Ambassador Carmona visits Kathmandu University School of Management (KUSOM)
Ambassadar Carmona visited Kathmandu University School of Management (KUSOM) and held a discussion with the Dean of KUSOM, Prof Subas KC, and also gave a talk to the members of the faculty and students.
===Speech at Kathmandu University School of Management (KUSOM)===
Kathmandu, Aug 16th, 2016
Dear Professor Subas KC
Dear members of faculty
It is a great honour for me to be at KUSOM today. I took up office as the Ambassador of France in February of this year so I am relatively new in Nepal as it is also my first time here.
As an Ambassador, my main priorities are focused in maintaining diplomatic and political relationship, developing French language and cultural presence and improving trade and investment cooperation between our two countries. Today I will focus on the latter.
Professor, I don’t personally like long speeches myself so will keep this one short and to the point. I would be happy to answer any questions that the audience may have.
To begin with let me share with you a few points about French economy and then a few data on Nepal - France trade activities.
First point, France’s economy is the fifth largest in the world and represents around one fifth of the Euro area gross domestic product (GDP). Currently, services are the main contributor to the country’s economy, with over 70% of GDP stemming from this sector. In manufacturing, France is one of the global leaders in the automotive, aerospace and railway sectors as well as in cosmetics and luxury goods. Furthermore, France has a highly educated labor force and the highest number of science graduates per thousand workers in Europe.
In the external sector, France’s closest trading partner is Germany, which accounts for more than 17% of France’s exports and 19% of total imports. France’s primary exports are machinery and transportation equipment, aerospace equipment and plastics, while primary imports include machinery, automobiles and crude oil. Additionally, France is the most visited country in the world, making tourism a prominent sector in the economy. In 2015, France was once again ranked the world’s leading tourist destination with a record of 84.5 million foreign visitors and our goal is to receive 100 million visitors by 2020.
2nd point, with 31 of the 500 biggest companies of the world in 2015, France ranks 4th in the Fortune Global 500, behind the USA, China and Japan.
If you look at the rankings, we find that several French companies rank as the largest in their domains. For example AXA in insurance and Air France in air transportation. Similarty L’Oreal as the largest cosmetic company and LVMH and PPR as the two largest luxury product companies. GDF Suez and EDF are leaders in their respective fields of energy and utility. Areva, Veiolia Environnement, Vinci SA, Bouygues and Eiffage are leaders in nuclear energy, environment services and water management, and the construction respectively.
Of course, we know Michelin ranks in the top 3 tire manufacturers, JCDecaux which is the world’es largest outdoor advertising corporation. Similary in the banking sector, BNP Paris Crédit Agricole, and Société Générale rank amont the largest in the work by assets.
Continuing, I have to mention that in the retail group, Carrefour is the world’s second, Total is the the world’s fourth largest private oil company, in the hospitality sector Accord is the leading European hotel group and Alstom is one of the world’s leading conglomerates in rail transport.
3rd point while the government’s labor reforms aim to rekindle growth in the medium term, the outcome of the Brexit vote might nevertheless weigh on economic activity. Furthermore, Brexit could fuel Euroscepticism and the threat of recurrent terror attacks could increase political uncertainty ahead of next year’s presidential election. Analysts expect the economy to expand 1.4% in 2016, which is down 0.1 percentage points from last month’s forecast. Panelists expect GDP to grow 1.3% in 2017.
Therefore, French companies have been looking for more growth outside of France and Europe and have become increasingly global as for their market, their human resources and their equity. Big French companies are conspicuously apt to partner with other corporations and their staff at management level is internationalized and multilingual, as exemplified by Airbus, Renault-Nissan alliance, Sanofi whose CEO until recently was German, etc.
4rd point, French business schools also are more internationalized
They have recently become more prominent in a world widely dominated by the US. INSEAD is number 1 in the world this year according to FR.COM and HEC PARIS is number 15. They have created courses in English and INSEAD has now a campus in Singapore, as well as others like ESSEC. The teachers and the students as well are increasingly international.
Now let me tell you about the trade activities between our two countries:
According to the latest data provided by the Department of Industry, there are 80 French projects having Rs 534,28 million as investment. These projects have created 2,871 employments. Amongst the 80 projects, 40 are in tourism sector, 19 in manufacturing and 13 and service sector.
In terms of the number of projects, France is currently in the 8th position and in terms of total amount of investment, France is the 23rd.
It is low compared to some other major countries but there are some areas where we both can take advantage of.
