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Econom ic Policy Networ k

Policy Paper 21

STRATEGY FOR PROMOTINGBUSINESS INCUBATION CENTERS

IN NEPAL

Dr. Chiran jibi Nepal

November 2006


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Prepared for:

Economic Policy NetworkGovernment of Nepal/ Ministry of Finance

Singha Durbar, Kathmandu, Nepal

Tel: 977-1-4211353E-mail: [email protected]:www.mof.gov.np

and

Asian Development BankNepal Resident Mission

Srikunj, Kamaldi, Ward No. 31P.O. Box 5017, Kathmandu, Nepal

Tel: 977-1-4227779

Fax: 977-1-4225063E-mail: [email protected]

Website: www.adb.org/nrm

Foreword

This report has been prepared by Dr. Chiranjibi Nepal, Trade and InvestmentSpecialist.

Inputs from various stakeholders during interactions at the Advisory Committeemeeting, and the workshop organized by the EPN Focal Unit have beenincorporated in the report.


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Economic Policy Network (EPN) initiated in August 2004 is an undertaking of theGovernment of Nepal with an Asian Development Bank (ADB) Technical Assistance (TA) todevelop and institutionalize an open, responsive and result oriented economic policyformulation process based on sound economic analysis and dialogues with the partnershipof public and private sector, academia, and independent professionals, to support andconsolidate the Government's economic policy reforms on poverty reduction strategy. Theinitial focus has been in the areas of macroeconomic management; trade, investment andemployment; infrastructure development; and tourism, agriculture, and regional developmentthrough four thematic advisory committees chaired by the secretaries of the respectiveimplementing ministries, and guided by a high-level steering committee. The present study isan outcome of the initiative under the Advisory Committee for Economic Policy onInternational Trade, Investment, and Employment chaired by the Secretary of the Ministry ofIndustry, Commerce, and Supplies.

This report deals with the concept of business incubation and itscomponents/linkages, and provides a brief overview of business incubation in practicesadopted in the South Asian region. It has also reviewed past and current efforts andstrategies in developing business incubation in Nepal, and identifies the shortfalls along with

the required organizational structure and linkages between R&D institutions, academia,financial institutions, and others for its development. The report reviewed the relevantpolicies, acts and plans and suggested policy reforms and actions that are vital inestablishing and promoting business incubation in Nepal. The recommendations are theoutcomes of consensus reached among major stakeholders through various consultationsand the EPN workshop. I hope the findings and recommendations will be helpful for policymakers for future reforms.

I would like to thank Dr. Chiranjibi Nepal for carrying out the study. I also thank allthose who have provided inputs for the report during the interactions, the advisory committeemeetings, and the EPN technical workshop held in Nepal Administrative Staff College,Jawalakhel, Lalitpur. The work of the Advisory Committee for Economic Policy on

International Trade, Investment, and Employment is to be commended for selecting theissue and for following through with the study. I would also like to appreciate the entire EPNteam for their hard work. Last but not least, I would like to thank the ADB for supporting thisinitiative.

Dr. Posh Raj PandeyMember

National Planning CommissionGovernment of Nepal[ChairmanEPN Steering Committee]


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Foreword

It is emphasized that the main goal of incubation system is to promote continuous national

industrial and economic growth through increasing of employment and general business

development and to stimulate specific economic objectives such as industrial restructuring as

well as wealth generation and utilization of national resources.

Establishment of business incubators enhances the business image as an innovation hub,

demonstrates commitment of the incubator founders to encourage and move into business

through technology entrepreneurship, and thus creates investors trust and promotes value

added technology oriented investments in the country. Definitely, business incubation is a

new word for us, but in the globalised world it has become essence for economic growth and

industrial development. So we cannot remain aloof from this new concept by which we can

drive our economy for the betterment of the Nepalese people.

The study will provide an indepth knowledge and strategy to develop business incubation

centre in the country with appropriate example of South Asia and South East Asia.

I believe this study will benefit all those who are interested in industrial development of

Nepal, particularly administrators, business people, policy maker and other who are involved

in development strategy making.

Chiranjibi Nepal, Ph.D.

Consultant

12 November 2006


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Acknowledgements

The author takes an opportunity to acknowledge with gratitude the assistance and inputs

received from policy makers, administrators, academicians and researchers, representing

different spheres of economic life.

The author would like to sincerely express gratitude to Ministry of Industry, Commerce &Supply, Ministry of Finance, National Planning Commission and other institution for

conceptualizing this study. My gratitude also goes to ADB for having sponsored this study.

Mr. Dependra P. Dhakal, former Governor, Nepal Rastra Bank and the Team Leader of the

Economic Policy Network (EPN), ably assisted by his team, provided all the support that I

needed during the preparation stage of the report, for which I would like to express my

sincere gratitude and appreciation to all of them.

Chiranjibi Nepal

Ph.D.

Consultant

12 November 2006


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Table of Content

Foreword

Acknowledgements

Executive Summary

Chapter I Briefly Explain the Concept of Business Incubation and Its

Components/Linkages, and Provide a Brief Overview of Business Incubation

in Practice in the South Asian Region....................................................................1

1.1 The Concept of Business Incubation (BICs) .............................................................1

1.2 Types of Business Incubators ....................................................................................2

1.3 Services offered by Business Incubators: ..................................................................3

1.4 Benefits: .....................................................................................................................3

1.5 Brief on BIC...............................................................................................................4

Chapter II Review Past and Current Efforts and Strategies in Developing Business

Incubation in Nepal, and Identify the Weaknesses and Gaps .............................5

Chapter III Identify the Required Organizational Structure and Linkages between

R&D Institutions, Academia, Financial Institutions, and Others, and Identify

the Specific Responsibilities of Each......................................................................7

3.1 Some observation about international best practices in BI development: .................8

3.2 Incubator Management ..............................................................................................9

3.3 Incubator Performance...............................................................................................9

Chapter IV Review Relevant Policies, Acts and Plans .....................................................11

Chapter V Identify Constraints (Policy, Legal Institutional, Administrative, and

Others if Applicable) in Developing the above Network and Individual

Mandates to Successfully Establish and Promote Business Incubation Practicein Nepal. ..................................................................................................................12

5.1 BI Services for Enterprise Development in Nepal...................................................13

5.2 Steps to Promote BICs:............................................................................................14

Chapter VI Suggest Policy Reforms to Encourage Business Incubation Practice in

Nepal........................................................................................................................15

6.1 Required Policies .....................................................................................................15

Chapter VII Suggest Further Actions Vital In Establishing and Promoting Business

Incubation in Nepal. ..............................................................................................16

Policy-Action Matrix .............................................................................................................18

Annex...................................................................................................................................21

Bibliography ........................................................................................................................27

Terms of Reference..............................................................................................................28


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Executive Summery

Business incubation is primarily a tool to facilitate enterprise creation and development.

