KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Anjan Shrestha has warned the government that neglecting the private sector could undermine efforts to revive the economy.
Speaking at the inauguration of the NADA Auto Show in Kathmandu on Tuesday, Shrestha said the confidence of the business community has fallen to its lowest level in 36 years.
He said the country’s economy is going through an extremely challenging period, with the private sector facing a sluggish market, weak confidence and an increasingly difficult business environment.
“In nearly 36 years of my business career, I have never seen business confidence this low,” Shrestha said.
He said the new government led by Balendra Shah has expressed its commitment to accelerating economic growth, but the private sector remains unclear about the strategies being adopted to achieve that goal.
Shrestha recalled that the government has set targets of increasing per capita income to US$3,000, expanding the economy to Rs 10 trillion and creating 1.2 million jobs over the next five to seven years.
However, he said the government has not clearly communicated how it plans to achieve and implement these targets.
He urged the government to formulate a clear strategy for economic recovery and said Nepal’s economy now requires fundamental “re-engineering” through cooperation between the government and the private sector.
Shrestha highlighted the contribution of the automobile sector to the national economy, saying the sector imported goods worth around Rs 106 billion in the last fiscal year and contributed approximately Rs 81 billion in government revenue.
“Of the total imports worth around Rs 1.8 trillion, the automobile sector alone contributed nearly 9 percent of the revenue to the government,” he said.
Shrestha also recalled that he and other automobile entrepreneurs had previously urged then-Finance Minister Dr Ram Sharan Mahat to reduce customs duties on automobiles. Mahat had instead encouraged businesspeople to establish industries, he said.
Some entrepreneurs subsequently established industries, but Shrestha complained that the government has not shown sufficient concern about their current condition.
He urged the government to pay attention to private industries while preparing to revive state-owned industries that have remained closed for decades.
“The government is talking about reopening state-owned industries that have been closed for 20 or 30 years,” he said. “It should also pay attention to the condition of private-sector industries. They too need to be understood and protected.”
Shrestha also cautioned the government against pursuing reforms in one sector at the expense of another.
Citing a Nepali proverb, he said, “It should not become a case of trying to pick something up from the ground and accidentally dropping what is already in the pocket.”
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