Outlining that contradictions in multiple business-related laws and policies that have been discouraging potential growth of business sector, they asked the government to bring a unified policy. “Even today, Nepal has some unnecessary laws and policies that are affecting investment,” former finance secretary Ramehwor Khanal said, while addressing an interaction 'A Discourse on Integration of Economic Legislations' organised jointly by Samriddhi Foundation and Society of Economic Journalists Nepal here today. “It is high time for the government to scrap such obsolete and unnecessary policies and introduce an integrated policy to regulate the business sector,” he said, adding that multiple business- and investment-related policies formulated by different ministries are contradictory and ambiguous, thereby discouraging businesses. “For instance, tax waiver and subsidy on any good and service can be given only through the Financial Act.”
However, other policies have also been giving tax subsidy under different headings,” Khanal added. “The registration and exit process for companies are yet to be simplified as procedural hurdles are the primary factors that investors look at before injecting investment in any country.”
He also opined that there should not be any minimum threshold and capital requirement for foreign investors to invest in Nepal. The government has increased the minimum threshold for foreign investors to Rs 50 million, which has discouraged most of the foreigners to invest in Nepal. Khanal also blamed the government authorities for duplication of laws. “Nepal achieved significant improvement in the Doing Business Index this year just because of the reforms in number of laws,” he said, adding that procedural hassles are, however, still there.
The private sector participants, on the occasion, also complained that contradictory policies have been deteriorating business and investment environment in the country. They criticised the government for failing to address new types of business, including start ups, in the new laws. “The government needs to come out of the conventional mindset of implementing policies only for trading of goods and services,” director of Laxmi Group Niranjan Shrestha said, adding that it also has to consider mobility based business like venture capital in its regulatory framework.
Acknowledging the importance of bringing integrated policy to regulate businesses and investment, president of Nepal Law Commission Madhav Poudel said that the concept has to be brought to light and discussed widely among stakeholders.
“The government is facing difficulty in addressing various practical hurdles in existing policies and laws,” he said, adding that it is, however, aware of all policy hurdles and contradictions in the existing laws that are discouraging businesses. “While the government is working to gradually address such issues, various agencies are facing structural problems and difficulties in coordination.”
Paudel also accepted that there is duplication of laws as there are many laws to regulate the private sector. “The disintegrated laws have been creating problems to possible investors,” he said, giving an example of the lengthy procedures that the entrepreneurs need to fulfil for tax compliance.
The participants, on the occasion, deliberated on the possibility of integrating Foreign Investment and Technology Transfer Act with other acts related to foreign exchange and banking, insurance and securities. The laws related to forest, environment and land acquisition can also be implemented through a single legal provision as the integration of laws can also help remove inconsistency and ambiguity in several government rules. “In many cases, government officials are found to be demarcating area in their jurisdiction and delaying service delivery even after merger of two or more government offices,” the participants complained, urging the government to revisit the Foreign Investment and Technology Transfer Act (FITTA).
Ahead of the Investment Summit in March, the government had hastly revised number of laws including FITTA and Public Private Partnership and Investment Act. The laws were, though expected to simplify the procedures related to the Department of Immigration, Inland Revenue Department, Department of Land Management, Department of Customs and central bank to facilitate foreign investors, the foreign investors are still complaining that the laws are more regressive than before.
“Despite implementation of these new laws, investors still do not have access to online system and it is difficult to validate their digital signature,” Paudel said, adding that the investors still need to visit various government agencies to submit hard copies of their signed documents.
However, joint secretary at Finance Ministry Uday Raj Sapkota, on the other hand, defended the government and claimed that it is serious about addressing the issues of policy ambiguity and contradictions. “The private sector should, nevertheless, clearly communicate about the problems they are facing due to existing policies and come up with feasible recommendations,” he said.
The government is in the process of implementing a single-code system for the income tax, value added tax, and excise duty, as an effort to simplify the procedures for taxpayers, Sapkota informed, adding that the tax administration had stepped up preparations for enforcing single-code for the three tax systems. “The ministry is about to make amendment to Financial Act for enforcing the new system.”
According to him, the government has adopted the policy of reducing the number of government institutions and integrating the related laws to reduce hassles for potential investors. “The government has established one-stop service center and enacted several laws to attract foreign investment,” he added.
On the occasion, researcher at the Samriddhi Foundation Kul Prasad Pandey gave a brief introduction about the context of the discussion citing international examples, areas in which Nepal is lacking and reasons thereof with regards to its ranking in the Doing Business report, the idea of consolidation of act, harmonisation of legislations and minimising duplication of government entities and subsequent regulations.
No comments:
Post a Comment