The government has issued three ordinances to create a conducive business and investment climate in Nepal. These ordinances amend the Foreign Investment Act, the Company Act, and the Land-related Act, enhancing service delivery and nurturing a favorable business environment. Despite these efforts, bureaucratic delays and legal and procedural obstacles continue to hinder our investment environment. Bold and decisive actions by our authorities have become necessary. The amendments to the Foreign Investment Act, Company Act, and land-related regulations offer welcome relief to prospective investors and business entrepreneurs. These new ordinances aim to facilitate investments, reform the business environment, and enhance service delivery, collectively addressing long-running concerns from the private sector while boosting economic activity across various industries.
The amendments to the Foreign Investment Act highlight the significance of how Nepal seeks foreign capital. Sectors such as international and domestic airlines, aviation training, and agricultural technology are in greater need of these investments, which the new ordinances seek to address. By allowing up to 95 percent foreign ownership in some industries, these reforms pave the way for new and increased innovation and competition, ultimately benefiting our economy. Similarly, non-resident Nepalis and their families will benefit from new visa permissions, while streamlined company registration procedures will spur major contributions to our economy. Alterations to the Company Act address hindrances affecting businesses. The removal of complicated procedures for liquidating inactive companies and the simplified process for businesses to repatriate their earnings will encourage and benefit entrepreneurs. Additionally, Nepali firms, especially those in the IT sector, can now set up branches abroad and bring in income earned overseas, enhancing their global competitiveness. Moreover, startup businesses will benefit from provisions for sweat equity shares that recognize intellectual property and technical skills as valuable assets.
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The prolonged decision-making process has often hindered progress within Nepal’s business sector. However, the new ordinances compel governmental bodies to reach decisions within seven days, promoting greater efficiency overall. Streamlined processes for service-oriented industries to be included in special economic zones further indicate the government's dedication to boosting the economy. Expedited mediation options for contract disputes aim to hasten conflict resolution and promote trust between private and public institutions. The private sector in Nepal generally views these reforms positively. FNCCI President Chandra Prasad Dhakal has acknowledged that these reforms have met the business sector’s long-held aspirations, favoring the investment climate and signaling constructive cooperation between government agencies and the business sector. Despite these ordinances highlighting our government’s assertive attitude towards rendering Nepal a promising destination for both local and foreign investors, their success depends on effective execution and close supervision. It is essential for the government to continuously assess new legal reforms to ensure better results without giving rise to malpractices. Last but not least, the government should work to secure parliamentary endorsement for these amendments within the stipulated time to uphold democratic parliamentary principles. While there is always room for issuing an ordinance in a parliamentary democracy, it must not be used as a tool to bypass Parliament. Ordinances should be issued only to address serious and emergency issues that arise suddenly between parliamentary sessions or when Parliament is in recess. That is why the ordinances are often criticized for overlooking the parliamentary democratic process of legislative scrutiny and discussions before endorsing bills through a majority of people’s representatives. However, they can effectively address urgent economic and emerging requirements.
