Nepal has seen a staggering incline in economic growth since the 2015 earthquake. However, there seems to be little that the Nepali governments have done to really open the economy up to the world and within itself.

While our neighbours have come up with crafty financial policies and strategies to liberalise their economies, Nepal has failed to do so on a both domestic and international level.

While fully being aware of how devastating the COVID pandemic has been for Nepal, the real reason for this is a conspicuous lack of strong, keen budgetary vision and economic ideology.

While all subsequent governments and parties differ in their social ideologies, they all seemingly have the common goal of maintaining a complacent economy.

Part of the reason why Nepal has not yet seen the economic benefits as they desire is due to overt protectionism and a lack of economic liberalisation.

This runs on more levels than one, which is detailed below.

Opening up an economy could mean many things. The first level is domestic. For instance, there is an overt existence of governmental red-tapism, which impedes ease of doing business. Nepal currently ranks 94th among 190 countries in terms of ease of doing business.

Having said the same, Nepal maintains a strong protectionist policy towards protecting its local businesses.

However, it has not done local businesses much benefit either. If local businesses were to indeed be buttressed by such protectionist an approach, then local businesses should flourish. That has not been the case.

On the contrary, there are multiple reports of how the system thrives on arduous bureaucratic measures as it feeds into pockets of corrupt government officials.

On that note, Nepal ranks 117th out of 180 countries in the corruption perception index-explaining the lack of businesses thriving in the country.

The sluggish economic benefits seen in the country could very well be attributed to this rank, and without improving the corruption perception, ease of doing business is likely to remain unchanged.

The next level is international. While there is good reason as to why Nepal would want to protect its local market from foreign competition, it has inadvertently damaged the influx of foreign business.

This has led to a rather clumsy situation in which both foreign and local businesses find it difficult to establish their standing in the market.

While a lot of it comes from the standpoint of pure complacency, it is also a result of a lack of budgetary vision about foreign investment in Nepal. A part of the problem is not having a strong vigorous budget that recognises the needs of the nation vis-à-vis ease of doing business and influx of foreign investment.

International businesses would hardly want to tap into an unexplored market which is already plagued with bureaucracy and an ideology that promotes domestic protectionism.

A detailed report by Nepal Rastra Bank in 2018 about the status of foreign direct investment (FDI) in Nepal concludes, albeit modestly, with the statement 'attracting FDI will be necessary, not only to increase investment in the economy, but also to maintain external stability'.

The reality truly is that Nepal is alarmingly behind in terms of its FDI goals.

The Ministry of Foreign Affairs also maintains that Nepal has a 'liberal' approach towards foreign investment.

However, the government needs to walk the talk before making this claim. Calling one's stance liberal while maintaining a policy that is contrastingly dissimilar does little to benefit the economy, and thereby the citizens.

The reasons as detailed in this piece show why Nepal is not a preferred destination for both foreign and domestic investors across all sectors (with few exceptions such as real estate).

Calling this approach liberal is incongruous to the realities of the market, to say the least.

Notwithstanding the abovementioned shortcomings, Nepal does indeed have great potential in its market. A large section of the population is well-educated, young and willing to boost the economy.

There is substantial potential in tourism and natural heritage sites, making it internationally appealing to a myriad of sectors of people that range from travellers to adventure sports enthusiasts to spirituality-seekers.

Of late, Nepal has managed to remain relatively peaceful in politics as well.

While some of these liberalised changes do seem visible, especially in the fintech and digitisation industry, without a lack of a focussed economic vision, not much can be achieved.

The government needs to capitalise on these areas of potential by slashing down the red tapes and formulating lucrative start-up policies that provide young entrepreneurs to open them up to the world and within itself.

Digitising the market and for a for opening up companies and start-ups, losing archaic bureaucratic rigmaroles, cracking down on corruption with an iron fist, and devising special economic zones could go a long way to ensure that both domestic and international players obtain an opportunity to play in the economic field.

While it is uncertain as to how this form of Keynesian economics would be received in Nepal, it certainly is a step different from the current complacent model, which has not proven to be much useful.

Either way, a well-articulated economic vision which government officials are willing to work tooth and nail for is the answer to this question.

Singh is a lawyer

A version of this article appears in the print on May 13, 2021, of The Himalayan Times.