Nepali private sector has low confidence in the business environment of the country, an FNCCI Business Confidence Survey has found. According to the survey, country’s Business Confidence Index (BCI) stood at 39.7 percent—index below 50 is considered a low confidence rating.
The survey says businesses involved in the service sector are more confident and optimistic on the economic situation of the country than those involved in agriculture and industry sector.
The survey, first of its kind, was carried by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) with the support of the USAID funded Nepal Economic, Agriculture and Trade (NEAT) Activity on 403 respondents—54 FNCCI member organisations and 349 business entities.
Political instability has been identified as the most critical challenges that Nepal’s economy is facing, reveals the survey. The report said that about 43 percent of the respondents of the survey ranked political instability as the most critical present economic challenge. More disappointing, according to the survey, was the private sector’s expectation for near future as 49 percent of the respondents predicted political instability to remain as the top critical challenge. And fittingly, 51 percent predicted that the economic situation in Nepal would deteriorate in the next six months.
Energy crisis is the second most challenging thing for the businesses, followed by strike/lock out, governance, labour problem and financial problem, according to the survey. The survey also attempted to reveal disintegrated findings for nine different indicators—production, employment, cost of production, profitability of the company, export, import, individual company’s situation, ease of obtaining bank loans and inflation.
Majority of the entrepreneurs (67 percent) believe that cost of production will increase in the next six months. “Seventy-three percent of the respondents from the industry sector expected the cost of production to rise six months,” says the survey.
Regarding foreign trade, 43 percent of the respondents believe country’s export would increase in near future. However, industry sector has the least confidence on the export, according to the survey. “This is not surprising, given the poor conditions of the manufacturing sector in Nepal,” it says.
Unveiling the survey, Industry Secretary Krishna Gyawali said that overcoming the political instability needs continuous interventions from all the sectors.
Posted on: 2012-11-09 09:14