsboardofdirectors.Initiallythis organizationwillhavetobepubliclyfunded,butitshouldbeabletotransitiontoa mixofpublicfunding,financialsupportfromITfirmsandITfoundations,and revenuesgeneratedfromconsultancyandotherservices. Developingtheinitialconceptandbusinessplanforthisorganizationshouldoccur intandemwiththedevelopmentofthelargerICThumanresourcespolicyand strategy. 4.TBD(Resultofstrategyfinalization) ThechoiceofotherICThumanresourceinterventionsshouldcomeoutofthepolicy andstrategydevelopmenteffort.Thiswillentailtakingonakeycomponentofthe humanresourcesdevelopmentprogram,andfinancingitsdevelopmentand successfulrollout. Linkages:DevelopingaCoherentICTTransformationProgram Nepalhasadvanceditseagendainavarietyofareas.Initially,itwasledbygrowth ininformationinfrastructure,byNTandnowmorerecentlynewprivateoperators. Thiswasthenfollowedbythelaunchofanumberofinitiativesfollowingthe2000 ITPolicy,suchasanincreasedgovernmentonlinepresence,theconstructionofthe ITPark,andtheestablishmentofanumberofITfocusedleadershipinstitutions. Nepalseagendaisnowatthepointwhereithastoconsolidatefoundations establishedoverthepastdecade,fillinggapsinreformeffortsandtheinstitutional capacitytoleadthem,whileatthesametimedevelopingnewinitiativesbasedon carefullythoughtoutstrategies. Theinitiativesthatarerecommendedabovecoveramixofcontinuityofpastefforts andthelaunchofnewones.Continuityappliesmosttoinformationinfrastructure, wheresignificantreformhasbeenundertakenoverthepastdecadeandnowneeds tobecompleted.Intheotherfocusareas,wherelimitedinterventionshaveoccurred todate,moreoftheworkwillbenew.Definitionofwhatthisworkwillentailis mostadvancedwithregardtoegovernment,largelyasaresultofeffortsbyKIPA, ADB,HLCITandMoEST.Afinalstageinclarifyingkeyapproaches,particularly
48
withregardtoinfrastructuredevelopmentandprivateparticipation,nowneedsto beembarkedupon. ThesamecannotbesaidfortheITsectorandICThumanresourcedevelopment. Bothoftheseareasrequirefurtherresearchtobeconducted,mostlyaboutthenature ofdemand(forITproductsandservicesbothdomesticallyandinternationally,and forICTskills).Basedonthis,supplyfocusedgrowthstrategiescanbedeveloped, providingthenecessaryinsightfornewprogramsintheseareas. Eachrecommendedinterventioncanbecategorizedaccordingtothetypeofwork thatitwillentail,bothforthosewhichareacontinuationofpreviousefforts,aswell asoneswhichareastartatsomethingcomparativelynew.Theaboveinterventions fallintothreemaincategories: AnalysisandStrategyFormulation.Thisfocusesondevelopingaclearstrategythat outlineswhatneedstobedoneandbywhen,basedoninitialresearchonsupply anddemandconditions.Thestrategiesmustforcechoicesandtradeoffsbasedon resourceavailabilityandconstraints. ThesestrategiescanthenbeintegratedtoformacomprehensivenationalICT strategy,updatingthe2000ITPolicy.Thismeansthatwhileeachindividualstrategy isbeingdeveloped,itwillneedtotakeaccountofotherstrategiesthatareinplaceor inprocess,toensurecomplementarilyandminimizeduplicationbetweenthem.53 InstitutionalCapacityBuilding.Thisfocusesondevelopingthecapacityofsubsector anchorinstitutions,public,privateorahybridofthetwo.Itentailsensuringthat theyhavethepersonnelprofileandresourcesrequiredtoplayakeyleadershipand coordinationrole,initiallyonmanyoftheinitiativesproposedinthisreportand thenonfutureonesthatwillfollow. Theseinstitutionswillideallyembodythebestofpublicprivatecooperationand partnership.FormanyoftheactivitiesthatoccurintheICTrealm,initialguidance andsteeringmaycomefromthepublicsector,butforthemostpartimplementation willbetheresponsibilityoftheprivatesector.Thisappliesacrossallofthefour focusareas,fromexpandingnetworkcoveragetounservedareas,developinge governmentapplications(andideallydeliveringegovernmentservices),ortraining thenextgenerationofICTprofessionals.Leadershipinstitutionsthatareableto effectivelyalignpublicandprivatevisionandensurecoordinationwillcontribute
53
AnationalICTstrategymayalsohavetoincorporateadditionalfocusareasbeyondinformation infrastructure,egovernment,ITsectordevelopment,andICTHumanresourcedevelopment.Itwill likelyincludestrategiesoncommunityusage,andpotentiallysocialapplicationssuchasehealth.

