The Federation of Nepalese Chambers of Commerce and Industry has stated that the country's overall economic revival is becoming challenging due to the neglect of the private sector.
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The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged political parties to include a clear policy on the protection, promotion and morale enhancement of the private sector in their manifestos for the upcoming elections.
At a press conference on the theme 'Private Sector in the Declaration' organized by the Federation on Saturday, Federation President Chandra Prasad Dhakal said that the country's overall economic revival is becoming challenging due to the neglect of the private sector. He said that the economy itself is at risk due to the weakness of the private sector, which contributes about 81 percent to the gross domestic product and creates 86 percent of employment.
'The morale of the private sector has reached a historically weak state. The inability to make investments despite having liquidity in banks is a serious sign. If this situation continues, employment and revenue may shrink further and the country may head towards failure,' he said.
According to the Federation, the private sector suffered direct physical damage worth about 36 billion rupees and an overall loss of about 80 billion rupees during the protests on Bhadra 23 and 24. The Federation believes that the insecurity and uncertainty after the protests have discouraged investors.
Private Sector Protection Plan Proposal
The Federation has proposed a ‘Private Sector Protection and Promotion Plan’ to restore the security and trust of the private sector. Under this, it has been suggested that industries and commercial establishments should be declared peace zones, a special mechanism should be established for industrial security, and a one-stop fast service should be provided for the reconstruction of damaged structures.
The Federation has urged the parties to clearly mention the respect for the constitutionally guaranteed right to property, ensuring unhindered occupation and business, and policy stability in their manifestos. The Federation has concluded that the socialist-oriented economy and the three-pillar policy have not been able to attract the expected employment and investment.
Law reform and digital services are necessary
The Federation demands that more than a dozen laws, regulations, and procedures that discourage entrepreneurship be repealed or amended. The Federation has also suggested that the entire process from business registration to exit should be made completely digital through the ‘Citizen App’ and that the annual business renewal system should be abolished.
Emphasis on agriculture, tourism, energy and infrastructure
The federation has mentioned that agriculture and tourism should be prioritized and agricultural product exports should be promoted through the Organic Hill Program, Farmer Identity Card, digital distribution of grants, and the 'From Farm to Bay' program.
The federation suggests that projects such as hill stations, cable cars, resorts, and teaching hospitals should be given tax exemptions and infrastructure facilities towards tourism and that Nepal should be developed as a wedding and conference tourism destination.
To attract private sector investment in hydropower projects towards energy and infrastructure, it has been demanded that additional tax exemptions, land acquisition, and the private sector should be involved in the construction of transmission lines. In addition, the federation says that clear modalities should be determined for the effective operation of Nijgadh International Airport, Gautam Buddha and Pokhara airports.
Urges to simplify the tax system
The federation has put forward a proposal to introduce a multi-rate value-added tax, tax cuts in manufacturing industries, elimination of double taxation, and an umbrella act for non-tax revenue to make the tax system simple, stable, and competitive. It has also been suggested that companies that reinvest should be given a 75 percent exemption on income tax.
'Only if the private sector is safe, respected and motivated will employment increase, revenue expand and a prosperous Nepal be possible.' Therefore, political parties should not only come up with private sector-friendly manifestos, but also implementable policies,' the federation concluded.
