Nepal is in the middle of a political fiasco. Uncertainty
looms after 9 billion rupees spent in the past 4 years for the same purpose
with zero output. The major political parties failed to agree on critical
issues plaguing the country. The uprising of subtle ethnic clashes so aptly
fueled by the Maoists Chairman will further add to the flailing Nepal’s
problem. In the midst of our country’s transition and a diminishing financial health,
I still see a dim light in the tunnel.
For a country like Nepal which depends heavily on foreign
aid and remittance, we haven’t been able to do much. It’s a shame. For a
country to operate independently it must have the capacity to use its resources
and generate income. But we have failed and quite miserably too. Since 1960’s
when Nepal first started receiving substantial amount in foreign aid and untill
now where we still continue to do so, we have failed to show positive gains
from this. Exact details and account of where the aid money is spent is hardly
accounted for.
According to a World Bank report, remittance from millions of
Nepali’s abroad has accounted for nearly 60 percent of Nepal’s total economy.
Yet, we are not being able to protect this income and create favorable
environment for investment. The
infrastructures haven’t been upgraded; in fact the 10 year people’s war ravaged
the country by destroying little progress we had made in building bridges,
roads and connecting far flung villages with electric grid. What can be done
then? This must be the single most important question our feuding political
parties should ask themselves every day. Nepal is hardly in a position to
generate and operate its national budget. Here is the solution to that dim
light.
If only all the political parties agreed on one issue – Reputation
of Nepal.
What I see is money still pouring in from the foreign
countries; not in the name of aid but in the name of Foreign Direct Investments
(FDIs). Our slogan of the year ‘Investment Year 2012’ sounds more like ‘Never
Invest in Nepal’. The investment year 2012 was proudly announced by the care
taker PM but failed to shed any light into it. Why parody the investment year
when Nepal is at a never ending process of uncertain political and democratic
transition? The unaccountable bandhs by various castes have crippled the
country’s production. As if this wasn’t enough, all political parties have
goons threatening factories and shops to shut down as per need basis. The
uncertainty has disoriented the private sector and now entrepreneurs are largely
looming under the clouded suspicion of wait and see or take the money offshore.
What is the use of this ’Loktantra’ if the citizens cannot work to earn their
income? Let us not even talk about those citizens who work on a daily wage
basis. It is just not important enough for the country’s leaders at the moment.
The prolonged transition has led to the increment in the prices of goods that
are considered basic necessity making the poor poorer. For starters, GoN can
behave more responsibly by stating clearly with an action plan as to when it
thinks the political situation in the country will be stable and favorable for
investment. I see no advantage and more harm in attracting investment that the
government cannot protect.
Although most countries are already wary about investing in
Nepal it is never too late. Stability in the name of stable income is the
utmost priority the grudging political parties must agree on. Effective laws
and regulations that assure investors of stability and favorable excise taxes
despite the changing political scenario can be a first step towards showing the
world that Nepal is ready for business. Recently, an article in Herald Tribune
claims that foreign investors in India are pulling away after the Foreign
Ministry proposed new taxes on foreign institutions doing business in India. It
also claims that the total foreign investment in India was $30 billion in 2010
compared to $16 billion in 2011. Nepal must learn from India’s stance on
foreign businesses and grab this opportunity to review its own policies and
make amendments attractive to the investors. It is pertinent that Nepal exercise
one window policy for foreign investors to quickly set up businesses legally
without any hassle. The one window policy will work to the advantage of GoN as
it can provide a one stop solution to investors, collect good chunk in taxes,
avoid provision of double taxation for investors and provide easy dividend
return. Currently investors have to apply through the Department of Industry
while investing but needs approval from Rastra Banijya Bank to transfer
dividends back to their country of origin. The one window policy can be the
ultimate window to attracting investors if Department of Industry acts as a one
stop solution to the investors in a true transparent manner. If only GoN sees
the same light in the tunnel as I along with many other Nepalese citizens do.
For the greater good of the country GoN must make permanent amendments to favor
foreign investments and act now. If Nepal can target just a few percentages of
those investments pulling away from India, Nepal will walk on the path to
creating more jobs, investment in infrastructure, boost local production,
increase per capita income, and pave way for sustainable economic development.
As the global economic landscape shifts, it is time Nepal
takes notice and grabs the opportunity to lure foreign investors who are
looking for favorable taxes and perks to invest. Nepal should take advantage of
the depreciating rupees to seek foreign investment and build Nepal locally
without the interference from donor countries and avoid being ground zero for
all possible political experiments.
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