South Asia Watch on Trade, Economics & Environment (SAWTEE)

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Political economy of advertisement
Published: The Kathmandu Post, 15 April 2005
By: Ratnakar Adhikari

Never did I think I would be writing on this topic because of my sheer belief that advertisement is such a neutral issue that could never have any significant political connotations. My naive belief was proven wrong by the decision of the Ministry of Information and Communications, which has forced me to analyse the political economy of advertisement, focusing mainly on the anti-competitive effect of the decision, its implications on good governance and on Nepal's commitment to developing a market-based economy.

Taking the risk of being repetitive, I would like to reiterate that competition is the conduit through which the objectives of market-based economy can be achieved. After the commitment made by Nepal to adopt this principle as the driver of economic growth, the country has made several advances. However, some of our leaders, who depict appalling ignorance, are making decisions that go against the fundamental principles of a market-based economy. As per the recent decision of the ministry, the advertisement by the government--which represents almost one-fourth of total revenues for the advertisement industry--will only be provided to those media, which are committed to "upholding the dignity of the nation and the crown." This figure cannot be considered trivial because the collective revenue of the advertisement industry is estimated at Rs 2 billion, which means the government will have a discretionary power to distribute around Rs 500 million worth of advertisement to favored media organisations. This hasty decision has three major ramifications.

First, there will be drastic loss of efficiency within the protected media organisations. So far, competition among media organisations to receive advertisements has led them to be efficient and competitive. They have even been compelled to enhance the quality of their output so that they could wean over readers/viewers from competitors. They have been forced to increase the number of pages, come out with better design and layout in the case of print media and better programs and better means of transmission in the case of electronic media. For example, Nepal Television would probably have never made a leap to satellite transmission had it not been for the competition from private television channels. Similarly, it was due to competition from the private sector publishing media that even a state-owned mouthpiece like Gorkhapatra Sansthan has attempted to undergo a metamorphosis so as to cater to readers' needs.

Second, the right to choose is a very important component of competition. Even government offices would like to choose those media for their advertisement, which provide them better value for money, i.e., more mileage and outreach. However, by restricting their right to choose, the ministry has forced them to compromise with the effectiveness of their advertisement.

Third, it is understood that the ministry itself will decide what constitutes commitment to nationalism and crown, thus providing it with discretionary powers. Giving discretionary powers means that the government would be in a position to pick and choose its "favored" media organisations, whom they could "promote" by defying the twin principles of transparency and accountability, which are essential elements of good governance. There is no dearth of ingenious ideas when one moves along a destructive trajectory. As of now, it is difficult to visualise other drastic moves the government might be contemplating. However, the danger becomes even more pronounced when there is a knowledge deficit on the basic tenets of market- based economy.

Market orientation entails minimal interference from the state in economic affairs so that market decides how best to allocate resources. This does not mean that the government should not adopt an interventionist approach on any issue. On the vital issues of national security, promotion of national industrial base, promoting competition, protection of public health and environment, ensuring food security and people's livelihood, prevention of fraud and deception, prevention of capital flight etc., government should use its authority to "guide" the market. But providing favor to one group of enterprises against the others and use of discretion to clip the wings of private media organisations does not figure anywhere in the list of "desirable" form of intervention.

Since Nepal has acceded to the World Trade Organisation (WTO), it has a responsibility to ensure non-discrimination in the conduct of its economic affairs. As a part of our WTO accession deal, we have gone to the extent of committing that we would not discriminate between foreign goods or services and national ones. However, the present government is discriminating "national" media organisations on the basis of their loyalty. The government seems hell-bent on making mockery of our international obligations, thereby making the country an object of ridicule before the international community.

The least the government could do is to roll back its decision and promote competition in the media sector. Whatever may be the system of government, let there be no retreat from our commitment to a market based-economy. Added to that is the issue of good governance, which cannot be brushed aside because the majority of Nepalis have faith in it.

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