Digitizing Public Transportation in Nepal: Challenges and Solutions

Introduction:

Public transportation in Nepal is a critical component of the nation's infrastructure, but it faces significant challenges in digitization. The sector, predominantly managed by drivers and conductors (khalasis), is resistant to change due to unofficial earnings and low levels of education among employees. Despite several companies going bankrupt while trying to address these issues, innovative solutions leveraging sound wave technology offer a promising way forward. This article explores the challenges, benefits for stakeholders, and necessary regulatory policies to successfully digitize public transportation in Nepal.

- Daily Fare Collection:

- The exact daily fare collection in Kathmandu Valley and outside is challenging to determine due to the informal nature of fare collection. However, digitization could provide accurate data.Here are the calculations based on the given data for the Kathmandu Valley:

Assumption of Max daily traffic 408,081 and Min daily traffic 225654 on (Estimated Population of Kathmandu Valley is 5 Million). The basic fair now is 25 and one passanger travel twice.

Daily Fare Collection:

- Maximum Daily Fare Collection: NPR 20,404,050

- Minimum Daily Fare Collection: NPR 11,282,700

Monthly Fare Collection (30 days)

- Maximum Monthly Fare Collection: NPR 612,121,500

- Minimum Monthly Fare Collection: NPR 338,481,000

Yearly Fare Collection (365 days)

- Maximum Yearly Fare Collection: NPR 7,447,478,250

- Minimum Yearly Fare Collection: NPR 4,118,185,500

Taxable Amount (13% tax rate)

Daily

- Maximum Daily Taxable Amount: NPR 2,652,526.50

- Minimum Daily Taxable Amount: NPR 1,466,751.00

Monthly

- Maximum Monthly Taxable Amount: NPR 79,575,795.00

- Minimum Monthly Taxable Amount: NPR 44,002,530.00

Yearly

- Maximum Yearly Taxable Amount: NPR 968,172,172.50

- Minimum Yearly Taxable Amount: NPR 535,364,115.00

NPR 7,447,478,250 yearly fair collected and NPR 968,172,172 taxable amounts that are potentially being evaded due to the lack of a digital payment system in Kathmandu Valley's public transportation sector

Current Challenges

1. Unofficial Earnings:

- Drivers and conductors keep a significant portion of fare collections, giving only about 50% to the owners, which makes them resistant to digital systems that could expose these earnings.

2. Job Shifting:

- The implementation of digital systems could prompt employees to leave their jobs, seeking roles that continue to offer unofficial earnings.

3. Low Literacy Levels:

- Many public transportation employees are uneducated or semi-educated, creating a barrier to adopting and using digital tools effectively.

4. Tax Evasion:

- Public transportation companies often evade taxes, reporting minimal taxable income by inflating expenses. Digital systems threaten this practice, leading to resistance.

5. Government and Mafia Influence:

- Previous attempts to digitize the sector have failed due to collusion between powerful mafia vendors and tendering companies, undermining government initiatives.

6. Labor Union Influence:

- The Majdur (Labor) Sangh (Union) is often politically inclined and can impose issues that align with their affiliated parties. This can lead to strikes and protests against digital initiatives perceived as anti-labor or against their political interests.

Government Strategy:

Implementing a tax waiver to the public by the government will motivate the adoption of digital transportation. This incentive will encourage both passengers and transportation providers to transition to digital payment systems. Moreover, the government will benefit by obtaining an accurate database of transactions, significantly reducing tax evasion and ensuring proper revenue collection. This transparency will improve the overall efficiency and integrity of the public transportation sector in Kathmandu Valley.

Lessons from Ride-Sharing Companies:

Ride-sharing companies in Nepal, such as Pathao and Tootle, faced similar challenges when they introduced digital payment systems and operations. They managed to overcome these hurdles and achieve success through the following strategies:

1. Customer Education:

- Extensive campaigns were conducted to educate customers about the benefits and usage of digital payments.

2. Incentives and Discounts:

- Attractive discounts and incentives were offered to encourage both drivers and passengers to adopt the digital system.

3. Training Programs:

- Comprehensive training programs for drivers ensured they were comfortable with the technology and could assist passengers effectively.

4. Strong Customer Support:

- Robust customer support systems were established to handle any issues or queries promptly.

5. Regulatory Compliance:

- Close collaboration with government authorities ensured compliance with local regulations, building trust and legitimacy.

