Investment growth key to economic development
| Investment growth key to economic development | |
RUDRA PANGENI
Though the country is seeing a rise in foreign investment commitments in recent years, only a few of them are translated into reality. The country desperately needs new investments, but it lacks necessary laws, infrastructure and workforce to attract them. Investors have to pass through a long and time-taking process to register the business. Acquiring approval for foreign investment, land acquisition, forest clearance, and environmental and social safeguard clearances is a herculean task. Worse still, they have to deal with civil servants many of who are not friendly and unaware of the benefits of having new investments. Former industry secretary Krishna Gyawali feels civil servants are not friendly to investments -- either they do not have good intention or they lack the capacity to serve investors. “Civil servants can play a great role to create investment-friendly environment in the country. But their performance is not up to the mark, maybe because of the outdated and unclear laws," he added. "Files of investors remain stuck for weeks. Decision-makers try to come clean by putting blame on outdated laws and provisions," he said, adding that many officials seek benefits for approving such files. In his keynote speech at Nepal Infrastructure Summit 2014 held in Kathmandu in November, Indian Minister for Road, Transport and Highway Nitin Gadkari had said indecisiveness of government can inflict huge loss on prospective investors. "A delay of single day in my ministry can inflict loss of Rs 5 billion on investors," he added. Stating that land acquisition, forest clearance, and approval of environment safeguards were the major problems that investors face, Gadkari said that there is a tendency of discouraging investors instead of facilitating them. Officials say the situation is no different in Nepal. Nepal ranks at the second position (108th) in doing business indicators in South Asia. Only Sri Lanka is ahead of Nepal in South Asia. But the pace of reforms in investment facilitation, particularly adopting automated service deliveries, shortening days of registering business, and seeking investment permission, has remained rather slow. A recent World Bank statement said it takes 86 days for a businessman to get permission for building a warehouse. Similarly, investors have to pass through eight ministries to get a license for starting a business. For investment above Rs 2 billion, one needs to seek approval of Industrial Promotion Board led by Minister for Industry which takes even months. Pashupati Murarka, senior vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said negative attitude is common among civil servants regarding new investments. "Some hesitate to take decision, fearing action by oversight agencies even though their decisions can bring huge benefits to the country," he added. Govind Raj Pokhrel, vice chairman of National Planning Commission (NPC), acknowledged that civil servants are not investment-friendly. Instead of putting blame on civil servants, Pokhrel wants to introduce a program to make them understand the value of investment to create investment-friendly environment. The budget for the current fiscal year includes a program to provide special trainings to around 400 government employees. Private sector had welcomed the program, saying that it will improve the way civil servants behave with the investors and take decision in time. But the program has fallen prey to red tape. The program has not take off; even program details have not been prepared. Pokhrel is worried that the current investment environment won´t help to improve per capita income to US$ 1190 or above from existing $540 by 2022. The government has set a target of graduating the country to a league of developing countries by 2022. To achieve the target, it should be able to increase per capita income to at least $1190. Two other key indicators -- economic vulnerability and social indicators -- are achievable, according to Pokhrel. Nepal needs to have investments of around $100 billion over the next years to achieve economic growth of 8 to 9 percent annually to achieve the target |
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