DISRUPTION IS HERE TO STAY Better Govern It

On January 14 last month, the Metropolitan Traffic Police Division (MTPD) took control of five bikes and also arrested all the respective riders for giving ride to paid passengers using the country’s two popular ride sharing platforms Tootle and Pathao. This came as a surprise to many, including the key people at both of these platforms, as the MTPD suddenly begun cracking down on these platforms by arresting some of the platform partners (bike drivers) without issuing a warrant beforehand. Following these arrests, Nepali social media users begun debating the good and bad aspects of this government intervention online. Major newspapers, selected politicians, researchers, and public intellectuals also joined this debate in no time.

While some of these discussants praised this crackdown saying that all the profit-generating activities in the country should be legally registered and should be under the government’s control, a majority of them remained dissatisfied with the government’s step and shared the common view that this move was ill-intentioned and the government should have brought needed regulations instead to further encourage and support the country’s evolving entrepreneurial culture and help minimise severe unemployment through creation of more employment opportunities for youths and adults with the help of even more Nepali startups now and in future. Within two days of these online and offline debates, KP Sharma Oli - the Nepali Prime Minister - himself made an intervention and on the evening of January 16 he requested the Minister of Communications and Information Technology, Gokul Prasad Baskota, to let the two ride-hailing platforms function as earlier. On the following day, the Department of Transport Management also announced that the government was working to introduce a new law on April 14 this year (Baishakh 01, 2076 BS) to regulate all ride-sharing platforms in the country.

From these major turns of events, we can confidently say that Tootle and Pathao’s impressive past records, their major impact on people’s lives and huge public support helped these platforms to convince the government to choose a policy reform track than going for other alternatives, potentially harsh options for Nepali startups and entrepreneurs.

Again in late January, a national daily brought to public notice how one of these platforms had evaded taxes between January 2017 and July 2018 that brings to the forefront a question over public trust on this platform and the latter’s genuineness. What has however come to the fore is debates on policy issues that are relevant to govern current and future technological disruptions and their implications on Nepal’s economy. Here, I would try to shed light on some of these issues.

Why Disruptions Matter?

A 2016 working paper published by the Stanford Graduate School of Business had studied patents issued to American companies in 85 years from 1926 to 201,0 and how stock market responded to the updates about these patents. The study had found that each technological disruption had boosted net wealth.

In January 2007, Apple unveiled the first iPhone. In the following years, this product not only helped Apple to dominate the global cell phone market but also helped to disrupt major industries including telecommunication, gaming, news and marketing, health, and computer industries. As iPhone continued revolutionising major industries and areas, it also brought into existence new jobs while putting thousands of labour intensive jobs under threats. Moreover, the wave of disruption in past 12 years also helped firms and governments incorporate new thought processes, changed work cultures, renewed business ethics and standards and helped major stakeholders to achieve encouraging growth. In a way, disruptions in the past few years have entirely transformed how people live, work, study, eat, play, sleep and do shopping. Looking at the current trends, I can say with much confidence that, disruption is here to stay for better no matter where it occurs.

Also, past disruptions have forced economists and policy-makers to think of new economic models for evolving global economic challenges. Till a few years ago, almost everyone believed that own contents and assets are key to overall success of a firm. But the cases of social media platforms - Facebook, Twitter, Instagram; sharing-economy platforms - Uber, Lyft, Grab and Airbnb; and communication platforms - WhatsApp, WeChat, Line and Viber - have taught us the power of user-generated content for boosting a firm’s position. The potential of all of these platforms are on the rise. For example, Business for Social Responsibility has forecasted that within 10 years, the sharing-economy platforms alone are expected to increase their revenue by more than 22 times and yield $335 billion in 2025 from just $15 billion in year 2015.

In the case of Nepal, where traditional industries still dominate the market, many people are still not that familiar with the full potential of technological disruptions. Also, I believe that without disrupting country’s all traditional and labour intensive sectors - few of them include agriculture, education, health, transportation; Nepali industries will continue to struggle maintaining minimal growth targets for decades to come. For these reasons, pushing the government to formulate needful policies for better managing and regulating all evolving and future disruptions is the most urgent task of our time.

Disruptions Vs Policy - Which Should Come First?

As shared by the government earlier, the Motor Vehicles and Transport Management Act 1993 governs all issues related to country’s motor vehicles and transportation issues. It is one of many Acts and Policies that Nepal first formulated to govern country’s different sectors after the country opened to the world after 1990 democratic movement. Coincidently, few years after Nepal adopted major policies, the Dotcom Bubble (1995 - 2000) began in North America. In the next 14-15 years, the world witnessed Smartphone Boom (late 2000s) and most recently the Social Media Boom (early 2010s). While all these developments substantially disrupted key sectors worldwide, most notably in advanced and in middle-income economies, meaningful disruptions in low-income economies, including those in Nepal, remain questionable. One of the key factors for low-income countries’ failure to properly harness benefits of the past two decades’ disruptions is mainly due to the respective governments’ inability to adopt suitable policies to effectively regulate rapidly evolving technological disruptions in those economies. For example, in Nepal, most of the policies formed to regulate country’s key sectors - education, health, transportation, telecommunication, finance - all date back to early 1990s and are yet to get updated to incorporate major changes in these sectors brought about by recent wave of technological advancements in the country. The recent crackdown on Tootle and Pathao also reinforces this fact.

If concerned stakeholders in Nepal wish to use technology for better growth and more inclusive results, the formers should be well prepared to amend relevant Acts and Policies as soon as new technology hits the local market and start affecting one or multiple sectors. To convince ourselves of these ambitious steps, we can refer to some of the countries which lead the world in terms of embracing technology and disruptions. For example, governments in Israel, Rwanda, Singapore, and most recently in Vietnam are well aware of first movers benefits in 21st century’s disruption economy and as a matter of fact they have been updating their policies time and again only to ensure no single meaningful disruption in their economies gets wasted. Thus, Nepal too needs to be prompt and prudent in this regard and now onwards should not wait for years only to reform policies rather revise all related policies as soon as disruptions hit local markets. Disruptions should lead the way and policies should follow without delay.