The government has announced the establishment of an AI factory and an AI compute center and the purchase of AI processing units (GPUs). While the government is presenting an ambitious plan through the budget to transform the economy using artificial intelligence (AI) in various sectors from communications to revenue administration, the justice system, and research, experts and stakeholders have raised questions about the implementation modalities, manpower, and resource assurance.

Although the AI-focused budget programs are novel and positive concepts, issues such as clear procedures and continuous supply of electricity have been considered as the main challenges. During the budget speech, Finance Minister Swarnim Wagle said that the country's first 'Sovereign AI Compute Center' will be established in Syuchatar, Kathmandu. Such centers are special AI infrastructures that any country establishes to ensure its national security, data privacy, and digital self-reliance. Such centers are equipped with cutting-edge and powerful AI GPUs. They can process (compute) large amounts of data.

Finance Minister Wagle said that a separate fund will be established to invest in the establishment of an AI factory under strategic projects. ‘We will establish a Motherland Fund to invest in strategic projects including fuel storage for at least three months, AI factories,’ he said, ‘The government will have a strong vision for the expansion of information technology infrastructure.’ Mentioning the word ‘AI’ a total of 14 times in the budget statement, Minister Wagle claimed that a special initiative has been launched to help Nepal enter the AI ​​era with confidence.

He pointed out that the goal is to convert Nepal’s clean hydroelectric energy into high-value AI compute services and lay the foundation for digital exports. Since the AI ​​GPUs and other equipment made by the world’s largest companies like Nvidia, AMD, and Intel are very expensive, experts have considered it positive that the government itself will purchase them and provide them to researchers and startups at a discount.

‘Such a system will provide great relief and support, especially to the youth conducting research in research institutes, universities and colleges,’ said Ananda Raj Khanal, an expert in the field of information technology. ‘The government will make a huge investment in equipment, and it will create an environment where startups and entrepreneurs can conduct research at no cost.’ This will increase the capacity and productivity of skilled manpower in the country. Ultimately, it will help in the growth of the AI ​​industry in Nepal and digital exports.’

The government has announced that it will invite at least 15 Nepali researchers who are earning international fame in the field of AI to return to Nepal by providing fellowships. Experts believe that the plan to return experts abroad to Nepal will increase Nepal’s ‘exposure’ in the global market. They say that since it will create an environment for work and research in the country, it will help stop the brain drain in the IT sector.

‘However, since this is only a theoretical concept, the modalities and procedures for its implementation are yet to be clear,’ Khanal said, ‘If the procedure is traditional, no achievement will be achieved. AI data centers require round-the-clock electricity, but since we are forced to import electricity in winter, there may be complications in operating the AI ​​center.’ Khanal believes that the location is suitable for ease of electricity as the Electricity Authority’s substation and data center are in operation in Syuchatar.

AI Association Nepal President Shailendra Raj Giri mentioned that although the government’s AI-focused plan has started enthusiastically, attention has not been paid to the ‘upskilling’ of the manpower. He pointed out that AI data training requires a lot of resources and having such infrastructure in the country would also be safe in terms of data sovereignty. ‘The main challenge lies in the way the government works, the government data centers are not functioning properly,’ said Giri, ‘It would be appropriate to go for a public-private partnership model by hiring skilled technicians to operate the AI ​​factory.’

Giri responded that the government needs to pay attention to the availability of ‘open data’ to make AI research effective, but this issue has not been clearly mentioned in the budget. He believes that the real benefits will be realized only if the AI ​​center is expanded as an ‘incubation center’ in all seven provinces or major cities, not just Kathmandu.

In addition to building a specialized center for AI, the government has presented in the budget its intention to adopt AI in various sectors and agencies. It has been said that the ‘e-assessment’ system with AI will be developed for tax research and testing in the revenue administration. Similarly, the budget has adopted a policy of using AI in forensic science laboratories and research to make the justice system faster and more effective. It is said that investment will be increased based on the AI ​​and ‘ed-tech’ readiness assessment to improve the overall ecosystem of the education sector.

Experts have warned that it will be difficult to take full advantage of such technology-friendly schemes unless the style of software procurement and the way of working in government agencies improve. Giri, Chairman of AI Associates, who is also the founder of MeroJab.com, said that a skill development program is needed to advance AI as a strategic engine. ‘The government has said that it will give high priority to educational disciplines such as mathematics, which will play an important role in the era of AI, but it cannot be done by emphasizing school education alone,’ he said, ‘Fresh graduates ready to enter the job market need skill development training according to the needs of the industry. Due to its lack, demand and supply are not meeting at present.’