Amendment to Industrial Enterprise Act

New law will improve industrial environment, says FNCCI

Published On: October 3, 2016 01:10 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 3: Country's leading private sector organization has welcomed the amendment to the Industrial Enterprises Act 1992.

Responding to the endorsement of the Bill to Amend and Integrate Industries Enterprises Act, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said it was hopeful that the new law will improve industrial environment in the country thereby increasing the contribution of manufacturing sector in country's economy.

FNCCI President Pashupati Muraraka lauded several provisions included in the new law.

“The law will revive country's industrial sector as it has clarified doubts related to industrial laws, which were contradicting with the provisions in the Income Tax Act, 2002 and a number of provisions including income tax incentives for selected enterprises," Murarka told media persons on Sunday. 

Among others, FNCCI has noted provision of forming a management committee at the central level to provide one-door service for industries, one-door service at the local and federal level to micro, small and cottage industries, introduction of 'no work, no pay' policy to discourage recurring protests at industries backed by political interests, and industry registration via online. 

The law will come into effect once it is authenticated by the President. 

Murarka also praised the government for prioritizing economic issues by endorsing the much-awaited bill which is expected to revive the country's ailing manufacturing sector that has seen sharp a decline over the past few decades.

FNCCI has welcomed a provision which says that the facilities prescribed in the law cannot be reduced by any other laws. “It has boosted confidence of investors who have been let down by frequent changes in policy,” it added.

Issuing a statement, FNCCI said: “We welcome the provision of 100 percent income tax waiver on tourism and tourism-related industries, except in metropolitan cities and sub-metropolis, having investment of worth Rs 50 million or more for the first five years and 50 percent income tax waiver for the next three years."

The law has also relaxed environmental obligations, allowing investors to set up industries before completing the Initial Environment Examination and Environment Impact Assessment studies. 

FNCCI has welcomed these reforms though some industrialists have said that it is not practical as setting up industries without conducting EIA might put their investments in risk. 

This is the first major amendment to Industrial Enterprise Act of 1992 in more than two decades.

Simplification in registration of micro enterprises can attract more investments and people to the manufacturing sector, said FNCCI. The apex body of Nepali private sector has also welcomed provisions of classifying of industries, and incentives and facilities for industries. It has hailed separate special provisions for sick industries.

Murarka urged the government to bring labor law which is key to implement 'no work, no pay' provision. 

As the new law has barred illegal strikes in the industries, industrialists say this will pave the way for better industrial environment. "As both the employers and employees have already agreed to implement 'no work, no pay' system, the government should not change provisions in new labor law which is under consideration at the parliamentary Labor and International Relations Committee," said Murarka.

The Bill to Amend Labor Act has a provision that says employers won't have to pay salary to workers taking part in illegal strikes, while they will have to pay only 50 percent of their salary to staffers taking part in legal strikes.

FNCCI also has urged for quick endorsement of several laws related to the economic sector like Electricity Bill, Intellectual Property Bill, Foreign Investment and Technology Transfer Bill, and Accreditation Bill, among others. 

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