Untapped tourism opportunities:
Tourism is one of the biggest if not THE biggest selling point of Nepal. The abundance of tourism opportunities makes Nepal stand out. Nepal regularly gets featured in various travel magazines, websites as one of the “must visit places in the world”. Now that I have been here for 5 months, I can vouch for it also. The pristine Himalayas, places of cultural heritages, beautiful national parks, wild rivers, lovely hiking trails are just some of the examples. According to the Tourism Ministry’s latest data for 2015, there were 16,405 French tourists compared to 24,097 in the year 2014. Of course, Great Earthquakes from last year and the blockade at the frontiers contributed negatively to this decline but I am confident that as situation is improving in Nepal, the number of Nepal loving French tourists is bound to increase.
We all know that during the peak tourism season, five star hotels run out of rooms. But hotels in Kathmandu and other big cities are not enough. We should also build hotels in other parts of the country so that it serves as a tourism infrastructure for both domestic and foreign tourists.
There is a clear need for infrastructure development in Nepal. Be it roads, airports, bridges. Connectivity is vital for the prosperity of the country and this will eventually have a positive effect on economic growth and pretty much every aspect development: human, social, and economic.
I am pleased to let know that in June 2016, a consortium of French consulting companies, MDP Consulting (full form ) and Systra, submitted a feasibility study from socio economic perspective for an urban cable car project in Kathmandu to the Ministry of Physical Infrastructure and Transportation. This feasibility study was financed by the French government and currently a detailed financial report is being prepared. The Government of Nepal has shown interest in this unique project because it will not only alleviate some traffic congestion but will also contribute to the development of tourism in Kathmandu and also increase economic activities. The study found out that there could be a cable car network consisting of 4 lines. You must have been to Manakama Temple by cable car right? It’s the same concept and hence will also help in tourism. Another important thing to note is that it will also create its own ecosystem. For example, in stations you can build parking spaces, commercial complexes, office spaces and many more. Hence it is hoped that this project will contribute to stimulating economic activities. France has a competitive advantage in this domain and companies like POMA have already worked out similar projects in other mountainous regions such as in Colombia. There are many other French companies specializing in infrastructure looking forward to investing and working in Nepal.
French aid through NGOs:
France does not have a bilateral development assistance program but that has not stopped many
French NGOs to work in Nepal in key sectors including education, health, and shelter. All French NGOs receive some form of French government subsidy and hence the money that they spend in Nepal in indeed French public money. At the Embassy, we have recently formed an NGOs Club so that the NGOs can regularly exchange ideas and share best practices among one another.
Energy is a key sector that France is very much interested in but this sector requires a lot of money, time and political will. It is a fact that Nepal has some natural advantages for the development of hydropower projects. Some big French companies such as EDF, which is the largest power company, and Engie are interested in investing in Nepal.
Investing and completing hydro projects is not an easy thing to do. When I was Ambassador for Laos, I had the opportunity to learn about a very significant hydroelectricity facility, Nam Theun 2 which has been operated since 2012. It has been designed, constructed and it is currently managed by the French company EDF, the major partner inside the running consortium, Nan Theun Power Company. It has a capacity of production of 1070 MW with a plant using water from a reservoir created with a dam on a tributary of the Mekong river. It took almost 20 years to gather the understanding and support of all parties involved : the governments of Laos, France and Thailand, ECAT (electricity of Thailand, which buys 95 % of the production), the development banks (ADP, World Bank, Agence française de développement) and other financial institutions which accepted to fund a 1,5 Bn$ project, and also the populations which were relocated around the reservoir lake and had to be reconverted to new economic activities. It has only been possible because of the political stability and the strong comitment of the Lao government. That is key to the success of big investments.
I touched upon some key opportunities. If there are opportunities then why aren’t we seeing progresses then? Now that’s a BIG question.
From my interactions with the interested French companies, with policy makers, academia and with everyday people I meet, the keyword that frequently comes up is: political instability.
I know that you must be tired of hearing this but it is true. Frequent changes in the government and administration reduces confidence of prospective investors. Giving a continuity to the policies is critical in maintaining investors’ confidence. I don’t go as far as saying that political stability is the answer to all the problems but it is the answer to many problems that have plagued Nepal.
I think I will stop here now.
I thank you all for your time, and thank you Professor for giving me this wonderful opportunity to speak to the future generation of Nepal. I firmly believe that Nepal will be in safe hands with you all and with the educational leadership you have here.
If you have any questions, I would be more than happy to answer them.
Photos courtesy of KUSOM.