N EPAL BUSINESS FORUM A platform for Private Sector-led growth in Nepal An update on progress and achievements
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ollowing the success of the second High Level Business Forum of NBF, the Secretariat takes this opportunity to inform key stakeholders of its current status and progress.
MESSAGE FROM THE CHAIRPERSON RT. HONORABLE PRIME MINISTER
The NBF Working Group Participants
Government: • Ministry of Finance (Co-Chair, Working Group on Business Environment, Labor Relations and Industrial Security) • Ministry of Commerce and Supplies (Co-Chair, Working Group on Export Promotion and Trade Facilitation) • Nepal Rastra Bank (Co-Chair, Working Group on Financial, Monetary and Insurance Affairs) • Ministry of Industry (Co-Chair, Working Group on Industrial Investment Promotion and Working Group on FDI) • Ministry of Energy (Co-Chair, Working Group on Infrastructure) • Ministry of Women, Children and Social Welfare (Co-Chair, Working Group on Women Entrepreneurship Development) • Ministry of Culture, Tourism and Civil Aviation (Co-Chair, Working Group on Tourism) • Board of Investment (Co-Chair, Working Group on Foreign Direct Investment) • Eastern Developement Region (Co-Chair, Eastern Regional Business Forum) • Ministry of Agriculture and Cooperatives • Ministry of Home Affairs • Ministry of Labor and Transport Management • Ministry of Information & Communication • Ministry of Local Development • Ministry of Physical Planning, Works & Transport Management • Ministry of Irrigation • Nepal Intermodal Transport Development Board
NBF is the country’s first national platform for public–private dialogue, established to deliberate on important investment climate issues and recommend measures to improve it. Poverty alleviation, employment–centric growth, agriculture, infrastructure building and social development are all key priorities for overcoming economic challenges and creating a business-friendly environment in Nepal.
The Nepal Business Forum, Nepal’s first public-private dialogue forum, facilitates private sector development in Nepal. It is a platform where constructive dialogue between the private sector and government identifies the real barriers to the private sector and generates solutions. It is a new way of doing things that addresses differences of opinion through dialogue not conflict, and leverages the comparative strengths of the participants. The NBF supplement being published on the occasion of High Level Business Forum meeting will help to make people aware about NBF achievements.
With this in mind, the Government of Nepal established NBF through an Executive Order in May 2010 to assist and accelerate the formulation and implementation of reforms that would develop a vibrant private sector which would benefit all Nepalis by creating jobs, attracting investment and developing much needed infrastructure. NBF is designed to facilitate partnership between private sector and government, to address differences through constructive dialogue and to jointly address the country’s national priorities by leveraging one another’s comparative strengths.
I am pleased to note that NBF has achieved significant reforms better engaging government and the private sector, resulting in an improvement in the private sector relations with the government for which we would like to thank all the responsible participants for their efforts.
Chaired by the Rt. Honorable Prime Minister, NBF has 75 members including senior government officials, policymakers, representatives from the private sector, civil society members, economists, academics and several development partners.
As we all know, Nepal has been able to improve the Doing Business ranking, implementing key reforms by creating better relations between the public and private sector stakeholders and much more remains to be done.
The NBF Working Mechanism
Government of Nepal is moving ahead effectively to work for the development of Nepali entrepreneurs by improving investment climate, removing obstacles for doing business, revising regulations and policies related obstacles to build the confidence of the private sector investment. In partnership with the private sector, and using the Nepal Business Forum as a tool for constructive dialogue, we can identify the real roadblocks to investment and economic growth and remove them.
NBF: Enabling Private Sector Development in Nepal Public and Private Sector separately identifies the constraints, and produces issues for analysis: problems, costs, possible solutions.
In this changing local and global economic environment, we hope to see growing support from the private sector to make overall reforms fruitful to boost the economy. NBF can make a big difference and create a positive change in the business environment and investment climate of Nepal.
Working Groups agree on recommendations and take decisions. Single Ministry issues are resolved in the WGs.
Steering Committee follows up on progress, coordinates issues across WGs and develops agendas for HLBF.
Private Sector Development Committee monitors implementation and clears inter-ministerial roadblocks, responds to private sector’s unresolved issues.
High Level Business Forum sets policy and direction, announces legislative changes and responds to private sector’s unresolved issues.
