The recent World Bank’s Ease of Doing Business Report saw Nepal slip to 110 position in the global ranking done annually. The website states that ‘economies are ranked on their ease of doing business from 1–190. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. The rankings are determined by sorting the aggregate scores on 10 topics, each consisting of several indicators, giving equal weight to each topic’.
Experts opine that a major area of concern is that Nepal has made taxes more complicated in recent days. Nepali companies have to on average make 39 payments and spend 353 hours to comply fiscal obligations while the global average in 2017 was 24 payments and 237 hours. The country has made paying taxes especially difficult through the 2017 labour act that has introduced mandatory labour gratuity, medical and accident insurance to be paid by employers. This places a huge burden on companies that are already facing challenges in doing business due to unstable policies, bureaucracy and administrative hurdles, and a climate of uncertainty in general.
Nepal has also not taken any major reform initiatives points the report. This is contrary to the political and economic aspirations of increasing investment in the country. The Ease of Doing Business Index is considered a barometer to show whether a country is moving in the right economic direction. Nepal is seen faltering when it can least afford to especially in areas of building sound economic policies and reforms, and attracting foreign direct investment. Nepal needs to improve its economic trajectory to change perception and we need to do it fast.
With India and China growing as global economic powers, it is definitely in Nepal’s interest to have a forward looking and goal oriented approach to work strongly on its economic diplomacy to build on partnerships that promote sustainable growth and investment. Trade balance is an area that requires creative focus and strategic preparation to create lucrative livelihood options for its young population.
The Ease of Doing Business Index is a tool for governments to make informed decisions. In an increasingly competitive and interconnected world, we must use every tool available to resolve issues and correct course.