Bills on industrial reform languishing in oblivion

- SANJEEV GIRI, Kathmandu
Bills on industrial reform languishing in oblivion

Oct 7, 2014-

More than half a dozen bills and policies related to reforms in the industrial sector are languishing in oblivion although they are vital components of the second generation reform programme unveiled by the government this fiscal year.

According to the Ministry of Industry (MoI), seven bills and two policies are awaiting approval by the government. They are Industrial Enterprises Bill 2014, Foreign Investment and Technology Transfer Bill 2014, Special Economic Zone Bill 2014, a bill for the amendment of Company Act 2006, a bill to amend Nepal Standard on Quality Control Act 1980, a bill to manage Nepal Accreditation Act and a bill to manage intellectual property.

Likewise, the policies awaiting approval are Foreign Investment Policy 2014 and the policy for safeguarding Intellectual Property Rights.

The government has planned to introduce new laws and policies to improve the country’s investment environment so that domestic and foreign capital will be forthcoming. The country’s industrial sector is estimated to have grown just 1.9 percent in the last fiscal year, and the growth rate has been disappointing over the last several years.

The contribution of the industrial sector to the gross domestic product (GPD) has decreased to 6.1 percent in the last fiscal year from around 10 percent a decade ago.

Policy inconsistency, power crisis, poor road network and rigid industrial and labour laws  have been identified as the four key constraints to realizing Nepal’s economic potential, according to a joint study done by Nepali and US experts under the Millennium Challenge Corporation, a US aid agency.

“Industrial growth has remained at a dismal position following the failure of appropriate laws and policies,” said Yam Kumari Khatiwada, spokesperson at the MoI. “Hence we have come up with plans to follow up the status of the bills and polices that are awaiting government approval and act accordingly.”

The MoI has accorded priority to the endorsement of the necessary laws and has asked the concerned departments to complete the task required for the specific acts and bills by allotting a concrete time frame.

The Industrial Enterprises Bill is presently being reviewed by the bill committee of the Cabinet. According to Khatiwada, the MoI is mulling efforts to make sure that the bill is passed at the earliest possible.

After a new Industrial Policy was introduced four years ago, the Industrial Enterprise Act had to be introduced soon to implement the provisions in it. However, it has not seen the light of day.

The government had tried to introduce the act through an ordinance during the Khil Raj Regmi-led government, but it failed to do so.

Similarly, the SEZ bill which was been awaiting passage for the last five years, has just been sent to the Ministry of Law for its approval before being presented to the Cabinet. The government had planned to incorporate some provisions regarding the SEZ in the proposed Industrial Enterprise Act during the Regmi-led government, but the idea was abandoned and new homework has begun to introduce a separate SEZ Act through the parliamentary process.

“It has been taking several years to introduce a single vital act,” said Poshraj Pandey, a trade expert. “This is a situation of policy paralysis, and it has conveyed a negative message to both domestic and foreign investors.”

Meanwhile, the government is mulling operating the Bhairahawa SEZ through a directive as it is taking time to introduce the SEZ Act.

The MoI has prepared a Bhairahawa SEZ Operation Directive based on which it will be operated. According to the MoI, the directive will soon be presented to the Cabinet for its go-ahead. The Bhairahawa SEZ will be operated based on the directive.

Similarly, another important bill on Foreign Investment and Technology Transfer will be sent to the Cabinet this month. “The act will be prepared based on the policy approved by the Cabinet,” Khatiwada said.

Likewise, the MoI has completed a private-public dialogue regarding the new Company Act and is making preparations to send it to the Law Ministry by mid-December.

Senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka has said that the changes in legal provisions which have been enforced in the last two decades need to be changed at the earliest possible for the growth of the country’s industrial sector.

According to him, the government should be broadminded and provide appropriate services and facilities to the sector for its growth. “Bringing the act only won’t do much good. The kind of legal provision that is endorsed will be the key for investors,” said Murarka.

He added that the existing Industrial Enterprises Act offered a lot of facilities for the industrial sector, however, they had been cancelled by the Financial Act. “We have urged the government to bring in clarity in the acts so that there won’t be problems,” Murarka said.

 

Published: 08-10-2014 09:58

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