Private Sector: • Federation of Nepalese Chambers of Commerce and Industries (Co-Chair, Working Group on Business Environment, Labor Relations and Industrial Security) • Confederation of Nepalese Industries (Co-Chair, Working Group on Industrial Investment Promotion) • Nepal Chamber of Commerce (Co-Chair, Working Group on Export Promotion and Trade Facilitation) • Nepal Bankers’ Association (Co-Chair, Working Group on Financial, Monetary and Insurance Affairs) • Independent Power Producers’ Association, Nepal (Co-Chair, Working Group on Infrastructure) • Federation of Woman Entrepreneurs Associations of Nepal (Co-Chair, Working Group on Women Entrepreneurship Development) • Eastern Regional Chamber of Commerce and Industry (Co-Chair, ERBF) • Tea and Coffee Associations • Association of Pharmaceuticals Producers of Nepal • Central Carpet Industries Association • Federation of Handicraft Associations of Nepal • Nepal Pashmina Industries Association • Federation of Handicraft Associations of Nepal • Federation of Custom Agents Association • Nepal Vegetable Ghee & Oil Manufacturers Association • Nepal Freight Forwarders’ Association • SAARC Chamber of Commerce and Industries • Nepal Insurers’ Association • Forum of Nepalese Banks • Federation of Constructor’s Association of Nepal • Computer Association of Nepal • Federation of Nepalese Small & Cottage Industries • Rastriya Laghu Udhyami Mahasangh
NBF is supported by a Secretariat which supports the private sector and government with technical advice to prioritize reforms and implement them, organizes meetings and keeps track of issues.
Dr. Baburam Bhattarai
NBF’s structure and functions have been developed through a consultative process between representatives from the private sector, government and civil society.
Structure of NBF
MESSAGE FROM THE MINISTER OF INDUSTRY I, on behalf of the Steering Committee of Nepal Business Forum, would like to thank all concerned stakeholders for their constructive cooperation in making the NBF dialogue process dynamic and moving forward, for creating a sound investment climate in the country and for removing barriers to doing business. Despite time constraints the Working Group members have met regularly to make important progress in improving the business climate in Nepal.
High Level Business Forum (Chaired by Rt. Honorable Prime Minister)
We recently completed our High Level Business Forum successfully which really gave directions to the line ministries and private sector stakeholders for making NBF constructive and strong to sustain reforms.
Working Groups
We have had a fruitful year 2011-2012, better engaging the private sector and the government despite some difficulties on the political front. Regional bodies of Nepal Business Forum have been already formed in Biratnagar, Dhanagadhi and Nepalgunj. We are trying to expand such bodies in other regions too. I am sure this kind of expansion will take place and will be beneficial for the development of sectors such as infrastructure, women entrepreneurship, trade promotion and foreign investment. This government has already focused its attention on economic development in an integrated manner. We have also realized the need to allocate a reasonable budget for the establishment of the Secretariat of Nepal Business Forum. In this matter the Ministry of Industry is committed to working with this Secretariat in a more organized manner in partnership with the private sector and International Finance Corporation (IFC). In Nepal, we are taking ahead this cooperation in close coordination with IFC. We believe that our country’s economy will also develop because of this cooperation as the other countries’ economies did.
Private Sector Development Committee
Steering Committee
(Chaired by Chief Secretary)
(Chaired by Minister of Industry)
Business Environment, Labor Relations & Industrial Security
Export Promotion & Trade Facilitation
MESSAGE FROM THE PRIVATE SECTOR
NBF’s initiatives have already led to several successful reforms, making it easier and faster to do business in Nepal but there is much work to be done. Continued and collaborative efforts on this front are critical for increasing domestic investment, attracting foreign investment, providing the much needed boost to the country’s economic and investment climate and ensuring the success of Nepal. Private Sector Co-Chairs of Nepal Business Forum
Infrastructure
Tourism
Women Entrepreneurship Development
High Level Business Forum
Anil Kumar Jha
We appreciate the Government’s acceptance of all the recommendations of NBF at the latest High Level Business Forum held last week, and we now look forward to their implementation which we will monitor through NBF and our chambers. We would like to thank those government colleagues who have worked with us on the identification of issues and solutions to the challenges facing the private sector.
