Commission for a new phase of reforms at the request of the Federation, Collaboration is essential for positive policy reforms and stability: FNCCI

Commission for a new phase of reforms at the request of the Federation, Collaboration is essential for positive policy reforms and stability: FNCCI

June 1, 2024, 1:48 p.m.

The Federation of Nepalese Chamber of Commerce and Industry (FNCCI) has positively taken the commitment of forming a commission for the new stage of reforms. The commission is in accordance with the demands of the Federation through the budget of the financial year 2081.82.

The budget presented by the Finance Minister Barshman Pun in the joint session of the Federal Parliament in this sense has some measures.

The federation held a macro-economic debate and for the first time presented a demand for the formation of a commission to implement a new phase of economic reform program for the existing economic reform and long-term development and was continuously lobbying for this.

The Federation believes that a special plan for policy reform and stability will be formed with the participation of the private sector in the said commission.

Similarly, in the promotion of the federation, the government has also covered the issue of promoting the initiative to establish an investment company by collecting the savings of small businessmen. It seems that it will help in the revival of the ailing industry by encouraging small investors when the investment climate is not being created.

Similarly, the government has announced an investment decade in agriculture in the context of the federation's demand for an investment decade. Fruit farming in the mountains, highway-focused businesses, etc. are covered. But as the budget provisions are not enough to attract private sector investment in agriculture, more homework is needed.

The Federation's demand to develop Nepal as a special hub for weddings and gatherings in tourism promotion has been amended in the budget.

Likewise, the demand for assistance to the private sector for the construction of hill stations near the Indian border has been addressed. The federation is of the opinion that the government should provide access roads, electricity and water by adding education and health and tourism to it. The amount of funds for start-ups has been increased this time.

It is believed that the work will proceed according to the start-up policy made at the initiative of the federation. More homework is needed on project mortgage loans to start-ups. The initiative to build an information technology hub is positive.

But the budget has not spoken about the increasing frustration among the youth due to policy changes in the information technology and start-up sector. In the context of the continuous decline in the share of manufacturing industry in the GDP, the government failed to pay attention to the possibility of boosting morale with additional programs in the budget.

No concrete program has been found to reduce the impact of upgrading from least developed countries. It is a welcome step that the first priority of the budget is economic reform and promotion of the private sector.

The federation demanded a special program for the promotion of the private sector for economic transformation. Accordingly, it has been given first priority. But in order to implement the said priority, more homework is needed as only a few topics are included in the budget.

It is mentioned in the budget that the monetary policy will be brought in line with the budget. But in the budget, there are very few concrete programs that can be used by the private sector of the excess liquidity in the bank financial institutions.

In this perspective, monetary policy can be expected to increase the morale of the private sector, but it is necessary to prepare a solid foundation for it.

Regarding the changes in tax rates through the economic bill and the impact on the enterprise business, suggestions are coming from the federation members, district city industry associations, objective associations, and associate members. There is past experience that there will be complications during implementation and it will affect the overall business environment as well.

The arrangement made by the budget of any one year will be changed immediately and the effective law will be applied. In the absence of predictable policies, the existing investment has been curtailed, while foreign investment has not been able to come. The federation believes that the Ministry of Finance and related agencies will be ready to reduce the impact of policy changes.

Lack of political and policy stability, frequent changes in revenue rates, suspicious behavior towards investors, etc., have discouraged the private sector, which holds 81 percent of the economy.

Due to the lack of investment, the manufacturing and construction sector, which provides many jobs in the current financial year, is negative. The goal of economic growth taken in the budget will be achieved only if the private sector-friendly provisions in the budget are implemented and the monetary policy encourages investors.

Therefore, the federation believes that there will be cooperation between the government and the private sector in the implementation of the private sector promotion program mentioned in the objectives and priorities of the budget.

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