As per the constitutional provision, the government is obliged to bring the annual budget for fiscal year 2017-18 on May 28. Keeping this constitutional provision in mind, the Ministry of Finance has started finalising new programmes and policies for the new budget and different government ministries have submitted their recommendations to MoF under the budget ceiling of Rs 1,156.04 billion as recommended by the National Planning Commission. In this context, Sujan Dhungana of The Himalayan Times caught up with Bhawani Rana, President of the Federation of Nepalese Chambers of Commerce and Industry — the largest umbrella body of the private sector of Nepal — to discuss the expectations of the private sector in the upcoming budget. Excerpts:

The government is preparing to bring the annual budget on May 28 as mandated by the constitution. What areas does the government need to focus on this time?

FNCCI has recently given a sectoral development advice to the government for the new budget. In the advice, we have mentioned that the government should give due priority to sectors like infrastructure development, tourism promotion, agriculture commercialisation, and improved tax administration, among others. On top of that, FNCCI along with the entire private sector wants the budget this time to give high priority to production-based industries and businesses. The budget should assure a business-friendly environment so that businesses will boom in the country. It has to be noted that a number of investors are shifting to trading sector due to lack of investment-security in the industrial sector in Nepal despite industrial sector having comparative advantage over the trading sector. Thus, the government should make the budget investment friendly. Similarly, economic growth indicators of Nepal as released by the government and institutions like the World Bank are encouraging. However, it is challenging for Nepal to sustain that growth. Business friendly budget will help the country to sustain the recent development indicators. Nepal today needs a favourable environment for investment which is not just related to programmes and policies of the government, but also with the bleak condition of different infrastructure in the country. For instance, tourism is an important sector that gives momentum to the national economy. However, tourism infrastructure is really very bad. We do not have proper air connectivity and the condition of Tribhuvan International Airport (TIA) — the only international airport of the country — is pathetic. Similar is the case with road infrastructure. Despite having a number of tourism destinations, we do not have both air and road connectivity to such places. Thus, the government should identify sectors with comparative advantage and prioritise them in the new budget.

FNCCI has been providing pre-budget suggestion to the government every year. Have these suggestions been addressed in the budget?

It is not that the government completely overlooks our suggestions and agendas in the budget. Our voices are addressed in the budget to some extent but the problem is again in the implementation side of our suggestions despite them being included in the budget. As a result, even when our suggestions are included in the budget it makes no significant difference. Though the government talks about bringing investment-friendly budget, the budget has not been investment friendly in the actual sense in the past years. As the private sector is the actual driver of the national economy and country’s development process, the government should not only take suggestions from us but actually prepare the budget in close coordination with the private sector. It is important to note that the government today is gearing up for development. So, the government should join hands with the private sector to drive economic growth in the country.

You had once chaired the Agro Enterprise Centre of FNCCI. What do you think are the major areas in the agriculture sector that need to be addressed by the budget?

Every year, the government has been increasing the budget in the agriculture sector with a number of popular agricultural programmes. However, the government seems to be doing nothing to implement such programmes. Similarly, the annual budget for agricultural sector is not spent timely and properly. Thus, the government should first focus on implementing its annual budget and programmes targeted for agricultural growth. The budget should also introduce policies related to contract farming and mechanisation in farming. Such policies will contribute to commercialisation of the agriculture sector. The budget should also reduce interest rates on loans in agriculture farming and increase access of farmers to financial services. The contribution of agriculture sector in national GDP — around 30 per cent at present — is in a declining trend despite a majority of Nepalis involved in agriculture.

How has the private sector analysed the recent development in business environment in the country?

Comparatively, there has been some progress in the business environment in Nepal and investors are encouraged too. However, there are still numerous problems that are restricting business growth here. Besides procedural hurdles and policy contradictions, there is no stability of interest rates in the industrial sector. Banks and financial institutions are increasing interest rates arbitrarily. Similarly, a number of existing government policies are old and new investment related policies are yet to be endorsed. Industrialists still feel insecure and the state has not taken concrete steps to ensure security to businesses. Our physical infrastructure is among the worst in the world. These are the factors that have been hindering business growth in Nepal. With such problems in hand, we cannot say that business climate in the country has become better. However, the commitment shown by the government to promote industries and political parties giving high priority to the country’s economy in their local election manifesto have encouraged the private sector a lot. The successful completion of the local election, which is in the offing, will lay the foundation for local level development in the country.

Ministry of Industry recently announced its campaign to bring at least $100 billion foreign investment in Nepal by 2017-18. How achievable is this target?

What the Ministry of Industry (MoI) is doing recently to promote investment is praiseworthy. The recently held Nepal Investment Summit, which was organised by MoI, really boosted the morale of potential domestic and foreign investors to invest in Nepal and it is proven by the fact that Letters of Intent worth $13.52 billion were signed by investors for investment in Nepal during the event. And now MoI has set a target to bring at least $100 billion foreign investment in the country by 2017-18, which the private sector believes is achievable. However, MoI alone cannot turn this target into reality. Other concerned ministries must support MoI to make this happen. All the related ministries should immediately contribute to developing a business friendly climate in the country. Nepal can really become an investment destination if all government ministries work together to improve investment climate in the country. Assuring investment friendly environment means that new businesses and industries will come into existence. These industries will generate thousands of employment opportunities and consequently no Nepali will have to go abroad for employment.

FNCCI recently elected a new executive committee under your leadership. What have you planned to boost economic growth in the country?

The current executive committee of FNCCI is full of youths with innovations in their mind. Thus, FNCCI will work on a number of programmes targeting youth entrepreneurial development in the days to come. We are planning to develop technical institutions in different parts of the country to train and provide skills to different youths so that they can work in the country itself. Nepal today does not have enough human resources in the industrial sector, which is why we should generate skilled manpower to achieve the target of economic prosperity that can be achieved only through industrial growth. At this point, FNCCI also urges the government to bring youth-focused budget. Being a woman, development of women entrepreneurship is also another priority of FNCCI under my leadership. As India is our largest trading partner, FNCCI along with the Indian private sector is planning to hold an economic summit in Nepal to boost Indian investment in the country.