Industrial Investment Promotion
Secretariat
Over the course of this year we have seen some major progress in the form of reforms initiated through Nepal Business Forum. It is proof that a strong mechanism for public-private dialogue is an effective platform to address issues facing the business community and deliver policy level support and solutions.
Foreign Direct Investment
High Level Business Forum is the apex body of NBF. Its primary responsibility is policy formulation and decision making for attaining the objectives of NBF. It is chaired by the Rt. Honorable Prime Minister and the Secretary of the Ministry of Industry serves as its Member Secretary. Its members include ministers, government ministries and organizations, representatives from the private sector, professional organizations and civil societies, in addition to invitees such as relevant sector–specific experts and professionals. The first meeting of the HLBF was held under the Chairmanship of Rt. Honorable Prime Minister Mr. Madhav Kumar Nepal on January 21, 2011. The second meeting of the HLBF was held on August 17, 2012 under the Chairmanship of Rt. Honorable Prime Minister Dr. Baburam Bhattarai.
Private Sector Development Committee
The Private Sector Development Committee is the third tier of NBF. It is chaired by the Chief Secretary of the Government of Nepal and includes the Secretaries of relevant ministries in addition to invited participants such as development partners and experts.
Steering Committee
The Steering Committee is the executive organ of NBF. The SC is chaired by the Minister of Industry and is responsible for ensuring effective functioning of the NBF initiative.
Working Groups Suraj Vaidya, President
As Member Secretary of the High Level Business Forum, I would like to express my heartfelt thanks to all our concerned stakeholders for their valuable support to make the HLBF meeting successful and productive. Government and Private Sector, working together through Nepal Business Forum, have been able to make NBF a result-oriented platform for private sector development and growth. On behalf of NBF, I proposed six recommendations put forward by the NBF Working Groups and approved by the Steering Committee, which is chaired by the honorable Minister of Industry. These are as follows: 1. There should be a single trade union in a firm, the election for which should be held by Ashad, 2070. 2. Readymade garments should be included in the list of exportable goods identified by NTIS to get financial and technical assistance under the WTO provision of aid for trade and Enhanced Integrated Framework. 3. The Ministry of Finance should allocate Nepalese rupees 10 million for the Technology Development Fund. 4. An independent agency akin to Nepal Rastra Bank should be established for regulation, monitoring and supervision of Savings and Credit Cooperatives through the Ministry of Finance. 5. Existing laws must be reviewed or new laws facilitating foreign investment in the stock market should be introduced immediately in coordination with Nepal Rastra Bank, Securities Board of Nepal and other related institutions. 6. The current provision of cash incentives for export should be improved in order to make it more effective. At the meeting, each Private Sector Co-Chair spoke in support of the recommendations which were endorsed by their government counterparts from the Working Groups. On behalf of the Government, the Chief Secretary endorsed the recommendations and they were accepted formally by the Prime Minister. These recommendations have been officially approved by this High Level Business Forum, Chaired by the Prime Minister and on behalf of NBF; I request all concerned ministries to work to implement these recommendations as advised by the Prime Minister. At the meeting, the Prime Minister also launched the NBF Website: www.nepalbusinessforum.org which has detailed information about Nepal Business Forum. In conclusion, I would like to thank all our colleagues in the private sector, concerned ministries, Office of the Prime Minister and Council of Ministers, colleagues at the Ministry of Industry and the NBF Secretariat for their untiring efforts to make the event a great success.
Uma Kant Jha Secretary, Ministry of Industry
Suraj Vaidya, President, FNCCI
Leelamani Paudyal, Chief Secretary
Narendra Kumar Basnyat, Snr. VP CNI
Achievements: Key Reforms
Let me also inform you that through the Steering Committee of NBF which I chair, we have taken a number of decisions to promote private sector growth in Nepal. NBF has been able to implement significant reforms with the coordination of the Ministry of Industry, which have positively impacted the private sector. Lastly, I would like to thank the development partners, especially IFC, the World Bank Group, for supporting public-private dialogue in Nepal which is now producing good results and strengthening the private sector.
