GMR’s Exit From Nepal: How Not To Read It

GMR Group is reportedly selling all its assets in Nepal and exiting the country. GMR is a big infrastructures company, which had investments in some hydropower projects in Nepal. It has involvements in multiple big infrastructure projects in India and outside.

Initial comments from Nepal’s social media seem to portray this as boding very bad for Nepal’s economy. They are claiming that GMR is quitting because of Nepal’s failure in providing an investment-friendly climate for foreign investors. I believe that this is premature and highly speculative. One should be careful about how uninformed interpretation of news like this can help spread the image of Nepal as an investor-unfriendly country.

Nepal’s hydro projects are not the only investments GMR is pulling out of. It is also selling its other assets in order to raise revenue to reduce its debt. Some days ago, it decided to sell its assets in Turkey’s Istanbul airport. It has also reportedly wanted to sell some of its road projects in India. It is an investment move by the company (divestment), to recover debt and to concentrate efforts in its core investments.

If GMR were pulling solely because of the investment climate in Nepal, the same could be said about Turkey and India. Certainly, all three countries are not investor unfriendly at the same time.

In fact, because of the new political environment in Nepal after the elections, GMR might have realized that investment here would be attractive. Nobody would want to buy assets that are not attractive at a prime price. GMR might be willing to sell Nepal assets precisely because it would be profitable at this point to sell it. There have been news of some parties expressing interest to buy these assets. These further indicate that investors still see good opportunity in Nepal.

It is true that the business climate in Nepal is not good. In the past, GMR had received multiple threats from the Maoist parties and its local cadres in construction sites. The ruling party of that time allegedly asked for Rs 260 million from the company. While the party was in the streets fighting for “citizen supremacy,” it also threatened the company because it was a member of the “foreign imperialist” class. This was not the only time the company faced troubles in Nepal. It’s buildings were put on fire, and later the breakaway faction of the Maoist party continued to harass the company. Please read this editorial and a related news for some more context on the matter. Cadres and youth wings of other parties exhibit similar behavior to investors and entrepreneurs in many areas of the country. There is much to be done to improve Nepal’s business and investment environment.

But naïve speculation and premature conclusions regarding news like this can do more harm than good. GMR’s decision to quit Nepal may be based solely on business reasons and not for the difficulties it faced in Nepal. To describe it as otherwise, without enough information would only help spread the image of Nepal as a bad place for business. In the possibility of a renewed economic and democratic revival in the country after the recent elections, such mistakes would cost us more in terms of image building in the future.


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