Economic Policy Network

Policy Paper 21

STRATEGY FOR PROMOTING

BUSINESS INCUBATION CENTERS
IN NEPAL

Dr. Chiranjibi Nepal

November 2006
 Prepared for:
Economic Policy Network
Government of Nepal/ Ministry of Finance
Singha Durbar, Kathmandu, Nepal
Tel: 977-1-4211353
E-mail: epn@mof.gov.np
Website: www.mof.gov.np

and

Asian Development Bank

Nepal Resident Mission
Srikunj, Kamaldi, Ward No. 31
P.O. Box 5017, Kathmandu, Nepal
Tel: 977-1-4227779
Fax: 977-1-4225063
E-mail: adbnrm@adb.org
Website: www.adb.org/nrm

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

Inputs from various stakeholders during interactions at the Advisory Committee

meeting, and the workshop organized by the EPN Focal Unit have been
incorporated in the report.

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

This report deals with the concept of business incubation and its
components/linkages, and provides a brief overview of business incubation in practices
adopted in the South Asian region. It has also reviewed past and current efforts and
strategies 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 relevant
policies, acts and plans and suggested policy reforms and actions that are vital in
establishing and promoting business incubation in Nepal. The recommendations are the
outcomes of consensus reached among major stakeholders through various consultations
and the EPN workshop. I hope the findings and recommendations will be helpful for policy
makers for future reforms.

I would like to thank Dr. Chiranjibi Nepal for carrying out the study. I also thank all
those who have provided inputs for the report during the interactions, the advisory committee
meetings, 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 the
issue and for following through with the study. I would also like to appreciate the entire EPN
team for their hard work. Last but not least, I would like to thank the ADB for supporting this
initiative.

Dr. Posh Raj Pandey

Member
National Planning Commission
Government of Nepal
[Chairman—EPN Steering Committee]
 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
 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
 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 Practice
in 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
 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 and
support 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 entrepreneur’s 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 to
develop 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.

i
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 knowledge
and 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.

ii
 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 they
are 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 70s
to 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 range
and 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.

2
 • Universities also are getting involved to provide incubator services through providing
use 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 development
services. 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 entrepreneur’s needs. Following are the typical type of
services provided by business incubator centers.

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

business,
• Training in relevant provision of business law, marketing, accounting and other
management 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 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. 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:

3
 • It helps overcome the bottlenecks and regulatory hurdles to rapid business
formation,
• 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 tomorrow’s 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.

4
 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, and
managers 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,

5
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 important
element 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.

6
 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 supply
driven 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 is
highly 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

7
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 effective
training, 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:

¾ Commitment of all stakeholders to the core principles of business incubation

¾ Develop networks of people and institutions to assist incubatees with technology
support, testing facilities, materials, prototyping facilities, etc.
¾ Incubators require a cocktail of funding support from various sources.
¾ Collect and assess key information, decide whether incubates products/services are
feasible or not.
¾ Ensure the needs of the incubator program dictate building requirements
¾ Structure the incubator to be financially self sustainable.
¾ Structure the incubator organization to minimize governance and maximize assistance
to incubate.
¾ Engage stakeholders to help business and support incubator operations.
¾ Recruit staff who will manage the incubator like a business and a manager who has
the capacity to help business to grow.
¾ Choose the product/service sector that will enable the incubator to generate sufficient
revenue and also support business incubation.
¾ Recruit and select tenant businesses that provide revenue required in the financial
model and have the potential to grow and to create jobs.
¾ Customize the delivery of assistance and address the development needs of each
business.
¾ Engage in continual evaluation and improvement as the incubator progresses
through various stages of development and as the needs of tenant business change
over time.
¾ Sound financial support both from the central government and local government and
other related agencies.
¾ Structure the incubator to provide value to tenants and stakeholders.
¾ Careful selection of tenant firms with highest growth potential.
¾ Appoint a proactive management board for overall guidance and a dedicated team led
by professionals for day to day operation.

