Closed shutters in Kathmandu show no respite from the volatile economy yet

Closed shutters
Closed shutters are quite common in Kathmandu as people have decided to shut down their businesses. Aryan Dhimal

A notice on Shop 509 at Kathmandu Mall in Kathmandu reads, “The shop owner has gone missing since January 15. The owner has 35 days from the date this notice was pasted to empty the space.”

The notice was put up there by Diwa Sapana JV, which has been awarded the contract to run the mall by the Employees’ Provident Fund. It told the ward office that it had to do this after the owners of Net Art Studio stopped responding to calls and messages.

Ever since the Covid pandemic, the number of people selling and shutting down their shops is increasing although the impact of the pandemic on other parts of public life is minimal. These closed shutters are another indicator of how volatile the country’s economy is at the moment.

Good old days gone

A mall in Kathmandu is deserted. Photo: Aryan Dhimal

In the past, such shops and spaces used to be bought and sold for millions. Currently, there are no buyers.

Manoj Dhamala, the manager of Arriving Fashion Wear at Sundhara Mall, says business is down and many businesspersons like him are worried about what is going to happen next. He says that he is waiting to sell goods worth Rs 20 million.

“There are days I don’t sell anything. I used to sell goods worth Rs 100,000 a day. Now I sit and wait,” says Dhamala. 

Dhamala says that the business, which slowed down after the pandemic has still not picked up resulting in closed shutters across the capital.

“This place is great. We’ve not struggled with footfall, but the recent economic recession has dried up business,” says Hamal.

Many shops at Sundhara Mall are empty. A few people go there for beauty-related services, but shops selling clothes, shoes and cosmetics do not have customers.

Sangam Bista recently sold his shop in Galkopakha. He says that he is not the only person to have sold his shop adding many closed shutters are empty on the road from Gongabu Chok to Thamel Chok.

Even those who are doing business now are wondering if they can survive this. “How can a business survive when no one comes to buy anything?” he says, adding he is planning to leave Nepal for foreign employment in Dubai.

He says that many have tried to sell their shops but with no buyers, people have decided to close down completely rather than paying rent.

Sanjita Ale, who bought a dairy shop in Kapurdhara two months ago, is feeling the pressure as her daily sales are dwindling as expenses keep on rising.

“The person who sold it told me that business is good. But it is nothing as told. I wonder if people have started to cut down dairy consumption,” says Ale.

Empty malls

Malls are struggling to sell their spaces to businesses due to the recent recession.

According to Kumar Karki, the chairperson of the Nepal National Federation of Entrepreneurs, so many closed shutters are a major concern as there was a time when it was almost impossible to find empty spaces. But now, the same spaces are vacant as shops are shutting down one after another.

To-let boards have started appearing even at buildings at Darbarmarg, where it was near impossible to find closed shutters. Bishwajyoti Mall is a prime example as more than 50 per cent space is vacant.

Shops are even shutting down in highly sought-after places like Labim Mall, Civil Mall and CTC Mall. Footfall in these malls has significantly gone down, say shop owners.

This is worrying as many shops in these malls had been pre-booked when these malls were being built. With these malls vacant, commercial buildings in places like New Baneshwor are also struggling to find tenants. This shows a reluctance in people to open new businesses at the moment.

Struggling small businesses

Naveen Luitel, the chair of the New Baneshwor Business Association, says that 25 to 30 per cent of the shutters are vacant in the Baneshwor area. He says that most businesspersons in the area are planning to sell their shops if the right price is offered.

“There was a time when many did not hesitate to pay Rs 100,000 as rent. But now with the recession taking place everywhere in the world, things are tight as many are struggling to pay rent,” says Luitel. “Banks are not handing out loans and cooperatives that support these businesses are struggling too. Times are tough at the moment.”

Now, with many closed shutters in New Road, alarm bells are ringing within the business circle as many fear the worst is yet to come.

Many shopkeepers also feel that lower footfall is a result of the rise in online shopping.

Ram Kumar KC, the ward chair of Kathmandu 10, says the ward office is getting many requests to vacate the shops in the Baneshwor area as shopkeepers are out of contact.

“We are getting requests every other day,” says KC.

Worse than the pandemic

Business persons say the current situation is worse than the pandemic.

The situation in Lalitpur’s Mangalbazar is no different. According to local businessman Bhim Rajthala, there was a time people would refuse to empty the space even when offered compensation in excess of Rs 1.5 million.

“Now people are ready to leave if they get around Rs 500,000. How times have changed,” says Rajthala, adding things are worse than during the two years of the coronavirus pandemic.

He says that people are struggling to pay off their loans and struggling to sustain their businesses. What has not helped is the haphazard road construction in the Mangalbazar area. 

“We are wondering if this is happening due to the expansion of the market even within the new settlements of Lalitpur. But all of us are shocked at how badly business has gone down over the past year,” says Rajthala.

But the situation of businesses in new settlements around Kathmandu and Lalitpur is the same. Due to this, the number of closed shutters is increasing.

Luitel of the New Baneshwor Trade Association says that the government has to come up with a plan to protect small businesses.

With no support and rising inflation, many businesspersons are shutting down businesses and leaving the country. 

“Policies should be made keeping in mind the problems faced by small businesses. It is clear they are struggling and the government has to do something to help them,” says Luitel.

The government is estimating that the effects of the recession seen in the industrial sector are reaching the business sector. The National Statistics Office has predicted that the industry sector will contribute only 5.32 per cent to the gross domestic product (GDP) this year.

Due to the decrease in vegetable, mustard, soya bean and sunflower oil production as well as iron and steel production, it is preliminary estimated that the total value-added growth rate in the financial year will go down by 2.04 per cent compared to the last fiscal year.

According to the statistics office, due to the decline in imports and domestic industrial products, the growth rate of wholesale and retail trade is also negative. 

It is estimated that wholesale and retail trade, vehicle and motorcycle repair services contributed 15.39 per cent to the GDP this year.

Karki from the Nepal National Federation of Entrepreneurs says, “If the government does not bring policies to protect businesspersons, businesses will continue to shut down, and the closed shutters will put pressure on the government’s revenue.” 

According to him, the high rate of customs assessment and high cost of goods have caused problems for traders who were shocked due to high-interest rates.

“There is no money in the market. Banks are handing out loans,” says Karki. “With no business, it is hard for many to pay rent and with many buried in loans, they feel leaving shops is the best option.”

Rajesh Kaji Shrestha, the former president of the Nepal Chamber of Commerce, says that businesses are being closed in the market because of the problems seen in the economy.

“It is high time we needed to stop talking about problems and start working towards a solution. The government should do whatever it takes to revive the industry and businesses,” says Shrestha.

This story was translated from the original Nepali version and edited for clarity and length.

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Ghimire is a senior business journalist at Onlinekhabar.

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