DOING BUSINESS: what it means for Nepal?
Arbin Aryal – Each and every business entrepreneurs are motives by profit and directed towards the growing growthrate or at least consistence growthrate of income from their business venture. The world becomes a global village due to the easy access of communication and modern economic uniform. The people of one country or territory can easily buy or use the goods and services produced in another side of the earth and vice versa. Considering the cost of delivery and time it consume, business house are establishing the venture towards the area of prospective customer regions. Considering the consumption level of the people are constraint in different any two region there are other factor that why not to establish the venture in the particular one region and choose another for the same level of business market even for the better opportunities cost to be bear. Based on these prospective World Bank has started to perform a research based analytical report to support entrepreneur and first was published in September 2003 investigating the regulations that enhance business activity and those that constrain it.
From the beginning, when doing Business covered 145 economies, the scope of the report has expanded to 190 economies worldwide. The regulatory areas measured by the report have also been expanded to include more aspects that are relevant to the daily operations of small and medium-size firms. For eight of the 11 Doing Business indicator sets, the reports traditional focus on efficiency which defined as the time, cost and number of interactions necessary to incorporate a new business or connect a warehouse to the electrical grid which has been complemented with a new focus on regulatory quality. Doing Business data shows that efficiency and quality go hand in hand, reinforcing each other. Its focus on promoting regulatory reform that strengthens the ability of the private sector to create jobs, uplift people out of poverty and create more opportunities for the economy to prosper. Higher rankings (a low numerical value) indicate better, usually simpler regulations for businesses and stronger protections of property rights that can be compared across 190 economies over time In starting a business, dealing with construction permits,getting electricity, registering property, getting credit, protecting minorityinvestors,paying taxes,trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year’s ranking. In the context of Nepal government should focused on improvement of those indicator for better rankings and to create more jobs for young generation to minimize/eliminate the rate of brain drain.
It is necessary to focus on promoting regulatory reform that strengthens the ability of the private sector to create jobs, uplift people out of poverty and create more opportunities for the economy to prosper. It is belief or says world recorded truth that the private sector has substantial economic, social and development impact in general people.More than 70% of employment in developing economies like Nepal are supported by Private sector including foreign employmentand are creditors for providing the opportunities to secure a good and sustainable standard of living. Encouraging or supporting those well-functioning private sectors is a major responsibility for government. This requires long-term policies of removing administrative barriers and strengthening laws that promote entrepreneurship whether it is national franchise or international venture.
The recent report and fall in ranking aware the government where we are in pace of mobilizations of labor, capital market and entrepreneur mindset. The data or report indicates that there are bureaucratic hurdles and transparency in Nepalese economy, which is the result of corruption and unwillingness or inefficacies of politically appointed leaders of those organizations whether it is General Secretary in bureaucrats or Chief Justice in legislation political leaders are not clean from this too. Some of the economy are affected by political instability and also are ranked batter than us and why not we? It is more than a decade that we go through the peace consolidation process and now more than a year we settled a constitution dilemma which was the long political phenomena but further we are ranked 5 steps back why? Also unemployment and poverty level are determinant for Rank position in Doing Business, are we much more capable in creating more employment opportunities and reducing poverty level? The main weapon is industrialization but government and socio-political environment is not in favor of investors whether it is national venture or Foreign Direct Investment (FDI).
The government is focused only on tax rate there is more trouble after decentralization of authority or legislation to the locally elected governing body investor are imposed by more tax rate and even double taxation in some area. Investors aim is not to reduce unemployment level, poverty level and to fulfill the bucket of government through tax the mainly important is how to earn profit and they invest whether the environment is in favor of them comparing the global economic environment investor choose the area to invest so government should focused to magnetize the investor intestate to make afraid about. This will help to increase the earning and increase the level and spending habit of general public which ultimately increase demand and productivity and tax bucket too in long run.
The manifesto of governing body should be change to boost economic activity or say industrialization instate to focus on tax based economy.We have ranked at 158 on paying tax indicator. The government or governing body should not think only the profit margin that private sector earn, should be consider as the backbone of economy to boost employment opportunities too.Considering this the payment way should be easiest and hurdle free till there are some payment difficulties if any organization is willing to pay tax as per the earning.
After the insurgency period of constitutional dilemma investors are focused on production maximization and also some new venture are investing in different sector. But bank have invested much more in unrealistic and unproductive sector where there is not created any employments opportunities at all and all the investment is used in daily consumption which are not national product. By the cause bank are facing the problem of credit crunch which directly affect the investors and startup venture also indirectly affect the general people by increased in goods and services price. If these situations exist for longer period we will further fall in rank so solving the problem is the only options to boost investing opportunities and economy as a whole. Attracting the foreign investment may beanother tool. We should focus on protection of investor’s right against labor related issue; copy right and patent and property right instate blaming the report. There are real evidence that we are not capable in protecting the international brands and patent right recent Kansai Nerolac’s issue make big deal in international arena.
Government has established the one window policy but not implemented effective. To consider the hassle free investment process all the work or transaction should be online from the first step of registration, payment of fee and charge to till the registration certificate which also should be issue online with barcode or QR code or say latest encryption technology which may reduce the corruption and hassle for new venture and in renew process of existing venture too. Further government should focused on providing basic infrastructure to establish or run the industry say road access and adequate electricity facility (we have ranked on 137th position on getting electricity) currently none of the existing industry are operating in full capacity due to the lack of sufficient energy which imposed high production cost which ultimately hit on inflation. Further there is construction related issue too in Nepalese society, obstacles from the adjacent society or politically expose group create construction huddles beside the government authority and EIA plan.We have ranked in 148th position on dealing with construction permit. Enforcing the contract is another main issue seen in report which implicates that we are not liable towards the contract deeds. Most of the organization and the contractor are not liable towards the completion of their task on time this increase the cost of production which ultimate increase the price too and make unable to compete with competitors price. We have ranked on 154 in enforcing the contracts.
There is a another indicator which is not tested here but is much more important part in case of Doing Business inNepaleseindustrial market that is labor market and its stakeholders or say regulation. It is focused on the flexibility of regulation of employment, specifically as it relates to the areas of hiring, working hours and redundancy. Doing Business also measures several aspects of jobquality such as the availability of maternity leave, paid sick leave and the equal treatment of men and women at the workplace. Recent Social Security Schemes 2075 address most of the issue but we may lack on implementation phase as other rules and regulation. Most of the government shareholding organization does not have sustainable development for long run due to labor related issue created by labor unions or say employee the case is same in the private organization too.
There are restrictions or not the systematic or say government working structure to work at night, work on a weekly rest day and for overtime too.Our labor market and working day do not match the international system as there is six working day in a week but international transaction cannot perform all the day considering the mismatch in week off day with international market. The worker are compiled to be the member of any of the labor union after joining the work station whether supporter with ruling party or opponent.So the employee get united to work less get paid high rate and argue with the management. There steps are supported by thelabor unions even for layoff or terminate the unproductive employee. So instate blaming the report we should focused on improvement of the week point that are noted or indicated by World Bank Group.