Nepal Business Forum, Nepal’s very first public-private business forum, was established through an Executive Order of the Cabinet in May 2010 with a mandate to work on private sector growth and development. It is aimed at accelerating and facilitating the reform process by providing the government and the private sector with a structured, transparent and result-oriented mechanism through which they can deliberate on investment climate issues, and jointly agree on reforms. Recently, the first amendment on the Executive Order has been made on 2016.
The Cooperation Agreement governing the operations of the NBF was signed in 18 January 2013 between the GON and IFC. The Cooperation Agreement stipulates among others the purpose, underlying principles, and responsibilities of Government, Private Sector and the Development Partners. Further, an Administrative Agreement was signed on 10 December 2014 between Denmark – Royal Ministry of Foreign Affairs, represented by the Embassy of Denmark (DANIDA) and the IFC.
The program falls under UNNATI Component 3: The Enabling Environment Component with subcomponent 3.1: Public Private Dialogue
NBF Institutional Framework
The institutional framework of NBF consists of three committees and ten sectoral Working Groups, supported by a Secretariat. At the apex is the High Level Business Forum chaired by the Prime Minister, the Steering Committee is chaired by the Industry Minister, the Private Sector Development Committee is chaired by the Chief Secretary, the Permanent Management Committee is chaired by the Industry Secretary, and the ten Working Groups are co-chaired by Secretaries of various ministries and Presidents of business membership organizations.
How does it work?
The strategic aim of the NBF is to institutionalize a recognizable reform process that contributes to the economic development of Nepal. For the same the secretariat calls for the policy level issues from the private and the public sector to be tabled in the related Working Group meetings chaired by the Secretary of the concerned ministry and Eastern Regional Business Forum (ERBF), where the issues are discussed and try to find a solution or the way forward. If the issues are not resolved in the Working Group meetings or the regional forum, it is directed to the Private Sector Development Committee (PSDC) Meeting chaired by the Chief Secretary or Steering Committee (SC) Meeting chaired by the Industry Ministry or directly to the High Level Business Forum (HLBF) chaired by the Prime Minister of Nepal. After the decisions made in the WG meetings, ERBF, PSDC, SC, and HLBF, monitoring mechanism is adopted to follow up on the implementation of the decisions made in the meetings.
Results till date:
Some key reforms that have been implemented include:
- An amendment in the Income Tax Act-2058 reduced the time taken to pay tax from 34 to 22 days.
- Hydropower businesses are now required to pay NRs 16,000 fee for company registration, instead of registration fee NRs 43,000 for per MW of electricity generation and an authorized capital of NRs 100 million.
- For hydro producers up to 5,000 MW, the provision for planting trees against the trees cut down ratio has been reduced from 1:25 to 1:2.
- The Nepal Rastra Bank introduced Export credit Facilities at 4.5% through the Monetary Policy decades back. However, Banks and Financial Institutions were not providing the facility and exporters had to draw loans at 12-15%. NRB has now enforced the provision of export credit facility. Exporters can now get concessional loans at 4.5 % under the Refinancing Scheme as opposed to 12-15%.
- Investors in Nepal shared grievances related to long and cumbersome processes related to obtaining and renewing visas. These lengthy procedures posed huge administrative burdens and long waiting time for approvals. Simplification of non-tourist visa and enforcement of five years business visa has.
- The FDI registration process was simplified to reduce steps from 22 to 15 at Department of Industry. In addition, this project has supported an estimated and to be verified USD1.683m in private sector savings from 4 recommendations related to streamlining trade:
- Rationalizing amendment of Entry fee: This has led to process simplification of rationalizing entry fee, reduction in the issuance of 1 document; 1 day saving. Further, the Gazette notification issued on Oct 7, 2013 confirmed the 50% reduction of fees (from $60 to $30) for Amendment of Entry Point leading to private sector savings of $357,630
- Rationalizing custom service charges for exports: The Government budget speech for FY14 addressed this issue on paragraph 374 which states "Rs. 600 as custom service fee levied on export of goods from abroad per custom declaration form has been reduced to Rs.100. ": a 83% reduction in on custom service charges for exporters, resulting in Private Sector Savings of $467,918
- Rationalizing the need for both GSP charges (NPR 150) as well as COO (NPR 18 plus 12% of invoice value):
Based on request of various public and private sector stakeholders through NBF- Trade Facilitation Working Group the Ministry of Commerce, Ministry of Finance and the Customs Department agreed to make the Certificate of Origin for exports optional when GSP certificates are issued. The Gazette notification of the Ministry of Finance was issued to this effect on 15 July 2013. This resulted in savings of $519,239.
- Harmonized Customs hours: These resulted in a direct time savings of 52 Saturdays per year or 14% increase in the number of trading days and a private sector cost savings of $337,974 per year.
These impacts have reached a wide range of beneficiaries, other than the direct recipients of our TA. First, most of these changes are economy-wide, and although TA was directly provided to GoN and private sector, the reach of the reforms extends to the entire private sector as a whole. Second, through the support provided to the ERBF, the impact of reforms and the participation of business in the PPD process was expanded subnationally, which allowed a much wider range of business to have a voice in the business reform agenda. This reach has spurred the private sector to replicate the ERBF in two other regions, which will further expand the reach of reforms, as well as increase the voice of subnational business in national business reform.