ICT, SMEs and Business Development in the Nepalese Context

1
ICT, SMEs and Business Development in the
Nepalese Context

• Suresh K. Regmi
• IPP, IT Professional Forum(ITPF)
• MD, Professional Computer System (PCS)

2
Major Players of SME Development in Nepal

• Government of Nepal
• The Department of Cottage and Small Industry
  (DoCSI)
• The Cottage and Small Industry Development Board
  (CSIDB)
• The Cottage and Small Industry Training Centre
  (CSITC)
• The Industrial Enterprise Development Institute
  (IEDI)
• Institute Of Environmental Management (IEM)
• Formalized skill training started since B.S. 1996
  (67 years back)
• Present organization structure of DoCSI since
  B.S. 2049 (17 years back)

3
Major Players of SME Development in Nepal

• NGOs
• GTZ, Private Sector Promotion Project
• Helvetas, Elam Project
• Small and Micro Enterprise Development Project
  (SMEDP)/FNCCI
• SNV/Private Sector Development Plan
• Micro Enterprise Development Program (MEDEP)/UNDP
• The Asia Foundation
• And many more

4
Major Players of SME Development in Nepal

• Private Sector
• Federation of Chamber of Commerce and Industry
  (FNCCI)
• Federation of Cottage and Small Industry (FNCSI)
• Nepal Chamber of Commerce (NCC)
• Women Entrepreneurs Association of Nepal (WEAN)
• Federation of Women Entrepreneurs Association of
  Nepal (FWEAN)
• Centre for Business Development (CEBUD)
• And many more

5
Major Players of ICT Development in Nepal

• GON
• Ministry of Environment, Science Technology
  (MOEST)
• High Level Commission Information Technology
  (HLCIT)
• National IT Center (NITC)
• Ministry of Information Communication (MOIC)
• Nepal Telecommunication Authority (NTA)
• Universities (TU, KU, PuU,PoU)
• NGOs
• Computer Association of Nepal (CAN)
• IT Professional Forum (ITPF)
• ISP Association of Nepal (ISPAN)
• Forum for Information Technology (FIT)
• Madan Pustakalaya and many more

6
Factors for SME Development using ICT in Nepal

• Business Environment in Nepal
• Government are more transparent than private
  sector
• Peace situation needs improvement
• Open and competitive business framework
• Independent rule of law for all firms exists but
  lacks implementation equally
• Multiple registrations for setting up businesses
  required
• Not so easy dissolution of businesses
• Few foreign investments

7

Factors for SME Development using ICT in Nepal

• Network Infrastructure in Nepal
• Service Penetration Rate (in )
• Total 5.16
• Fixed Telephone 2.24
• Cellular Service 2.92
• Internet (subscribers only) 0.17
• National Network Bandwidth 1762 Mbps
• Nepali websites hosted in Nepal 742
• International Bandwidth
• uplink 17.90 Mbps
• downlink 51.71 Mbps

Source (NTA data as of 16 July, 2006 )
8
E-readiness Assessment of Nepal

• Computers and Internet form the basis of
  communication and work in most offices
• Online local content is inadequate
• Slow Internet connections and limited bandwidth
  form the major barriers of the growth of Internet
  in the organizations

Source E-readiness Assessment Report, The Nepal
Gateway Project, January 2004
9
Factors for SME Development using ICT in Nepal

• Trust infrastructure
• Trust, security, privacy and consumer protection
  is still weak.
• Digital products and information services
• Government large organizations have static
  websites
• Few local content availability
• Skill upgrading
• Literacy rate still low
• Lack of ICT skills in rural areas among middle
  to old age personnel
• Intangible investments and assets
• People still hesitant to invest in skills,
  organization, software, networks etc.

10
Other Enabling Factors for SME Development using
ICT in Nepal

• Information
• Although SMEs are beginning to understand the
  role of ICT, no government support is available
  for making the right choice.
• Government on-line
• Most of the ministries departments of GON have
  static websites
• E-gov project is in the pipeline
• Competition
• Use of ICT introduces more competition. SMEs need
  to be made aware about it.
• Intellectual property
• Laws are in place but implementation has been a
  problem

11
Some Survey Results
Distribution of SMEs/MEs by Study Area
 
Source A Study on Environment and Need
Assessment of Business Incubation in Nepal,
ITPF, 2005
12
Some Survey Results

• Major Problems
• Obtaining adequate financial support -37
• Difficulties in finding competent human resource
  -21
• Marketing problem -21
• Technical Problem -15
• Use Computer, Internet - 6

Source A Study on Environment and Need
Assessment of Business Incubation in Nepal,
ITPF, 2005
13
Some Survey Results
Source A Study on Environment and Need
Assessment of Business Incubation in Nepal,
ITPF, 2005
14
Some ICT Initiatives for SMEs in Nepal

• CAN INFOTECH Exhibitions
• IT Park, Kavre
• Online Service in Kathmandu Office of Cottage
  Small Industry (Registration, Renewals etc.)
• Inland Revenue Department (e-PAN, e-TDS, e-Return
  initiatives)
• Internet Banking SMS Banking

15
www.incubation.org.np
16
www.bolpatra.gov.np- A Public Procurement Portal
17
www.b2b.com.np- A B2B E-commerce Service
18
www.tradepointkathmandu.com- An initiative for
trade information
19
www.bizmantra.org.np SME toolkit support
20
www.muncha.com An e-commerce portal of Nepal
21
www.thamel.com- Another e-commerce portal of
Nepal
22
www.nepalmoneytransfer.comMoney Transfer Business
23
www.myshopasia.com A Nepalese exporter e-com
site
24
www.namastecarpet.com - An online carpet exporter
25
General Observations on ICT, SMEs and Business
Development in Nepal

• SMEs starting to use ICTs
• Use of Accounting, Inventory, Payroll software,
• Email Internet for business Development
• Some have started using ERP solutions as well
• SMEs more ICT friendly in Nepal
• Export oriented
• Travel tours related
• Sporadic interventions from government and INGOs
  Lack of continued support
• No specific organization to provide ICT support
  for SMEs in Nepal

26
Recommendations

• Electronic Transactions Digital Certifications
  Act needs to be effectively implemented asap
• E-payment laws and infrastructure needs to be
  established
• Establish fiber-optic cable link to the world via
  both India and China to make the cost of larger
  bandwidth of data communication can be cheaper
• Liberalize network infrastructure so that
  extensive use of broadband communication can be
  made available at a cheaper price
• Business Incubation Center, Kathmandu needs to be
  brought in operation asap and similar incubation
  centers needs to be planned for at least in each
  development region
• www.bolpatra.gov.np needs effective
  implementation by GON

27
Recommendations

• Organizations like DoCSI, CSIDB, CSITC, IEDI
  should work hand in hand with NITC private
  sector IT companies/projects in bringing special
  awareness for SMEs in making use of ICT
• Strengthen the infrastructure for trust, security
  (including spam and viruses), privacy and
  consumer protection
• E-governance project should be effectively
  implemented asap
• Provide special rebates in income tax for SMEs
  introducing ICT for their business development

28
References

• www.dcsi.gov.np
• www.itpfnepal.org
• www.nepalchamber.org
• www.fncci.org
• Environment and Need Assessment Survey for
  Business Incubation in Nepal, ITPF, 2005
• ICT, E-Business and SMEs, OECD, 2004

29
Thank You

• Contact
• skregmi_at_pcs.com.np
• Professional Computer System P. Ltd.
• http//www.pcs.com.np
• Phone [phone]