Lack of investment-friendly laws raises concerns as Investment Summit approaches

Published On: April 20, 2024 08:35 AM NPT By: Dilip Paudel

KATHMANDU, April 20: Despite the private sector’s recommendations to amend about two dozen laws to promote both foreign and domestic investment in the country, the government has yet to make any amendments. With only nine days remaining for the start of the Nepal Investment Summit-2024, where the government aims to attract foreign investment, the private sector is worried due to the absence of legal reforms.

The government has announced the third Nepal Investment Summit-2024 on April 28 and 29, stating insufficient domestic capital for the development and prosperity of the country. Although the Investment Board Nepal has prepared to showcase projects worth billions of rupees during the summit, stakeholders have expressed concern due to the need for a legal framework to instill trust in potential investors.

Instead of addressing pressing amendments to laws through parliament, the government has concluded the winter session. Despite the provision to amend laws through an ordinance, the issues raised by the private sector over the years remain unaddressed. Domestic and foreign investors continue to question Nepal’s investment-friendly legal environment.

Rajesh Kumar Agrawal, president of the Confederation of Nepalese Industries (CNI), mentioned the need to amend 24 laws and regulations, retract five laws, and introduce three new laws to foster an investment-friendly environment in the country.

"Although the government pledged to amend 11 laws and regulations before the investment summit, no amendments have been made so far,” Agrawal stated during the CNI’s annual general meeting held recently. He stressed on policy reforms to encourage investment and to win the trust of foreign investors.

“Even now, they are trying to run the business with 50-year-old laws,” Agrawal said, adding, "In case of financial irregularities committed by industrialists, it should be given high priority not to imprison but to impose financial fines.”

Finance Minister Barshman Pun, during his visit to America to participate in a World Bank program, also faced inquiries from multinational companies regarding certain laws in Nepal. The private sector complained that there is a lack of a conducive environment for investment despite past commitments from the government.

Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that the government should immediately amend the laws to create an environment of trust among foreign investors. “The private sector and the government working group have recommended amendments to the law,” FNCCI President Dhakal said, “If we want to win the trust of foreign investors, the law should be amended before the investment summit.”

Aiming at the investment summit, the law reform committee chaired by Secretary Ek Narayan Aryal recommended amendments to a dozen laws for the policy, structural and procedural reforms, but it is yet to be implemented.

The committee proposed amendments to several laws and regulations and handed over the suggestions to the Chief Secretary of the Government of Nepal, Baikuntha Aryal. “Traditional laws, policies, and regulations are major obstacles to investment, so we have been asking for amendments,” said Dhakal, a member of the working group.

The government task force has suggested amending the Industrial Enterprises Act (2076), Foreign Investment and Technology Transfer Act (2075), Special Economic Zone Act (2073), and Forest Act ( 2076) to remove the legal and policy obstacles seen in industry, business, and investment and to remove the difficulties and delays experienced in the implementation of construction projects.

Similarly, the government study recommended to amend various provisions of the National Parks and Wildlife Conservation Act (2029), Lands Act (2021), Land Acquisition Act (2034), Environment Protection Act (2076), Electronic Transactions Act (2063), Nepal Civil Aviation Authority Act (2053), Foreign Investment and Technology Transfer Rules (2077) and Forest Act Regulations (2079).

Admitting the challenges in amending the investment-friendly laws through Parliament, Padam Giri, minister for Law, Justice and Parliamentary Affairs, said, “Efforts are underway to amend investment-friendly laws through the ordinance before the summit.”

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