Industrialists switch to trading due to labour, power problems

BIRATNAGAR, MAY 10 -

Perennial labour problems, strikes and increased load-shedding have forced industrialists in the Sunsari-Morang Industrial corridor to shift to trading from manufacturing. Fewer risks and higher profits in trading is the major reason why industrialists have been giving up manufacturing for the last couple of years.

It is ironic that industrialists have been switching from industry to trading at a time when the government has announced 2012-13 as Investment Year to increase domestic and foreign investment. The Investment Year campaign also aims to strengthen the country’s economy by increasing investment in production and generating more employment.

But Investment Year does not mean much to industrialists who have been facing multiple problems. The Golchha Organization is engaged in trading in a number of products like motor vehicles, television sets, mobile phones and electronic and home appliances.

Other industrial houses like the KL Dugad, Goyal, Mundada, Murarka, Bohara, Sarada, Bishal and Rathi groups are apparently putting their investment in the trading sector.

Industrialists like Tara Chand Khetan, Nabin Rijal, Mahesh Jaju and Moti Dugad have accorded priority to trading instead of production-oriented industries. They said that the trading sector had swelled by more than 25 percent in recent times.

Tulsi Ram Agrawal, vice-chairman of the Bishal Group, said that due to political instability, load-shedding and labour problems, the investment environment is deteriorating day by day. He added that industrialists were being attracted to trading as the risks are less. Besides, the energy crisis is likely to last for the foreseeable future; and without an adequate power supply, industrialists have no choice but to put their money in trading. “The energy crisis has aggravated the situation,” said Rajendra Raut, vice-president of the Eastern Region Chambers of Commerce and Industry.     

When the production sector expands, it creates jobs and helps replace imports. In addition, foreign exchange earnings increase. In contrast, trading increases the country’s dependency on imports and slows down the economy.

Meanwhile, traders have been increasing their investment in trading to cater to rising demand for imports as people are increasingly becoming attracted to luxury goods. “Trading has comparatively less risks and it can generate more profits,” they said. Nowadays, reputed industrialists are seen increasing their investment in trading in mobile sets, cars, motorcycles, home appliances and alcoholic beverages. Most of them have obtained authorised dealerships in Nepal.

Source: The Kathmandu Post