Kathmandu. KATHMANDU: The Confederation of Nepalese Industries (CNI) has taken the budget presented by the government for the fiscal year 2083\/084 positively. The CNI believes that the effective implementation of the budget will prepare the basis to give a new direction to the country’s economy. According to the Confederation of Nepalese Chambers of Commerce and Industry, the budget is expected to attract foreign investors along with domestic production. <\/p>\n
The decision to reduce the customs duty on 273 goods to differentiate the customs duty on finished goods and raw materials for manufacturing industries will make domestic production competitive and help accelerate the pace of industrialization. It is believed that the removal of excise duty on 360 items will help reduce the cost of production. <\/p>\n
Proper use of forest and natural resources, green industrialization, employment generation and import substitution are prioritized and industrial areas like Motipur and Mayurdhap will be promoted by the private sector. The CNI has already submitted its intention to the Government of Nepal for the construction and operation of the industrial zone some years ago. The Confederation is confident that it will now be implemented. <\/p>\n
In order to enhance the competitive capacity of the production-based industries, review the demand fee of electricity and discount on electricity tariff, and allow industrialists to mortgage structures built on industrial zone, special economic zone and leased land for banking purposes will encourage industrialization. <\/p>\n
The provision of automatic refund of value added tax, withdrawal of case if additional 1% of the disputed tax is paid, no interest, penalty, etc. are very practical. Many industrialists and investors have been embroiled in litigation for years. This arrangement will give them great relief and help them to focus on productive work. <\/p>\n
The Confederation believes that the provisions including the exclusion of Section 57 of the Income Tax on involuntary transfer of rights will remove the complexities seen in the course of succession management, institutional restructuring and business expansion. <\/p>\n
The announcement to withdraw profits and facilitate the return of royalty will attract foreign investment and play an important role in creating an investment-friendly environment. <\/p>\n
The limit of personal income tax is Rs. Reaching 1 million and reducing the maximum rate by 10 percent is an important step for the economy. Industry, trade and service sectors can gain momentum only if the purchasing power of consumers can be increased. In this context, the Confederation hopes that these provisions will help to expand demand in the economy. <\/p>\n
Employment linked production zones would be operated as models for the development and expansion of labour-intensive industries including agro-processing, tourism service and light production, investment promotion, economic reforms and easy service delivery. Formulation of laws related to recovery of loans, formulation, replacement or amendment of dozens of Acts, Rules, Procedures and Directives for the promotion of investment and presenting some Nepal Act amendment bills in the parliament to immediately repeal 15 laws already announced will encourage the investors. <\/p>\n
The decision to dismantle and merge government agencies will significantly improve government efficiency and cut unnecessary expenditure. <\/p>\n
Legal provisions for the projects approved by the Investment Board of Nepal (IBN) without requiring approval from other bodies, scrapping the license of the projects that have signed power purchase agreement but have not started construction and making new PPA on the ‘take-or-pay’ method and the use of alternative development finance fund, offshore bonds, clean energy bonds, diaspora bonds and climate fund to mobilize private investment in the infrastructure sector are some of the issues that are trying to attract private investment for the projects. <\/p>\n
To ensure financial access to small and medium enterprises, to secure loans for “first loss recovery”, to encourage capacity expansion and growth by providing “commercial revitalization loan” to industries and businesses that have not been able to operate in full capacity due to lack of capital, to provide electricity at subsidized rates by signing purchase guarantee agreement to promote green urea production from the private sector and to make legal provisions regarding corporate social responsibility of industries, The idea of establishing Nepal Enterprise Facility as a platform to connect startups, small and medium enterprises to the national enterprise ecosystem is positive. <\/p>\n
Identification of environmentally suitable places for extraction and processing of stones, pebbles, sand, physical and financial incentives to high-value resorts and hotels and health tourism branding will help strengthen the economy. <\/p>\n
Domestic Production Promotion and Protection Fee would help protect domestic industries and Nepali production, and the industry could deduct the expenses for social responsibility programs for income tax purposes. <\/p>\n
However, some important issues have been left out in the budget. Quality promotion and import of quality goods have been left out of the budget. <\/p>\n
Productive industries should adopt a policy of not imposing limitation on the required land. For this, the Confederation has failed to address the issue of not applying any provision related to the ceiling on such land by stating that the land of the industry submitted to the registering body while registering the industry will not be limited to the land mentioned in its project or scheme. <\/p>\n
The Confederation said that it would be easier for the industrialists, entrepreneurs and the government to adjust the amount that the industry has to pay to any body of the government and the amount that the government has to pay or return to the industry. <\/p>\n
According to the CNI, effective implementation of the budget is imperative to achieve the 7 per cent economic growth projected by the budget, to promote investment and to make the economy dynamic. <\/p>\n
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