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 ¾ Identify and develop a panel of professionals who provide critical support services for
start-ups venture and development.
¾ Facilitate access to venture capital scheme and other innovative financing
mechanisms.
¾ Effective networking with other R&D institutions for making BICs a focal point for
technology in the region.
¾ Be customer service focused with both tenants and stakeholders.

3.2 Incubator Management

¾ Use a planned and structured approach to develop the incubator.

¾ Prospective entrepreneur are selected.
¾ Are assisted in preparing business plans and flexible licenses for viable business.
¾ Recruit staff that fit the incubator program and are able to understand the needs of the
tenant business and help tenant business to grow..
¾ Assisted to access seed/venture capital and credit for working capital.
¾ Arranging and facilitating use of equipment and facilities in the center or in technical
institutes, university, laboratories and research facilities.
¾ Trained in small business management and technical skills.
¾ Counseling and backstopping provided for entire operational aspect of the business.
¾ Tenants are graduated after a stipulated incubation period (usually 1-3 years).
¾ If need be provide continuous assistance.
¾ Should focus on adding value to tenant businesses

3.3 Incubator Performance

¾ Provide visionary leadership.

¾ Extend strategic support services.
¾ Clear focus on IT, biotechnology and more importantly high value added products.
¾ The incubator facility should have resources, methods and tools that contribute to the
effective delivery of business assistance to client firms.
¾ Enhance local business and community support, and integration with other business
and economic development services in the area.
¾ Rental fees below market rates.
¾ Fee based services (no free launch).
¾ Standardized communication facilities to facilitate internal and external
communication.
¾ Focus the incubator's space, business services and advice on the needs of the tenant
businesses

9
 ¾ Support the incubator with a wide network of business support services, network with
universities, 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 Nepalese
environment.

10
 Chapter IV

Review Relevant Policies, Acts and Plans

BICs concept is new to Nepalese environment. Past Development Plans have been
continually 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 Nepal’s 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 and
would 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.

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
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 environment
for 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 and
activities 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 of
management,
• 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 in
general 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.

12
 • 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 registered
cottage 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 services
particularly electric power has affected enterprises and they are burdened with high
transaction cost,
• Alliances and linkages between smaller and larger enterprise are not getting
encouragement under any policy,
• Bank's and financial institution's more focus towards bigger borrower, cumbersome
documentation requirement, bureaucratic hassles and delay in processing loan
requests 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 raising
awareness 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 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.

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

13
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 on
the fundamentals of BICs.
• Enhance tie up between the university and the corporate private sector to nurture
internship from colleges.
• Facilitate and encourage development of BICs by larger corporate sector to support
sub-contacting exchange on the model of industrial estate, technology and Science
Park.
• Identify appropriate institutions (such as; IEDI, DCSI, FNCCI) having potentiality to
develop the capability needed to independently manage and deliver the BICs services.
• Embrace policy to encourage networking and alliance amongst Colleges/ universities
and 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 promoters
from the Banks and financial sector for BI infrastructure development and recurring
expenses, as well as financial need of the incubatee’s enterprises (tenant enterprises)
by extending the recognition to BICs as service industries.
• Initiating loan guarantee scheme to cover BICs incubatees to encourage and facilitate
banks 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 for
sourcing 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 Sectoral
Ministries, 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.

14
 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 encourage
and promote BICs.
• Encourage private sector to establish, operate and manage the Business Incubators by
giving status of service enterprises.
• High School level curriculum to include entrepreneurship development and business
start-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 of
credit 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 essential
tool. 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.