Financial, Monetary & Insurance Affairs
Resolutions of the High Level Business Forum Held on August 17, 2012
Eight Working Groups (co-chaired by a senior government official and private sector representative) have been formed to resolve thematic and sector–specific issues through in-depth study and analysis. They are responsible for identifying and diagnosing regulatory issues, finding solutions and making recommendations in the form of implementable reform measures. They also initiate the formation of Separate or Joint Task Forces which are responsible for conducting regular meetings to review the progress and status of the issues in consideration.
2. VAT exemption: A provision of Nepalese rupees one million ($ 13.33 thousand) as Value Added Tax exemptions in the purchase of construction materials (cement and rods) per megawatt of hydropower generation had been made in the budget for the FY 2011–2012 in order to promote investment in the hydropower sector. Reforms Supporting Exports of Nepalese Goods 1. Pashmina trademark registration: Nepal’s Pashmina trademark was registered in 40 countries, supporting a rapid expansion of exports. FY 2010–2011 witnessed an increase of 50% in Pashmina exports compared to the FY 2009–2010 – from Nepalese rupees 1.86 billion ($ 24.8 million) to Nepalese rupees 2.73 billion ($ 36.4 million). 2. Establishment of a testing laboratory for silver: With an objective to improve the quality of export products and generate higher demand for them in the future, the private and the public sector jointly contributed a sum of Nepalese rupees 12 million ($ 0.17 million) for a testing machine for silver which is in the premises of the Nepal Bureau of Standards & Metrology. 3. Harmonization of custom opening hours: On May 25, 2012, the Ministry of Finance issued a notice to harmonize
Suresh Kumar Basnet, President, NCC
Maha Prasad Adhikari, Deputy Governor
Nepal Business License e-Portal
With the active participation and sincere contribution of its members, 120 issues and agendas have been raised through NBF, out of which 38 recommendations have been implemented. Some of the key reforms are: Reforms Making it Easier and Faster to Do Business 1. Reduction in tax payment days: There was a reduction in tax payment days from 34 to 22 days per year resulting in savings of over Nepalese rupees 362.25 million ($ 4.83 million) to the private sector.
Krishna Hari Baskota, Secretary, MoF
The Government of Nepal has just launched an e-Portal of business licenses to support the NBF licensing improvement recommendations. The e-portal is a one-stop-shop of information about what approvals are needed to start, operate and close a business in Nepal. Once fully functional, the e-Portal is expected to save at least a day that Nepalese businesses spend searching for requirements to apply for licenses. It is freely accessible through the Internet to members of business communities, individuals and organizations, and is available in Nepali and English.
The Nepal Business License http://licenseportal.gov.np
the opening days/hours and holidays of major custom points along Nepal’s borders with India and China, which has allowed timely passage of commercial goods to/from neighboring countries. Other Reforms Directed at Supporting Business Growth 1. Elimination of the provision on authorized capital: Removal of the provision of an authorized capital of Nepalese rupees 100 million ($ 1.33 million) for per megawatt of electricity generation for business registration purposes and during the period of survey licensing has helped developers ease the pressure of costs by saving approximately Nepalese rupees 43,000 ($ 573) as fee payment to obtain the license. 2. Establishment of the Social Security Fund: Social Security Fund has been established for the benefit of workers within the private sector. 3. Women Entrepreneurs Development Fund: A sum of Nepalese rupees 10 million ($ 0.13 million) has been allocated for the establishment of the Women Entrepreneurs Development Fund, which is expected to remove the constraints women face in doing business because of lack of finance, and accelerate the growth of women-run enterprises. 4. Establishment of a Money Laundering Investigation
Department: As per the Anti-Money Laundering Law, a separate unit has been established under the Ministry of Finance to look into cases of money laundering, terrorist financing and other illegal activities defined by the Law.
e-Portal
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The Secretariat of the Nepal Business Forum is currently supported by the Nepal Investment Climate Reform program, a part of the SouthAsia Enterprise Development Facility. The NICRP aims to improve the business environment, support sustainable business growth, and create jobs in Nepal. SEDF is managed by International Finance Corporation, in partnership with the UK Government and the Norwegian Agency for Development Co-operation. Nepal Business Forum is an important tool for Nepal’s private sector development and needs the active and ongoing support of stakeholders to remain effective. Please visit the NBF website www.nepalbusinessforum.org for more information on the Forum, and provide your input on key issues to your chamber representatives and government ministries.