IN FOCUS
low FDI infl ow in the country; a situation which has now
resolved to a large extent.
With the formation of the new government, a stable
political environment has come into being but other factors
such as business licensing system, bureaucratic hassles and
proper legal framework call for positive interventions.
According to the annual ranking, Nepal made paying taxes
more diffi cult through a 2017 Labour Act that introduced a
labour gratuity, medical insurance and accident insurance
paid by employers in a way that places a more substantial
administrative burden on companies that already face
considerable bureaucracy.
“Nepal needs to make paying taxes easier by simplifying
the process of social security related payments. This is the
reason that the recent labour act has made the process more
cumbersome and contributed to pushing the country down
fi ve places to 110th in a global ranking for the ease of doing
business”, said a World Bank report released in October 2018.
While multinational companies are facing diffi culties in
registering their offi ces due to various reasons, international
investors are demanding a hassle-free visa process. The
government has amended the laws which are now in place,
on account of these issues. On the eve of the Summit, the
Parliament endorsed the Foreign Investment and Technology
Transfer Act, Public-Private Partnership and Investment Act
and Special Economic Zone Act (fi rst amendment).
These laws aim towards the ease of doing business in
Nepal by clearing bureaucratic hurdles while establishing
companies in Nepal in three phases - pre-establishment phase,
operational phase and repatriation phase. In order to address
the concerns of international investors, the government
has simplifi ed the provisions on land acquisition, company
registration, environmental assessment and infrastructure
development.
The government has pledged to provide all services from
one place to ease red tape in bureaucracy; however, it is not
sure how this will be implemented. At the same time, there are
criticisms that laws have been formulated in a hurry without
suffi cient stakeholder consultations within the country. IBN
presented 77 viable projects worth $31.93 billion (50 public
and 27 private projects) during the Summit in key identifi ed
areas and could secure only modest success: Energy,
Tourism, Industry, Transport Infrastructure, Information
and Communication Technology, and Agriculture for foreign
investment.
Of late, Nepal’s Transport and Transit Treaty with
China and the new electricity guidelines issued by India
pave the way for Nepal to trade electricity with third world
countries and construction of transmission line with India
have generated hope among international investors. The
pre-feasibility study of these projects has fi nally completed,
courtesy IBM.
The experts in Kathmandu call out for continuous follow-
up after the Summit and creating an appropriate environment
for investment. Through rapid economic growth, Nepal aims
to graduate from the status of Least Developing Country
(LDC) to Middle Income Country (MIC) by 2030. Procedural
reforms and macroeconomic stability will be the critical
factors in enabling Nepal to attain its goal.
* 1 Author is New Delhi-based columnist and public policy
professional; 2 Author is Kathmandu-based journalist and
political analyst. They can be reached on summertickets@
gmail.com / [email protected]
72 • Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 4 • April-May 2019, Noida