Investors Seek Security Amid New Government Formation

News Summary: With the formation of the new government, industrialists and businesspersons in Nepal are anticipating policy stability and a more conducive business environment. Industry leaders demand the government remove procedural complexities and implement a one-door system to streamline operations. As the Nepal Chamber of Commerce and Industry (FNCCI) elections approach, Raghunandan Maru has filed his candidacy for a leadership position. The establishment of the new government has sparked optimism within the business community. Entrepreneurs believe that political stability will bring policy consistency, paving the way for economic advancement. Meanwhile, the Ministry of Finance is preparing the new budget, and election activities within FNCCI are gaining momentum. Below is an exclusive interview with Raghunandan Maru, President of the Cement Producers’ Association and Managing Director of Shivam Cement.

How do industrialists and businesspeople feel following the formation of the new government?
We now have a strong two-thirds majority government, which the industrial and business sectors warmly welcome. Not only them, but even ordinary citizens are excited because we expect the ‘habitable’ environment that had existed merely in theory until recently to be implemented practically. We anticipate the removal of the longstanding issues that have plagued us.

What specific expectations do industrialists have from a stable government?
Policy stability is a primary expectation. Long-term policies are essential. Investors seek assurance that their investments will be secure. Our group is actively working to attract foreign investors. However, they have noticed inconsistency in policies as budgets and governments change. Therefore, stable policies are the foremost demand. Additionally, procedural complexities must be eradicated. Issues persist at all stages—from company registration to operations. Unnecessary hassles in licensing must be eliminated entirely. Such obstacles continuously disrupt industries during this critical phase of nation-building. While no applications should be accepted without completing international legal procedures, the practice of circulating files even after fulfilling all requirements must end. The impractical forest user rights procedures are adversely affecting the hydropower and mining sectors. Although we unanimously agree on forest conservation, procedural delays must be removed. There should be regulations such as requiring 50 trees to be planted for every tree cut. We especially stress addressing the impact of user rights on hydropower and mining industries. The issue of limits and caps also presents challenges. To achieve a $100 billion economy, it is essential to ease conditions for establishing large industries. The government should demonstrate generosity and formulate investor-friendly policies to boost employment and strengthen the economy. Processes must be simplified with a one-door system. For instance, if a mining industry requests 1,200 ropanis of land, the state should allocate the boundary accordingly. If the industry fails, the land could be sold but not repurposed, enforcing clear regulations while maintaining ease of process. The Ministry of Land Reform’s complex procedures must be reformed and the practice of file circulation halted.

What are your thoughts on the one-door system making all procedures smoother?
Absolutely. Even in today’s digital era, the practice of passing files from one table to another only hampers progress. A system where file status can be monitored easily via computer is necessary. We must adopt faster technology in government work and transition to a paperless system. Achieving this will allow the current government to transform the country’s economic structure.

The Rastriya Swatantra Party Nepal (RSWP) has promised to repeal outdated laws, and Finance Minister Dr. Swarnim Wagle has set up a dedicated team. How do industries and businesses react to this?

This is a significant achievement, and we are optimistic. The Economic Reform Commission, led by former Finance Minister Rameshwar Khanal, had also emphasized repealing redundant acts and regulations six years ago. This must now be implemented. It will accelerate reforms across the country.

The current government aims to double per capita income from $1,500 to $3,000 within five years. How feasible do you find this target?
Youth migration must be halted, and despair dispelled—things the government can accomplish. The environment should promote youth entrepreneurship through flexible policies. We must support startups and small businesses with all kinds of incentives. Once young people start businesses, the economy will respond positively. Therefore, the $1,500 to $3,000 per capita income goal is achievable. Currently, many youths seek foreign employment, which negatively impacts societal structures. Relying heavily on remittances weakens the economy; a production-based approach is essential.

So you advocate increasing the number of young entrepreneurs?
Yes. If we want a $3,000 per capita income and a $100 billion economy, nurturing youth entrepreneurship is vital. With the right vision and mindset, our nation can develop rapidly and become a donor country.

What do entrepreneurs expect from the upcoming budget?
Tax policy requires revision. Value Added Tax (VAT) slabs should be differentiated, similar to India. Essential sectors should have lower taxes, while luxury goods should be taxed more. Tax policy must be pragmatic and balanced.

What tax rates would be appropriate?
Lower taxes on essential items like food are needed to alleviate consumer costs. Higher rates can be applied on luxury goods.

How is the current status of the cement industry?
The cement sector is increasingly export-oriented. While production capacity is sufficient, exports remain limited. The government used to provide export subsidies but has since halted them, causing difficulties for manufacturers. Continuation of such subsidies is necessary because they do not result in revenue loss. Nepal’s production capacity is about 20 million tons, but consumption is just over 8 million tons. Therefore, surplus production should be encouraged for export.

Why have cement prices increased?
Increases in transportation costs, diesel prices, packaging expenses, and raw material prices are the main factors. Although the Iran-US conflict’s impact isn’t directly visible, its multifaceted effects are beginning to emerge. We hope for a swift resolution.

What are your expectations from the new government regarding the cement industry?
Limits and forest user rights remain major challenges. The user rights system should be abolished. Why require dual permits for cutting trees? Legal amendments are necessary. The mining industry needs procedural reforms; with improvements, it could contribute significantly to GDP, similar to China. The government should remove the environmental tax imposed on coal imports; taxing non-domestically produced goods is unjustified. Eliminating procedural complexities could make the cement sector highly profitable. Increasing government expenditures and focusing on capital investments will also boost cement consumption. Currently, provincial budgets consume a significant share, which requires reassessment.

How is cement export performing?
Exports are nearly stalled, limited to border areas only. Competition with India has become challenging after subsidy cuts; state support is needed to maintain competitiveness.

What potential do you see for rapid national development?
Infrastructure development will drive rapid progress. In a small country like Nepal, reducing distances is vital—for example, making it possible to travel from Taplejung to Biratnagar in two hours. This will strengthen the economy.

What is necessary to ensure an investment-friendly atmosphere in the current budget?
Implementing a one-door system in government services is mandatory. Though this demand has been raised before, it has not been practically enforced. Improvements in licensing procedures, faster implementation, and guarantees for investment security are essential.

What role will you play in the upcoming FNCCI elections?
With elections approaching, I am contesting for a committee member position on the dedicated panel led by Anjan Shrestha and Shiv Ghimire. Our goal is to run FNCCI responsibly and efficiently, contributing significantly to economic prosperity.

What are your priorities?
Reducing the gap between the government and FNCCI is a key priority. The chamber should lead the government toward digitization, an area where we currently lag. I aim to remove the pessimism among industrialists and businessmen. I intend to promote new approaches to advance FNCCI and break distrust between the private sector and government. If successful, it will foster a more favorable investment environment.

Any final remarks?
According to RSWP’s manifesto, legal and administrative reforms will alter the nation’s character. The Nepalese people should place full trust in the government, and industrialists should commit to developing the country domestically. This commitment will empower us to build a prosperous Nepal.