Balen's Golden Opportunity for Nepal’s Metamorphosis

Many Nepali politicians have long promised transformation of Nepal, akin Singapore. In the first general election following the abolition of the Panchayat system under absolute monarchy, in May 1991, Krishna Prasad Bhattarai pledged metamorphosis of Kathmandu: he was a candidate in Kathmandu constituency number 1 of the House of Representatives. He was defeated, perhaps because the voters found the promise unconvincing. After a decade of armed conflict, Babu Ram Bhattarai, upon becoming Finance Minister in Pushpa Kamal Dahal's cabinet in August 2008, advocated the Singapore model and regarded then Prime Minister Lee Kuan Yew as his ideal. However, he failed to deliver. Later, when Dahal became Prime Minister again in August 2016, he too promised to metamorphose Nepal like Singapore of Asia, but did not fulfil that commitment. KP Sharma Oli, who assumed office in February 2018, introduced the slogan of "Prosperous Nepal, Happy Nepali" and pledged to transform Nepal not only into another Singapore but also into Switzerland. This, too, remained unfulfilled. None of those politicians adequately grasped the underlying factors behind Singapore’s rapid rise to prosperity. Nor did they develop coherent plans, policies, strategies, or roadmaps to achieve such transformation. Without these, implementation was inevitably absent. SINGAPORE'S PAST Singapore history is instructive. It was once part of the Federation of Malaysia and faced significant economic, social, and political challenges. Unemployment was widespread, and much of the population lived in poverty. Infrastructure was minimal, and communal tensions were frequent. The country lacked natural resources and even depended on Malaysia for water. Cultivable land accounted for less than one percent of its total area of 735 square kilometers. Corruption and illicit financial flows were also prevalent. Against this backdrop, Singapore was expelled from Federation of Malaysia in July 1965 and became an independent nation. While countries like Sudan, Ethiopia, Czechoslovakia, Yugoslavia, Korea, etc. fragmented after wars and new countries came into existence. COMPARISON WITH NEPAL Nepal's economic condition remains weak. At the time of Singapore being expelled, its per capita GDP was approximately $500, while Nepal’s was about $66, just 7.5 times more. By 2024/25, Nepal’s per capita GDP is still below $1,500, whereas Singapore’s has reached approximately $95,000; 63 times more. This stark contrast illustrates the pace at which Singapore achieved prosperity. A similar disparity exists in electricity consumption. In 2024/25, Singapore’s per capita consumption was about 9,800 kWh, compared to Nepal’s 395 kWh. According to Transparency International, Singapore ranks among the top countries in controlling corruption, with a score of 84 out of 100, while Nepal ranks 109th with a score of 34, indicating significantly higher levels of corruption. SINGAPORE’S METAMORPHOSIS Following independence Singapore successfully attracted foreign direct investment (FDI) in a huge magnitude by ruthlessly controlling corruption and black money. In 2024 alone, Singapore received US $192 billion FDI, and with cumulative inflows reaching $3.154 trillion. In contrast, Nepal received only $63 million FDI in the same period, with total FDI stock being limited to $2.5 billion. NEPAL'S ECONOMIC CHALLENGES Nepal’s inability to attract significant FDI is largely attributable to pervasive corruption and black money. Consequently, the Financial Action Task Force (FATF) placed Nepal on the grey list for the second time in February 2025; the first instance was in February 2008. Nepal was removed from the list in October 2014 after committing to strengthen its legal framework and enforcement mechanisms. However, failure to sustain these reforms led to its re-listing. If Nepal does not enact and effectively implement adequate measures by January 2027, she risks being blacklisted, which would have severe economic consequences. Corruption is widely perceived as entrenched. Intermediaries often facilitate transactions in exchange for unofficial payments. Investor confidence is further undermined by concerns regarding dispute resolution. Notably, an early foreign investor in the hydropower sector expressed a lack of trust in Nepal’s legal and judicial systems (including lawyers). This scribe personally actively endeavored to address such concerns. First amendment to the Foreign Investment and Technology Transfer Act 1992, got promulgated in January 1996, which added Sub-section (4) to Section 7 that stipulated: “Disputes arising in connection with foreign investment may be resolved as mentioned in the Foreign Investment Agreement”. This allowed disputes to be resolved as stipulated in foreign investment agreements, including the use of foreign governing law. Today, many investors rely on foreign jurisdictions. DOMESTIC INVESTMENT Domestic investors are similarly hesitant to engage in long-term productive investment due to governance concerns. Instead, many prefer sectors such as trade, real estate, and share markets. This is reflected in the industrial sector’s contribution to GDP, which remains below 13 percent, compared to over 49 percent in Bhutan. LESSONS