Kathmandu. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has announced the financial transformation of the fiscal year 2083. It has suggested the Finance Minister to bring the budget of 84 years.
Presenting the budget recommendations to Finance Minister Swarnim Wagle at the Ministry of Finance on Sunday, the FNCCI suggested for a drastic change in the current model of economy, saying the upcoming budget was not just an annual document but was coming at a special juncture in the history of Nepal’s economy. The FNCCI has suggested policy reforms in the budget to lift the deteriorating business morale, create demand in the market, attract the stalled investment and create employment opportunities.
Presenting the suggestion before the Finance Minister, FNCCI President Anjan Shrestha said that the common national framework along with six pillars, 60 initiatives recently unveiled by the FNCCI would support the government’s policy and programmes. “The tendency to change tax policy every year has eroded investor confidence. It is necessary for the private sector to end the unsustainable practice of the Finance Act, implement the ‘Single Revenue Code’ with interpretation and the formation of an empowered Board of Revenue. At the same time, there needs to be a clear guarantee that the tax law will not be retrospective,” he said.
Finance Minister Wagle said that the year of transformation would come with the aim of structural reforms in the economy. He also made it clear that the government was committed to moving ahead by considering the private sector as the main partner, urging the FNCCI delegation to remain optimistic. “We have brought about a change in politics. Now we have to change the economy. As this is the first full budget of the government that got new mandate, it should break the old traditional structure,” he said, adding that the government is sensitive to the low morale of the private sector and the decrease in demand in the market. The upcoming budget will lay the foundation for transformation in the model of the economy. We may not be able to do everything in this fiscal year, but we will be able to do a lot of improvement in the economy within 5 years. I urge the private sector to remain optimistic. ’
Shrestha said that the budget should revive the country’s economy at a time when the industrial production capacity of the country has been limited to 40 per cent, the construction industry has reached a difficult turning point in its history and the contribution of the private sector to the GDP has come down from 28 per cent to 16 per cent in the last four years. The FNCCI also drew the attention of the government towards the fact that Nepal’s tax growth rate has reached 11 per cent in the past two decades against the average economic growth rate of only 4 per cent and revenue as a proportion of GDP has crossed 19 per cent.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed the view that high tax has led to informal transactions, illegal trade and migration of enterprises. Likewise, the crisis in the Middle East is likely to have a negative impact of around 1.8 percent on Nepal’s foreign employment, remittance and foreign exchange reserves.
Vs. Stating that there was no alternative to moving from remittance-based economy to production-based economy as Nepal’s demographic advantage would gradually be exhausted after 2045 BS, Shrestha urged the Finance Minister to give policy priority to the ‘indigenous mind, indigenous and indigenous economy’.
Stating that there was a risk that Nepal’s production would be further weakened due to transportation and financing cost in the backdrop of upgrading Nepal from LDC to developing country, the FNCCI has demanded the government to bring a special and long-term integrated policy for export-oriented industries (textile, carpet, garment, pashmina and felt).
Regarding the priorities of the post-LDC government, Finance Minister Wagle said that the government has taken it seriously but should be prepared after the proposal to postpone it.
The FNCCI has also recommended the government to make legal provisions allowing Nepali companies to invest a certain portion of the income earned from exports abroad for regional and international expansion. Similarly, businessmen have complained that it is more challenging to save the business than to run the business. They have also called for controlling the smuggling taking place through the open border and stopping the anomalies in which ready-made goods are imported cheaper than raw materials under the SAFTA.
The federation has also suggested developing special schemes for the resumption of sick industries, energy, transmission lines, pump storage, tunnel and boot and PPP models in the industrial zones as well as encouraging private investment through the Viability Gap Fund. Giving high priority to agriculture, tourism, medicinal herbs, tea, coffee, information technology and service exports, the private sector has expected concrete steps from the government through the budget to make Nepal a nation to export products and services from the consumer market. He also drew the attention of the Finance Minister on the issue of protection of business environment and criminalization of entrepreneurship.
Likewise, the federation has suggested the government to improve in various thematic areas including import subsidy, export promotion, agriculture, tourism, start-ups, promotion of small and medium enterprises, among others.
Stating that the government and private sector would work together, he pledged that the budget would help maintain good governance, support the development of private sector and help create employment opportunities by increasing investment.