Incubators facilitate entrepreneurs with the expertise, and tools they need to operate the

enterprises successfully. "Business incubation (BI) is based on the philosophy that

entrepreneurs can thrive when they are surrounded by fellow entrepreneurs, guidance andsupport of business experts and others who understand the startup process. Incubator type can

vary between countries depending on the local conditions and the range and quality of

business development services available. The business incubation programs/center provides

on-site space, general services, management & marketing skills, mentoring and counseling

services, financial resources etc to new enterprises according to entrepreneurs needs.It helps

government to generate jobs, income and support small companies while the universities and

research centers can commercialize their discoveries, inventions and products. University

graduates can be transformed into job creators from job seekers. While the entrepreneurs

increase their skill and synergies to run business, the business houses facilitate spin-off

companies and create wealth. There are around 4000 various types of Business and

Technology Incubators in operation in the world. In Nepal, the concept of business

incubation received a fresh currency in the year 2000, when groundwork was initiated todevelop technology incubator center at Banepa. Information Technology Professional Forum

(ITPF) has been involved in this study for the planning of general business incubation in

Nepal. The World Bank assisted study has suggested few models for BIC development

including one in Kathmandu under the supervision and management of Department of

Cottage and Small Industries, Government of Nepal and another IC Technology Park at

Banepa, both to run with the fund from the Government. We should push for autonomous and

professionally managed BICs capable of innovating new and competitive products &

services. The public-private partnership approach of BIC is more likely to attract potential

incubates and thus facilitate and enhance entrepreneurship capability and competitiveness.

Presently, some governmental agencies and some projects assisted by donors are providing

some level of promotional and extension services. It has been commonly observed that these

supports have not been effective to develop competitive entrepreneur and tap potential

business opportunities. The business incubation programs are closely linked to delivery

system. Therefore, its success is highly dependent on the mechanism, organization structure,

capability and efficacy of the services delivered. Business incubation practice can be a

successful mechanism to enhance networking between the big industry and SMEs. Japan,

Taiwan, South Korea, Malaysia and India have launched sub-contracting exchange and

ancilliarization program effectively and successfully through business incubation approach.

To replicate this approach, the major problems foreseen in Nepal are the absence of policy

thrust and incentives packages, undeveloped stage of BICs, lack of coordination amongst

government agencies, financial institutions and academia and limited R&D Institutions.

In Nepalese context, during initial phase public( government should take initiation and

management should be run by private sector) private partnership organizational set up

independent of bureaucratic hassles, could be an effective model of BIC development.

There is, therefore, need to facilitate establishment of BICs and its development through

supportive policy strategy and offering financial and non-financial incentives for those

offering BIC services and business development services.


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Enterprise in the present context of globalization and liberal economic regime are facing stiff

competition, both locally and internationally. Also the continuing discretionary role of

bureaucracy has enhanced hassles and hindrances in entry and operation of enterprises, sales

and distribution, export and import trade. The present industrial policy has offered some

incentives for export enterprises, but smaller enterprises cannot harness such incentives

because of their inability to meet the delivery terms required in the export market. Because

small enterprises are managed mostly on intuitive basis without having required knowledgeand proper business information, they, therefore, would need professional support and

counsel in deciding what, where and how to manage the challenges, when to explore

unexplored market segments and how to tap it, where and how to get need based training,

information and services on technology, products, accessing finance, regulatory hurdles,

enhancing networking for acquiring vital cooperation from other enterprises.

Development of BICs therefore, calls for a close coordination and mobilization of multitude

of development partners in the government sector, private sector, colleges and universities,

banking and financial institution sector and a combination of sponsors. Development of

BICs therefore, calls for a close coordination and mobilization of multitude of development

partners in the government sector, private sector, colleges and universities, banking and

financial institution sector and a combination of sponsors.


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Chapter I

Briefly Explain the Concept of Business Incubation and Its

Components/Linkages, and Provide a Brief Overview of Business

Incubation in Practice in the South Asian Region

Entrepreneurs' needs in Nepal are diverse and start from knowledge on potential business

models, technical knowledge, logistical and administrative support, coordination with the

government and local community and mentoring when they face a severe stress. Incubators

nurture young entrepreneurs, firms, helping them to survive and grow during the start-up

period when they are most vulnerable. Incubation concept provides the complete process of

incubation from moving a technical concept through to its commercialization through three

phases namely, entrepreneurs, enterprise and market." This approach increases survival rates

of business and benefits both the start-ups and the economy. Thus, a business incubator (BI)

is an economic development tool and a dynamic process of business enterprise development.

"Business incubation (BI) is based on the philosophy that entrepreneurs can thrive when theyare surrounded by fellow entrepreneurs, guidance and support of business experts and others

who understand the startup process. BI programs can support the entrepreneurs and small

enterprises by providing a proper ladder to technology-led start-ups as they move out of

prototyping and into production. Like an incubator machine that provides essential

temperature & environment to hatch chickens from eggs, the incubation center supports fresh

entrepreneurs who have innovative ideas but lack overall knowledge & resources to run the

enterprise and develops the enterprise to be successful in future by providing hand in hand in

its growth.

1.1 The Concept of Business Incubation (BICs)

The concept of business incubation is a relatively new development, which started in late 70sto develop entrepreneur and small and medium type of enterprises. Business incubation is

primarily a tool to facilitate enterprise creation and development. Incubators facilitate

entrepreneurs with the expertise, and tools they need to operate the enterprises successfully.

According to the National Business Incubation Association (NBIA),USA, "Business

Incubation catalyses the process of starting and growing companies, providing entrepreneurs

with the expertise, network and tools they need to make their business successful. Incubation

programs diversify economies, commercialize technologies, create jobs and build wealth."

The 7th. International Summit of Business Incubators and Science Park Association held in

Richmond USA 2003 defined the business incubation as: "A business incubator program is

an economic and social development process designed to advise potential start-up

companies, provide them with a comprehensive business assistance program, and help

them establish and accelerate their growth and success. The main goal is to produce

successful businesses that leave the program, in a timely manner, financially viable, and

freestanding. These graduates create jobs, revitalize communities, commercialize new

technologies, and create wealth for local and national companies."


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1.2 Types of Business Incubators

Review of the history of incubation centers indicate that incubators differ in their facilities,

the operation system, types of enterprises incubated etc. Incubator management assure close

hands-on relationship with client businesses, and encourage the incubatees to graduate

when they have established sufficient market share or maturity and performance capability.

Incubator type can vary between countries depending on the local conditions and the rangeand quality of business development services available. NBIA, USA, has identified following

types of incubators according to sponsors and stakeholders:

For-profit property development ventures

Non-profit (economic) development corporations

Academic institutions

Venture capital firms

A hybrid of the above

Business incubators are also categorized according to their objective and features of tenants.

On this basis, currently, following categories of business incubators have been Identified in

developed and developing countries:

Generalized or non-specialization- Nurturing of varieties and array of business.

The main goal of these incubators is to promote continuous regional industrial and

economic growth through general business development. While these incubators

include knowledge-intensive firms, they also include low technology firms in services

and light manufacturing. A main focus of support is access to local/regional sources

of technical, managerial, marketing and financial resource.

High tech or specialized- Here the incubation services can be focused on the needs

of a particular industrial activity to avail industry synergy.

These are incubators whose primary goal is to promote the development of

technology based firms. These are mainly located at or near universities and science

and technology parks. They are characterized by institutional links to knowledge

sources including universities, technology-transfer agencies, research centers, national

laboratories and skilled R&D personnel.

Rural, special group focused empowerment, hybrid enterprise development-cum- incubator centers and small enterprise development centers.

Virtual incubators- web based video conferencing, distance education and

counseling.

Local bodies or public-private, NGOs supported by community groups, multi-national

corporationss or foundations join hand to establish and provide incubation services in

the hardship areas. The main aim is to stimulate specific economic objectives such as

job creation and industrial restructuring and to help create new firms and nurture

existing firms that create jobs. In some countries, the goal of these types of incubators,

target specific groups such as displaced and disadvantageous group, unemployed

youth, women and minorities.


