Kathmandu. As the government prepares the budget for the upcoming fiscal year 2082/83, President of the Federation of Nepalese Chambers of Commerce and Industry, Chandra Prasad Dhakal, has said that a budget should be brought that encourages investment.
The Federation of Nepalese Chambers of Commerce and Industry, in the pre-budget discussion held on Sunday regarding the upcoming budget, said that the government’s policies and programs have been made public and that it has taken the promotion of the private sector positively and that the private sector expects the budget for the upcoming year to come in a way that encourages investment.
According to him, this time’s budget should include aspects such as the expansion of an open economy with social justice, structural changes for a new phase of economic reform, promotion of the private sector, enhancement of good governance and revenue mobilization and effectiveness of public expenditure in its objectives and priorities. The main attraction this time should be the program to reduce general expenditure and increase development expenditure and increase the purchasing power of the general public and the production and productivity of entrepreneurs.
Dhakal said that according to a study conducted by the Federation of Nepalese Chambers of Commerce and Industry across the country, policy instability has been seen as an obstacle to the expansion of industry and business. He said, “Many countries have achieved economic progress by stabilizing policies and institutions despite the lack of political stability. Therefore, policy stability is the main need of the hour. The second issue is that all parties publicly acknowledge the importance of the private sector and ensure an environment where entrepreneurs can do business with respect. According to a study conducted by the Federation and the World Bank, the private sector contributes to 81 percent of the economy. Similarly, the private sector provides 86 percent of employment. The morale of the private sector has decreased due to the inability to invest due to various reasons despite the potential. Foreign investment has come in at only 0.2 percent of the gross domestic product. In such a situation, special attention should be paid to stability by declaring 2082-92 as an investment decade in the upcoming budget, covering all sectors.”
Chairman Dhakal also said that investment-related integrated laws should be made to ensure policy transparency and business security by reforming laws such as land, forest, environment, public procurement, minerals and hydropower, which are obstacles to investment. According to him, a budget that guarantees good governance is necessary to reduce public frustration and attract youth to business. For that, he said that arrangements should be made to do everything from business registration through the Citizen App by making the best use of technology.
Chairman Dhakal said that the compulsion to renew a business should be ended. Arrangements should be made for renewal based on the payment of revenue. Until technology is accessible and all services are online, arrangements should be made for micro, household and small enterprises to register with the concerned ward office in one place and pay the revenue. Arrangements should be made to issue tax payment certificates immediately upon payment of revenue.
Chairman Dhakal said that for facilitating large and foreign investments, the Investment Board and the Department of Industry should be merged into a powerful body and the entire work should be done by the same body after the investors submit their details to the body. Stating that it would be appropriate to make a simple arrangement for the common citizen to change their previous citizenship to a national identity card, he said that the digital service is to provide convenience to the common people.
According to Dhakal, the biggest problem in Nepal’s budget process for about two decades has been the inability to make capital expenditure. The trend of only about 17 percent of the budget being allocated for capital expenditure and that too only about 60 percent being spent has, on the one hand, not resulted in the expected development in the country, while on the other hand, it has led to low demand in the market and has also affected private sector businesses. While deciding the size of the budget for at least the next two years, the size of the budget should be increased at the same rate as the revenue growth rate.
The federation has concluded that more than 600 billion rupees of investable money has been accumulated in Nepal’s banking system for more than 6 months and that despite the interest rate being reduced by three percentage points to single digits in three months, there has been no demand in the market, leading to the failure of further business and industry expansion.
Making suggestions in the upcoming budget, Dhakal said that the system of cutting off the facilities provided to the industry by the Industrial Business Act and other laws by the Economic Act should be ended, that production-based subsidy programs should be implemented continuously for ten years, including high value-added production sectors, and that in India, since it was implemented covering 14 production sectors, five times more investment has been made in such programs in one year.
According to him, import-substituting industries should be given priority in the upcoming budget and subsidies should be provided. The guidelines on the use of indigenous goods should be fully followed. Under the Industrial Corridor Special Program, a special program targeting industries should be introduced on the roadsides from the Indian border to Churephedi and other potential corridors and the concept of an open special economic zone should be initiated.
Stating that manufacturing industries, tourism, and service industries that provide more than 100 jobs should be given a minimum 40 percent exemption on income tax along with the honor of employment champions, he said that the expansion of small and medium enterprises under the Small and Medium Enterprises Subsidy Program would be another priority. He said that in the upcoming budget, arrangements should be made to provide loans of up to Rs 10 million as collateral for projects, with entrepreneurs, the Credit Guarantee Corporation, the government, and development partners bearing the risk to keep the economy moving. Similarly, if those going for foreign employment regularly send remittances through legal means, arrangements should be made to provide special entrepreneurial loans to their dependent families at concessional rates, companies should be established with the investment of local government and Chamber of Commerce and Industry-affiliated entrepreneurs for the storage and transportation of agricultural and non-agricultural products produced at the local level, and support should be provided to small entrepreneurs in finding markets for their products online, Dhakal suggested.
Stating that the study and approval of EIA should be done within 6 months and the scope of projects falling under IEE should be expanded to 3 months, Dhakal emphasized the need to introduce a policy in the budget to make EI and IE mandatory based on environmental impact rather than linking them to the investment amount. He said that since domestic timber has the potential to meet domestic demand and even export it, the prevailing forest-related laws and procedures should be simplified to ease the use of domestic timber by ending the situation of importing billions of rupees worth of timber and timber products annually. He said that despite the provisions in the act on forest-based industries, there are practical difficulties in establishing such industries. He said that necessary procedures should be made regarding the excavation, sale, distribution and export of gravel and stone and arrangements should be made to export more than 20 million cubic meters of domestic consumption annually.
Making suggestions in the upcoming budget on behalf of the leading private sector organization FNCCI, he said that the exemption facility currently given to startup industries should be continued for another five years and that startup growth centers should be established in all provinces in collaboration with the private sector. Dhakal also urged the government to collaborate with the Federation of Nepalese Chambers of Commerce and Industry to launch the ‘Hundred Startups, Hundred Investors’ program to attract private sector investment in at least one hundred startups in a fiscal year in the next few years.
According to him, it is necessary to encourage the use of software produced in Nepal in public and private institutions, and it is necessary to encourage the private sector to establish ICT malls. This is like an ICT park. Where companies can go and set up their offices. In urban areas, the private sector will establish such malls and provide infrastructure and other facilities to information technology enterprises.
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