Stakeholders in the public transportation sector can learn from these steps to facilitate the transition to a digital ecosystem. Here are some key takeaways:

1. Prioritize Education:

- Educate all stakeholders about the benefits and functionalities of the digital system through targeted campaigns.

2. Offer Incentives:

- Provide financial incentives to drivers and conductors to encourage the adoption of digital tools.

3. Simplify Technology:

- Ensure the digital system is intuitive and easy to use, catering to the low literacy levels of some employees.

4. Build Trust:

- Establish transparent and reliable systems to build trust among all stakeholders.

5. Provide Support:

- Set up dedicated support teams to assist with any technical or operational issues during the transition.

Benefits for Stakeholders and Passengers:

- Vehicle Owners:

- Increased revenue transparency.

- Reduced tax liabilities through proper fare collection reporting.

- Better control over operations and reduced fraud.

- Drivers and Conductors:

- Potential for performance-based incentives.

- Secure, formal earnings.

- Simplified fare collection processes.

- Passengers:

- Convenient and flexible payment options.

- Transparent and fair fare calculations.

- Improved engagement and services.

How to Making Adoption Easier?

1. Government Mandate:

- The government should enforce a digital ecosystem and digital payment system in public transportation. This would reduce tax evasion and streamline revenue collection.

2. Incentives for Adoption:

- Provide financial incentives and subsidies to transportation companies and employees to transition to digital systems.

3. Education and Training:

- Conduct extensive training programs to educate employees about the benefits and usage of digital systems, ensuring smoother adoption.

4. Phased Implementation:

- Implement the digital system in phases, starting with pilot projects in major cities to address teething issues before a nationwide rollout.

5. Stakeholder Engagement:

- Involve all stakeholders, including drivers, conductors, company owners, and government officials, in the planning and implementation process to gain buy-in and reduce resistance.

6. Transparency and Monitoring:

- Ensure transparency in the tendering process and establish monitoring mechanisms to prevent collusion and corruption.

Regulatory Policies Needed:

Implementing a tax waiver to the public by the government will motivate the adoption of digital transportation. This incentive will encourage both passengers and transportation providers to transition to digital payment systems.

Moreover, the government will benefit by obtaining an accurate database of transactions, significantly reducing tax evasion and ensuring proper revenue collection. This transparency will improve the overall efficiency and integrity of the public transportation sector in Kathmandu Valley.

1. Mandatory Digital Payment Systems:

- Enforce the use of digital payment systems for all public transportation vehicles.

2. Subsidies and Incentives:

- Provide financial incentives for companies and employees transitioning to digital systems.

3. Regular Audits and Monitoring:

- Establish regular audits to ensure compliance and prevent tax evasion.

4. Education and Training Programs:

- Implement mandatory training programs for all public transportation employees.

5. Anti-Collusion Measures:

- Strengthen regulations to prevent collusion between mafia vendors and tendering companies.

Kathmandu Mayor Vidya Sundar Shakya once attempted to implement the Viyana model in the transportation sector, but the initiative remained only in the news, highlighting the challenges of overcoming entrenched interests and resistance to change.

Proposed Solution:

Sound Wave Technology

I proposes a solution utilizing sound wave technology that addresses several of these challenges:

- Offline Capability:

The system works without an internet connection, ensuring reliability even in remote areas.

- Auto Fare Calculation:

- Automated fare calculation minimizes human error and potential fare manipulation.

- Prepayment and Post-payment Options:

- Flexible payment options cater to different passenger preferences and increase convenience.

- Premises Payment and Passenger Engagement:

- Enhances passenger experience through seamless payments and engagement tools.

Conclusion

Digitizing public transportation in Nepal presents significant challenges, primarily due to resistance from stakeholders benefiting from the status quo. However, with innovative solutions like sound wave technology and concerted efforts from the government, it is possible to overcome these hurdles.

By enforcing digital ecosystems, providing incentives, and ensuring transparency, Nepal can achieve a more efficient, transparent, and user-friendly public transportation system. Learning from the successes of ride-sharing companies, stakeholders can adopt effective strategies to ensure a smooth transition and sustainable growth in the sector.

Implementing a tax waiver to the public by the government will motivate the adoption of digital transportation. This incentive will encourage both passengers and transportation providers to transition to digital payment systems. Moreover, the government will benefit by obtaining an accurate database of transactions, significantly reducing tax evasion and ensuring proper revenue collection.