Changed system in paying taxes, cumbersome rules, red tape and corruption make Nepal a difficult place for doing business

As the country aims for higher growth and rapid development, the World Bank’s annual flagship report may come as a dampener — and also as a wake-up call to the government. Nepal has slipped five places in the latest global ease of doing business index to land at 110th position, behind three (India at 77, Bhutan at 81 and Sri Lanka at 100) and ahead of four countries (Pakistan at 137, Maldives at 139, Afghanistan at 167 and Bangladesh at 176) in South Asia. The World Bank index has ranked 190 countries on the basis of 10 indicators — starting a business, dealing with construction permits, registering a property, getting credit, getting electricity, trading across borders, resolving insolvency, enforcing contracts, protecting minority investors and paying taxes. The best ranking Nepal achieved in the last decade was in 2014 when it was ranked 94th.

The World Banks’ Doing Business 2019 report titled “Training for Reform”, which was released on Wednesday, says Nepal made paying taxes more difficult through a 2017 Labour Act that introduced employer-paid labour gratuity, medical insurance and accident insurance in a way that places a larger administrative burden on companies that are already facing considerable bureaucracy. This has made the process of complying with tax obligations more cumbersome, adds the report. The labour gratuity is a “particular burden” as employers must file and pay it manually every month whereas the medical and accident insurance is paid annually, says the report. Nepal’s performance in other indicators is also dismal and ranks very low in other sub-indices.

After years of upheaval, the country now has achieved political stability following the three tiers of election last year as per the new constitution promulgated in 2015. As the country has got a strong government, which looks set to govern for a full five-year term, it should now urgently identify the loopholes and plug them to create a favourable business climate. As the government aims to achieve an eight per cent growth, calculated on the basis of projected growth rates in agriculture, industrial and service sectors as per Finance Minister Yubaraj Khatiwada, Nepal urgently needs to create a favourable environment for the foreign direct investment and introduce some substantial reform measures to help thrive the private sector and small and medium enterprises (SMEs). Ever-soaring interest rates on lending have become the bane of the private sector, and this will be one area where the government should focus on. For a country like Nepal, SMEs can be the backbone of economy. The government should lay more emphasis on regulatory quality and efficiency and put effective rules in place. The country can enjoy a vibrant economy only when there is a healthy private sector and flourishing SMEs.  There is no doubt that revenue collection has to go up, but the government needs to be careful not to put too much pressure on companies. Corruption and unnecessary red tape have also made Nepal a difficult place for doing business. There is no time for a take-it-easy approach; the government should make it easy for businesses.

Preventing dengue

As many as 81 cases of indigenous dengue have been reported from Kathmandu, Pokhara, Parbat and Syangja districts. This is the first time the country has witnessed cases of indigenous dengue in such a larger number, which is transmitted to humans through the bite of infected female aedes aegypti mosquito. The female mosquito is day-time feeder and lives in urban habitats and breeds mostly in man-made containers. Its peak biting periods is early in the morning and in the evening before dusk. Mild bleeding from nose, eye bruising, fatigue and pain are some of the symptoms of dengue.

Dr Anup Baskota, spokesperson for Sukraraj Tropical and Infectious Disease Hospital, said most people suffering from indigenous dengue were those who had not travelled outside the country in recent past. As many as 156 cases of dengue have been reported across the country till date. People need to use mosquito repellents, even indoors; wear long-sleeved shirts and long pants tucked to socks. They need to ensure that windows and door screens are secure and free of holes. The local environment must be kept clean. One must consult doctors in case these symptoms appear.