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Universities also are getting involved to provide incubator services through providinguse of provision of buildings, in-kind support of faculty and staffs and student

resources to the incubators. Income is generated through rentals, the use of office

services and payment for professional assistance.

Private sector incubators work to make a profit through new business developmentservices. Hence their emphasis is on high-tech business with fast growth potential.

There are not many instances of financially sustainable private sector innovators,

except some in USA and Japan (Panasonic).

1.3 Services offered by Business Incubators:

The business incubation programs/center provides on-site space, general services,

management & marketing skills, mentoring and counseling services, financial resources etc

to new enterprises according to entrepreneurs needs. Following are the typical type of

services provided by business incubator centers.

An incubator assures space and on-site management, to develop and orchestratebusiness,

Training in relevant provision of business law, marketing, accounting and othermanagement disciplines.

Training in technical skills.

Support and arrange in-house venture funds (startup seed money).

Counseling for entire operational aspect of the incubatees' business.

Counseling on business planning, administration, regulatory and incentive program.

Integration with other business development services, marketing and networking.

Shared office having facilities of fax, copy machines, meeting rooms etc.

Research facilities and networking with various laboratories.

Tenants are graduated after a stipulated incubation period (usually 1-3 years).

Provide continuous assistance during post operation phase.

1.4 Benefits:

The government, individual entrepreneurs, universities, research centers, business houses,

and local communities can benefit from this concept. It helps government to generate jobs,

income and support small companies while the universities and research centers cancommercialize their discoveries, inventions and products. University graduates can be

transformed into job creators from job seekers. While the entrepreneurs increase their skill

and synergies to run business, the business houses facilitate spin-off companies and create

wealth. For local community, it can be an instrument to promote social development, culture,

generate jobs and mobilize local resources. Main benefits derived from BICs to the

entrepreneurs are following:


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It helps overcome the bottlenecks and regulatory hurdles to rapid businessformation,

It guides and motivates potential entrepreneur,

It improves capability and confidence of the early entrepreneurs.

Incubator "graduates" enhance business, create jobs, revitalize neighborhoods,commercialize critical new technologies and strengthen local and national economies.

Three quarter of the business in the incubators is likely to succeed, compared to one-quarter in the outside world.

Business incubation catalyses the process of starting and growing companies by providing

entrepreneurs with the expertise, networks and tools they need to make their ventures

successful. International research has proven that incubation programs diversify economies,

commercialize technologies, create jobs and build wealth. Incubation can provide a pipeline

of innovative, high growth companies which can be part of tomorrows economic engine

room for knowledge based economy.

1.5 Brief on BIC

There are around 4000 various types of Business and Technology Incubators in operation in

the world. The USA alone has more than 1000 incubators while in Europe there are nearly

1000.Germany alone has more than 300 incubators. Among developing countries, China is

leading with about 400 incubators. India, Brazil, Korea, Malaysia and Singapore have also

progressed with many a program for business incubation.

In India, Tiruchirappalli Regional Engineering College - Science and Technology

Entrepreneurs Park (TREC-STEP), is the first Science Park promoted in the country in the

year 1986, for promoting knowledge based ventures of young Science and Technology

Entrepreneurs. The promoters of TREC-STEP are Department of Science and Technology;

Government of India, Government of TamilNadu, Industrial Development Bank of India,Industrial Credit and Investment Corporation of India (ICICI), Industrial Finance Corporation

of India (IFCI), state financial and development organizations such as Tamil Nadu Small

Industries Development Corporation etc. along with the premier educational institution -

Regional Engineering College ( now renamed as National Institute of Technology ),

Tiruchirappalli. In order to assist promotion of enterprise in the high tech areas, the National

Science and Technology Entrepreneurship Development Board (NSTEDB) and the

Department of Science and Technology (DST), guided by global experience, initiated a

scheme for the establishment of Technology Business Incubators (TBIs) in the year 2000. It

has been reported that the DST had been able to establish 12 TBIs in well-identified thrust

areas including several institutions of excellence such as IIT Bombay, IIM Ahemedabad,

BITS Pilani and Vellore Institute of Technology Vellore. Indica in Pune is a private for profit

Business Incubator Center in India.

Illustration about some successful Incubators in Asian countries and South Asian region are

provided in the attached Annex. I.


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Chapter II

Review Past and Current Efforts and Strategies in Developing Business

Incubation in Nepal, and Identify the Weaknesses and Gaps

In Nepal too, many approaches to promote and nurture enterprises are being attempted.

Notably, since last 5 decades or so, enterprise development activities are being extended on

continual basis either through donor assisted special projects or under the government

programs. Wide-ranges of program of technical and management training, industrial

information and counseling, credit facilities, product buy-back schemes, work space and

infrastructure facilities through the public sector industrial districts are being extended. A

private sector led BIC came into operation in April, 2003 under the aegis of Lotus Holdings

(it is already closed), Lalitpur, and it had promoted few private sector small enterprises.

These all can be termed as isolated and uncoordinated activities for enterprise promotion and

extension services, hence, do not match with the intensity, scope and quality of services

offered under BICs. Therefore, this paper does not delve reviewing such activities.

In Nepal, the concept of business incubation received a fresh currency in the year 2000, when

groundwork was initiated to develop technology incubator center at Banepa. Now that the

infrastructure for an IC Technology Park is near completion at Banepa, it is yet to be fully

functional mostly due to frequent changes in the policy about ownership and management

caused by political instability in the country. In the year 2003, an environment and need

assessment study was also initiated to assess the enterprise environment and design and

suggest about appropriate incubation development program. Information Technology

Professional Forum (ITPF) has been involved in this study for the planning of general

business incubation in Nepal. The infoDev Incubator Initiative, a project of The World Bank,

supported the ITPF for this study and provided grant assistance in 2004-2005. Named as the

Business Incubation Initiative in Nepal Project, the objective was to assess pre-feasibility of

BIC concept and identify the network of academics, businesses, professionals, financers, andmanagers for nurturing the economic growth of Nepal through innovation, information &

communication technology. The study has been completed now and can be looked as a pre-

feasibility study of developing business incubation program in Nepal.

Apart from the continuing internal strife and adverse impact on entrepreneurial initiative, the

study findings indicate that the prevailing business environment in Nepal is somewhat

complex and not conducive for enterprise development. The study also indicates similar

findings as in other numerous earlier studies about the unfavorable environment for enterprise

development. Lack of appropriate technology and technological know how, lack of marketing

know how and market networking, poor infrastructure and unreliable delivery, difficulty in

accessing credit in rural areas, poor coordination between major players involved in

enterprise development and lack of accurate and up-to-date business information remain

major barriers for start-up and growth of enterprises in Nepal. Some other reasons are short

sighted vision of policy makers, poor implementation, and poor governance. This has also

given rise to general lethargy in enterprising and lack of drive to succeed & grow on the part

of entrepreneurs.

Implementation of the business incubation program can promote and motivate potential

entrepreneur who have innovative ideas but lack supporting infrastructure, mainly resources,


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managerial and marketing skills. The recent political development is more likely to

rejuvenate investment and enterprise friendly environment. In order to benefit from this

environment and globalization opportunity, Nepalese entrepreneurs need to enhance

capability to compete globally. It is high time now to push ahead BICs tool, to uplift the

entrepreneurial capability and technology for generating small enterprises. This will nurture

an environment for high value innovation in the sectors with competitive edge and tap the

opportunity available under globalization.

