Economic reforms pushed to backburner
Kathmandu, June 14
Many of the economic reforms in Nepal, some of which build high hopes of tangible progress, have either being stalled or abandoned. This is because the change in government also usually results in change in priorities.
One such example is the legal and administrative reforms announced through the fiscal budget of 2014-15 to kick-start the economy, considering the retarded economic growth of the country due to decade-long conflict followed by lengthy political transition.
Through the fiscal budget, the then government has announced that around three dozen laws, policies and regulations would be amended and some laws would be introduced to ensure a better business environment and help attract both foreign and domestic investment in the country. The budget also announced reforms in administrative sector as it is marred by ineffective service delivery due to frequent transfer of civil servants in line with the change in the government.
The private sector was largely upbeat about the government’s announcements, which was hailed as ‘the second generation economic reforms’.
Subsequently, some of the bills were framed, amended and also endorsed from the Parliament. These include Industrial Enterprise Act, Special Economic Zone Act, Bank and Financial Institution Act, Banking Offence and Punishment Act, Company Act, Act on Establishment and Operation of Deposit and Credit Guarantee Corporation, among others.
However, some crucial economic and financial bills that were to be amended or introduced, as announced through the budget, are yet to be tabled and endorsed by the Parliament.
Ram Sharan Mahat, former finance minister and architect of second generation economic reforms, opines reform process that had gained momentum with passage of some crucial bills has been stalled of late as the reform agenda has not been given due priority.
“The desired reforms can only be achieved through collaborative efforts of the concerned ministries,” said Mahat. Citing the vital role of investment in boosting the economy, Mahat said that a lot needs to be done to improve the investment climate.
Amendment in Labour Act, Electricity Act, Privatisation Act and introduction of some new laws, namely, Electricity Regulation Act, Contract Farming Act and Financial Accountability Act, have been in limbo since long.
While reform in administrative sector is a must to deliver the desired changes, ‘frequent transfer of staffers along with change in government has been a major discouraging factor for civil servants in ensuring effective service delivery’, said Mahat, adding, the principal of ‘the right person in the right place’ should be strictly adhered to, to motivate the government employees.
At the same time, the optimism of the private sector has faded, as the reform process has stalled. Moreover, the fiscal budget for 2017-18, which was presented by the earlier government, has ignored the suggestions put forth by the private sector in addressing some challenges related to productive capacity enhancement, said Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
“The government and private sector must work in cohesion to revitalise the economy by attracting more domestic and foreign investment in various sectors, including infrastructure,” he added.