The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has recommended the government to establish an integrated investment body and law, announce ‘Investment Decade’, promote local production, substitute import, policy stability, and special tourism programs targeting neighboring countries.
The FNCCI President Chandra Prasad Dhakal has recently presented the suggestions to Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, asking the minister to emphasize on policy stability for economic growth, for the budget for the next fiscal year 2025-26.
Policy reforms on the basis of High-Level Economic Reform Recommendation Commission report and its gradual implementation can help encourage the private sector confidence, according to the FNCCI. “The budget must address crucial and long-term issues, considering the complex international environment, national needs, and public frustration,” reads the FNCCI recommendation, suggesting to reduce general expenditure, increase development spending, boost public purchasing power, and enhance entrepreneurial productivity.
The government has allocated only about 17 percent of the budget for capital expenditure, and out of that also only about 60 percent is spent, which has hindered development and affected private sector due to low market demand, the umbrella organization of the private sector claims.
Despite having potential, investments could not be increased due to various reasons, reducing private sector morale, according to FNCCI president Dhakal. “Therefore, FNCCI has proposed declaring 2082-92 as the "Investment Decade" to attract both domestic and foreign investments.” The FNCCI has also highlighted the need for a unified investment-related law, a single facilitating and regulatory body, and integrated services.
The private sector body has also asked the Finance Minister to also incorporate inclusive economic growth, structural transformation for a new wave of reforms, private sector promotion, improved governance, effective public spending, and better revenue mobilization, in the next fiscal year’s budget.
Highlighting tourism potential, the FNCCI recommended budget provisions for developing hill stations with hotels, resorts, polytechnic institutes, educational institutions, and teaching hospitals, with road and electricity access and a 50 percent income tax discount for the first five years. The FNCCI also urged the government to ensure good governance to reduce public frustration, attract youth to entrepreneurship, and simplify business registration and tax procedures for micro and small enterprises.
Additional recommendations includes:
- Ending conflicts between industrial laws and economic acts
- Running production-based support programs for 10 years
- Launching industrial corridor programs targeting the Indian border and mid-hill areas
- Offering income tax discounts to industries employing over 100 people
- Providing startup loans and supporting one million-rupee credit projects
- Facilitating concessional loans for families of workers who regularly remit money
- Utilizing domestic wood to meet internal demand and reduce imports
- Extending current startup benefits for another five years
- Establishing business incubation centers in all provinces with FNCCI collaboration
- Running the "100 Startups, 100 Investors" program
- Encouraging the use of Nepal-made software in public and private institutions
- Promoting organic cash crops and agricultural exports to Gulf countries via existing daily flights
- Expanding hydropower production and transmission infrastructure, extending tax exemptions to 2092 BS
- Allowing industries to purchase electricity directly
- Enacting a unified revenue code to ensure stability
- Gradually reducing corporate income tax to 5% lower in 5 years
- Providing tax exemptions for reinvested profits
- Abolishing advance tax on international cargo businesses
- Capping personal income tax at 30 percent, raising exemption limits to Rs 800,000 for individuals and Rs 1,000,000 for couples
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