Private sector has hailed the fiscal budget 2015-16, presented by Finance Minister Ram Sharan Mahat at the Legislature-parliament on Tuesday for its focus on infrastructure development and boosting productivity of agricultural and industrial sectors.

The Confederation of Nepalese Industries (CNI) — umbrella body of industries — has appreciated the various announcements through the budget, including establishing ‘Project Bank’ in collaboration with the private sector; 30 per cent corporate income tax exemption for the industries employing more than 100 labourers; interest rate waiver for cold storages; 50 per cent registration tax exemption for industries while acquiring land, among others.

CNI, today, said that budget’s announcement of threshold expansion of value added tax (VAT); allowing foreigners to procure apartments; access road and electricity to the industry and mines; VAT refund in imports of raw materials for the industries established in special economic zones; and exemption in dividend tax for tourism-related industries in expansion of businesses from the profit, will help in attracting more investment into the country.

CNI has expected that the country’s economic growth will accelerate if the capital and reconstruction budget are spent properly. The government aims to spend Rs 208.88 billion under capital expenditure heading.

Apart from reconstruction activities, the government has announced some game changer projects like Kathmandu-Tarai fast track, new large scale industrial parks and zones, Nijgadh International Airport and East-West railway. CNI, however, has expressed doubts regarding progress of these projects ‘as the government has not allocated sufficient budget for the said projects’.

CNI has also drawn the attention of the government to establish a Business Recovery Centre (BRC), which was proposed by CNI and also announced in fiscal budget, at the earliest to help recovery of small and medium enterprises (SMEs) in the earthquake-hit districts. As per CNI, these SMEs are linked with large industries in value chain and their early recovery should be the major concern of the government as well.

Likewise, Nepal Chamber of Commerce (NCC) has hailed the budget’s announcement of connecting each village by road and electricity within three years. NCC has said that this announcement is ambitious to a large extent, but if achieved it could bring about economic revolution in the country. NCC has also appreciated the budget’s provision of surrendering capital budget by the second quarter if a particular project is unable to spend the earmarked budget. As per NCC, this would help improve the current situation of snail-paced development activities.

“It is commendable that the budget has encouraged insurance firms to go for mergers and scrapped tax while settling claims for the deceased,” said NCC.

Hotel Association Nepal (HAN) also appreciated the budget that has talked about revitalising the tourism industry. HAN has especially hailed the announcement of loan rescheduling and restructuring facilities and announcement of conducting safety audit of the tourist destination of earthquake-affected districts. “The government’s initiation of developing Kathmandu and Lumbini as green and smart cities will lure more tourists to Nepal.”

Nepal Foreign Trade Association (NFTA) has also said the budget of 2015-16 is investment-friendly. Tax exemption on reinvestment, VAT threshold expansion, revitalisation of tourism industry and allowing foreigners to purchase apartment are the positive steps in luring the foreign investors to Nepal. However, NFTA has said that removal of VAT exemption in cell phones may help flourish gray channel and smuggling. The government in fiscal budget has announced five per cent import duty and removed VAT exemption in cell phones.