The High Level Economic Reform Suggestion Commission is submitting its report to Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel. The commission is going to submit the final report to Poudel on Friday with recommendations for the reform of the economy that has been sluggish for a long time, repealing more than one and a half dozen laws, facilitating company registration, open investment abroad, and access to the international capital market.

The commission chaired by former Finance Secretary Rameshwar Khanal submitted an interim report to Finance Minister Paudel on December 24, and is now about to submit the final report. There are 26 parts to the report containing various suggestions to be made in the immediate, medium and long term for the improvement of the economy. It has only 485 pages. 

The members of the commission formed by the government last October include Prakash Kumar Shrestha, a member of the National Planning Commission, Ram Prasad Gyawali, head of the Central Department of Economics, Tribhuvan University, economist Vishwas Gauchan and Kalpana Khanal, a senior researcher at the Institute of Policy Research. According to the source, it is essential to increase the confidence of the citizens by ending the economic laxity and providing dynamism to the economy, and for that, it is necessary to create economic opportunities, encourage the expansion of economic activities and ensure equal access to opportunities. 

The conclusion of the report is that sustainable, broad, equitable and high economic growth cannot be achieved unless there is an environment where citizens can develop their abilities, create economic opportunities and use the available economic opportunities.

For legal reform, the Commission recommends that 15 laws including Income Stamp Duty Act, Black Market and some other social crimes and punishments Act, Private Forestry Nationalization Act, Export Importation (Control) Act, Revenue Leakage (Investigation and Control) Act should be repealed.

Medicines Act, 2035 is amended and the 'Drugs and Health Materials Regulation Act' is issued, and the Immovable Property Acquisition Act, 2013 and Land Acquisition Act, 2034 are amended and a 'Private Property Acquisition Act' is also suggested in the report.

There is also a suggestion in the report to issue a new 'Intellectual Property Rights Protection Act' to address all the challenges of intellectual property protection and to create a good business environment, to protect the intellectual property of Nepali businessmen at the international level and to approve the Madrid system and the agreement under it.

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These are the main suggestions

– repeal existing 15 Acts 

– free business registration and one-stop service 

– online company registration 

– check only after the cargo vehicle reaches its destination 

– Stopping exporting cargo vehicles from reaching the customs point and prohibiting searches 

– Investment abroad is open to Nepalis 

- 25 percent of income to export companies and up to 50 percent of paid puja to hotel and tourism companies.

– At least one percent lower interest rate for industry than consumption 

- The secretary who will be posted in the ministry will not be transferred for at least two years 

– Private Property Acquisition Act and Intellectual Property Rights Protection Act released 

- To address the problems of consumers, micro, small and medium industries, the new Damasahi Act

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The report recommends that a new 'Extraction and Import Regulation Act' should be amended and a new 'Extraction Import Regulation Act' should be issued to organize and regulate the extraction and sale of construction materials such as sand, stone and gravel from the river surface and mines in an environmentally friendly manner.

It is suggested that a new Damasahi Act should be introduced to address the problems of consumers, micro, small and medium enterprises and other organized organizations facing financial problems. In order to improve the business and investment environment in the country, the report suggests to repeal the existing law on black market and some other social crimes and punishments and issue a new law that includes provisions on market protection and consumer protection.  It is also suggested not to set a maximum percentage of the profit of the services sold by

businesses, to make the same price for commercial service fees in areas such as parks, protected areas, mountain climbing, to prevent the trend of providing services at a very low cost to some consumers and high prices to the majority, to prevent the giving of lottery gifts on matters related to sales and business, and to effectively implement the existing provisions of the Consumer Protection Act on electricity, drinking water, medicine, essential goods or services. 

It is also said to ensure that there is an effective regulation, investigation and prosecution system to prevent the price of essential goods or services from being unnaturally high. The report also suggests that the principle of cost accounting and price determination of industries producing essential goods should be amended and mentioned in the Consumer Protection Act and the related industries should be made to comply.

To make the business registration process simple and hassle-free, it has been suggested to establish a single registration body that registers all types of businesses, private firms, partnerships and companies in one body, to arrange that companies can be registered completely online, to provide business registration certificates and income tax along with the permanent account number, to use the national identity card number of the person who owns the company in the business registration, and to develop a system that details how many business registrations he owns.

The report suggests that all types of business registration should be made free of charge, that tax payment information be automatically sent from the information system of the Internal Revenue Office to the business registration system of the Company Registrar, and that the system should be renewed. 

