Kathmandu Post

Editorial»

Doing better business

OCT 20 -


According to the latest Doing Business report released by the World Bank, Nepal ranks 107 in among 183 countries. In South Asia, despite improvement in rank by three points, Nepal falls behind Maldives, Sri Lanka and Pakistan but ahead of India, Bangladesh, Bhutan and Afghanistan. The rankings show that Nepal can do more to promote business in the country. There are, however, some positive signs. Due to the improved monitoring of the legal system, the process for filling claims has been relatively easier but strengthening the enforcement of contracts is still a challenge.

On the brighter side, labour cost is quite low. There’s a large number of skilled and unskilled labour, which needs to be utilised fully. Unfortunately, a lot of Nepal's productive labour is working outside the country. Despite the remittances, the fact that able bodied workers are spending their productive years abroad with little job security and pension plan means that the country will have to face difficulties taking care of them in when they retire. This is one of the reasons it is important for the Nepali government to generate jobs nationally. Starting a business and promoting entrepreneurial spirit is an excellent way to generate employment. For this to happen, the financial sector of the economy needs to be spread in such a way that capital is allocated to the most efficient and profitable ventures. Providing loans at low interest rates to small and business owners can, for example, help many set up their own businesses. The government is marking 2012-13 as Investment Year with hopes of generating greater foreign investments. This policy has been supported by the present government, which gives a positive signal of a changing investment climate in the country. The growing NRN movement could be another source of investment. The government should focus on drawing investments in hydropower projects and the manufacturing sector. If these sectors are not rescued, Nepal will not be able to accelerate its economic growth and achieve growth rates comparable to its neighbours.

The three key areas that the government should prioritise are energy, infrastructure and policy. Without adequate improvement in these areas, Nepal's attractiveness for foreign investment is bound to suffer. The government should consider policies and initiatives to increase the confidence of foreign investors and work actively to tackle and eliminate the perception that Nepal is a risky country to invest in. It is essential to implement these measures to increase foreign direct investment. The rights of creditors and investors, establishing companies, registering property etc should be regulated and protected without shouldering unlimited liabilities. However, more than anything else, doing business in Nepal depends on political stability and security. This is one more reason the government should work hard to successfully conclude the peace processes and constitution writing process. Without doubt, stability is essential for development and prosperity.


Posted on: 2011-10-21 12:43

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