The Concept of ‘Property Rights,’ and Nepal

Today, there are numerous examples from all around the world on how securing property rights has led to the economic prosperity of nations. Be it the farm privatization in China or securing formal titles to the property under possession of the Peruvians, these actions have been the harbinger of economic growth in the respective countries, esp. their nationals at the bottom layer of the pyramid. Secure property right sits well-established as one of the most important elements for economic prosperity. As more and more people from developing nations are stressing on the need of economic growth, and as Nepal is no exception to this, it is therefore crucial that the status of protection of physical and intellectual property in Nepal be discussed.

In partnership with Property Rights Alliance (PRA), a Washington DC-based non-partisan organization that advocates the protection of property rights (Physical and Intellectual), Samriddhi, The Prosperity Foundation launched the International Property Rights Index (IPRI)Report, 2014 in Kathmandu, Nepal on the 4th of November, 2014. The report-launch was done during an Econ-ity event which is a monthly discussion forum where politicians, bureaucrats, entrepreneurs, academicians, journalists and all concerned stakeholders partake in a discourse on contemporary political-economic issues of Nepal. This edition of Econ-ity featured a discussion on the position of Nepal in the global property rights context, the reasons behind why Nepal fares so poorly in terms of security of property rights and the importance of the concept of property rights being acknowledged and respected by the state for achieving economic prosperity in Nepal.

The panelists for the event were:
1. Dr. Chiranjivi Nepal – Economic Advisor to the Prime Minister of Nepal
2. Dr. Bhimarjun Acharya – Constitutional expert
3. Mr. Khim Lal Devkota – Former Member of the Constituent Assembly

Panelists during the event
Panelists during the event

The event was moderated by Mr. Yuvaraj Ghimire, Chief Editor, Annapurna Post.

As per the report, Nepal’s IPRI has remained at a stagnant 4.5 this year, as the last year. Legal and Political Environment has remained stagnant at 3.3 while Physical Property Right and Intellectual Property Rights have gone down by 0.1 point each to 5.9 and 4.1 as compared to 6.0 and 4.2 respectively last year. With this index, Nepal is still a nation with one of the weakest property rights in the world, securing 78th position out of 97 countries that were studied in detail.

Below is the snippet of the views expressed by the panelists during the discourse.

During the event, Dr. Chiranjivi Nepal stayed true to his roots as an economist and displayed great enthusiasm in supporting the importance of Property Rights in leading a nation towards economic development and prosperity. “Access to natural resources or being natural resource rich is not enough to ensure richness,” he argued, “as strong property rights enforcements will naturally foster an environment for wealth creation.” Moreover, further supporting his strong belief on the importance of property rights, he said, “political ideologies are not a barrier or impediment to growth, as evinced by Finland, a socialist state, which is a powerhouse in terms of technological advancement because of its proper enforcement of property rights laws.” In the case of Nepal, he provided strong evidence for the weak property rights situation by verifying the number of people who have lost their property in the guise of road expansion. He stated that the state-sanctioned ‘Road Expansion Drive’ has been a direct violation of the constitutional right to private property of all Nepalese citizens, leading to such dismal performance in the global comparison. He expressed that such unconstitutional acquisition of private property kills the spirit of entrepreneurship in people and pushes the country towards economic regress. He drew examples from countries like India, the US and more where they have opted to shift capitals to new locations to protect and preserve the historical resources and safeguard private properties instead of bulldozing them in the name of traffic management. He further urged the policy-makers to learn from the examples of India and China where economic liberalisation, where protection of private property is one of the responsibilities and commitments of the state, has led to their attaining such high levels of economic growth in the last few decades as they have.

Dr. Bhimarjun Acharya, as an expert in the legal system of Nepal provided a concise viewpoint on the issues related to property rights which are contentious in the current constituent assembly, namely: ceiling on earning, compensation on public earning, ceiling on land holding, and whether property is a fundamental right. He further added that UN’s Fundamental Declaration on Human Rights recognizes property as a fundamental human right. He added that public acquisition of private property can only take place in the case of public interest and when such actions are taken due compensation is a requirement. Similarly, “an accountable government should take all necessary steps to ensure the public that the acquired property is being utilized for the same purpose as the pretext that led to such acquisition in the first place” he concluded. He added that despite Nepal’s once having endorsed the notion that all the land in a country belongs to the state and people are given permission by the state to use the land for economic gains, it is a completely impractical notion in the modern context and no state action can be justified if it breaches the fundamental right of the people without prior compensation.

panelists all-ears on the audience
panelists all-ears on the audience

Former CA member Mr. Khim Lal Devkota had a differing opinion in terms of private property. He stated that property rights are provisioned by law; hence, they are legal rights and cannot be accorded the position of fundamental rights. He explained that government planning on the allocation of private property is required and that compete freedom of property utilization through private parties will result in failure as verified by the recent economic downturn and failure of a number of corporations which ultimately required government intervention. Similarly, he suggested that private property ownership will not lead to economic freedom as such wealth owners will only be looking for themselves—the difficulties faced in the construction of transmission lines being an example. Asymmetric wealth distribution is a looming problem and an undeterred property acquisition would only aid those who are already rich, leaving the poor poorer he stated. Moreover, he argued, such conditions would foster an unequal and volatile social environment that could incubate unrest and disorder. In a world where 85 people—who could easily influence world events to their whim—posses more wealth than that held by half of the world’s population, he concluded, it is important to structure property rights around activities that are beneficial to the public as a whole.

Akash Shrestha

Akash Shrestha is a researcher at Samriddhi Foundation where his focus areas are investment laws, public enterprises and education.


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