FROM LEE KUAN YEW Singapore’s metamorphosis was underpinned by a policy of zero tolerance toward corruption in both public and private sectors. Strong legal frameworks were enacted and rigorously enforced. Additionally, public sector salaries were increased to reduce incentives for corruption. A close examination reveals that Singapore’s economic success accelerated after corruption and black money was effectively controlled. ANTI CORRUPTION IMPERATIVES Over the past three decades, only a limited number of corruption cases in Nepal have been prosecuted, often selectively. Existing laws contain huge loopholes, and enforcement remains selective. Crucially, those who offer bribes are rarely prosecuted. As Prithvi Narayan Shah observed, “both the bribe taker and the bribe giver are enemies of the nation”. Without addressing both sides, corruption and black money cannot be effectively eliminated. If corruption and black money is a coin, the corrupt ministers and bureaucrats are the obverse side of the coin, and the corruptors (business groups/houses, intermediaries, middlemen, brokers, etc.) are its reverse side. INVESTIGATION COMMISSION The Balen government has recently constituted a commission with former Justice Rajendra Kumar Bhandari as convener to investigate the disproportionate wealth of ministers and high-ranking bureaucrats from 2005/06 to 2025/26, which is commendable. It is worth remembering that a similar commission was formed in March 2002 under the chairmanship of then Supreme Court justice Bhairav Prasad Lamsal, which recommended action against 15,000 ministers and bureaucrats. However, neither the report was made public nor all those mentioned in the report were prosecuted; only former ministers Chiranjeevi Wagle, Khum Bahadur Khadka and Jayaprakash Gupta were selectively prosecuted, while then judges Chandi Raj Dhakal and Purushottam Parajuli were cautioned by the Judicial Council. (Note: even former justices of the Supreme Court, including chief justices and former Army Generals including Chief of Army Staff come under the ambit of the present Commission, which was not the case with the Lamsal Commission.) Surprisingly, the same former Justice Chandi Raj Dhakal was appointed as a member of the Bhandari commission. It is a mystery as to why he got appointed as such. There is no provision in the terms of reference of both these commissions to investigate the source of disproportionate wealth. The main source of disproportionate wealth of ministers and bureaucrats is certainly the corruptors. Because there is no possibility of accumulating disproportionate wealth by exchanging bribes between ministers or bureaucrats. SACRED COW Most Hindus consider cow a sacred animal and they don’t eat beef (even non-vegs), and even worship cows. But it is not necessary to treat Nepal’s private sector as “sacred cow”, since most of the business groups/houses, intermediaries, middlemen, brokers, etc. are corruptors. The state should not hesitate to act against corruptors on the pretext that private sector would be discouraged to invest in Nepal if they are brought under the ambit of investigation for corruption and black money. If Singapore had exempted the private sector from the ambit of investigation for corruption and black money, she would never have become so prosperous in less than 3 decades. Corruption will not come to an end as long as the corruptors are exempted from investigation against corruption and black money. If the corruptors are prosecuted for corruption and black money, it will not discourage private investment. On the contrary, transparent and fair systems encourage both domestic and foreign investment. The ground reality is that because corruptors are not prosecuted, there is disincentive to bribe. The job of GoN is to encourage the private sector by providing facilities and concessions, and facilitating their work. But the private sector needs to be dissuaded from corrupting ministers and bureaucrats. Therefore, the corruptors must be brought under the jurisdiction of CIAA. It would be an uphill battle to have Nepal removed from FATF’s grey-list till corruptors are not prosecuted. Failing that, it is highly possible that FATF would blacklist Nepal by January 2027. If corruption and black money is eradicated from the country, the private sector too will benefit, as the money they are forced to invest on bribing ministers and bureaucrats will be saved, which could be productively invested. Additionally, work will be accomplished at a faster pace after the bribery system is abolished and there will be a far-reaching positive impact on the economy. BALEN IN ACTION The Balen government has arrested notorious businessmen like Deepak Bhatt, Shankar Agrawal and Sulabh Agrawal of the Shankar group, Shekhar Golchha of the Golchha group, and contractor Vikram Pandey (also former minister), etc. Some of the corruptors not only corrupt ministers and bureaucrats, they are even able to form governments and also cause governments to fall. An intermediary even had arranged a meeting for the then RAW chief with then Prime Minister Oli in Baluwatar at midnight. It must be remembered that according to TI, neighboring Bhutan is eighteenth in corruption control with a score of 71, while Nepal, as mentioned above, has