49
greatlytotheefficientuseoftalentandresourcesindevelopingtheICTsectorin Nepal. Finally,becausesomuchoftheseinstitutionsrolewillentailmanaginganumberof projectsandbuildingagreementandconsensusamongavarietyofactors,theywill requirestaffwithstrongmanagementandbusinessexperience.Despitebeing focusedonthedevelopmentoftheICTsector,theyshouldnotbecomprisedofonly technicalorICTtrainedstaffbutalsopersonnelwithstrongbusinessor organizationalmanagementbackgrounds. ProjectImplementation(Operations).Whileaconsiderableamountofworkrequiredto advancetheICTagendainNepalfocusesonlearningmoreaboutdemandand devisingeffectivestrategiestomeetit,thereareareaswherespecificprojectscanbe developedandimplemented.Thesearemostlywhereprojectswerestartedearlier buthavenotbeenconcluded.Inthesecases,theinitiativeswillneedtobeginwith understandingwhyperformancehasnotmetexpectationssoastoensurethatkey bottleneckscanbeaddressedupfront. Somenewerareasforimplementationhavebeenbroadlydefined,suchassupportto theITclusterorestablishinganICThumanresourcessectorsupportorganization. However,detailsofthescopeandscaleoftheinterventionsrequiredarenotfully known,andwillhavetobeclarifiedthroughthedevelopmentofconcretestrategies orbusinessplans. Yetotherareasforprojectimplementationcannotbedefinedatthisjunctureatall, astheydependonthecreationofsectorstrategiesorondecisionstakenbysector leadersaboutwheretofocusfutureeffortandresources. Thetablebelowcategorizestheproposedinitiativesofeachfocusareaaccordingto themaintypeofworkthateachentails.
Information Infrastructure RuralStrategy andRollout Taxationand Incentives EGovernment Government Network Development PublicPrivate Partnership Development/E Government Outsourcing ITIndustry Legaland Regulatory Framework ITClusterSupport* ITParkLaunchand Management Support* ICTIncubator Development* ICTHuman Resources ICTHuman Resource DevelopmentPolicy andStrategy ICTHuman ResourcesSector Support Organization* Analysis&Strategy
50

CapacityBuilding NTACapacity Support Strategy Implementation BridgingSupport CANInstitutional CapacitySupport Institutional Leadership Development
Implementation
Telecommunica tionsSector Governance Continued Liberalization
eProcurement PlatformRevival TBD(Resultof strategy finalization)
ITClusterSupport* ITParkLaunchand Management Support* ICTIncubator Development*
ICTHuman ResourcesSector Support Organization* TBD(Resultof strategy finalization)
*Theseinitiativesbeginwithstrategyorbusinessplanningwork,afterwhich(andbasedonwhich) implementationactivitieswillfollow.
NextSteps Notalloftherecommendedinitiativesneedtobeundertakenimmediately; however,workonsomeneedstostartsoon.Thegovernmentneedstothinknow abouthowbesttodevelopitsICTinfrastructureaccessandwhatroletheprivate sectorshouldplayinthisbeforecommittingsubstantialresourcestothiseffort. FurtherinactionontheITParkinKavrewilllikelytarnishmanyeffortstoadvance theeagenda,thereforerapidlydevelopingaplantoturnitaroundandunlockits benefitsshouldbestartedsoon. Thetablebelowoutlineskeystepsthatneedtobetakentoadvanceeachofthe recommendationsforchangeoutlinedabove,includingsuggestionsforsequencing ofeachofthesteps.Thesequencingattemptstostrikeabalancebetweenwhatneeds tobeactedonsoonwithlimitationsinresourcesavailabletodrivethedifferent changeeffortsforwardandcoordinateacrossthem.
InformationInfrastructure 1.TelecommunicationsSectorGovernance ReconstituteNTboard 2.ContinuedLiberalization ReviveNTprivatizationplan Launchnetworkoperatorlicense Publicizebackboneinvestmentopportunities 3.RuralStrategyandRollout Developruralrolloutplan Coordinatewithegovernmentnetworkrollout 4.NTACapacitySupport Conductinstitutionalaudit Immediate Nearterm 51 Mediumterm