15
 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 private
partnership organizational set up independent of bureaucratic hassles.
• Study the entrepreneurial climate to select the potential activities and suitable location
so that the barriers are minimized.
• Products likely to have competitive edge, high value and high-tech products, IT
products 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 tangible
financial return in the short run.
• Business incubators can not reform the economy single-handedly. It should be backed
by 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 business
communities, policy makers, local private and public agencies etc.
• The incubator needs to be equipped with required facilities, resources, working
system and methods and tools that contribute to effective delivery of services.
• Backstopping service need to address the developmental needs as well as to grapple
with the difficult business environment.
• To ensure credit and seed fund need of small incubates, easy flow of credit, loan
guarantee 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 of
Nepal Rastra Bank will be required.
• Sponsor an" BICs Entrepreneur Award." Such an award, especially if properly
publicized, can reap tremendous rewards by getting people excited about the idea of
starting a successful business.

16
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.

17
 Policy-Action Matrix
Constraints (policy, legal, Recommend Policy Improvements Activities Indicators of Responsible Time Frame
institutional, administrative, Achievement Agencies (immediate,
and others if applicable) intermediate,
and long term)
a. Majority of enterprises are • High School level curriculum to includ• Raise awareness about • Increased • Ministry of 7 years
inherited and family based. entrepreneurship development and changing values and establishment Industry,
b. General lack of spirit to business start-up cases. opportunity and the of vibrant and Commerce
excel on the part of • Emphasize in the Development Plans benefit through BICs modern and Supplies
entrepreneurs. and announce national level policy to • Make aware of successful small and its
c. Inadequate start-up exercise encourage and promote BICs. opportunity and enterprises. agencies ,
have embedded traditional • Recognise BICs as service industries. entrepreneurial climate • Increased Business
system of management, • Provide policy incentive for nurturing and encourage selection of response to Associations
d. Domination of outmoded BICs approach in possible agencies in potential activities to business and Business
technology and know-how. Academia, private sector, non- minimize the barriers. development Federations,
e. Negligible support for government organizations and suitable • Facilitate action on high services of Universities,
business innovation and government agencies for promoting value and high-tech BICs and other Colleges and
innovative ideas and high- tech and high value state of art products, IT products and agencies. Educational
continuation of supply technology growth sectors with core • Increased Institutions,
driven enterprise programs • Encourage private –public sector competencies for promotion of Ministry Of
by government promotional partnership or independent professiona incubation. modern and Education,
agencies. agencies to establish, operate and • BICs can not reform the productive Science and
f. Utter lack of marketing manage the BICs by giving status of economy single-handedly, enterprises Technology
know-how, and business service enterprises and adequate and hence, ensure good • Promotion of Agencies,
information and linkages. incentives. governance and enterprises Nepal Rastra
g. Lack of alliances and • Set up a Steering Committee to investment friendly engaged in Banks and
linkages between smaller initiate action and mobilize resources environment. high- tech Financial
and larger enterprises. to identify and develop BICs models • Increase awareness about products, and Institutions
h. Weak implementation of in 5 development regions. BIC role in promoting products with etc.,
policy and frequent • Investment fund should be allotted by successful business. higher value-
withdrawal of facilities and
the government to establish, monitor • Enhance tie up between added.
rampant discretionary and facilitate work to assess potential the university and the
practices, corporate private sector to
incubation activities, evaluating
i. General lack of trained and nurture internship from
appropriate candidate agencies and
skillful human resources.

