Regulatory weakness, uncertainty stall investment

About one-third of the respondents opined that investments have been stalled in the country because of regulatory issues, according to a Stakeholders' Perception Survey conducted by National Business Initiative (NBI), in partnership with the SouthAsia Enterprise Development Facility under the International Finance Corporation (IFC).

Time and cost compliance are too uncertain for investment planning, said senior private sector development specialist for Nepal Investment Climate Reform Programme of IFC’s SouthAsia Enterprise Development Facility Laura Watson, presenting the perception survey result that was carried out among three stakeholder groups in nine districts of the country.

"Poor regulation, lots of paperwork, lack of transparency and access are linked to the process of implementation of the law, despite the country having laws," she added.

"However, e-governance activities, can address these issues," she said, adding that the three stakeholder groups — opinion makers, labour representatives and private businesses — mostly agreed on key issues of the economy.

They all broadly agree that political instability, lack of power, corruption, lack of skilled labour and productive workplaces, and difficult government procedures to start and operate businesses, are key hindrances in the country.

They also agree that business reforms are needed and it can benefit the country but the reform agendas should be highlighted thoroughly, she added.

However, opinion makers and the business community opined that the overall economic policies in the country are not favourable.

The survey was undertaken to get a sense of the perceptions of labour, opinion makers and businesses towards business reform initiatives and perceptions towards the private sector.

The 'pulse check' can help understand the effects of government policies and reform measures to improve investment climate, business sustainability and development of the private sector, said president of NBI and entrepreneur Padma Jyoti, who explained that there are a few issues — like quality of products, transparency, accountability, integrity — which the business sector is expected to address seriously but overall, the public image of the private sector is quite positive and most stakeholders are aware of the important role the private sector plays for the development of the country.

Some 80 per cent of the stakeholders believed that the private sector contributed positively to both local development and the development of the country, but labour representatives perceived that fair and decent wages and salaries should be the top priority of the private sector, also may be due to rising prices, he said, adding that, the survey has however, surprisingly, revealed that multinationals are the least reliable in terms of product and service quality as compared to domestic private houses and jointly owned public and private enterprises.

The results will assist the private sector and the government in addressing the needs and expectations of different stakeholders, and contribute to the development of strategic policies and measures for improving the investment climate, said vice president of Confederation of Nepalese Industries (CNI) Narendra Basnyat.

The insights will also help initiate public-private dialogue on important issues related to private sector development through Nepal Business Forum (NBF), which is the country’s first national platform for public–private dialogue, and which was established to deliberate on important investment climate issues and recommend measures to improve it.