UndertakeNTAmentoring/training 5.TaxationandIncentives Conductanalysisoftaxationregime Undertaketaxrationalization EGovernment 1.StrategyImplementationBridgingSupport Definesupportroleandrecruitadvisorystaff Rescopekeyprogramsasnecessary 2.GovernmentNetworkDevelopment Scopegovernmentinfrastructureneeds Conductgapassessment Undertakeprivateconsultations DevelopjointPPinvestmentplan 3.PublicPrivatePartnershipDevelopment/EGovernment Outsourcing Undertakeprivateconsultations Scopeareasforprivateparticipation/outsourcing Publicizeopportunities 4.eProcurementPlatformRevival UndertakePPconsultations Securefinancing Launchprogram 5.TBD(Resultofstrategyfinalization) UndertakePPconsultations Selectinitiative Finalizescope Developfunctionalrequirements IssueRFPandcontract ITIndustry 1.LegalandRegulatoryFramework Conductlegislativeandregulatoryassessment Conveneworkgroup
52
Undertakeoutreachcampaign
Enactlegislativechanges 2.CANInstitutionalCapacitySupport DefineCANsleadershiprole Developbusinessplan 3.ITClusterSupport ExportSupport Developexportstrategy Facilitatechannelactivation Addressdomesticbusinessbarriers DomesticMarketSupport: Establishegovernmentcontractsupporthub Providetrainingonpartnershipformation ReviewgovernmentITprocurementguidelines Conductdomesticmarketanalysis ConductawarenessraisingofICTapplicability Developvoucherprogram 4.ITParkLaunchandManagementSupport

Developturnaroundplan Secureadditionalinvestment(ifnecessary) 5.ICTIncubatorDevelopment ConductPPconsultation Developbusinessplan Securefinancing ICTHumanResources 1.ICTHumanResourceDevelopmentPolicyandStrategy Conductsupplydemandassessment ConductPPconsultation DevelopICTHRpolicy DevelopICTHRstrategy 2.InstitutionalLeadershipDevelopment Conductinstitutionalassessment Confirmleadinstitution Developoperatingplan 3.ICTHumanResourcesSectorSupportOrganization Developconcept Developbusinessplan Developgrantfacility Launch 4.TBD(Resultofstrategyfinalization) UndertakePPconsultations Defineintervention
53
References ADB,2006:InceptionReport:PreparingtheInformationandCommunications Technology(ICT)DevelopmentProject. ADB,2007:Nepal:EmpoweringRuralAreasthroughCommunityECenters. ADB,2007:PreparingtheInformationandCommunicationsTechnology DevelopmentProject:AProgramofModernizationforNepal. GoN,2004:ETransactionActofNepal. GoN,2004:TelecommunicationPolicy,2060(2004). HLCIT,2004:AfactbookonInformationandCommunicationsTechnologysector ofNepal. HLCIT,2004:DeskandFieldResearchonICTResourcesintheKingdomof Nepal. ITPF,2002:Consultations,Documentation,andAdvocacyRegardingDraftITBill ofNepal. ITPF:TheFrameworkofeGovernanceRoadmap. ITU,2000:NepalCountryCaseStudy. KIPA,2006:eGovernmentMasterPlanConsultingReport MoIC,2004:SectorOverviewReportforStudyonIncreasingICTAccessinRural andPeriurbanAreasofNepal. NTA,August2007:ManagementInformationSystem. NTA,October2006:ManagementInformationSystem. UNESCONepal:ICTUseinEducation. WorldBank,2007:CountryAssessmentsforIdentifyingPotentialPublicPrivate PartnershipsineGovernment. WorldBank,2007:DevelopmentandInnovationofICTinNepal. WorldBank,2007:GovernmentofNepal,ElectronicGovernmentProcurement: Roadmap.
54
WorldBank,March2007:AideMemoire:NepalTelecommunicationsSector ReformProject. WorldBank,November2007:ProjectAppraisalDocumentMexicoInformation TechnologyIndustryDevelopmentProject. WorldBank,October2006:AideMemoire:NepalTelecommunicationsSector ReformProject. ____,2004:ETransactionActofNepal:AnOrdinanceMadeforProvisionsRelating toElectronicTransactions.(Drafttranslation).
55
AnnexI:ListofInterviewees FieldresearchandconsultationsforthisreportwereconductedinOctober November,2007.Belowisalistofpeopleinterviewedbytheprojectteam.

