Cabinet approves rescue plan for sick enterprises

KATHMANDU, MAY 26 -

Rescue is at hand for sick enterprises that have long been clamouring to be bailed out by the government. The cabinet endorsed the government’s report on sick enterprises on Thursday opening the way for them to receive relief packages.

The report has offered recommendations to revive sick industrial unit besides providing easy exit measures for those beyond rescue.

“The endorsement of the report by the cabinet has prepared the ground for its implementation,” said Deependra Bahadur Kshetri, vice-chairman of the National Planning Commission (NPC) and chief of the Sick Industry Rehabilitation High-Level Task Force which prepared the report.

“When the government is looking for foreign investment, it is necessary to provide incentives for sick industrial units that have been suffering due to the country’s poor industrial atmosphere,” added Kshetri.

The report has recommended classifying sick enterprises as per the degree of their problems and introduce incentive packages accordingly. Troubled enterprises have been divided into three categories — fully sick, sick and close to being sick.

“Fully sick enterprises are those which have no hope of revival due to their weak infrastructure, competitive market, poor technology and massive debts, among other reasons,” states the report. The report has suggested an easy exit policy to enable them to be dissolved within a two-year period.

Sick industries, according to the report, are those that can be revived provided the government takes special care of them. The government should offer them a three-to five-year package for rehabilitation, loans at low interest rates and tax exemptions, said the report.

The report has identified industries suffering from high interest rates, power cuts and an unfavourable industrial environment under the category of industries on the verge of sickness. “Rigid labour laws, deteriorating industrial environment, lack of market and growing cost of production have hit a majority of the enterprises hard,” said the report. “If they are not taken care of in time, they could soon turn into sick industries.”

The report has also mentioned establishing a separate body with representatives of the private sector and experts to take care of the industrial sector permanently. “Though the government has formed numerous committees to study the status of sick industries in the past, their recommendations were not implemented due to frequent government changes,” said a member of the report drafting committee. “Hence, there is a need for a permanent body to take care of sick industries.”

Officials at the Industry Ministry said they would ask the Finance Ministry to allocate the necessary funds in the upcoming budget to provide incentives. “We will request the Finance Ministry for funds and begin implementation of the report from the beginning of the next fiscal year,” said Chabindra Parajuli, joint spokesperson at the Industry Ministry.

The private sector has urged the government to implement the report at the earliest. Industrialist Manish Agrawal said that such relief packages would not only help sick industries to resume operations but also boost the morale of the entire industrial sector. “It reflects the state’s concern over the industrial sector which is quite critical at this time,” said Agrawal.

Source: The Kathmandu Post