Business confidence up after new govt: Study

Business confidence up after new govt: Study

Jun 27, 2014-

Business confidence has improved after the formation of the new government, a Finance Ministry survey has shown.

The study titled “Investment and Business Sentiment Survey” states the business confidence index (BCI) has crossed the 50-point mark, indicating better business confidence.

The survey says the confidence level is high in businesses related to infrastructure, information technology (IT), tourism, capital market and foreign employment sectors. “Businesses related to the services sector are more confident and optimistic on the economic situation of the country than those involved in the agriculture and industry sectors,” it states.

The latest survey also reiterates the findings of a previous review carried out by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). The “FNCCI Business Confidence Survey” conducted a year ago had shown the business confidence index at 49.5 percent, up 9.8 percentage points compared to a similar survey of November 2012.

“The survey has been conducted using scientific tools and methodologies. The surge of stock market by 150 points after the formation of new government in itself is one of the major indicators that the situation is getting favourable for doing business,” said Finance Minister Ram Sharan Mahat, adding the overall system should work harder to push the confidence level further up in the days to come. He said the government as well as the private sector should work to build investment-friendly climate.

Basudev Sharma under secretary at the ministry said the services sector has been the biggest contributor to the BCI, with a share of 6.1 percent. In terms of sector-wise confidence level, infrastructure has 60 percent, IT, telecom, pharmaceuticals, hospitals and education 59 percent, financial and capital market 58 percent and RMG, carpet and handicrafts sector 49 percent.

Political instability has been identified as the most critical challenge that Nepal’s economy is facing. It is followed by issues like energy crisis, governance, labour problem and coordination and financial problems. In the case of foreign trade, 55 of the respondents believe the country’s export would increase in the near future, and sectors like tourism, IT and agriculture will perform better.

Hari Bhakta Sharma, vice-president of Confederation of Nepalese Industries (CNI), said the achievement so far is positive and the upcoming budget should come up with a vision of completing the tasks on a time-bound basis to achieve more investor confidence. “The government should allot significant budget to projects identified as national priority,” he said.

FNCCI Director General Hemanta Dabadi said there is a swing of opinion in the survey and that a lot more effort is required for sustaining investor confidence. “As someone involved in the process of preparing the index, I can say the opinion of the people swings from time to time in such kinds of researches. The outcome seems good as the new government is in place and the CA election was held successfully,” said Dabadi.

According to the ministry, five indicators—financial condition and profitability, investment situation, employment situation, business cost and sales order or export order—were chosen to develop the index. A total of 300 respondents from manufacturing, trading, service and corporate sectors, private limited companies, and business entities were selected as sample firms for the study.

Published: 28-06-2014 09:11

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