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Transportation Syndicate: Burden on Consumers

transport syndicateIf you’ve ever travelled on public vehicles in Kathmandu, I believe our story would be somewhat similar― a constant struggle to grab yourself a seat, loads of frustration and anger. What if that overcrowded vehicle is your only option? You might complain, but that would be all. I am a student who has to communte to his college in Baluwatar, Kathmandu and I use one particular public vehicle – “Nepal Yatayat.”

The bus plies the Koteshwor –Baluwatar– Chabahil route. I always wondered why the number of buses on this specific route is limited. That the buses are always overloaded with passengers. Therefore, it is obvious that there is high demand. But why aren’t people investing in this industry despite such profitable prospect it offers. This sure is a question that seeks an answer.

So one day, one of my daily commutes, I was seated beside the bus driver. After easing myself up (somehow) into the dilapidated seat, I initiated a casual conversation. I inquired about the limited availability of buses. He replied, “Our bus association determines the number of vehicles that are allowed to ply this route”. He further added that operating a bus on this specific route would cost four times the actual amount of buying a bus. The association charges this three-fold fee to permit a new bus to entering the business. Based on our dialogue and my personal experience, it was crystal-clear to me that transport entrepreneurs were operating a syndicate. Now this was supposed to have ended by fiscal year 2011/12 as supreme court had termed these forms of fraudulent associations illegal. The duty of an accountable state then would have been to enforce rule of law and serve the consumers – the people that were bearing the cost of such illegal activity. It is a pity that the government could not, and till date, has not been able to do its duty to the people. Supreme Court’s order against transport syndicates has not yet been translated into any form of action. All attempts of consumer rights advocates have gone in vain.

What if someone wants to operate a bus on a specific route? Why should the route permit cost thrice as much as the cost of the vehicle itself? The entrepreneurs’ association seems to have created an artificial entry barrier in Nepal by offering special previleges to a bunch of cronies allowing them to reap the benefits of a public infrastructure built by the state by taxing lawful citizens of the state.

What syndicates do is limit the resources by creating entry barriers and playing around the market causing unnaturally high prices which in the end has to be borne by consumers like you and me. By killing quality and stifling innovation, syndicates allow for market monopolies to firmly set themselves into the system and we, the consumers, are made to pay exorbitant prices for low quality goods and services in the wake of lesser options being available to us.

As a consumer, and as a future taxpayer, it gives be great displeasure in learning that the state has been unable to acknowledge these day-to-day practicalities that rob the taxpayers of the kind of quality service that they are entitled to. All it requires from the state’s side is to monitor these market malpractices and instate the rule of law. I firmly believe that competition in market renders better services to consumers at lower prices and I wish that these syndicates are broken as soon as possible for the sake of protecting consumers’ rights.

Suraj Dhakal

About Suraj Dhakal

Suraj Dhakal, a student of Development Studies works with Research Department at Samriddhi, The Prosperity Foundation. Mr. Dhakal was previously associated with We Inspire Nepal (WIN), a youth led leadership and personal development organization.

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Who says we don’t need more schools?

no new schools?Nepal’s education system has long been pointed fingers at—enrollment rates, dismal performances, and education-market mismatch are just a few points of accusation. We said that the public schools lacked infrastructure and quality services and we also said that private schools charged too much for the services they provided. While we continued to raise concerns over the kind of education system we have, the government went a step further and put a ban on the registration of new private schools. Their usual sense of reasoning brought forth these replies—private schools have been growing like mushrooms; we have enough schools already, we need to focus on strengthening the existent public schools—well of course!

The ban on registration has meant that no new schools have been registered for quite some time and that many hold school licenses so that they can sell them at premium rates. Adding to the artificially hiked prices of schools are the additional costs pertaining to the Institutional School Criteria and Operations Directive 2013. Following the directive (which is mandatory) means that the schools need to undergo a lot of infrastructural changes—the size of classrooms to playgrounds as prescribed—all of which cost money. And the only way through which such private schools can make money is through hike in fee. The fees, however, has been regulated by the government as the Supreme Court has passed a decision on the price ceiling for school fees.

If these were not enough, private schools have to comply with end number of contradictory regulations. Private schools, as such, can be registered as a profit making company as per the Company and once they are registered they have all legal rights to make profits. If only the government stopped interfering then and there. Sadly, it does not. The same schools as per the Education Act as required to provide scholarships to a certain percentage of their students. Provided that most schools do not have problems complying with the same; just that to regulate every bit of their operation seems too strangling to an entity. The Company Act allows schools to be opened in any location deemed necessary for business while the Education Act asks the same schools to follow a lot of procedural requirements when it comes to choosing a location (taking permission from two neighboring schools is included in the deal). And taxes are an altogether different ball game. Schools pay 25% income tax as any other private company as per the Company Act and on top of that the government levies 1% as Education Service Tax. There is no clarity over whether the government wants to treat private schools as profit making companies or service oriented organizations. This this ambiguity has translated into laws that have repercussions on the operations of private schools.

With these many contradictory policies in place; with the kind of regulations that exist—it sure is a climb up steep hills for any school that wants to provide services at competitive prices.  And yet, they say that we need no more schools (probably in the light of their capacities in not being able to monitor existent schools).

Anita Krishnan

About Anita Krishnan

Krishnan holds dual degrees--in law and sociology. Currently, she works as a Research Associate at Samriddhi, The Prosperity Foundation.

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