Incentivise Private Sector

Private sector has been the engine of Nepal's economy, driving economic growth. Taxes they pay go a long way to fund the state's expenditure and serve as lifeline to many public institutions. The sector is said to provide jobs to some five million of our countrymen, contributing to over 80 per cent of our GDP. For a vibrant economy, the vitality of the sector is crucial. Because they make up the lion's share of our productive sector, without them our development effort cannot go far enough. To meet national and climate goals, their efforts are complementary to government's actions.  

Recognising this importance, Prime Minister Pushpa Kamal Dahal Prachanda has assured the private sector leaders that the government will take necessary initiatives to improve the economy according to their suggestions. From plastic and steel wares to furniture to now cement, industries run by private sector is countless. In almost every country, the sector has proven track record of being more productive than their government counterparts.

But in Nepal the sector is beset by several problems. First and foremost, many businesses complain about their poor, if at all, access to finance. With availability of finance from banks still scarce and the interest rate exorbitant, they are starved of the much-needed capital to start or expand the business. Remittance inflow and foreign exchange reserves have swung back to healthy levels but they have failed to bring cheers to them. The reason: the money continues to pile up in the banks. Lack of money in the market means consumers are short on money to splurge of goods, creating low demand for finished products and causing factories to run well below their capacity. In this context, the government upping its capital expenditure can act as a lifeline to reeling industries. 

Second, 'uncalled-for' policies, vigilance and regulations in the name of rooting out corruption that only harass and dent their confidence and poisons the business-friendly climate without bringing intended results should be excised. Third, their demands on debt restructuring and rescheduling deserves the government's empathic response, as does the matter concerning amendment to laws on investment and taxation that act as deterrent to business. Fourth, the government should leave no stone unturned to inject momentum to projects that are installed due to a lack of fund or disputes. Doing so is critical not only to unnerved investors who are staring at mounting loss but also to incentive new ones to pour money in risky but rewarding venture.

Experts agree that we need some 80 billion USD in investment to graduate to a middle-income country by 2030 and over half of that investment is expected to come from the sector. It is also the country's largest exporter. Private cement companies are increasingly exporting cement to India. Another important development is at its initiative, Nepali coffee has grown in popularity, finding a niche market abroad and earning foreign currency. What's more, because of the growing participation of private sector in hydropower development, our electricity generation has seen impressive growth. Many such potential will be harnessed should the government act as a facilitator.  No country can afford to ignore this pillar of economy. Many businesspersons allege that their demand are met with apathy by the government. This must change.