FirstName Madan Manohar Saroj Prashant Bunty Bhola Biplav Amod Kabindra Iswar Laxman Purushottam RameshworPrasad ShankarPrasad Subarna Sugat Dinesh Madhu Sunil Dipeve NP LastName Pariyar Bhattarai Devkota Shrestha Agarwal Thapa ManSingh Rana Jonchhe Thapa Mainali Ghimire Khanal Koirala Shakya Kansakar Sharma Pradhan Jakibanja Timalsena Mokhariwale Company HLCIT HLCIT HLCIT Informatics Javra KathmanduUniversity MandalaSystemPvt.Ltd/CAN MercantileComm.Pvt.Ltd MercantileOfficeSystems MoEST MoEST MoEST MoF MoIC NationalInfoTech.Center NepalTelecom NepalTelecommunications SpiceNepalPvt.Ltd STMTelecomSancharLtd. SupremeCourt UnitedTelecomLtd Title MemberSecretary FulltimeMember ViceChairman DepCentreMgr AssociateProfeesor MD SeniorEx.Engineer SeniorManager JointSecretary JointSecretary UnderSecretary Secretary Secretary ExecutiveDirector CEO Chairman Dp.ChiefTech.Off. CountryManager MISDirector CEO
56
AnnexII:KeyLawsandRegulations CyberLaw,2061(2004) TelecommunicationPolicy,2060(2004) LongTermPolicyofInformationandCommunicationSector,2059(2002) NepalTelecommunicationAuthoritysRegulation,2059(2002) ITPolicy,2057(2000) ConsumerProtectionRegulation,2056(1999) TelecommunicationRegulation,2054(1997) ConsumerProtectionAct,2054(1997) TelecommunicationsAct,2053(1997) NationalBroadcastingRegulation,2052(1995) NationalBroadcastingAct,2049(1992) RadioCommunication(License)Regulation,2049(1992) NationalCommunicationPolicy,2049(1992) TelecommunicationCorporationAct,2028(1971) RadioAct,2014(1957)
57
AnnexIII:ListofAssessmentsandAnalyses InformationInfrastructure StudytoreconstituteNTboard AssessmentandupdateofNTprivatizationplan Ruralrolloutplan NTAinstitutionalaudit Analysisoftaxationregime
EGovernment Assessgovernmentinfrastructureneedsandsupplyoptions Assessareasforprivateparticipation/outsourcing ITIndustry Legislativeandregulatoryassessment CANbusinessplan
ITindustryexportstrategy DomesticICTmarketanalysis ITPark(Kavre)turnaroundplan ICTincubatorbusinessplan
ICTHumanResources Supplydemandassessment ICTHRpolicyandstrategy Institutionalleadershipassessment
58
AnnexIV:SampleICTInitiativesinNepal
Source:ADB,May2007:Nepal:EmpoweringRuralAreasthroughCommunityECenters,byMahesh PrasadAdhikari. Funding/ ExecutingAgency ADB Project Period 2006 Implementing Agency HLCIT
ADB/UNESCAP APT COPPADES ENRD/NWP HLCIT ICIMOD
20062008 2004 2001 2004 2004 19972000
MOIC SECEN&others Schools ENRD/NWP HLCIT,others
ProjectObjective Implementationplanforegovernment project PartofSASECprojectwithIndia, Bangladesh&Bhutan.Countryspecific objectiveincludesreductionofpoverty, empowercommunities,andimprovethe qualityoflifeinruralareasthrough telecenters. Preparatorystudytoestablishing telecenters Spreadingofcomputerliteracy Introduceeeducation&emedicinein participatingschools&communities Reducepovertyandempower communitiesthroughtelecenters Networkingofresearchers,development administrators,practitioners,policy makersetc. Internationalnetworkingthrough ENRAP;developmentofNepalilanguage contentandapplications PreparationofeGovernmentMasterPlan Reducepovertyandempower communitiesthroughtelecenters Egovernance Reducepovertyandempower communitiesthroughtelecenters Knowledgenetworkinganddevelopment oflocalcontent Introducetelecentersatcommunity libraries Introducetelecentersatresourcecenters Reducepovertyandempower communitiesthroughtelecenters Establishruralurbanlinkages,reduce povertyandimprovequalityoflife Reducepovertyandempower communitiesthroughtelecenters
IDRC/ICIMOD
19972000
NepalNet VariousNational agencies&local institutions NITC FITNepal
IDRC/UNDP KIPA KOICA/NITC MLD NITC OWSA READNepal SAPNepal UNDP/ICT4D UNDP/RUPP
2002 2005 2007
DDCs/ Continuing Municipalities 2004 Various dates 2004 2003 20022004 2002 NITC,others OKNNepal& others READNepal SAPNepal MOST RUPP Community Multimedia Centers
UNESCO
20032005

