Simplification of licensing policy reduces cost and time for business and attracts investment, according to a study of International Finance Corporation (IFC).
However, the simplification of licensing policy is the first step to attract more investment as it is the entry point of any business, said secretary at the Prime Minister Lilamani Poudyal during an interaction on 'Unleashing Private Sector Potential: Licensing and Regulatory Reform in Nepal,' of IFC.
Since Nepal is observing Nepal Investment Year 2012-13, doing away with the bureaucratic hassles like simplifying licensing policy will create investment friendly environment, he added.
However, simplifying licensing policy does not mean less monitoring, said chief secretary Madhav Ghimire.
Licensing reform can bring economic growth as it has huge potential savings for business and government and make information more accessible. "Inadequate information creates hurdles and discretionary power leading to corruption, he said, adding that the country has, thus sadly ranked in the second highest corrupt — according to the Transparency International's (TI) report — in the South Asian.
The study has revealed that the cost and time will come down to almost half, if the government simplifies the licensing policy. "Government officials spend 2.5 million person days per year to process 167,000 licences," according to the IFC study that has revealed regulatory gaps, overlapping regulations, lack of appropriate institutional framework on central regulatory quality and licence review for delay in the licensing.
In Nepal, some 125 different types of licences by the 41 institutions, said the IFC study that is expected to support Nepal Investment Year 2012-13, by improving business environment leading to job creation and increased private investment. The study has proposed need to coordination business licensing reform through institutional mechanism; remove inconsistencies and unpredictability of business licences through appropriate instrument and consolidation in sector specific reforms.