Kathmandu. At a time when the government is preparing the budget for the coming fiscal year, the private sector has suggested the government to bring a transformational budget in such a way that it can improve the structural of the economy.
The private sector has not only suggested to the government to make a drastic change in the current model of the economy, but has also pledged to move forward by being fully supportive of it.
Politically, the government is also full of new ideas and ideas.
Likewise, a new leadership of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has been elected. Stakeholders believe that there will be a drastic change in the model of the economy. The priorities and principles of the Appropriation Bill have already been passed by both houses of the Federal Parliament. As stipulated by the constitution, the Finance Minister will present the budget through a joint meeting of both houses of the Federal Parliament on May 15.
Presenting the budget recommendations to Finance Minister Dr Swarnim Wagle, the FNCCI has suggested for drastic changes in the current model of economy, saying the upcoming budget is not just a general annual document but it is coming at a special juncture in the economic history of Nepal.
Finance Minister Dr Wagle said that the citizens are now looking for results, not speeches, adding that legal reforms, institutional accountability, deadline, digital tracking, direct monitoring and outcome measurement have been kept at the centre of the state’s governance. He has made it clear that this is the first time that he wants to move forward on the basis of mission mode.
The private sector has suggested policy reforms in the budget to lift the deteriorating business morale, create demand in the market, attract stalled investment, and create employment opportunities. Newly-elected FNCCI President Anjan Shrestha said the recently unveiled ‘Six Pillars, 60 Initiatives’ has a common national framework that supports the government’s policies and programmes.
The private sector has also come to the understanding that an economy based on remittances and imports cannot provide long-term prosperity. Therefore, the private sector is optimistic that a transformational budget will come. The total remittance inflow in the first nine months of the current fiscal year amounted to Rs 1.659 trillion. A large part of the remittances are spent on consumption. Due to the import-based economy, the industrial sector has not been able to expand. Despite the increase in liquidity in banks and financial institutions, investment has not been expanded.
According to FNCCI President Shrestha, the trend of changing the tax policy every year has led to the loss of confidence of the investors.
The private sector has been demanding an end to the unstable practice of the Finance Act, implementation of the Single Revenue Code with interpretation and the formation of a high-powered Revenue Board.
Stating that the upcoming budget will lay the foundation for transformation in the model of economy, the Finance Minister has been saying that many works of reform will be carried out gradually.
According to the Federation, the country’s industrial production capacity has been limited to 40 percent.
The FNCCI has said that the budget should be formulated keeping in mind that the construction industry has reached a difficult turning point in its history and the contribution of the private sector to the Gross Domestic Capital has fallen from 28 per cent to 16 per cent in the last four years.
The FNCCI estimates that the recent crisis in the Middle East will have a negative impact of around one .8 percent on Nepal’s foreign employment, remittances and foreign exchange reserves.
Similarly, the private sector is aware that there is no alternative to moving from a remittance-driven economy to a production-based economy as Nepal’s demographic advantage is gradually eroding.
Similarly, there is a risk that Nepal will lose access to the priority market after upgrading from LDC to developing country and Nepali production will be further weakened due to transportation and financing costs.
The FNCCI has stressed on the need to bring a special and long-term integrated policy for export-oriented industries (textile, carpet, garment, pashmina, felt).
The private sector has demanded that a law should be made allowing Nepali companies to invest a certain part of the income earned from exports abroad for regional and international expansion.
smuggling through open border should be controlled and the anomalies in which finished goods are imported cheaper than raw materials under SAFTA should be stopped immediately.
Special programme for resumption of sick industries and promotion of boot and PPP model in energy, transmission line, pump storage, tunnel and industrial sectors and promotion of private investment through the Viability Gap Fund have been stressed.
Shrestha said that the private sector has expected concrete steps from the government through the budget to make Nepal a country to export products and services from the consumer market, giving high priority to agriculture, tourism, medicinal herbs, tea, coffee, information technology and service exports.
The committee has suggested the government to improve in various thematic areas including export promotion, agriculture, tourism, start-ups, promotion of small and medium enterprises.
Stating that the government and private sector would work together in the budget, Finance Minister Wagle expressed the commitment that the budget would help maintain good governance, support the development of private sector and help create employment opportunities by increasing investment.
The Confederation of Nepalese Industries (CNI) had issued a circular to its members to give suggestions about the budget. The CNI has submitted the suggestions to the Finance Minister on industry and investment, foreign direct investment, tax policy and system, customs, tourism, agriculture, medicinal herbs and forest products.
Likewise, the committee has recommended energy, information technology sector, banking and finance, insurance, cooperatives and capital market, domestic production promotion, infrastructure, health and education, non-taxation, revenue leakage and money laundering.
Birendra Raj Pandey, president of CNI, said that they have suggested to bring the budget in a way to support income generation and wealth creation.
He expressed his confidence that significant improvement in economy expansion, job creation and investment growth would significantly contribute to the journey of prosperity of the country.
The Confederation has suggested to adopt a policy to attract the private sector in big infrastructure projects, not to impose ceiling on the required land as per the approved projects of the industry and to make arrangements for keeping additional land as collateral.
The CNI has urged the government to ensure the stability of such policies for at least
10 years, to formulate and implement a commodity-centric industrial development strategy with competitive potential, to bring the budget keeping employment, production and import substitution in the center.
Finance Minister Dr Wagle has been reiterating that the priorities have been laid on the basis of five guiding principles: dividend of good governance, restructuring of economy, integrated infrastructure, social investment and multidimensional international relations.
“We believe these priorities will lay the foundation for economic growth, employment, social justice, productivity, competitiveness and improvement in the quality of life of citizens,” he said. ‘
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