In order to make the investigation of revenue leakage effective without spoiling the business environment, the report suggests that the Revenue Leakage (Investigation and Control) Act, 2052 and the Revenue Investigation Department should be abolished. The report also suggests that the investigation of foreign currency embezzlement carried out by the Revenue Investigation Department naturally falls under the crime of money laundering, so that the investigation should be carried out by the Money Laundering Department. The Commission has also said that the government agency which is responsible for controlling non-tax leakage should be given the responsibility of controlling leakage.

The commission suggests that cargo vehicles that are considered to be monitored should be checked only after reaching their destination and the system of stopping and checking cargo vehicles at places on the highway should be stopped. The Commission has also suggested to stop the tendency of cargo vehicles carrying goods for export to be stopped before reaching the customs point and to stop the search.

The Commission has also suggested opening foreign investment in Nepal. As the Foreign Investment Prohibition Act, 2021 is irrelevant, the Commission has suggested to repeal it and issue a new Foreign Investment Act that clearly covers areas, investment limits, approval methods, and regulation methods.

The Commission has also suggested opening up foreign investment in commercial activities where a regular and reliable source of essential raw materials or equipment can be built, where Nepali skilled manpower can be used. According to the report, companies that have exported goods or services are allowed to invest up to 25 percent of their annual export income to open sales branches or factories abroad, and companies that work in hotels, restaurants and tourism services in Nepal are allowed to invest up to 50 percent of the company's paid-up capital.

So far, Nepali citizens who have established companies or firms abroad or have invested in the share capital of foreign companies have been asked to self-declare and arrange for listing such investments in the Investment Board. The commission suggests that Nepali citizens should be allowed to take sweat shares for providing technology or services of a specific nature to a foreign company residing in Nepal, at least 50 percent of the returns earned from investments abroad and 100 percent of the income received abroad, including royalties and technical fees, should be brought to Nepal. It is also suggested that if a Nepali citizen, firm or company that has received approval to invest abroad is found to have misused the investment, action should be taken as it is considered to be money laundering.

In order to expand the access of Nepali investors to the international capital market, the commission has suggested that companies listed in the Nepalese securities market can issue global depository receipts after completing the prescribed process and being listed in the foreign securities markets.

The commission has also suggested to develop Nepal as a 'remote work destination'. "To invest in the development of internet network, convenient co-working workplaces and other physical infrastructure in Kathmandu, Bharatpur, Pokhara and Lumbini areas to be suitable for remote work and digital nomads, and encourage the private sector to invest," said the report.

Three suggestions have been included to increase the productivity of the available capital by increasing the resource allocation efficiency of the market, building an effective market research and information system, diversifying the areas of productive investment to prevent investment from being concentrated in one area, and guiding the market to increase credit flow in productive investment and providing concessions on interest rates.

It is suggested in the report that at least 60 percent of loans should go to the productive sector, and that loans should be encouraged from the financial sector in the areas of information technology, alternative renewable energy development, and forest resource-based industries. The report suggests that the interest rate on productive loans should be at least one percentage point lower than the interest rate on consumption, the establishment of a development bank to invest long-term loans in productive industries in public-private partnerships, and legal arrangements to facilitate the issuance of long-term loan instruments to productive industries and large commercial infrastructure projects.

Information technology-based services, production of tools and equipment required for information technology, agriculture, forest resources and mining-based industries, hydropower, alternative renewable energy and tourism industry to create new opportunities for investment, it has also been emphasized that public investment should be increased. 

In order to improve institutional capacity and increase credibility in the economy, every ministry, department and central level agency should formulate and implement a strategy that is business-friendly, investment promotion-friendly and easy for citizens to get services. For this, the report suggests that the secretary who will be posted in the ministry should not be transferred before completing at least two years, that the chief and technical staff should not be transferred during the project period, and that no employee should be transferred between ministries after at least five years in a ministry to develop ministerial efficiency. It has also been suggested that in order to be promoted to the post of secretary of the federal government, a provision should be made that one should complete a term of two years in the ministry of the state government. 

For the efficiency and effectiveness of revenue administration, it is suggested that the minimum educational qualification of employees should be set and employees should be recruited accordingly. For revenue services, one should have completed the required academic degree in accounting, commerce, business, tax policy, economics. In the report, it is recommended that new employees should be assigned to work only after adequate training in the relevant subjects, and that they should not be transferred to another department or ministry within five years from the department in which they were assigned for the first time.

In order to improve political finance and election expenses, it is mentioned that transparency and accountability should be increased in election expenses. For this, it is suggested to introduce a new law on political finance or amend the existing law on political parties and give subsidies from federal government funds based on certain criteria.