Business confidence ‘improves’: FNCCI survey

The private sector that has been asking the government to create better business environment has come up with a report of improving business confidence in the country in the last six months.
The Business Confidence Index (BCI) has improved to 49.5 per cent – up by 9.8 percentage points compared to the first report in November 2012 – according to the FNCCI Business Confidence Survey released here today.
However, the 49.5 per cent – below 50 per cent – still reflects that the business confidence is yet to improve for the better investment opportunities in the country.

 According to the survey, business confidence is the lowest in the manufacturing sector – the sector that can create employment in the country – whereas service and agriculture sectors are more confident and optimistic.

The survey has identified governance as the most critical challenge for the economy, followed by political instability, power shortage and corruption.

Governance used to be the fourth most challenging factors six months ago, while political instability, energy and strikes topped the chart. Some 18 per cent respondents attributed corruption – which did not find its place in the last survey – as the fourth most critical challenge.
The survey carried by FNCCI with the support of the USAID funded Nepal Economic, Agriculture and Trade (NEAT) Activity has collected opinion from 420 businesses from agriculture, service and industry sectors.

The survey has also highlighted production, employment, cost of production, profitability, export, import, overall business environment, ease of obtaining loan, inflation and the overall economy, and their role in economic expansion.
The private sector seems to be optimistic of the future as 50 per cent of the respondents believe business climate will improve in the next six months, whereas only a quarter – some 26 per cent – expected it to deteriorate further.
The manufacturing sector, however, is not much optimistic as only 43 per cent of the respondents from the manufacturing sector believe that the business climate will improve in the next six months.

Some 67 per cent respondents expected expansion of their production level, whereas 58 per cent expected an increase in the profit level.

Likewise, some 67 per cent expect that the cost of production would rise and 61 per cent expected that the inflation rate would go up in the next six months.
Though, there has been no new employment generation in the country, more than half – over 51 per cent of the respondents – were hopeful of increase in employment ratio in the next six months.