Shivshankar Yadav_12336

Economic Environment: Economy related policies in Nepal

Trade and Transit policy: Government of Nepal has implemented trade policy 2009AD for liberal, open and transparent economic environment to simplify and regularize the domestic as well as international trade. Along with this, proper import and export policy, arrangement for foreign exchange and internal trade policy have been implemented. Nepal has become a member of World Trade Organization (WTO) which ensures foreign investors security of investment and return as well. Nepal, as being land locked least country, depends on India for export and import transactions. Cost of business is high due to land locked least developed country (LLDCs). Nepal is also focusing on reducing the tariff on trade i.e. 130% to 80% that show the commitment toward liberalized economy. Besides these Nepal has entered in some bilateral, regional and multilateral agreement to enhance economy environment in Nepal for doing business. Privatization policy Nepal has adopted mixed economy policy. The 7th plan declared to handover all the sectors to private sectors except the defense and very important and basic services. The policy of privatization was developed in BS 1993AD and privatization law was enacted in 1994AD by the parliament. This policy makes easy for investors to operate private companies effectively. Economic policy Financial and monitory policies come under economic policy. These policies also have direct effect on business organization. Tax and public expenditure policies also come under the economic policy. Nepal government makes these policies. The business organizations must follow such policies. Nepal Rastra Bank makes the monitory policy in Nepal. It directly affects the demand and supply of money, cost of credit, level of average demand etc. This affects interest and inflation rates by which business organization get affected. Industrial policy A proper and suitable industrial policy should be adopted to industrialize the country. So Government of Nepal has adopted Industrial Policy 2049 BS, According to this policy government can gradually handover state owned enterprises to private sector and it shall not nationalize the private sector companies. Nepal government has updated and outdated industrial policy of 1992 with Industrial Policy of Nepal 2067 BS. The new policy makes some important provisions i.e. Finance support to construct infrastructures, Promotional incentive package for export-oriented industries, Promotion of Special Economic Zones (SEZs) and AgroExport Promotion Zone (AEPZ), Firms located within in SEZs and AEPZ zones to be exempted from customs duty, excise duty and VAT. These provisions makes economic environment more favorable for national and international business in Nepal.