Report

114 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
environmental standards. The second commitment
provides that a foreign investor making an investment
in foreign currency shall be entitled to repatriate the
following amount outside Nepal:
• The amount received by the sale, in whole or part,
of the investors share of equity;
• The amount received as profit or dividend as a
result of an equity investment;
• The amount received as the payment of the
principal of and interest on any foreign loan; and
• The amount received under an agreement to
transfer technology approved by the Department
of Industries or the Department of Cottage and
Small Industries.
From the commitments Nepal has undertaken it
appears that its commitments are closer to the
prevailing regime. The construction and related
engineering services sector is an important sector in
Nepal and plays a crucial role with respect to adding
to the growth and employment. Exact figures on
employment provided by the construction industry in
Nepal are not available. However, it is estimated that
for three quarters of those who are economically active,
the main place of work is the agriculture sector and for
almost half (47%) of those who work in agriculture
are considered to be underemployed, construction
offers a viable option. Being a landlocked country any
infrastructure bottleneck has a relatively heavy effect
of pricing. In order to upgrade its infrastructure it needs
to have a liberal regime. Nepal has a strong import
interest in the sector and also has some export interest
particularly with a view to exporting construction
workers to other South Asian countries. It may also
have some export interest under Mode 1. However, it
should remove barriers to Mode 4 and make wider
commitments in the sector for other countries from the
region. Nepal lacks skilled labour and the other SAFTA
countries can fill this gap which will raise the skill level
and bring best practices in the country.
The Maldives
Although the Maldives submitted its schedule of
commitments on services in 1995, its commitments
cover accounting, auditing and book-keeping services
under professional services and computer and related
services. Hence it has undertaken no commitments in
the construction and related engineering services sector.
It is estimated that the construction industry is the
fourth largest industry in the Maldives (MCPI 2006).
However, the recent past has seen this industry going
through a lot of dynamic changes. These changes reflect
the aspirations of the private sector to promote the
construction industry as a properly regulated industry,
and the government’s efforts to promote and regulate
the growth of the construction industry. The private
sector, with the support of the construction ministry,
has come together in a joint effort to create the Maldives
association of construction industry (MACI), aimed
towards creating a structured industry. In order to
increase private sector participation in promoting the
construction industry, MCPI suggests setting up a construction
industry development board to look after the
industry. As regards professional associations, it
recommends the government to work to help set up,
increase role and involvement of professional associations
in promoting the industry, including financial
assistance to such recognised associations such as
Architects’ Association of Maldives and Association
of Engineers. MCPI also suggests the government to
prepare and implement regulations lacking in the construction
industry which should include building code,
building control regulations, building designers
registration, building practitioners registration, contractors
registration and categorisation, procurement guidelines,
health and safety regulations, arbitration guidelines,
Acts of parliament, and construction industry
policy paper.
The construction industry in the Maldives has
grown, primarily due to tourism. It is made up of many
small firms who act independently and do not have
common working conditions and practices. It is unique
in the sense that practically all building materials have
to be imported in bulk, broken down into lots, and
shipped from the port to the islands (The World Bank
2006). There is little storage space available and
construction is hostage to importation. The construction
costs have become exorbitant in the past few years.
There do not appear to be construction-industry indices
against which to benchmark. Nor do construction/
building inspection and control seem to be exercised
sufficiently. The following measures are recommended
by the World Bank to address these issues: (i) development
of indices of construction, such as costs per square
metre or per room; (ii) better supervision of construction,
possibly using specialized firms.
Access to land has emerged as one of the biggest
obstacles to business growth in the Maldives. The
majority of business operations are being carried out
in rented/leased out land and buildings. Given the
traditional allocation of land by government at request,
there is no proper land market in the Maldives. How-