The World Bank assisted study has suggested few models for BIC development including

one in Kathmandu under the supervision and management of Department of Cottage and

Small Industries, Government of Nepal and another IC Technology Park at Banepa, both to

run with the fund from the Government. Implementation phase of both these BIC model is

questionable at this stage, understandably due to resource constraint and non-committal

attitude shown by government agencies.

International experience in business incubation and its evolvement through the past two

decades have yielded numerous success stories. Thus, in the Nepalese context, when we are

in the planning stage of business incubation, it will be prudent to pursue an appropriate model

of BICs to avoid failures and adopt right strategies to progress ahead. BICs are an importantelement to strengthen our entrepreneurial potential and innovation system. They give

fledgling Nepalese entrepreneurs an opportunity to develop their innovative ideas and set up

new businesses in order to commercialize them. We should push for autonomous and

professionally managed BICs capable of innovating new and competitive products &

services. The public-private partnership approach of BIC is more likely to attract potential

incubates and thus facilitate and enhance entrepreneurship capability and competitiveness.


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Chapter III

Identify the Required Organizational Structure and Linkages between

R&D Institutions, Academia, Financial Institutions, and Others, and

Identify the Specific Responsibilities of Each

BI concept is analogous to extensive extension and business development services in an

integrated approach for the enterprise development. Considering the characteristics and

constraints of majority of small entrepreneur in Nepal, the need to identify and deliver

demand driven BI services is highly important. Presently, some governmental agencies and

some projects assisted by donors are providing some level of promotional and extension

services. It has been commonly observed that these supports have not been effective to

develop competitive entrepreneur and tap potential business opportunities. Also many of the

participants who receive training/services and are takers of support from governmental

promotional agencies, often can not use them effectively, resulting in a large number of non-

starter, business failures and "sick" enterprises. Analyses have shown that the root cause of

these problems is the mismatch between the market led need of entrepreneur and supplydriven activities of promotional agencies. The present policy and programs for small

enterprise development are not fully responsive to entrepreneur's traits and needs. Also, the

existing promotional and extension services provided by government agencies hardly meet

the standard for business incubation support services.

The business incubation programs are closely linked to delivery system. Therefore, its

success is highly dependent on the mechanism, organization structure, capability and efficacy

of the services delivered. Appropriate government policy and adequacy of promotional

programs and packages of financial credit add to the pace of business incubation

development. Also close cooperation and coordination among government enterprise

promotional agencies, universities, financial, technological and promotional agencies and

most importantly, active involvement and collaboration between public private agencies ishighly essential for enhancing the business incubation movement.

Tie-ups between the business sector and the academic institutions in the area of enterprise

development are hardly observed and the business sector does not avail the services and

facilities of academic institutions for product development and innovation.

Another major issue observed in the present industrial structure in Nepal, is the growing

divergence of management of large scale enterprises (LSEs) and SMEs. This must be

corrected and affordable amount of complementation and alliances is developed amongst

them. Business incubation practice can be a successful mechanism to enhance networking

between the big industry and SMEs. Japan, Taiwan, South Korea, Malaysia and India have

launched sub-contracting exchange and ancilliarization program effectively and successfully

through business incubation approach. To replicate this approach, the major problems

foreseen in Nepal are the absence of policy thrust and incentives packages, undeveloped stage

of BICs, lack of coordination amongst government agencies, financial institutions and

academia and limited R&D Institutions.

Also, bureaucratic hassles and regulatory requirements are often seen as obstacles to

enterprise and also would post threat to the success of BICs. Periodic review of this situation


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is needed and immediate steps should be taken to ensure that the process of starting a

business is further facilitated with lesser regulatory formalities and greater proactive

facilitation from the government regulatory and facilitation agencies.

Cardinal theory of incubation is that entrepreneurs can thrive when they are surrounded by

fellow entrepreneurs, guidance and support of business experts and others who understand

the startup process. In other words, the start-up entrepreneur are likely to get more effectivetraining, guidance, required motivation and confidence building tips to enterprise from

entrepreneurs and practicing professional business development service providers (BDS

providers). In Nepalese context, during initial phase public( government should take initiation

and management should be run by private sector) private partnership organizational set up

independent of bureaucratic hassles, could be an effective model of BIC development.

3.1 Some observation about international best practices in BI development:

Commitment of all stakeholders to the core principles of business incubation

Develop networks of people and institutions to assist incubatees with technology

support, testing facilities, materials, prototyping facilities, etc. Incubators require a cocktail of funding support from various sources.

Collect and assess key information, decide whether incubates products/services arefeasible or not.

Ensure the needs of the incubator program dictate building requirements

Structure the incubator to be financially self sustainable.

Structure the incubator organization to minimize governance and maximize assistanceto incubate.

Engage stakeholders to help business and support incubator operations.

Recruit staff who will manage the incubator like a business and a manager who hasthe capacity to help business to grow.

Choose the product/service sector that will enable the incubator to generate sufficientrevenue and also support business incubation.

Recruit and select tenant businesses that provide revenue required in the financialmodel and have the potential to grow and to create jobs.

Customize the delivery of assistance and address the development needs of eachbusiness.

Engage in continual evaluation and improvement as the incubator progressesthrough various stages of development and as the needs of tenant business change

over time.

Sound financial support both from the central government and local government andother related agencies.

Structure the incubator to provide value to tenants and stakeholders.

Careful selection of tenant firms with highest growth potential.

Appoint a proactive management board for overall guidance and a dedicated team ledby professionals for day to day operation.


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Identify and develop a panel of professionals who provide critical support services forstart-ups venture and development.

Facilitate access to venture capital scheme and other innovative financingmechanisms.

Effective networking with other R&D institutions for making BICs a focal point for

technology in the region. Be customer service focused with both tenants and stakeholders.

3.2 Incubator Management

Use a planned and structured approach to develop the incubator.

Prospective entrepreneur are selected.

Are assisted in preparing business plans and flexible licenses for viable business.

Recruit staff that fit the incubator program and are able to understand the needs of thetenant business and help tenant business to grow..

Assisted to access seed/venture capital and credit for working capital.

Arranging and facilitating use of equipment and facilities in the center or in technicalinstitutes, university, laboratories and research facilities.

Trained in small business management and technical skills.

Counseling and backstopping provided for entire operational aspect of the business.

Tenants are graduated after a stipulated incubation period (usually 1-3 years).

If need be provide continuous assistance.

Should focus on adding value to tenant businesses

3.3 Incubator Performance

Provide visionary leadership.

Extend strategic support services.

Clear focus on IT, biotechnology and more importantly high value added products.

The incubator facility should have resources, methods and tools that contribute to theeffective delivery of business assistance to client firms.

Enhance local business and community support, and integration with other businessand economic development services in the area.

Rental fees below market rates.

Fee based services (no free launch).

Standardized communication facilities to facilitate internal and externalcommunication.

Focus the incubator's space, business services and advice on the needs of the tenantbusinesses


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Support the incubator with a wide network of business support services, network withuniversities, research and development agencies and business federations and

associations

The foregone summary of best practices, in terms of their applicability, is observed to be

relevant in the Nepalese context as well. Thus, the planning phase for the establishment of

business incubators has to take into consideration these practices and adapt it to suit Nepaleseenvironment.


