Kathmandu, January 6:

The ministry of finance, giving final touches to the Finance Ordinance 2062 for the next six months currently, is reported to be planning a decrease in import tariffs. The business sector has strongly reacted to this plan saying that the likely ‘move’ to decrease custom tariffs may destroy the already shaky industrial base.

Speaking at a press meet held today, Binod K Chaudhary, president of the Confederation of Nepalese Industries (CNI), said if the ministry of finance is going to decrease custom tariffs, it would invite disaster to the industrial sector. Chaudhary said that the business sector has been shaken following the news of reduction in import tariffs.

Considering the existing industrial situation of the country, the reduction in customs tariff is not a practical move, said businesspersons associated with CNI.

Nepal, however, is mandated by its commitments to WTO and SAFTA, to bring down custom tariffs over time.

Chaudhary urged the government to increase revenue through the removal of ceiling on VAT which stands at two million rupees currently. This would, he opined, definitely mobilise resources required for the national economy.

As per the survey conducted by CNI, during the year 2000-01, foreign investment in the country had been worth over three billion rupees while in 2005-06, the figure has gone down Rs 570 million only.

The CNI has attributed this fall to declining industrial environment. The flight of talented people from Nepal to abroad in search of jobs is increasing day by day, says CNI.

According to the ministry of finance officials, state minister of finance, Dr Roop Jyoti is working to reduce customs tariff from existing average nine per cent to about six per cent. Atma Ram Murarka, vice-president of CNI, also expressed serious concerns on the hike in import tariffs on some 30 capital goods. If the government moves in this line, it will create havoc with the country’s efforts to expedite industrialisation process, said Murarka. Under such a scenarios, we would have to look for alternatives for investing abroad, he added.

CNI has been urging the government for promoting investment through backward integration, effective protection to domestic industries, link corporate sector with agricultural sector, reform labour laws, allow corporate sector to borrow from external markets and to issue bonds and debentures. CNI has also drafted an industrial policy and submitted it to the government, informed the organisation.