It is good that the policy for the first time has promised an easy exit to sick industries. This was a glaring lack in Nepal’s past industrial policy due to which industrialists were unable to close down their ventures even when circumstances were extremely unfavorable or they were no more financially viable. Entering into an industrial venture in Nepal was like a one-way tunnel; Once you entered it, there was no way to turn back. Another feature of the policy is the addition to allow sub-contracting of industrial production, one of the most vibrant modern business activities. This will help develop specialization in manufacturing processes and lower the cost of production, thereby enhancing competitiveness.
The acknowledgment that local industries may sometimes need tariff protection is also fairly realistic. Nepal has seen hundreds of industries being doomed and thousands of jobs being lost because of their inability to withstand the competition posed by cheap imports. In the past, we had many products such as textiles in which Nepal was fairly competent, but those industries have now virtually disappeared. Republica has always been a supporter of a liberal economic policy but we think the government cannot afford to be perennially indifferent toward the inconveniences faced by industries and its people. We have seen how advanced countries have resorted to protectionism to nurture their domestic industries, but protectionism should be within a limit—it should provide space for healthy competition and innovation.
Meanwhile, we must acknowledge that the lack of an appropriate policy is not the prime reason for the poor health of Nepal’s industrial sector. For years, industrialists’ have been complaining about rigid labor laws that, according to them, heavily favors workers, but the complaints have been falling on deaf ears. Power cuts have been so severe that no industry can think of making profits, let alone expanding production. Law and order has been so fragile that most industrialists have no choice other than to pay extortion to political parties and criminals to protect themselves. Policy level inconsistency is so rife that investors do not have the confidence to make long-term investments. Hence, if we are to see a surge in industrial activities, the new policy alone will not suffice; we also need to quickly get down to fixing the other problems discussed above.
Related story
DPR for three industrial estates to be ready in 7 months
