Monday, 10 May, 2021

Joint Efforts For Growth

Industrial development in Nepal has been a mirage for the last many decades. There were multiple excuses for the poor performance of the tertiary sector of the economy – Maoist insurgency, power shortage, political instability, trade unions, poor infrastructure, poor linkages to the domestic and international markets and so on. There were widespread concerns about underperformance of the industrial, especially the manufacturing sector while various policies were amended and created in the past one-and-half decades to check the free fall of the economy. But even after the end of the Maoist conflict, availability of power, improvement in infrastructure and better policy environment, contribution of industrial production to the Gross Domestic Product (GDP) is still hovering around about 6 per cent. According to the Economic Survey 2019/20, industrial sectoral contribution to GDP was 15.7 per cent in 2018/19 and 20. 3 per cent in 2016/17.

Meanwhile, the government organised two investment summits to showcase available large projects to attract foreign investments. The Investment Board is currently evaluating four large infrastructure projects including that of cable car, industrial park and logistic facilities worth Rs. 137.2 billion. It is reaching the investors who had expressed their interest to invest in Nepal at the second Investment Summit in 2019 through Nepali missions abroad. The speed of materialising the investment intention was obstructed by the COVID-19 pandemic. Of late, the government and IBN have put joint efforts in improving the investment climate and improve the position of the country in the Doing Business index.

To expand the manufacturing industry and promote entrepreneurship, the government, in the past couple of years, had made policy and procedural reforms. Investment and Technology Transfer Act, Special Economic Zone Act, Public Private Partnership and Investment Act, Industrial Enterprise Regulation and Directives for Establishment and Operation of Industrial Village are implemented since 2019. Likewise, Integrated Check Post (ICP) is in operation in Birgunj while ICP in Bhairahawa is in the process to come into operation while a couple of them are in the pipeline in the southern border points. Single Point Service is launched at the Department of Industry and IBN.

As most of the reforms were put into effect before the COVID-19 crisis, there is a need of policy adjustment in order to address the gaps and challenges created by the pandemic. The other day Prime Minister KP Sharma Oli rightly said that there were still problems which should be resolved with the joint efforts of the government and the private sector. The pandemic has created opportunities for countries like Nepal to apply the latest technology in the enterprises and develop communication infrastructure for the crisis like this.
For Nepal, this is high time for industrial growth as the agrarian economy is transitioning to industry and service sector while demands in the domestic market is growing exponentially backed by the remittance and increased income at home. At the same time, the private sector is ready to move ahead in collaboration with the government. This intention is better expressed in the Vision Paper 2030 published by the Federation of Nepalese Chambers of Commerce and Industry on Saturday. The private sector needs supporting policy, financial relief and support to the pandemic-affected enterprises and trade facilitation. It will result in enhanced production, increased export and self-reliance in certain goods and employment generation which are the goals of the government as well.