Nepal Aims for Knowledge-Based Economy with AI Focus

Kathmandu. The government led by Balen has announced that Nepal will be established as a 'knowledge-based economy' in the coming decade, focusing on modern technology and financial engineering.

Finance Minister Dr. Swarnim Wagle on Friday presented a plan in the Federal Parliament's budget for the fiscal year 2083/84, primarily integrating AI (Artificial Intelligence), startups, innovation, and strategic utilization of foreign currency. In point no. 18 of the budget, with the aim of entering the AI era, it was announced to establish the country's first 'Sovereign AI Compute Center' in Syuchatar, Kathmandu, and to purchase thousands of 'AI Processing Units'.

'We have initiated special efforts to confidently enter the AI era in Nepal. We will establish the country's first 'Sovereign AI Compute Center' in Syuchatar, Kathmandu.'

'We will provide concessional computing capacity to AI entrepreneurs and startups by purchasing thousands of AI processing units,' Wagle said.

He proposed transforming clean hydropower energy into high-value AI compute services. He expressed confidence that by utilizing Nepal's existing immense energy power for AI development, a foundation will be laid for skilled employment, digital exports, and AI-based economic transformation.

However, Dr. Shankar Khatiwada, a teacher at Trichandra Campus and a researcher in practical science and technology at Tribhuvan University, stated that Finance Minister Wagle's announcement is ambitious. Khatiwada, also a researcher in nano biotechnology, argued that it is not possible in Nepal when even neighboring India has not been able to achieve this in the field of AI.

'India has not succeeded in the field of AI. Currently, only competition is seen between America and China. In Nepal's case, we need to teach the basic aspects of AI before moving forward. The government seems to be aiming for immediate results without focusing on the fundamentals,' he said.

Khatiwada stated that while the budget allocated by the government for science, technology, and innovation is appropriate, the main issue is identifying our capabilities, conducting research, and being able to add value and certify them. He said, 'Investment is needed in necessary equipment, technology, policy, and human resources. The focus has not been there. Previous governments also allocated budgets for science and technology, but we couldn't get anything when we asked. The current government appears to be repeating the past.'

Finance Minister Wagle has invited internationally renowned researchers in the AI field to return to Nepal by providing them with prestigious fellowships.

'The government will invite at least fifteen Nepali researchers who are gaining international recognition in the field of AI to return to Nepal and contribute by providing them with prestigious fellowships in the upcoming fiscal year. We will give high priority to academic fields including mathematics, which will play an important role in the AI era,' Wagle announced.

This announcement seems to strengthen Nepal's educational and research foundation, with the government presenting AI not just as technology but as a tool for job creation and efficiency enhancement. Khatiwada also asserted that the plan to bring back at least fifteen Nepali researchers with prestigious fellowships is not new.

'The government does not proceed based on homework done by the Prime Minister's limited team without sufficient discussion with stakeholders. It has come based on what his team has done. There was a campaign to bring them back before as well. But those who returned have faced misery,' Khatiwada said.

Finance Minister Wagle had announced the establishment of 'Nepal Enterprise Facility' as a platform to integrate startups and small and medium enterprises into the national enterprise ecosystem.

In today's world, as data and computing power become more expensive, the government appears to be focused on exporting high-value 'digital services' by utilizing the country's abundant hydropower energy in AI factories. This seems to aim at connecting Nepal to the global AI value chain.

Similarly, points no. 28 and 57 of the budget consider startups and innovation as the main basis for the country's economic transformation. Startups in Nepal were constrained due to a lack of sufficient capital and clear policies. This year's budget seems to attempt to address these issues.

With an investment of 500 million rupees through the Nepal Enterprise Facility and an allocation of 4 billion rupees for science and technology, new entrepreneurs are being encouraged. Khatiwada stated that the budget allocated by the government is welcome.

While the government's policies have always been excellent, their implementation has consistently been weak. Khatiwada believes that even though budgets are allocated for startups, it takes months for the procedures to be formulated, and there is always a risk that 'connected individuals' will benefit rather than actual entrepreneurs. 'Although four billion rupees may seem large for one sector, it may not be sufficient for an expensive technology like AI. Without adequate budget, human resources, and clear policies, it is impossible to open an AI factory in Nepal,' Khatiwada said.

The three main announcements made in the budget (AI, startups, and strategic financial management) present implementation challenges as they are interconnected. According to Khatiwada, AI requires energy and capital, while startups need technology and market access.