Govt urges World Bank to revise ‘Doing Business’ methodology

The government has again expressed strong concerns regarding the ‘Doing Business’ report, which was published by the World Bank (WB) on October 31.
At a programme organised by the Society of Economic Journalists-Nepal (Sejon) to mark the 21st Sejon Day in the Valley, finance minister Dr Yubaraj Khatiwada, said that the report had reflected a negative picture of the country’s economic condition and investment environment.
“We had expressed our concern to the World Bank over the report," he said, adding that the World Bank mission officials have already arrived in Nepal and have started reviewing the report.
Minister Khatiwada rued the fact that the World Bank had been using six months old data to prepare report. "The World Bank must use the latest data as much as possible if it wants to provide a relevant report,” he emphasised, adding that it should include data till at least October. However, the World Bank (WB) prepares the report according to its annual schedule despite the change in governments in any of the countries. It also uses the data according to its annual calendar, not according to each of the country. But Khatiwada claimed that the World Bank collects data till May only and it is the major reason for a gloomy investment picture of the country.
Nepal ranked 105th in the ‘Doing Business’ ranking in 2017 but this year the country has dropped to the 110th position, hinting at a weakening state of trade and investment climate as it has failed to simplify the tax payment process. But Khatiwada claimed that the tax regime in Nepal is more progressive and simplified against what the World Bank reported. He also reiterated that the incumbent government has created an investment friendly environment by taking the initiative to strengthen existing policies and the system of the government but the report does not reflect that.
“World Bank needs to change the methodology of its research," the finance minister added, though the World Bank doesnot change the methodology for any one country.
Khatiwada, on the occasion, also defended the whopping trade deficit. "We recently acquired two wide-body aircraft for Nepal Airlines Corporation,” he said, adding that Nepal needs to import the equipments for development works like hydropower, which will in long run pay off. "We are planning to generate 10,000 megawatts of electricity in the next decade and for that we have to import machinery and equipment, so import in itself should not be taken as a negative development."
On the occasion, Sejon presented Rudra Khadka of Nagarik Daily and Subash Yonjan of Capitalnepal with the annual Sejon Award.
Khadka has awarded under the print media category. He was recognised for his series of in-depth stories on Sikta Irrigation Project. Khadka has been honoured with a cash prize of Rs 50,000 and a certificate of appreciation.
Similarly, in the online category, Subash Yonjan from CapitalNepal.com was honoured with the Sejon award for writing in-depth stories on fake rescue scams in the mountaineering and trekking sectors. Likewise, Bhagwan Khanal from Karobar National Economic Daily was awarded Late Sanjay Neupane Research Grant, while Amar Baduwal and Arun Sapkota were given Hydro Solution Fellowship grants.
Likewise, editor of Karobar National Economic Daily Kuber Chalise, chief editor of Abhiyan Daily Madan Lamsal, Hridaya Gautam from Ajako Artha and news chief of Kantipur TV Prashant Aryal were honoured by the Sejon for their long contributions in economic journalism.

Nepal slips 5 places, needs to make Doing Business easier: World Bank

Nepal needs to make paying taxes easier by simplifying the process of social security related payments. This is the reason that the recent labour act has made the process more cumbersome and contributed to pushing the country down five places to 110th in a global ranking for the ease of doing business, according to the World Bank Group’s 'Doing Business 2019: Training for Reform report', released today.
According to the annual ranking, Nepal made paying taxes more difficult through a 2017 labour act that introduced a labour gratuity, medical insurance and accident insurance paid by employers in a way that places a larger administrative burden on companies that already face considerable bureaucracy. The labour gratuity is a particular burden as employers must file and pay it manually every month whereas the medical and accident insurance is paid annually.
This has an impact on the number of tax payments and time in hours to comply with tax obligations. As a result, it took companies in Nepal around 39 payments and 353 hours to comply with their fiscal obligations in 2017. This compares unfavourably with the global average of 24 payments and 237 hours.
“Raising revenues for spending on social expenses is needed and possible," said World Bank country manager for Nepal Faris Hadad-Zervos. "It will be critical to find ways to do this that do not overly burden companies with paperwork, taking time and resources away from generating profits to employ workers and spread prosperity," he said, adding that Nepal’s tax authorities are considering the use of an e-filing platform that will need to be rolled out to make compliance easier for businesses. "Similarly, the government is considering the possibility of merging taxes and contributions that are levied on the same tax base."
The government has asked the World Bank to support its immediate priority of simplifying process for businesses in the coming period. "We view this as a very positive step forward and stand ready to support these critical reforms as part of government new vision of crowding in the private sector,” he added.
Nepal ranks 158th for paying taxes in the Doing Business ranking out of 190 countries and this is its lowest ranking among the 10 indicators. Aside from paying taxes, Nepal also ranks low in other indicators for the ease of doing business, including enforcing contracts (154), dealing with construction permits (148), and getting electricity (137).
Nepal’s performance contrasts with the rest of South Asia, where a total of 19 business reforms were carried out in the region during the past year, the second highest ever, compared with previous year’s revised record of 21 reforms.