BUDGET BUZZ: Bring investment-budget

As the umbrella organisation of the Nepali private sector, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) wants this budget to focus on increasing investment -- in short, it should be an 'investment budget'.

Without an favourable investment-climate and increased investment, economic development would be a distant dream.

To create an investment-friendly climate, anarchy and the culture of bandhs, strikes and road blockades -- that are bleeding the business white -- should be immediately stopped. If bandhs continue, industrialists will be compelled to close their business further fuelling unemployment problems. The government should bring a provision where businesses can get compensation for losses caused by bandhs, strikes and road blockades.

The government should also take strong measures to promote investment in productive sectors. The budget should be guided by the value of production. The security of investors and their investment are the main problems in Nepali private sector. Other obstacles are dilemma in adopting an economic policy and laws, their implementation and the prevailing energy crisis. The budget must encourage generation of wind energy, solar energy and energy from wastage.

The budget should also promote private public partnership (PPP) in infrastructure development, enhance the purchasing power of consumers and promote good governance. It should focus on strengthening joint public-private investment with greater leverage to the private sector.We suggest that the budget set a growth target of eight per cent for the fiscal year 2009-10 because it is a prerequisite for fast development. Nepal can achieve this target if there is peace and a business-friendly environment. For speedy development, the government must immediately ratify foreign investment policy, industry policy and commerce policy in the House, form the proposed Investment Board and set up Special Economic Zones (SEZs) within a month.Stable tax policies encourage businessmen to invest more. Thus, FNCCI opposes any new tax policies that government might introduce before the country gets a new Constitution. The budget must address the private sector's demand of multiple VAT at 1, 4 and 13 per cent instead of the present 13 per cent VAT. There has been a huge leakage in revenue due to single window VAT. If multiple VAT comes into effect, the government will be able to generate more VAT revenue. The budget must waive taxes on investments made in hydropower and reduce corporate tax by five per cent to 20 per cent which now stands at 25 per cent. The Kabadi Tax (scrap tax) must be scrapped and the proposed property tax should not be implemented before a new Constitution comes into effect.

The manufacturing sector should not be charged more than 8-10 per cent interest rate. The industries hit by conflict should get a chance to reschedule loans and get waiver on interest for the duration of the conflict period. The budget should also declare tax holiday for 10 years to industries that use domestic raw materials. To encourage domestic production, the budget must make it mandatory to buy domestic goods for official purposes.

Apart from tackling the deteriorating law and order, power crisis and other infrastructure related problems, the budget must also try to resolve the private sector's pressing problems like labour disputes. The government should ensure a liberal labour policy that guarantees 'No Work, No Pay' and ban politically-affiliated trade unions. Trade unions should be apolitical.

Kush Kumar

President

Federation of Nepalese Chambers of Commerce