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Chapter IV

Review Relevant Policies, Acts and Plans

BICs concept is new to Nepalese environment. Past Development Plans have beencontinually highlighting the importance of sustainable cottage and small enterprise sector for

the economic up-liftment of rural population through creation of employment opportunity.

Similarly, subsequent Industrial policies, programs in the industrial and commercial sector

and corresponding Acts such as Industrial Enterprise Act also emphasized need to extend

multifarious promotional and extension support activities for the growth and development of

enterprises and promised various types of financial incentives and facilities to the enterprises.

BICs activities are related to offering of services to the clients. However, BICs type of

approach and delivery of services in packages for the development of enterprises did not

figure in Nepals policy and plans. Also, deliveries of business development services do not

attract any encouragement /incentives under any Act or policy as yet. Providing developed

on-site space, general services, management & marketing skills, mentoring and counseling

services, sourcing of financial resources etc., are highly specialized professional services andwould require substantial resources and effort. There is, therefore, need to facilitate

establishment of BICs and its development through supportive policy strategy and offering

financial and non-financial incentives for those offering BIC services and business

development services.


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Chapter V

Identify Constraints (Policy, Legal Institutional, Administrative, and

Others if Applicable) in Developing the above Network and Individual

Mandates to Successfully Establish and Promote Business Incubation

Practice in Nepal.

Enterprise growth particularly micro and small enterprises is crucial for the economic

development as it not only utilizes natural resources, agricultural and knowledge based

resources but also creates employment which enhances income level and purchasing power of

the rural mass. The current Tenth Development Plan has set the target to reduce

unemployment to 4.1% and underemployment to 22.3% in Nepal. In order to achieve this, the

nation needs to implement and support policies that aid growth and development of small

enterprises. Since, main thrusts of BICs relate to entrepreneurial development and

employment creation, it is regarded as an important economic development tool.

Effectiveness of programs like BICs, is dependent upon good governance, the environmentfor the delivery of business development services and the general environment of enterprise

sector. Enterprise in the present context of globalization and liberal economic regime are

facing stiff competition, both locally and internationally. Also the continuing discretionary

role of bureaucracy has enhanced hassles and hindrances in entry and operation of

enterprises, sales and distribution, export and import trade. The deregulation and

decentralization is still to get foothold in practice. Reduction of taxes on imported raw

materials and equipment has benefited mostly the larger enterprises as most of the small

enterprises use indigenous raw materials and old equipment. The present industrial policy has

offered some incentives for export enterprises, but smaller enterprises cannot harness such

incentives because of their inability to meet the delivery terms required in the export market.

Following highlights the constraints and challenges being confronted by the enterprise sector:

The development of industrial and business enterprises in Nepal is highly skewed andactivities are concentrated in and around few urban centers and district headquarters,

Majority of enterprises are inherited and family based.

Inadequate start- up exercise and information have embedded traditional system ofmanagement,

General lack of spirit to excel on the part of entrepreneurs.

Domination of outmoded technology and know-how.

Absence of marketing know-how, information and linkages.

Weak implementation of policy provisions and frequent withdrawal of facilities ingeneral and rampant discretionary practices,

Difficulty in access of credit-both long term and recurring.

General lack of trained and skillful human resource.

Ineffective implementation of regulation and policy provision.

Limited and inappropriate business development services.


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Difficulty in access to credit from the formal financial sector in rural areas.

Negligible support for innovation and innovative ideas.

Lack of trust and coordination between government and private sector.

General unawareness and accesses to information related to input supply,technological know and other resources

Informed sources maintain that more than 60 per cent of the government registeredcottage and small enterprises are not in operation and more than 50 per cent of those

in operation are characterized by under utilization of capacity, sickness and non-

competitive operation,

Inadequate infrastructure and inordinate delays in delivery of utility servicesparticularly electric power has affected enterprises and they are burdened with high

transaction cost,

Alliances and linkages between smaller and larger enterprise are not gettingencouragement under any policy,

Bank's and financial institution's more focus towards bigger borrower, cumbersomedocumentation requirement, bureaucratic hassles and delay in processing loanrequests have restricted credit access to smaller enterprises.

Also, much needs to be done about the implementation aspect of industrial, commercial,

monetary and similar policy provisions. The unstable political situation, has given rise to

large scale corruption and harassment at each and every stage of enterprise development

namely, the industrial, revenue and local administration

5.1 BI Services for Enterprise Development in Nepal

However, the recent political changes, has also created a hope for restoration of conducive

environment for market-led growth with expanded role for the private sector and raisingawareness towards the need for raising competitiveness, efficiency and productivity. Not

being able to adjust and keep pace with the fast pace of global change, majority of enterprises

in Nepal are engulfed in constraints of insurmountable proportion. Some major features

characterizing Nepalese enterprise sector, at present, are as per following:

For accelerating the effectiveness of BI role, will require the peaceful and investment friendly

environment, existence of economic opportunity, sympathetic and supportive government

policy, motivation and facilitation, effective and friendly bureaucracy, easy access to

institutional credit, appropriate legal framework and strong entrepreneurial values and traits.

Because small enterprises are managed mostly on intuitive basis without having required

knowledge and proper business information, they, therefore, would need professional supportand counsel in deciding what, where and how to manage the challenges, when to explore

unexplored market segments and how to tap it, where and how to get need based training,

information and services on technology, products, accessing finance, regulatory hurdles,

enhancing networking for acquiring vital cooperation from other enterprises.

In the light of the above traits of majority of small entrepreneur in Nepal, the need to

introduce and deliver promotional and extension services following BI approach is highly

important. The development of enterprises is dependent on the quality, effectiveness of the


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policy and promotional programs. However, for those policy and programs to have a major

impact, they must be made fully responsive to entrepreneur's traits, needs and also closely

linked to the delivery systems like BICs. Also close cooperation and coordination among

ministries and departments, educational, financial, technological and promotional agencies

and most importantly, active involvement and collaboration between public private agencies

(government agencies, chambers and business associations, municipalities, district

development committees) will be highly essential.

If we want to install BICs development contribute more robustly to the economy, greater

commitment of promotional and support agencies and government must be ensured. Also

adequate encouragement, motivation and facilitation need to be provided for developing and

grooming BICs and private business development service providers.

5.2 Steps to Promote BICs:

Identify and assess potential activities for incubation.

Encourage and motivate private sector (such as; FNCCI's Youth Entrepreneur

Development Forum) to initiate and develop business development services based onthe fundamentals of BICs.

Enhance tie up between the university and the corporate private sector to nurtureinternship from colleges.

Facilitate and encourage development of BICs by larger corporate sector to supportsub-contacting exchange on the model of industrial estate, technology and Science

Park.

Identify appropriate institutions (such as; IEDI, DCSI, FNCCI) having potentiality todevelop the capability needed to independently manage and deliver the BICs services.

Embrace policy to encourage networking and alliance amongst Colleges/ universitiesand the private business sector for beneficial relationship through access to testing and

laboratory facilities and qualified faculty for product testing and development. Facilitate the BICs location by extending assistance of leasehold land for development

of BI complex / Technology and Science Park.

Facilitate through policies and Acts to enable credit mobilization by BICs promotersfrom the Banks and financial sector for BI infrastructure development and recurring

expenses, as well as financial need of the incubatees enterprises (tenant enterprises)

by extending the recognition to BICs as service industries.

Initiating loan guarantee scheme to cover BICs incubatees to encourage and facilitatebanks and financial institutions by making more loans to small enterprises.

