Federation of Nepalese Chambers of Commerce and Industry Submits Suggestions for Fiscal Year 2082/83 Policy and Program

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has submitted various suggestions to the government for the policy and program of the fiscal year 2082/83. FNCCI President Chandra Prasad Dhakal presented these suggestions to Minister of Industry, Commerce, and Supplies Damodar Bhandari on Wednesday.

During the submission, President Dhakal commended the government’s recent amendments to laws and emphasized the need for formulating regulations and procedures to ensure their effective implementation at all levels. “Policy amendments have sent a positive message,” he said, “but to ensure their execution, the implementation of regulations must be guaranteed across the board.”

The FNCCI has recommended the use of technology for business registration, renewal, revenue submission, and cancellation processes. It has suggested incorporating a ‘Business Icon’ in the Nagarik App to provide all business-related services through a single platform, a provision that should be included in the upcoming fiscal year’s policy and program. The federation also stressed the need to make all government services efficient and robust under the banner of ‘smart services.’

Key Suggestions from FNCCI:

• Boosting Investment: Noting that foreign investment has been limited to 0.2% of GDP over the past two years, the FNCCI proposed launching a widespread ‘Invest in Nepal Campaign’ both domestically and internationally to mobilize investment resources. It also suggested merging the Investment Board and the Department of Industry for restructuring and ensuring the full implementation of a ‘One-Stop Center’ where investors can submit files without needing to visit multiple offices.

• Policy Stability: Instead of frequent changes to revenue laws through annual economic acts, the FNCCI recommended creating a unified legal code to be passed by parliament. This would reduce arbitrary changes via annual budgets, ensuring policy stability and encouraging investment by guaranteeing business-friendly provisions.

• Banking Reforms: With over NPR 600 billion in investable funds accumulated in the banking system and interest rates dropping by three percentage points in three months, investment demand remains stagnant. The FNCCI pointed out that the Central Bank’s working capital loan guideline from two years ago, while necessary, has discouraged lending. It suggested suspending the guideline for at least two years or making it flexible so banks and borrowers can decide independently.

• Support for Small Entrepreneurs: Due to issues in cooperatives and microfinance, the flow of funds to small and medium entrepreneurs has been disrupted, necessitating facilities like refinancing.

• Export and Tourism: To address declining domestic demand in a remittance-dependent economy, the FNCCI emphasized boosting tourism and exports. It proposed immediate policies to export agricultural products and water to Gulf countries, supported by cold storage, X-ray machines, and warehouse facilities at airports, given the daily operation of about 12 flights to the Middle East from Nepal.

• Project-Based Loans: A system should be established where businesses, the Credit Guarantee Corporation, the government, and development partners share risks to provide loans up to NPR 10 million based on project collateral.

• Attracting Indian Tourists: Offering incentives for hotels, resorts, polytechnic institutes, educational institutions, and teaching hospitals near the Indian border to attract Indian tourists and investment.

• Energy and Tax Reforms: Electricity should be provided as a raw material for industries, and load-shedding in industries must stop. Taxes on production-oriented industries should be gradually reduced by 5 percentage points over five years, while income tax rates should be lowered and tax exemption limits increased.

The FNCCI also suggested forming a task force with private sector involvement to prepare for a multi-rate Value Added Tax (VAT) system, requiring extensive tax awareness, skilled manpower, and systemic infrastructure. It proposed piloting reduced VAT rates for certain goods and services facing operational difficulties due to the single-rate system starting from the 2082/83 budget.

To mitigate the impact of SAFTA on domestic industries, the FNCCI called for a tax policy that promotes local industries. It stated that it is continuously collecting suggestions from its members to revive the sluggish economy and will maintain dialogue with the government accordingly. These suggestions are expected to drive policy reforms and create an investment-friendly environment.