Nepal | June 01, 2020

Pvt sector against minimum capital requirement

Says such provisions discourage drawing investment in small and medium enterprises

Himalayan News Service
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Kathmandu, December 26

The private sector players have urged the government to remove the provision of fixing minimum capital for micro-enterprises. They have said that by fixing minimum capital for small industries, government is hindering promotion of small, medium enterprises (SMEs).

The recently passed Industrial Enterprise Act has given industry status to micro-enterprises. However, it has defined micro-enterprise as small industries having fixed capital of at least Rs two million.

“Minimum capital requirement that the government has fixed for micro-enterprises has discouraged small entrepreneurs willing to set up businesses with small capital. On one hand, the government vows to promote small industries and on the other hand, it is discouraging investment in micro-enterprise sector,” Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said today at a programme organised by Ministry of Industry (MoI), adding that the government should not fix capital requirements for other industries either.

According to Murarka, entrepreneurs today are more attracted to trading businesses than setting up industries due to policy hassles they face in industrial sector.

“The government policy levies heavy customs duty on raw materials for domestic industries but customs duty for finished products is lower. This has directly increased production cost of industrial goods, making domestic goods less competitive in the market,” Murarka added.

He also said that the government is creating hassles for the domestic businesses with allegations that they are over-charging customers, which is against the principles of free-market economy that the country has adopted.

Hari Bhakta Sharma, president of the Confederation of Nepalese Industry (CNI), said that local level industries are facing lots of hassles due to lack of strong local administration of the government.

“The number of investors in the local level is dwindling as they don’t have strong support of the government to address their immediate concerns. Local industries have been entangled in enormous day-to-day challenges in terms of obstruction, insecurity and connectivity at the local level,” Sharma said. According to him, MoI should form a separate unit at the central level to solve minute problems that local industries are witnessing every day.

As per Sharma, the government should facilitate local investors by providing necessary land because investors are bound to inject huge resources in acquiring land if they consider setting up a new industry.

FNCCI past president Ravi Bhakta Sharma stressed on the need to analyse implementation of suggestions that private sector has given in the past.

Meanwhile, Industry Minister Nabindra Raj Joshi said that MoI will do the needful to address all logical concerns of private sector to promote domestic industries.
“Things are changing, though there are still a lot of hurdles for industrial growth in the country. MoI will work closely with the private sector to improve investment climate of Nepal,” Joshi said. According to him, MoI is gearing up to pass all industry-related policies and acts from the Parliament with provisions that encourage industries and investment.

A version of this article appears in print on December 27, 2016 of The Himalayan Times.

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