Essentially, the operation of BICs should be on business philosophy of cost plus.Hence for meeting the recurring and development cost during initial phase of

establishment, mobilization of donors/INGOs support and assistance (both forsourcing of professional services, providing seed capital and venture capital in the

form of revolving fund and myriad of technical assistance) will be highly essential.

For facilitating BI management and development, close involvement of SectoralMinistries, Banks, promotional and monitoring agencies, nodal agency for innovation

and technology like Royal Nepal Academy of Science and Technology, Universities

and colleges, Research Laboratories and larger enterprises and multinational

enterprises will be highly desirable.


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Chapter VI

Suggest Policy Reforms to Encourage Business Incubation Practice in

Nepal.

BICs have proved to be an effective model to promote innovative enterprise and

entrepreneurial talent in a country. After graduation the incubates like other business

enterprise can create jobs and invigorate local economies by advantageously mobilizing

local natural and human resources. Development of BICs therefore, calls for a close

coordination and mobilization of multitude of development partners in the government sector,

private sector, colleges and universities, banking and financial institution sector and a

combination of sponsors. Adequate government policy and facilitation for bringing active

collaboration of the private sector, and the academia is highly vital for the development of

effective BICs.

6.1 Required Policies

Emphasize in the Development Plans and announce national level policy to encourageand promote BICs.

Encourage private sector to establish, operate and manage the Business Incubators bygiving status of service enterprises.

High School level curriculum to include entrepreneurship development and businessstart-up cases.

Policy level incentives to assure easy flow of facilities both financial and non-financial.

A investment fund should be created for assessing potential incubation activities,evaluating appropriate candidate agencies and desirable location, awareness creation and

capacity building of BICs.

Investment policy of the banks and financial institutions should facilitate easy flow ofcredit for the purpose of infrastructure development and capital investment and recurring

and long term investment needs of tenant enterprises.

To commercialize innovative entrepreneurial ideas, venture capital can be an essentialtool. The Government should initiate establishment of sizeable fund for Venture Capital

and extend its scope to cover BICs, and its tenants (incubatees) through a well

established and capable bank and financial institution.


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Chapter VII

Suggest Further Actions Vital In Establishing and Promoting Business

Incubation in Nepal.

History and experience in business incubation and its evolvement through the past three

decades have yielded numerous success stories. BICs are highly relevant and critical in our

entrepreneurial environment. Government of Nepal should include this in the enterprise

development strategy and facilitate development. Following tips need to be followed and

relevant actions taken to accelerate the pace of BICs development in the country.

Illustration of successful incubators are seen in not for profit public privatepartnership organizational set up independent of bureaucratic hassles.

Study the entrepreneurial climate to select the potential activities and suitable locationso that the barriers are minimized.

Products likely to have competitive edge, high value and high-tech products, ITproducts and growth sectors with core competencies could be some viable activities

for incubation services.

In our context incubators can not be a viable commercial venture in terms of tangiblefinancial return in the short run.

Business incubators can not reform the economy single-handedly. It should be backedby appropriate and timely government policies and acts to facilitate operation

professionally.

Provide incubator services on commercial terms for ensuring financial sustainability.

Business incubation can flourish with close collaboration and support of businesscommunities, policy makers, local private and public agencies etc.

The incubator needs to be equipped with required facilities, resources, workingsystem and methods and tools that contribute to effective delivery of services.

Backstopping service need to address the developmental needs as well as to grapplewith the difficult business environment.

To ensure credit and seed fund need of small incubates, easy flow of credit, loanguarantee scheme and making available venture and seed fund to BICs incubates

need to be assured.

Proper incentives( tax incentive at least for 10 years), local tax credits, exemptions,

and refunds need to be offered to encourage small enterprise creation.

Necessary addition of provisions in relevant Acts, policies, directives including that ofNepal Rastra Bank will be required.

Sponsor an" BICs Entrepreneur Award." Such an award, especially if properlypublicized, can reap tremendous rewards by getting people excited about the idea of

starting a successful business.


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The 21st Century is going to be an era where entrepreneurship and small business grow ever

more important. To quote an old phrase, communities that think globally, but act locally are

the ones that will prosper. Though incubators in urban settings have higher prospects of

succeeding in the present context, the need to expand it in rural settings will also necessary as

entrepreneurs in rural settings are mostly devoid of the formal mentoring and other support

input.


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Constraints (policy, legal,

institutional, administrative,

and others if applicable)

Recommend Policy Improvements Activities Indicators

Achieveme

credit to BIC services and its tenants.Investment policy and procedure of th

banks and financial institutions should

facilitate easy flow of credit for the

purpose of infrastructure development

and capital investment of BIC and also

recurring and long term investment

needs of tenant enterprises.

and policies to make thementerprise friendly and

compatible to global

perspectives.

infrastructuredevelopment and

recurring expenses, as

well as financial need of

the incubatees

enterprises( tenant

enterprises)

Meeting the recurring anddevelopment cost during

initial phase ofestablishment,

mobilization of

donors/INGOs support

and assistance (both for

sourcing of professional

services, providing seed

capital and venture capital

in the form of revolving

will be essential.


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Annex

Briefs about Business Incubation in Asia and some relevant countries

INDIA

Tiruchirappalli Regional Engineering College - Science and Technology EntrepreneursPark (TREC-STEP), is the first Science Park promoted in the country in the year 1986, for

promoting knowledge based ventures of young Science and Technology Entrepreneurs. The

promoters of TREC-STEP are Department of Science and Technology; Government of India,

Government of TamilNadu, Industrial Development Bank of India, Industrial Credit and

Investment Corporation of India (ICICI), Industrial Finance Corporation of India (IFCI), state

financial and development organizations such as Tamil Nadu Small Industries Development

Corporation etc. along with the premier educational institution - Regional Engineering

College ( now renamed as National Institute of Technology ), Tiruchirappalli. TREC-STEP is

situated in 2,00,000 square meters of land, between Regional Engineering College,

Tiruchirappalli and Bharat Heavy Electricals Limited, and right in an industrial area that

houses a nationally reputed SME Cluster of over 300 fabrication industries. These locational

advantages provide a unique industrial and academic ambience for TREC-STEP to promoteknowledge-based ventures. The info Dev funded work program is planned as a flagship

Incubation initiative in the country, for other incubators to emulate. TREC-STEP, with its

good track record of Best Performing STEP in India, is to implement a series of ICT

enhanced incubation initiatives for developing ICT Synergies in Business Incubation. These

set of innovative initiatives is to facilitate formation and growth of start-up clusters, while at

the same time leveraging regional competencies. Specifically the work program is to include

the Creation of an ICT enabled business incubation web portal; Capacity building through

training in focus areas (emerging ICTs, business excellence models and quality issues);

Learning and partnership traveling tours and networking platforms; Information

Infrastructure development; and Documentation and dissemination platforms.

Contact: Mr. R. M. P. Jawahar; Tel 91 431 2500085, 2500697; Email: [email protected],

[email protected]

Website: www.trecstep.com

BANGLADESH

Recently an entrepreneurially spirited team has created a "Business Incubator" in the capital,

Dhaka. The young energetic team with fair experience in entrepreneurship wants to help

other young entrepreneurs in the city by creating a platform. The unit provides a PLUG &

PLAY service where people can start working with their brilliant ideas to shape it to reality.

The business idea got recognized by ATDP (an US-AID project) and AIUB (a local privateuniversity) recently in a BUSINESS PLAN CONTEST.


