Private sector shattered by CA dissolution

KATHMANDU, MAY 29 -

When the Constituent Assembly (CA) became history on Sunday without producing a constitution, the country’s private sector was shattered as it had high hopes that promulgation of the constitution would lead the country to political stability and economic prosperity.

There was optimism among the private sector when the contentious issue of integrating Maoist combatants had been resolved and political parties had shown seriousness in drafting the constitution. However, with the CA going up into thin air after all the build up, captains of the country’s business and industry said they had been deceived by the political leadership.

With another election to a second CA planned in the next six months, the private sector is now worried about business and economic growth. “Dissolution of the CA has shattered the hopes and dreams of the private sector,” said Bhaskar Raj Rajkarnikar, acting president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Industrialist Pradeep Jung Pandey said that termination of the CA had shattered the patience of the private sector. Pandey, who is also a vice-president of the FNCCI, said that the current political transition has been detrimental to the private sector’s development. “The politicians have not only prolonged the transition but also pushed backthe private sector growth.”

According to Rajkarnikar, the private sector, which was in a wait-and-watch mode till Sunday, will have to wait for a few more years before the country gets its new constitution. With the government announcing 2012-13 as Nepal Investment Year (NIY), the private sector had been looking for big investments. “Had there been a constitution, the private sector was ready to jump into investment mode, abandoning the wait-and-watch mode,” said Rajkarnikar.

The Golchha Organisation’s executive director Shekhar Golchha said that the termination of the CA would discourage investors who were looking forward to investing in the country. “Investors had seen some ray of hope and were ready to bring in investments,” Golchha said. “But the CA’s dissolution has discouraged them all,” he added.

The country’s leading business houses said their immediate investment plans were now on hold. Golchha said his own group would not make any new investment at least this year as there is no certainty in politics. The Golchha Organization had planned to invest around Rs 4 billion in cement production alone and was doing a feasibility study for a hydro power project.

The post CA scenario will also hit the Nepal Investment Year campaign. “Due to political uncertainty along with a series of disturbances, we can neither run our current industrial enterprises smoothly nor introduce new projects,” said Pashupati Murarka. “When local investors are facing problems running their factories, the country can’t expect any FDI projects.”

Representatives of the Investment Board and the private sector had begun talks with foreign investors targeting NIY. The campaign had revived the interest of foreign investors in Nepal and some of them had even visited the country.

Pandey said no foreign investment will come to the country in the current mess. “Peace, stability, investment-friendly laws, infrastructure development and investment climate are the prerequisites for attracting foreign investments in the country,” added Pandey. “We do not have these factors.”

Former FNCCI president Ravi Bhakta Shrestha said that dissolution of the CA without a constitution had imparted a negative message of the investment climate in the country. “Interested investors across the globe have been discouraged to bring investments to Nepal,” said Shrestha.

The government is planning to hold an Investment Summit next year for NIY. With the country still in political turmoil, the government will have a tough job wooing foreign investors.

Source: The Kathmandu Post