We need to understand the difference between trading and value addition

Ashish Garg is the executive director of Clean Developers Private Limited, which is involved in eco-friendly construction projects.Celebrity Malvika Subba had a tête-à-tête with him.Excerpts:

How did you start Clean Developers?
This is basically an infrastructure company which was begun two and a half years ago. I was involved in the banking sector before that. I was working with the World Bank in the financial sector project. I was also deputed in the management team of Rastriya Banijya Bank, where I worked for six years. After that I started this company. Clean Energy Development Bank sponsored some equity in this company and they are also our shareholders. This is an associate company of theirs. We had a clear vision when we started, of getting into sustainable infrastructure, which is green and eco-friendly.

So we started off with Central Park. We are one of the most successful projects. Sales are critical but we have bookings of 90 per cent. This is the largest project in Kathmandu within the Ring Road. Encouraged by the success of Central Park, we came up with Central Business Park. We have received an overwhelming response and have started the construction as well. We are certified by the US Green Building Council and have a renowned architectural team.
When you started two and a half years ago, real estate business was booming. But sales have diminished after 2010.

How has it affected Central Park?
The country's situation, liquidity and banks' concentration on the real estate sector is not so good, but we are still getting bookings.Nepalis have sentimental value about property .When a common man here starts earning, the first target is to buy land then construct a house.That is driving the sales.It's a city of 5 million people; you need about 50,000 odd houses every year. I personally don't see many projects taking off, going for construction on real ground activity . Several of them have vanished. But there is a good demand, and this sector is here to stay.

Organised housing can be sustained because the city has no power, water, security, or organised way of construction. Housing projects will provide solutions for the people.

As a builder and developer, what expectations do you have from the government?
This sector is looked upon negatively. There are rags to riches stories where land brokers and people engaging in land trading earn millions overnight. It's like gambling, a volatile and quick buck business.

First of all, we need to change this image. We need to understand the difference between trading and value addition.
The former means land trading and plotting while the latter refers to buying land and developing housings which are part of urban development. Our housing community has to differentiate between them and notify the government that these two need to be treated differently.

Nepal Rastra Bank has to come up with regulation that treats these two entities separately. The second thing is the approval, for which there is no single window concept. Till date, we don't know how many approvals we are supposed to get. We approach one ministry , which passes it on to the next one. And that makes the process difficult and confusing.

Do you think it would be beneficial for the country and the real estate business if the government allows nonNepalis to buy houses and apartments here?
If you open property investment for non Nepalis in Nepal, it will be full capital convert ibility. The inflow and outflow of foreign money to and from Nepal will be deregulated. Our economy fundamentals are not so strong. Today we may think that foreigners will buy property and the economy will benefit. But that money can be taken away in one go as well. This happened in South East Asia. So we should not be over enthusiastic about this concept. Perhaps we can start on it in a steady manner, like by allowing NRNs to buy it first. Or as the government is suggesting, by allowing them to buy apartments but not land.

What is the toughest challenge you have had to face?
The toughest challenge is approvals. Sales and other things depend on your business module, which may or may not click. The way you have to run around the system is discouraging.

What future projects are Clean Developers planning?
We realised that the corporate crowd needs office space. So we are developing Central Business Park. We have another project for villas coming in soon. We are also into hydropower now. We won the bid, for lower Solu, which is an 80 mega watt project. It was unprecedented that someone paid upfront cash for hydro license.We are now going full on and expect to complete it in four years' time. We are also expanding into road construction.


source: The Himalayan Times(2011),"We need to understand the difference between trading and value addition", The Himalayan Times, 19 March 2011

photo: The Himalayan Times

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