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INDONESIA

Broadband Network System (BNS) is a registered private enterprise founded in 2001, and

is located at Jakarta, Indonesia. Beside office space, the Incubator facilities include state of

the art broadband network, servicing major cities in Sumatra, Java, Bali and Lombok islands.

PT Broadband Network System is a holding company, and it consists of several IT

companies with a cumulative 13 years of experience as Network System Integrator, Turn-keysolution Provider, Broadband ISP, IP based Multimedia Operator, Fiber & VSAT links

Provider & Operator (together with a licensed microwave Batam-Singapore link) as well as

IP Phone Operator. Using the financial and technical resources from infoDev and the

Indonesian government, BNS is to infoDev Incubator Initiative consolidates its operational

and self-sustaining capacity, to provide quality ICT services by enhancing its organization

infrastructure. This will include improving efficiency, performance and outreach of business

incubation services through the building and more effective use of broadband- enabled

information communication technology and e-services solution.

Contact: Mr. Kurnia Tugiono, Tel 62-21 3905611; Email: [email protected]

Website: www.bns.co.id

IRAN

Isfahan Science And Technology Town (ISTT); a government organization running three

incubators, a pre-incubation program, a multi-tenant building, and one newly-established

technology park; Yazd Science And Technology Park (YSTP), established in 2001 with

special focus on IT, Biotech, new energies, and textile technology, and Rooyesh ICT

Incubator affiliated to the Not-for profit organization National Job Creation Organization of

Iran (JobIran) that was established in 2000. This funding for this unique publicprivate

partnership include internal funds, and those solicited as grants from Deputy Minister of

Science, Research and Technology, and from State Management and Planning Organization

(MPO), in addition to funding from the infoDev Incubator Initiative. The planned work

program is to result in the creation of training packages for trainers, enhance the incubator

services, and establish wider relations

Nationally and internationally, establish new incubation programs, and develop an Incubators

Portal System to benefit from ICT-enhanced capabilities and services towards the

achievement of their organizational goals and contribute to national interests. The work

program is to include five main modules related to training of site specific content by national

and international experts; creation of two complimentary networking systems, one for tenants

and the other for technology parks and business incubators; enhancement and diversification

of services and eServices; creation of a bilingual portal system; development of virtual

incubation programs.

Contact: Mr. Mehdi Keshmiri Tel 98 311 3913912; 3913917; Email: [email protected]

Website: www.istt.org


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KRYGYZSTAN

The Union of Business Incubators and Innovation Centers of the Kyrgyz Republic, the

implementing organization of the infoDev Incubators Initiative funded work program being

implemented in Kyrgyzstan, was launched in August 2003. The mandate of the Union of

Business Incubators and Innovation Centers, include the promotion of small and medium size

business development in the Kyrgyz Republic through implementation and maintenance ofbusiness incubators, innovation centers, and technology parks. In addition to functions related

to asset- maintenance, the Union is also responsible for promoting economic growth of

Kyrgyzstan, raise employment, help start-up businesses and integrate Kyrgyzstan into the

global knowledge-based economic system through development of business incubators and

introduction of Information technologies. The infoDev Incubator Initiative funded work

program are to include three main activities to the already existing business incubator of the

Union of Business Incubators in Kyrgyzstan including introducing tenant companies of an

existing business incubator to the information technologies in order to increase efficiency of

their operations; launching a branch to incubate ICT projects; and rendering help in ICT

development to the

Regional business incubators. The partners for this work program include Eurasia

Foundation, Organization for Cooperation and Security in Europe OCSE Center in Bishkek,IFC-SECO Program for Leasing Development in Central Asia, UNIFEM, and the UNDP

program in Kyrgyzstan.

Contact: Ms. Zamira Akbagysheva Tel 996 312 66 45 49; Email:

[email protected] Website: http://congresswomen.host.net.kg/

TURKEY

Ankara Cyberpark is a science and technology park, which is established in partnership

with Bilkent University. The universitys affiliate Bilkent Holding has also been involved

with nformation technology and has been a local leader in research and development of

software systems. Ankara Cyberparks primary mission is to establish an infrastructurebringing together government, business and the academic community and to create an

atmosphere to better develop IT technologies and solutions. The Cyberpark seeks to provide

its stakeholders (shareholders, tenants, academicians, students, government, and city of

Ankara) and provide its tenants with an atmosphere that creates synergy, the best quality and

most cost-effective techno park services. With this infoDev incubator initiative, the

Cyberpark plans to establish Turkeys first private incubator within a technopark, aiming to

create an incubation culture in Turkey and guiding future private incubator establishments in

Turkey, which will have an important contribution to the communitys development.

Furthermore, support of important organizations, such as Turkish Technology development

Foundation (TTGV) and Small and Medium Industry Development Organization (KOSGEB)

is expected to facilitate the growth and development of the incubator. The incubator is to

serve research and development project groups and technology-based start up firms, andencourage these firms to utilize ICT to a maximum level possible. The incubator is also

expected to foster the internationalization of firms operating within it by using European and

international knowledge networks to which the parent Cyberpark will be associated. It will

also be a gateway to access international resources, such as programs funded by the European

Union, the World Bank, the UNDP, and the OECD.

Contact: Mr. Mustafa Atilla, Tel +90 (312) 266 31 37; Email: [email protected],

[email protected] Website: http://www.cyberpark.com.tr/tr/


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MAURITIUS

The National Computer Board, the implementing institution for the infoDev Incubator

Initiative work program in Mauritius, was established under the National Computer Board

Act 1988. It is a para-statal organization under the Ministry of Information Technology and

Telecommunications,and is administered by a Board of Directors. The role of the NCB is to

e-power people, businesses and the public sector by developing and promoting ICT and ICTrelated services in line with national goals and policies. The NCB is a key enabler in

transforming Mauritius into a Cyber Island and, amongst others, advises the Government on

the elaboration of national policies for the development of the ICT sector in Mauritius. The

overall objective of the project is to conduct an appraisal of existing facilities and services

offered to start-ups in the Information and Communication Technology (ICT) field at the

National Computer Board ICT Incubator Centre and to examine ways to enhance and

streamline the same. A marketing and business strategies plan is to be formulated for the

Incubator Centre, a strategic plan for partnership created, and the development of a training

plan for IT incubatees and the managing staff is also envisaged.

Contact: Mr. Kemraz Mohee Tel +230 2105520; Email: [email protected],

[email protected]: http://ncb.intnet.mu/

MONGOLIA

The activities during the planning phase are to be directed towards building a solid

foundation towards the establishment of a business incubator. This proposed New Path

Incubation Center,

is to be a joint initiative resulting from an on-going and highly productive relationship

between InfoCon, the Mongolia Development Gateway, and the Mongolian Academy of

Sciences (MAS).

It is to be complemented by the involvement of the Mongolian Chamber of Commerce and

official recognition and support from the Ministry of Infrastructure. In the medium term, this

incubator centre is to engage a number of partners from the private sector to strengthen the

capacity and viability of the project. The role of InfoCon is to oversee the implementation of

the project and to foster and maintain strategic partnerships. The Mongolia Development

Gateway is to contribute its expertise and experience in the area of ICT development and

training, and the ability to facilitate the integration of ICTs and sound business practices into

participating organizations. The role of the Mongolian Academy of Sciences in the New Path

project is to serve as the link between Mongolian businesses and research and development

information and outcomes. The main activities that are to be undertaken during the planning

phase are to include extensive needs assessment, strategic and business planning, creating

partnerships, establishment of incubator infrastructure, and a formal monitoring and

evaluation mechanism.