18
 Constraints (policy, legal,
institutional, administrative,
and others if applicable)
j. Lack of alliances and
linkages between smaller
and larger enterprises.
k. Ineffective implementation
of regulation and policy
provision.
l. Non-effective and
inappropriate business
development services.
m. Lack of trust and
coordination between
government and private
sector.
n. General unawareness and
accesses to information
related to input supply,
technological know and
other resources
o. Inadequate infrastructure and
inordinate delays in delivery
of utility services
particularly electric power
Problem for credit access to
smaller enterprises and new
start-ups.
Recommend Policy Improvements
desirable location, awareness creation
and capacity building of BICs.
• For facilitating BICs management,
close involvement of sectoral
Ministries, Banks, promotional and
monitoring agencies, business
associations nodal agency for
innovation and technology,
universities and colleges, research
laboratories and larger enterprises
and multinational enterprises will be
highly desirable.
• Facilitate through policies and Acts
to enable credit mobilization by BICs •
promoters from the Banks and
financial sector for BIC.
• Encourage sub-contacting and
networking practice through policy
commitment and incentives.
• Policy to encourage networking and
alliance amongst Colleges/
universities and the private business
sector for testing and laboratory
facilities and use of qualified faculty •
for product testing and development.
• Implement policy to encourage adoptio
of productive and modern technology.
• Necessary revision, addition of
provisions in investment policies,
directives including that of Nepal
Rastra Bank to assure easy flow of
19
Activities Indicators of Responsible Time Frame
Achievement Agencies (immediate,
intermediate,
and long term)
colleges.
• Motivate larger corporate
sector to support sub-
contacting exchange on
the model of industrial
estate, technology and
Science Park.
• Facilitate the BICs
location by extending
assistance of leasehold
land for development of
BI complex / Technology
and Science Park.
Initiating loan guarantee
scheme to cover BICs
incubatees to encourage
and facilitate banks and
financial institutions by
making more loans to
small enterprises.
• Allow to operate BICs on
business philosophy of
cost plus.
Promotional and
extension services need to
address the demand
driven needs as well as to
grapple with the difficult
business environment.
• Reviewing and amendment,
addition of regulations, acts
 Constraints (policy, legal, Recommend Policy Improvements Activities Indicators of Responsible Time Frame
institutional, administrative, Achievement Agencies (immediate,
and others if applicable) intermediate,
and long term)
credit to BIC services and its tenants.and policies to make them
• Investment policy and procedure of the enterprise friendly and
banks and financial institutions shouldcompatible to global
facilitate easy flow of credit for the perspectives.
purpose of infrastructure development •infrastructure
and capital investment of BIC and also development and
recurring and long term investment recurring expenses, as
needs of tenant enterprises. well as financial need of
the incubatee’s
enterprises( tenant
enterprises)
• Meeting the recurring and
development cost during
initial phase of
establishment,
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.

20
 Annex
Briefs about Business Incubation in Asia and some relevant countries

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. 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 promote
knowledge-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: jawa_ts@yahoo.com,

trecstep@hotmail.com
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 private
university) recently in a BUSINESS PLAN CONTEST.

21
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-key
solution 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: kurniat@bns.co.id

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 public–private
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: mkeshmiri@istt.ir
Website: www.istt.org

22
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 of
business 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:
congresswomen@intranet.kg Website: http://congresswomen.host.net.kg/

TURKEY

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

with Bilkent University. The university’s affiliate Bilkent Holding has also been involved
with nformation technology and has been a local leader in research and development of
software systems. Ankara Cyberpark’s primary mission is to establish an infrastructure
bringing 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 Turkey’s 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 community’s 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, and
encourage 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: havci@cyberpark.com.tr,
info@cyberpark.com.tr Website: http://www.cyberpark.com.tr/tr/

23
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 ICT
related 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: ncb01@ncb.intnet.mu,

incubator@ncb.intnet.mu
Website: 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: travis@mongolia-gateway.mn, tsetseg@mongolia-gateway.mn
Website: http://www.infocon.mn/eng/index.php, http://www.mongolia-gateway.mn

24
NEPAL

Nepal Lotus Business Incubation Centre, Lalitpur

Official launch-2003.
Objectives: Foster a business climate, help promote creation of jobs, help others to establish
similar 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 through
networking 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:

jayanthag@itdg.slt.lk
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 with
an 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: marcd@kiasia.org
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-seed and seed stages. 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 years
of 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: crc@hut-fem.edu.vn

Website: www.hut-fem.edu.vn

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 Bibliography

1. White Paper on Business Incubation, Introduction to Business Incubation, Software and

Technology 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 – Success
Story 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 an

Industry 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, and
provide 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 in
Nepal, 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 the
above 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 days
from 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 and
external 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).

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