KATHMANDU, Aug 4: Reforming the policies and Acts to create a favorable environment and ultimately lure foreign as well as domestic investors with mega investment in the country has been badly affected due to the prolonging transitional politics and uncertainty of holding next election.
The government´s plan to endorse a new Foreign Direct Investment (FDI) policy replacing the existing FDI and One Window policy, 1992 and to enact new Industrial Enterprises Act (IEA) are unlikely to happen in the absence of parliament and full-fledged government in place.
“We are working on finalizing the draft of the FDI policy and IEA. However, it´s difficult to say what will be the fate of those drafts,” Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI) told Republica on Friday.
The ministry, which is preparing the drafts with the help of United Stated Agency for International Development (USAID), has circulated them to the stakeholders for further discussion. “Similarly, we have outsourced expertise to develop a draft of a new FDI policy,” Thakur said. “We will try to push for endorsing the IEA through ordinance and FDI policy from the cabinet.”
The government even formed a high-level team under the leadership of Dipendra Bahadur Kshetry, vice-chairperson of the National Planning Commission (NPC), assigning it to study what should be changed in the laws to make them consistent.
The dramatic change in the political situation of the country after May 27 - when the Constituent Assembly (CA) was dissolved - and uncertainty about holding another CA elections has posed a serious constraint on endorsing new laws and policies.
“It is better not to bring new laws and policies without winning the confidence of the opposition,” Semanta Dahal, lawyer specialized in International Economics, said. “Investors´ psychology does not let them to come here with investment when political situation is so chaotic even though the government keeps all the policies consistently.”
Meanwhile, the special economic zone (SEZ) bill, which the government was planning to bring through ordinance, is not in the priority anymore. According to a high-ranking official at the MoI, the SEZ bill has been at the bottom of the government´s to-do list.
“We are trying to push for it since it is important to improve the situation of industrial sector. But it has been sidelined lately,” said the official.