Nepal Chamber of Commerce Recommends Government to Make Laws to Establish a Favorable Climate for Marijuana Export; What are the Other Suggestions?

The President of Nepal Chamber of Commerce, Rajendra Malla, in an Economy program held at Hotel Radisson has brought the attention of the Honorable Prime Minister, Finance Minister, and Home Minister with recommendations regarding the current state of the economy and some steps to be taken for policy reforms.

The Nepal Chamber of Commerce was founded in 2007 primarily with the goal of giving the government institutional assistance as it drives the private sector for the nation's overall development and economic prosperity. The oldest private sector chamber's nationwide organizational network has grown recently. More than 70 friendly nations have joined forces with the chamber under a memorandum of understanding, and work is being done to advance economic development and other areas of shared interest.

The recent conflict between Russia and Ukraine has significantly impacted the global supply and value chains as a result of the scenario brought on by the Covid-19 pandemic, and the value of the Nepalese currency is steadily declining. The economy has not been able to grow at the anticipated rate because there has not been good coordination between the budget and monetary policy.

Recent economic activity has not returned to normal due to factors such as a shortage of liquidity, excessive interest rates, delayed capital expenditures, insufficient revenue to meet current expenses, etc. A new government has been formed in the nation following the election. For the past few years, it has seemed as though the nation's economy is losing its momentum.  The economy's foreign sector is showing a small improvement, but the domestic sector has not yet been liberated, according to the most recent statistics. Due to pressure on liquidity, a decline in capital spending, and an increase in interest rates, the economy is under stress as a result of the price increase of almost 8.5 percent.

Why, in spite of its enormous potential, can't the nation's economy grow? What is the root cause of politics or political instability? By bridging the policy disputes, the chamber has provided the following recommendations to increase the overall economy of the country.

• There is no other way to advance the economy except by boosting production, an atmosphere that encourages investment, and economic activity. Today, progress must be made with an investment-friendly environment, agriculture, infrastructure development, information technology, tourism, and water resources as the top priorities in order to create a self-sufficient economy. First requirements for this are sound planning and strong governance.

• Due to the high interest rates, industrialists and borrowers as a whole are in a state of distress. In order to achieve the government's goal of achieving double-digit economic growth, the chamber has been raising its voice that single-digit interest rates should be maintained. The increased bank rate since the end of Chaitra 2078 made the financial sector unbalanced. We believe that if the bank rate decreases, the base rate will also decrease.

• It is believed that the economy's external sector is improving to some extent. Up until the end of Mangsir, the foreign exchange reserve is Rs. 9.82 Arba in USD. Remittances also went up by 23%, coming to almost Rs. 4.80 Kharba. The maximum capital expenditure by the government is 14%, so It would appear that if 90% to 95% of the capital expenditures that have not been utilized at the central, state, and local levels could be operationalized through banks and financial institutions, it would contribute to the creation of market liquidity.

• The government has received tax payments totaling Rs. 83 Arba for the first six months of the current fiscal year. Government revenue has also found it difficult to cover current expenses. The open border is used as a means for around 45% of illegal trade. The inability to strengthen customs administration has an impact on revenue collection. The chamber is requesting that PAN cards be made mandatory alongside citizenship in order to broaden the tax base. In a similar vein, it is crucial to promote cash transactions via digital channels while discouraging transactions in the future. For this, the Chamber of Commerce is constantly prepared to work with the government.

• It is a sad thing for the country that the trade deficit is increasing every year. Last year, the trade deficit reached Rs. 17.20 Kharba. This year, up to Mangsir, the trade deficit has reached Rs. 5.97 Kharba. The share of exports is only 7 percent while the GDP is about 34 percent.

• There has been a delay in the adoption of a technology-based farming system in the agricultural nation of Nepal. The need for a strong policy framework for developing an economy that is self-sufficient through the scientific station, mechanization, and modernization of agriculture. Government policy should require that agricultural loans only be given to farmers who cultivate the fields, not to people who purchase them.

• Similar to this, it is important to promote and export more Nepali-made handicrafts, herbal items, and other products that are processed from herbs. Making laws is a necessary step in establishing a favorable climate for marijuana export.

• To lower the current trade deficit, it will be beneficial to cultivate hemp alongside pharmaceuticals and textile products and export them to other countries.

• The Chamber has also asked for the retention of export houses to help promote exports in each of the seven provinces.

• Although the country has a capacity of 83,000 megawatts, currently only around 2,200 megawatts of electricity is being produced in the country. It is necessary to ensure the return on investment in hydropower. Last year, Nepal exported electricity worth more than 10.5 billion. However, in winter, it is still necessary to import from India. The chamber is of the opinion that there should be no delay in taking the initiative to export electricity through the tripartite agreement between Nepal, India and Bangladesh.

• Both the Pokhara International Airport and the Bhairahawa International Airport have opened. To increase its effectiveness, more work must be done. The government should act right away to broaden the direct air communication network across several nations. In a similar vein, if the nighttime traders can be encouraged to operate by providing the appropriate security in popular tourist locations like Thamel, Pokhara, and Chitwan, tourism revenue will rise and more jobs will be created.

• IT services are evolving quickly. It is possible to keep young IT engineers by providing them better opportunities in the nation rather than making them seek jobs abroad.