Government to Overhaul Laws to Boost Investment, Ease Doing Business

Kathmandu — The government will put in place appropriate policy and legal arrangements to promote investment, drive economic reform, and ensure smooth service delivery, Finance Minister Dr. Swarnim Wagle announced through the budget.

To this end, dozens of acts, rules, procedures, and directives will be drafted, replaced, or amended. Wagle said a bill to amend certain Nepal acts will be presented in Parliament to immediately repeal 15 previously announced laws.

On company law, the government will amend existing provisions to bring clarity to matters such as conflict of interest and disclosure of details, while easing the company dissolution process. Foreign investment protection and double taxation avoidance agreements will be signed with additional countries. By amending the Insolvency Act, 2063, the government will address the financial problems of consumers as well as micro, small, and medium enterprises. To promote investment, a limited liability partnership law will be drafted, which will encourage angel investment to flow into venture capital and private equity funds.

The provision allowing Nepali citizens to invest abroad will be made easier. By amending the Industrial Enterprises Act, arrangements will be made so that matters such as expanding an industry's capacity, changing ownership, and increasing capital will only require notifying the Department of Industry. By amending the Foreign Investment and Technology Transfer Act, a provision will be made so that prior approval from Nepal Rastra Bank is no longer required to repatriate investment — mere notification will suffice. Convertible instruments, project-linked funding, and other hybrid instruments will be brought within the scope of foreign investment. The requirement of prior approval in the automatic approval process for foreign investment will be removed. The process of paying service fees, royalties, and technology-related amounts abroad will be simplified.

Legal provisions will be made for the recovery of credit sales. A law on the protection of intellectual property will be drafted soon. By analysing past overall economic activity, arrangements will be made to extend loans based on the creditworthiness of individuals and businesses. A separate tribunal will be established for the swift resolution of commercial disputes, and the Mediation Act will be improved.

To enable Non-Resident Nepalis to participate in the secondary securities market, the government will amend the legal provisions related to foreign investment approval, accounting of investment, profit repatriation, and capital gains tax.

By amending the National Civil Code, 2074, the government will allow foreign investors, international organisations, and branches of multinational companies investing in Nepal to take residential buildings — or apartments at locations designated by the government — on long-term lease for residential purposes, provided this does not exceed 25 percent of the total units.

To ensure financial access for small and medium entrepreneurs, the government will provide credit guarantees on a "first loss recovery" basis.