Nepal's Stock Market Accounts for 85% of the National GDP; Investor Forums Submit 7-Points Letter of Demand to Newly Appointed Finance Minister

Pertaining to the fact that the stock market has had a staggering 84% contribution to the entire GDP of Nepal, Nepal Investors Forum and Share Laganikarta Sangh Nepal have submitted a letter of reform to the newly appointed Finance Minister Janardan Sharma.

Nepal's only stock exchange is now twice the size of the national budget, the letter highlights. The exchange has been able to generate over Rs. 14 Arba in capital gain tax as national revenue annually. Thus, apart from being the backbone of the national economy, the capital market has become its primary sector, the letter states. As such, the respective chairman of Nepal Investors Forum and Share Laganikarta Sangh Nepal, Mr. Chotelal Rauniyar, and Mr. Uttam Aryal, have collectively submitted a 7-point list of demands for reforms in the securities market.

This is the summarized transcript, translated with the essence kept intact:

1) To cherish the constitutional right of citizens in all corners of the nation to be able to invest without barriers, the secondary market should be made accessible to residents of all 77 districts. This can be achieved by expanding the brokering services via BFIs and entities that fulfil the requirement.

2) Investors in the secondary market pay an excruciatingly high, two-way broker commission. The broker commission should be no higher than 0.15%, and should only be paid once during the course of a complete transaction.

3) The government recently decided to levy a 7.5% capital gains tax for traders with a holding period of less than a year. This has discouraged investors and may result in a decline in collected revenue for the government itself. As such, the broker commission for traders should be kept what it was before, i.e. 5%, and long-term investment may be encouraged by reducing the CGT on long-term holdings to 2.5% instead.

4) The capital market should be made accessible to Non-Resident Nepalese, with a special emphasis on the youths working, studying, and residing abroad.

5) In order to discourage foreign borrowing, the citizens of the nation themselves should be encouraged to invest in the companies they work for and benefit from. This way, the citizens themselves are able to benefit from the investment returns.

6) Investors can invest as low as Rs. 1000 in the primary market. While there have been talks of changing the minimum investment quantity to 50 units, there should be no change to the currently maintained 10 units minimum threshold. This has encouraged people from all walks of life and economic background to participate in the capital market, and it should be kept that way.

7) The 58-point agreement made between investor communities and the government should be revised, and any changes not implemented should be brought into action.