Kathmandu: Nepal’s corporate sector is having trouble commercializing Nepali films due to the lack of transparency in expense reports and tax evasion. The profitability of any Nepali movie is uncertain. Nobody can predict if the film will be a blockbuster, a disaster, or a break-even in terms of revenue. However, the giant corporate houses of Nepal wish to get some surety before investing in it.
Unlike our southern neighbor, the Nepali film sector is yet to be established as an industry, and the corporate sector is yet to enter the film market to transform the movie sector into a giant industry that will contribute to the GDP of the nation.
The 8th Nepal International Film Festival held a discussion on ‘Commercialization of Nepali movies’ where renowned Nepali business owners and bankers shared their insights about commercializing Nepali movies, investment vision, drawbacks, and improvement aspects. Here is what they had to say:
Shekhar Golchha, Chairperson of Golchha Group
Nepali cinema has its own objective and possibility. However, there are still major drawbacks that exist in the film industry. As any business owner would only invest after seeing the potentiality of a film. The ‘dharma’ of any business is earning profit. But, the profit should be earned with decency. The generated revenue should add some value to the country. After closely observing the business potential and loopholes in Nepali films, Ranjit Acharya and I have together invested in ‘Bioscope Cinema Pvt. Ltd. Corporate sector has already entered the movie sector in foreign countries. Their investment is huge, which has created a ripple effect. As a result, the film standard has increased, the earnings of technicians and crew members are significantly higher, and the quality has enhanced with higher chances of expansion. We can also include Nepali diasporas to work together in this sector. Making only one movie as a hobby and making movie consistently as a production house are two completely different approaches. One problem we have seen in the movie sector is the lack of a professional approach towards their work. This directly impacted the commercialization of Nepali films.
Nakim Uddin, Director at QFX
Distribution is a business done out of obligation. Our journey began from Jai Nepal Hall, which we renovated as QFX, intending to create a safer space for mothers, sisters, and families to watch movies in a better environment. When we entered this market 23 years ago, there were a lot of foul plays. Everything was disorganized. Tax evasion was a major issue. Hence, we thought to make the QFX system transparent. From tickets, and number of audiences, to earnings, everything was digitized for transparency. However, this was not always the case. To change this disorganized system, we connected with all the concerned authorities and changed the whole game. We had to do a lot of homework and learn about new technology to convert from analog to digital methods. Adopting the changing technology every 4-5 years is a challenge too. We ended our dependency on Bombay regarding analog systems and collaborated with UFO for digitization. UFO provided us with 14 servers for 14 halls for the movie Kagbeni. We invested in infrastructure and digitized all cinema halls by 2010. At present, almost 50 percent of the business is done by QFX for the movie. Not all films that we show are a blockbuster hit. To minimize the loss, we also need some filler films, which sometimes make a break even. We were operating fine even during the depressing period in 2020. Revenue is uncertain in the movie industry and cannot be predicted. Hence, this uncertainty regarding profitability has caused problems for the corporate sector to enter the market and commercialize the Nepali movie industry.
Manoj Gyawali, Deputy Chief Executive Officer at Nabil Bank
As a banker, account reports, income-expenses, and a clear understanding of numbers for pre-production and post-production are crucial. But, the expense details and account of the movie are not transparent. Hiding the actual expense and revenue is a common practice in the Nepali movie industry. Because of this, the banks in Nepal refuse to invest in the movie business. Banks have provided 35% to 50% financial support to movies that guarantee minimum screening and have a clear account report. Transparency in accounting reports poses a risk for banks to push for any financial help. Having said that, if the government introduces new policies, corporate houses enter the market, and the numbers are clear, banks will have no issue financing movies and projects. Tax clearance is an even bigger issue. Film artists refuse to take the tax burden on themselves. They refuse to handle tax ‘hassles’. The actors ask the production house for their payment and leave the 15 percent tax payment to the production house, which the actor needs to pay. Hiding expense reports reflected the unprofessionalism of filmmakers, which created doubt among investors to invest in movies. Nepal Rastra Bank needs a special directorate for banks to finance movies. India has a separate directorate to provide financial help to movies, but Nepal does not have one. The government needs to look into this matter for banks to film finance.
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