Increasepasspercentageofschool students Plansonestablishingcommunication facilitiesinruralareas Telecommunicationssectorreformand ruralaccess
UNESCO USAID/WINROCK WorldBank
2006 N.A. 2002
CMC Mercantile NTA
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Progress and Challenges of ICT Development in Nepal

Strategy Implementation BridgingSupport

Institutional Leadership Development

Telecommunica tionsSector Governance Continued Liberalization

eProcurement PlatformRevival TBD(Resultof strategy finalization)

ITClusterSupport* ITParkLaunchand Management Support* ICTIncubator Development*

ICTHuman ResourcesSector Support Organization* TBD(Resultof strategy finalization)

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

MoES MoEST MoIC NITC NRNs NT

Progress and Challenges of ICT Development in Nepal

PMU RTDF SASEC STM UT

ProjectManagementUnit RuralTelecommunicationsDevelopmentFund SouthAsiaSubregionalEconomicCooperation STMTelecomSanchar UnitedTelecom VillageDevelopmentCenter VoiceOverInternetProtocol VerySmallApertureTerminal

VDC VOIP VSAT

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Important other sources of demand

E-Government as a demand anchor

Progress and Challenges of ICT Development in Nepal

Inapolicynoteondeployingegovernmentprograms,theWorldBanknotesthat:Governments shouldpromotestrategiesthatpromoteICTinfrastructureasaprerequisitetoegovernment:anI beforeEstrategy.(R.SchwareandA.Deane,2003:DeployingEgovernmentPrograms).

Progress and Challenges of ICT Development in Nepal

1,600 1,400 1,200 1,000 800

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Departments Information Postal Print

Divisions Communications Administration Frequency & Technology Mgt.

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Indicative Telecommunication-Specific Taxes

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Planning and Management Information Postal Print

IT Development and Promotion Telecenters Training E-technology promotion E-government

* Committees added based on information from web site

Progress and Challenges of ICT Development in Nepal

Regulations Village VoIP Rural ISPs Price predation Citizenship regs

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Top 5 Exports (US$ millions, 2006)

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Thiswillhelptorespondtoacommonindustryperceptionthatgovernmentcontractsare packagedsuchthatonlyinternationalcorporationscanrealisticallybeexpectedtowin[them] (AsianDevelopmentBank,2007:TheInformationandCommunicationsTechnologyDevelopment Project:ProgramofModernizationforNepal).

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal

Progress and Challenges of ICT Development in Nepal