KATHMANDU, MAR 07 - The killings of entrepreneurs and businessmen and threats against the business community coupled with load-shedding, credit difficulties and continuous poor performance environment in the World Bank's ranking may seriously hamper investment in Nepal.

Two media entrepreneurs Jamim Shah and Arun Singhaniya were killed in the most 'secure' places of the country while dozens of Kathmandu based entrepreneurs receive threats through emails and phone calls. Businessmen are running in fear and forced to adopt low profiles.

On the other hand, entrepreneurs are complaining that the cash strapped banks are not providing loans as promised and charging higher interest 'unfeasible' for manufacturing industries. The 12-hour long power cuts and labour related problems are plaguing the business sector of the country.

"The morale of the business community is devastated with deteriorated law and order situation and scores of other problems including power cuts and difficulty to get credit in the recent days," said industrialist Atma Ram Murarka. "Sometimes, I regret investing a penny in the manufacturing sector."

According to him, banks are charging as high as 14-15 percent interest even for the manufacturing industry which is unfeasible. This is the sector marred heavily by labour problems too.  On the other hand, the Nepal has lagged further behind in each successive ranking of World Bank, when it comes to business environment.

Nepal is one of the top 10 poorest performers in the world in terms of logistical support while exporting and importing goods, underperforming even worse than other South Asian countries, according to recent World Bank's Logistic Performance Index (LPI) 2010 report.  Nepal stands at 147th position out of 155 countries ranked. Somalia is the worst performer and Germany is the best performer.

Prashant Pokharel, president of Nepal Garments Association said that it was natural for Nepal to lag behind in freight cost as Nepal is a landlocked country and it has not got easy access to sea ports like Switzerland.

"There is no railway, no fast track and the existing road infrastructure is also poor which anyway remain frequently obstructed," he said. "The syndicate system is also increasing the transportation cost contributing to erode our competitiveness."

But, trade expert Ratnakar Adhikari is hopeful that Nepal's ranking on LPI will get uplifted in another ranking as the Department of Customs (DoC) has eased the process of custom clearance by adopting the policy of random checking instead of complete checking.

The World Bank's 'Doing Business Report' on Nepal revealed that Nepal's position deteriorated to 123 in 2010 from 121 in 2009. The deteriorated areas are staring business, dealing with construction permits, paying tax, level of labour rigidity, getting credit, trading across border and protection of investors.

Nepal's position is the worst in South Asia regarding labour rigidity.  Nepal is just one step ahead of Afghanistan in trading across the border which also confirms why Nepal lagged behind in LPI. Nepal remained in same position in the area of enforcing contract and closing businesses. Only area Nepal did better is an ease to register property in which Nepal performed the best in South Asia.

Adhikari said that the one after another report about the worsening situation of Nepal to do business scares away the potential investors from within the country and outside. 

Posted on: 2010-03-07 09:03

Post Your Comment

Please note that all the fields marked * are mandatory.
* Full Name
* Address
* Email Address
* Comment
* Captcha	Get another CAPTCHA code
Note:	Comments containing abusive words or slander shall not be published.