KATHMANDU, Jan 28: The private sector stakeholders have expressed optimism on the recently endorsed ordinances by the government stating that these revised laws will help improve the business environment of the country.
Two weeks ago, the government issued ordinances to amend over two dozen laws related to reform in economic and commercial environment and investment promotion, promotion of good governance and public services, and land and forest. According to the private sector, the provisions related to company registration, information technology, land ownership threshold and business operation, among others, could help increase economic activities at a time when the country has been facing economic slowdown.
Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), termed the ordinances private sector-friendly. “They are expected to minimize the existing policy and procedural hassles,” Dhakal told Republica. He added that the provision, like minimizing hurdles in closing the firms, could help attract more investors to start new businesses.
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The ordinance also talks about simplifying the process of registering firms. It looks for providing operation permits to new firms within 15 days of starting the process. “The provision could encourage new firms to start business in the domestic market,” said Pashupati Murarka, former president of the FNCCI.
Murarka said the review of the blackmarket act is also expected to facilitate private sector business. He, however, expressed that the entrepreneurs are in wait and watch mood for the enforcement of the guidelines related to the amended acts. “Although the recent ordinances have largely simplified the legal obstacles, there are still a number of complex issues that need to be addressed,” Murarka added.
The new law stipulates that approval is not required when a private company is converted into a public company. The amended laws allow up to 40 percent of sweat shares to be issued to those who contribute in various ways to startup companies. The legal provisions now allow startup companies to issue shares based on their ideas, reputation, intellectual property, value addition, business goodwill, technical information, or knowledge transfer from individuals.
The private sector has also welcomed the provision to allow Nepali IT companies to invest abroad and to compete in foreign markets and permitting non-resident Nepali citizens to open a company in Nepal without having to obtain permission for foreign investment. Murarka said the simplification in registration process of companies and waiving penalty to liquidate a company are good moves. “However, there is no clarity in ownership transfer and tax related issues.”
The Confederation of Nepalese Industries in its press release has stated that the reform measures included in the revised laws will disseminate a positive message to investors at a time when the economy has witnessed a heavy decline in aggregate demand.