only scored 34. This is because Bhutan does not have business groups/families, intermediaries, middlemen, brokers, etc. that corrupt ministers and bureaucrats. EXTENT OF CORRUPTION It is said that only 40 percent of the capital expenditure is actually spent in the field, and 60 percent vanishes in corruption in a number of ways. In 2024/25 Rs. 243 billion was incurred as capital expenditure and out of this even if only 50 percent got actually spent in the field, then Rs. 121.5 billion may have vanished because of corruption. And, this trend must have been going on for the past 35 years. This undermines infrastructure quality and public trust, as projects frequently deteriorate prematurely or remain incomplete. PUBLIC SECTOR DYNAMICS When discussing corruption, it is also necessary to make a distinction. The majority are honest and do not accept bribes. They survive with what they receive. Some cover their expenses by involving in part-time income-generating activities outside office hours. For example, some teach in educational institutions. Some, having no other alternative, accept the bare minimum bribe just to survive. They fall into the category of taking bribes out of compulsion. Such people would not have taken bribes if they were to receive a sufficient remuneration to live with self-respect. Another category takes bribes in large quantities to earn enough to amass huge wealth sufficient for seven generations. This is the group that colludes with the corruptors. BALEN’S GOLDEN OPPORTUNITY If Prime Minister Balen, like then Prime Minister Lee Kuan Yew of Singapore, is to ruthlessly control corruption and black money, metamorphosis of Nepal is possible within a few decades. It is worth remembering that Singapore does not have any natural resources. But nature has endowed Nepal with water resources, which have multidimensional uses and if put to use in Nepal’s interest, Nepal can prosper quickly. Unfortunately, since the time of then prime minister Chandra Shamsher a century ago, no water resource-related project has been built in Nepal’s interest. By ruthlessly controlling corruption and black money not only FDI will enter Nepal in large amounts, but Nepal’s businessmen, who are reluctant to invest in productive activities would too invest. This can be estimated not only from the investable funds accumulated in banks and financial institutions, but also from the fact that whenever an IPO is issued, those are invariably oversubscribed. ADVERSE IMPACT The active cooperation of the bureaucrats is sine qua non to ruthlessly control corruption and black money. Also, when the remuneration paid is not adequate to survive with self-respect, they would fall prey to bribery. Therefore, like Singapore's Lee Kuan Yew, the remuneration should be at least doubled. Some opine that an increase in remuneration will increase inflation. That would be the case if taxes are increased to finance such an increment. However, remuneration can be increased by putting Nepal’s water resources to Nepal’s benefit, in which case inflation would not be impacted. In this scenario, instead of increasing inflation, with the increase in the salaries, the purchasing power too will increase, increasing demand in turn and the economy will benefit due to the multiplier effect. According to the integrated financial statements of the federal, provincial and local governments, published by the Financial Comptroller General’s Office, total remuneration paid out to civil servants, judicial services, army, police, teachers, etc. in 2024/25 was Rs 344.14 billion. If allowances, facilities, etc. was 25 percent of the total remuneration, an estimated Rs. 258.1 billion would be salaries. SOURCE TO INCREASE SALARIES NEA had exported 2,380 GWh surplus electricity for Rs. 17.47 billion in 2024/25. This year too, at least the same amount of surplus electricity will be exported. If GoN is to purchase such electricity at NEA’s export rate and to mine Bitcoin, 21,636 Bitcoins could be mined and if sold at the current rate of $77,000/Bitcoin, GoN would earn a revenue of Rs. 250 billion. This amount is sufficient to double the salaries. It is worth remembering that the Bhutanese government too increased the salary by 65 percent with the proceeds from the sale of Bitcoin in 2023. CONCLUSION If Prime Minister Balendra, like then Prime Minister of Singapore, is to ruthlessly control corruption and black money, Nepal not only would receive FDI in huge amounts but Nepal’s private sector too will invest in industries, factories, etc. thereby creating employment on a large scale, and at the same time, there will be a huge increase in state revenue due to increased production, import substitution and increased exports. In this manner metamorphosis of Nepal will become a possibility. Further hundreds of billions of rupees “stolen” from capital expenditure would be saved and could be put to uses that benefit the general public. Moreover, if he succeeds to achieve metamorphosis of Nepal in this manner, his name would be recorded in Nepal’s history in golden letters like that of Lee Kuan Yew in Singapore’s history. Published in People’s Review of April 7, 2026 Ratna Sansar Shrestha https://peoplesreview.com.np/2026/05/03/balens-golden-opportunity-for-nepals-metamorphosis/