The Nepali economy is going through its nadir, all because of political instability, and the
government’s inability to spur development activities which have been provisioned in the budget for the fiscal year 2011-2012. The industrial output has been dismal, a result of management-labour disputes,
extended power outages and high fuel costs, among others. In this context, the government had
announced Nepal Investment Year 2012-2013,
without laying concrete groundwork for making it a success. There is more populist tone in all that the government announces. The Investment Board that had been formed got to a late start with the lacklustre pace of putting the pieces together.
Now, albeit a little delayed, the government has
finally woken up to the reality that foreign
investment is not going to pour in only because of the tag of the investment year. There are a host of
pre-requisites that have to be put in place to allay the fears of the would-be investors. The first and
foremost fear of the foreign investors is the security
of their investments. For example, many projects
in Nepal with foreign investments are behind
schedule because of protests by the local people
and others, backed by the various political parties.
If this scenario continues, the investors would be
reluctant to step in with their investments.
Now, it seems that the government has realised that investments will come provided requisite incentives are offered for designated projects, besides guaranteeing security to the investments made. As per the latest move, projects that concern infrastructure, hydro-power generation, agriculture, railway
services, etc. are to receive additional facilities and incentives over and above what have been provisioned in the existing Act. This makes sense in that the said projects would have to receive the approval of the Board for being eligible for the additional incentives. Such positive gestures would also help attract investments in the priority sector, which is of utmost importance at this crucial juncture the country’s economy is passing through. That the foreign investors would receive the same
access to facilities as enjoyed by the Nepali investors is laudable. This is making investments in Nepal more attractive. For this, the investment Board has chalked up a list of projects for which foreign
investors would be eligible for additional facilities and incentives. Two elements in particular,
additional tax waiver and loans at a lower interest rate than that in the capital market have been floated to make investments in Nepal worth embarking on for the foreign investors.
However, the incentives provisioned for foreign
investors may look quite attractive on paper, but the government has to step in to make it a reality to attract the investors. The dissolution of the Constituent Assembly and the resulting fluid political situation can prove to be a hard nut to crack as far as a sudden surge of foreign investments is concerned. Political stability is what guarantees sustained inflow of foreign investments, and the government cannot in any way provide the needed assurance at this stage.
Many former lawmakers of the now defunct Constituent Assembly (CA) have exhibited their irresponsible nature. Actually, most people take them as role models, but such behaviour puts people off. The latest is the example of some former MPs failing to return the vehicles provided to them by the state for discharging their responsibilities. However, they were required to return them to the Parliament Secretariat within seven days of the CA dissolution. But, the MPs concerned have yet to return them. This just goes to show how things are in Nepal. The law apparently seems to apply only to the common man, and the powerful can get away with virtually anything.
To set a precedent for a change, the vehicles must be seized from the ex-lawmakers. If they refuse and fail to return the vehicles, which are public property, they should be punished as per the law. This action would at least show that there is a semblance of law and order in the country, which is now in a delicate transient period. The high-handedness of the erring former lawmakers can under no circumstances be tolerated.