Contact: Ms. Tsetseg-Ulzii Yadamsuren Tel +976 11 325 438;

Email: [email protected], [email protected]

Website: http://www.infocon.mn/eng/index.php, http://www.mongolia-gateway.mn


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NEPAL

Nepal Lotus Business Incubation Centre, Lalitpur

Official launch-2003.

Objectives: Foster a business climate, help promote creation of jobs, help others to establishsimilar centers.

Service provided: Physical Space, Clerical Services, Counseling, Outreach services, Training

and Workshops

SRI LANKA

Intermediate Technology Development Group South Asia (ITDG) helps eradicate

poverty in developing countries by developing and using technology and by demonstrating

results, sharing knowledge and influencing others. Under the infoDev Incubator Initiative,

ITDG will work with small scale agro processors to strengthen their market linkages throughnetworking and introducing simple and effective applications of ICTs and link them with the

e-business world. The services that are planned to be identified include market intelligence,

marketing services, expert inputs, management inputs and timely information that are beyond

the conventional business development services delivery. This commercial provision of

marketing and other consultancy services for the rural and small scale agro processing sector

is to be undertaken through a community network model Rural Enterprise Network (REN)

that was established among the group enterprises assisted by ITDG, which has now emerged

to be the business incubating arm of ITDG South Asia. Today, REN is incubating fifteen

group enterprises in the districts of Badulla, Kurunegala, Kandy, Matara, Anuradhapura and

Puttalam in the field of agro processing (dehydrated vegetables, fruits, and medicinal herbs.)

Contact: Mr. Jayantha Gunasekara, Tel 94 1 829412/ 94 1 829412; Email:

[email protected]

Website: www.itdg.org

THAILAND

Kenan Institute Asia (KIA) and the Office of Vocational Education Commission developed

the KIAsia Business Incubator in 2003 to assist aspiring entrepreneurs within Thailand,

especially in rural areas whose residents typically lack funds and necessary basic business

know-how. The KIAsia Business Incubator is currently focusing on assisting these aspiring

entrepreneurs realize there business ideas, while expanding their scope to include areas such

as ICT utilization and international business practices. (KIAsia was established in 1996 withan endowment provided by USAID, the Royal Thai Government, the Frank Hawkins Kenan

Institute of Private Enterprise and the William R. Kenan Charitable Trust). The planning

grant under the infoDev Incubator Initiative is to be utilized over one year to fully research

and plan to make this business incubator customized for site specificities in Thailand. The

Office of Vocational Education Commission of Thailand is working with the BAC and is to

be a strategic partner in providing facilities, staff and recruitment of tenants once the planning

phase is concluded and the operational phase begins. This work program is to focus on four

key areas that are to include basic business education, competency development, funding


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assistance and ICT utilization/skills. Each area is planned to include a number of activities,

which are a pre-requisite for the successful implementation of an effective and efficient

incubator. These activities are to have a positive impact on the ICT community within

Thailand as the rural community begins to utilize their benefits.

Contact: Mr. Marc DaSilva, Tel (662) 229-5920 ext. 324; Email: [email protected]

Website: http://www.kiasia.org/

VIETNAM

The Center of Research and Consulting on Management (CRC), an autonomous unit of

Hanoi University of Technology, is the lead implementing institution for the work program in

Vietnam. The objective of the work program is to fill the current gap in Vietnam of

supporting entrepreneurs in their idea,pre-seedand seedstages. This is to be ensured through

Entrepreneurship Training, Research-Application Linkages, Business Plan Development,

Infrastructure Provision, Network Building, and Business Development Services. The

primary target tenants include students, and researchers in universities and research

institutions; authors of ICT related technology innovations; individuals or teams with a

research under way or a completed innovation; and young companies with less than 2 yearsof operation. The work program includes seminars and

workshops on entrepreneurship topics, annual business plan competitions within HUT,

regular networking events with VCs, later-stage incubators, corporate ventures, angel

investors; maintain relationships with national competitions; leverage the novelty of the

university incubator concept to create media coverage. The overall ICT strategy is planned to

include three elements: E-learning platform for business plan seminars, and management

trainings; Internet-based information platform on business start-ups; services for web-site

creation and e-Commerce.

Contact: Mr. Pham Minh Tuan, Tel 84 4 868-3713; Email: [email protected]

Website: www.hut-fem.edu.vn


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Bibliography

1. White Paper on Business Incubation, Introduction to Business Incubation, Software andTechnology Parks of India).

2. Global Forum on Business Incubation, Creating Conditions for Innovation, 11 August,

2004, New Delhi,

3. As adopted from: Growing New Ventures, Creating New Jobs, Rice & Matthews,Quorum, 1995.

4. As adopted from: Business Incubation Initiatives in India, National Science &Technology Entrepreneurship Development Board, Department of Science &

Technology, Government of India for Successful Launch of Technology Business

Incubators (TBI).

5. Adapted from: Indica (Pune, India) Private for Profit Business Incubator SuccessStory by Rahul Patwardan & Vadim Kotelnikov.

6. 5.As adopted from: Australia and New Zealand Association of Business Incubators,

7. ANZABI, (1996) Business Incubation in Australia Best Practice Standards and anIndustry Profile, Chapter 2 Best Practice Standards

8. Environment and Need Assessment Report on Business Incubation in Nepal, June, 2005,IT Professional Forum, Kathmandu, Nepal


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Terms of Reference

Study Topic: Strategy for Promoting Business Incubation Centers in Nepal

This assignment is equivalent to one man-month. The consultant should establish adequate

interactions with key informants, stakeholders and government agencies while conducting the

study.

Task details:

1. Briefly explain the concept of business incubation and its components/linkages, andprovide a brief overview of business incubation in practice in the South Asian region.

2. Review past and current efforts and strategies in developing business incubation inNepal, and identify the weaknesses and gaps.

3. Identify the required organizational structure and linkages between R&D institutions,academia, financial institutions, and others, and identify the specific responsibilities of

each.

4. Review relevant Policies, Acts, and Plans.

5. Identify constraints (policy, legal, institutional, administrative, and others if applicable)in developing the above network and individual mandates to successfully establish and

promote business incubation practice in Nepal.

6. Suggest policy reforms to encourage business incubation practice in Nepal.

7. Suggest further actions vital in establishing and promoting business incubation in Nepal.

8. Provide a policy-action matrix containing (a) constraints (policy, legal, institutional,administrative, and others if applicable); (b) recommended policy improvements; (c)

activities; (d) indicators of achievement; (e) responsible agencies; and (f) timeframe

(immediate, intermediate, and long-term)

9. The paper should include an executive summary not exceeding five pages.

10.The consultant is requested to provide a short article, in English or Nepali, related to theabove topic, to be published in a national daily for information dissemination.

11.Submit draft report (electronic and hard copy) to the EPN Focal Unit within 30 daysfrom the date of assignment.

12.Present the draft at the Advisory Committee meeting (to be scheduled by the EPN).

13.Present revised draft (incorporating comments from the Advisory Committee andexternal reviewer) at the workshop organized by the EPN.

14.Present final report (incorporating comments from the Workshop) at the Advisory

Committee meeting for final validation. Submit final report to the EPN Focal Unit

(electronic and hard copy).

strategy promoting (1)

Documents