The private sector today seems to be annoyed with the government and its policies complaining that new regulatory frameworks are troubling business operations in the country. While the government claims to have developed a friendly environment for business growth, the private sector has been giving a contrary viewpoint. Against this backdrop, Sujan Dhungana of The Himalayan Times caught up with Padma Jyoti, chairman of Jyoti Group and president of National Business Initiative, to know the details regarding business scenario in the country. Excerpts:
What do you think of the doing business environment in the country in the past and now?
We had high hopes after the conclusion of the first phase of the political transition after the promulgation of the new constitution. We are still carrying that hope and are optimistic that the coming days will be better for the economy. However, I must say that our expectations from the government have not materialised at the pace or degree that we had expected. But we are hopeful that the efforts to improve the
doing business environment in the country will speed up in the days to come.
The government claims to have created a favourable environment for businesses while the private sector often has a contrasting view. Where actually is the gap?
The speeches made by government officials and their opinions are positive. It seems that they want the private sector and the businesses to contribute more to the economy. But when policies are being formulated and plans being developed, the private sector is worried whether or not those policies are in line with the aspirations of the stakeholders in the economy or will ensure a conducive business environment. The private sector is concerned whether policies being formulated are restrictive to the doing business climate. Businesspeople are a little worried that government policies are becoming more restrictive and controlled in nature.
Do you mean to say the government rarely consults the private sector while formulating business-related policies?
I think some mechanisms have been put in place and the private sector federations, chambers and other forums have been raising private sector-related issues and are giving their inputs and suggestions to the government while drafting policies. In fact, the job of the organisations representing the private sector is to raise issues and ensure that the suggestions of the private sector reach the government. There are mechanisms that have been framed to ensure the private sector’s involvement in policy formulation but I cannot pinpoint what it is. Also, I feel there is something missing in between what the private sector seeks in policies and what the actual policies are. Due to that missing link, the private sector is not gaining the confidence for conducting business even from a politically stable country like Nepal today.
How friendly are existing business policies of the government?
The government is trying to include more businesses and transactions in the formal sector, which is good and nobody should question this attempt of the government. The government should be heading like this. But when I talk to businesspeople, they say that existing policies are restrictive in nature. Many of them are forced to spend more time in complying with new policies rather than giving priority to their business and its expansion. An environment should be created wherein investors can invest and operate their business in an open and free manner. This is also essential to give boost to the confidence of investors.
Of late, the private sector has been taking the new taxation system as a burden to doing business. How business-friendly is our tax administration?
The tax system in the country has been improved a little bit compared to the past, as tax offices today have officials with knowledge on tax issues. This is a good sign. The government is also obliged to collect revenue. However, it should be kept in mind that the tax system does not only favour the government but also taxpayers. The tax administration should encourage taxpayers, not discourage them.
Earlier you mentioned that bodies representing the private sector had a crucial role to raise and help address concerns of the business community. However, increasing politicisation and division on common private sector agendas among such bodies is on the rise. What is your take on this?
I don’t think there are notable differences among existing private sector representing bodies on issues of the private sector. As all those involved in such bodies are involved in some business or the other, they must not have differences regarding business concerns and agendas. But if they are not in any business or their interest is in something else, there can be differences. There might be some differences in opinion regarding policies between small and big traders or formal and informal sector at times, but the private sector in general does not have many differences within itself. Thus, I don’t think that private sector should have any differences in general on policies. But a few people may wish to be in the limelight or use big chambers or their positions for personal motives. We will have a problem if people at these forums try using their position for personal prestige and benefits at the expense of private sector issues. Those in such private sector representing bodies should rise above their personal interests and work for the betterment of the entire private sector and business growth.
Against this backdrop, how do you see the future of Nepal’s economy? Is the set economic growth of 8.5 per cent for 2019-20 achievable?
I am optimistic towards achieving the economic growth rate set by the government in the ongoing fiscal year. The country’s youths with fresh innovative ideas are entering business in recent years. They are coming up with such new business ideas which 10 years ago none of us could even have thought of. However, infrastructure is quite weak in Nepal, which has made certain kinds of businesses and investments infeasible here. If the government is able to ensure basic infrastructure, businesses are bound to grow in coming days. The government should focus on bridging the infrastructure gap.
Under your leadership, the National Business Initiative recently concluded Responsible Business Summit. How responsible are businesses in the country?
Responsible Business Summit is a campaign that NBI initiated since its inception 15 years ago. Our main task at that time was to support the government in maintaining peace. However, that phase is over. Now our duty is to sustain that peace. NBI is trying to link economic activities in the country to the new political system that the country has adopted. We tell our friends in business that one way to support and sustain peace in the country is by conducting business with some sense of responsibility. We have to look beyond our factories, shops and also our sector and take a look at the community that we are serving and see whether or not we are working with some sort of responsibility to the community. Through the Responsible Business Summit, we are trying to bring a sense of responsibility among the business community. Moreover, responsible business is good for a business in the long run. In a bid to get support from the community, the people should feel that businesses in the country are responsible towards them. In the kind of business growth and development we are planning, responsible business has a crucial role. This year, we organised the summit with the theme of Sustainable Development Goals (SDGs). The 17 global SDGs are directly related to Nepal’s economy and different sectors. Nepal has decided to adopt these goals and has made SDGs a part of country’s development planning. Meanwhile, the private sector has also been identified as the major force or contributor to achieving the SDGs. It is said that almost $2 trillion investment is required every year to achieve SDGs and over 36 per cent of that fund needs to come from the private sector. So, NBI’s priority is to try connecting SDGs and business activities in the country. We tried to convey the message that SDGs can also be a part of business strategies of businesses in Nepal.
A version of this article appears in print on September 10, 2019 of The Himalayan Times.