Bhawani Rana was recently elected president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), becoming the first woman to lead Nepal’s private sector. Active in the tourism sector for the past several years, Rana was also one of the four members representing the private sector to the Investment Board Nepal (IBN) last year. Rana, talked to IBN Dispatch about the opportunities and challenges for investment in Nepal, as well as the role of the private sector in promoting investment.
How do you assess the investment climate in Nepal ?
The investment climate in Nepal is gradually improving. We see hydropower, agriculture, services and many infrastructure projects opening up for investment. The ongoing legal reforms and policy initiatives, the comparatively stable political environment, and the new constitution are key factors in creating this positive investment environment. Most importantly, the end of load shedding in major industrial areas, including the capital, has boosted economic activity. It is right time to invest in Nepal.
What are the indicators that Nepal is on a positive economic trajectory?
The end of load shedding in economically significant areas has had a positive impact across the country. The industrial sector has benefited the most. With the improved supply of power, industries are running for more hours, which has enhanced production and the supply of goods to domestic and international markets. The forecast for GDP by the government and international agencies for this year is in the range of 6.5–7.5%. A favourable environment has emerged to boost the industrial sector, whose contribution has dwindled to around 6% now, from over 15% a few years back. However, it will be challenging for us to sustain the growth that we are going to achieve this year. We are still behind in terms of policy and legal reforms. We need to do more in this regard.
In your experience, what are the major obstacles to improving investment in Nepal?
Although the government has taken the initiative to remove legal and policy obstacles through reform initiatives, some of the government’s policies and laws are still hurdles for investors. Even some of the new policies and laws have not been implemented sincerely to simplify the process of doing business in Nepal. Long overdue reforms to the Labour Act and Foreign Investment and Technology Transfer Act should be made quickly. Prospective investors and multi-national companies already operating in Nepal are also asking for reforms to existing policies and laws to facilitate a hassle-free process for doing business.
How do you evaluate the recently held ‘Nepal Investment Summit’?
The Summit sent a positive message to local and international investors about Nepal’s investment potential. The overwhelming response from investors at the Summit was really encouraging. They can see that now is the best time to put their money here. We, on behalf of the FNCCI, have also been urging foreign investors at different global forums to invest in Nepal, and their responses are always positive. However, Nepal still lacks the systems, policies and laws to provide a one-stop investment service. We need to make sure that investors do not have to go through cumbersome bureaucratic process to get things done.
What role does Nepal’s private sector play in the country’s economic prosperity?
The FNCCI has long been lobbying for legal and policy reforms, which we believe are vital to accelerate infrastructure and industrial development. The government should heed these policy recommendations to create a favourable climate for industrial development. It is a fact that we can’t boost exports to reduce the trade deficit without increasing production. We urge all political forces to forge a common agenda for economic prosperity, rather than merely paying lip service to it in their speeches and election manifestos.
For the upcoming budget, we have suggested that the government institute scientific tax reforms in line with the proposed new federal structure. Similarly, we have been putting pressure on the government to give high priority to improving connectivity, including the development of transport infrastructure, which is crucial for industrial and tourism development. We can’t attract traders to industries in Nepal until we offer incentives in the industrial sector.