The struggles of business in Nepal: A fight against all odds

By Nandi Keshar Poudel

Running a business in this country feels like stepping onto a battlefield unarmed. This bitter truth has become evident through my experience in the cement industry. Despite adhering to regulations and systematically operating mines, the industry faces unwarranted challenges. These obstacles often stem from a peculiar societal mindset: opposition for the sake of opposition.

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1. The Story of Mines: Following Rules, Facing Resistance

Even when our mines operate in full compliance with regulations, they face relentless resistance from local communities, often without any rational basis. Addressing these baseless objections involves activities like gathering evidence, engaging in legal battles, and fulfilling cumbersome bureaucratic requirements—all of which impose significant financial burdens.

Despite paying taxes and maintaining a well-managed industrial site, disputes with locals and uncooperative government officials have left us in limbo, jeopardizing smooth operations

Adding to the frustration, tax authorities remain oblivious to these hardships. Despite paying taxes and maintaining a well-managed industrial site, disputes with locals and uncooperative government officials have left us in limbo, jeopardizing smooth operations.

A glaring example of systemic inefficiency is when my company procured a bill from a vendor that passed their tax audit, only to have the same bill deemed invalid during our tax inspection. It remains unclear whether this stems from ambiguous regulations or the discretion of tax officials. Such arbitrary practices—where payments are denied and invoices invalidated—are not only demoralizing but also a significant barrier to industrial growth. These inconsistencies erode trust in the system and crush the morale of entrepreneurs.

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3. The Onslaught of Chinese Cement

Under the pretense of foreign investment and with the backing of influential leaders, Chinese cement companies have flooded the Nepali market. By selling products below production costs, they have gained a dominant market share while funneling profits back to China. These companies leverage Nepali bank guarantees to their advantage, undercutting local businesses. This practice not only undermines domestic industries but also prioritizes foreign profits over Nepal's economic well-being.

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Tasks that should be straightforward are delayed unless unofficial fees are paid

4. The Tyranny of Middlemen

Who truly governs this country? The reliance on intermediaries by government agencies adds to the frustration of doing business. Nothing moves forward without the involvement of middlemen—whether it’s at ministries, the Department of Mines, or other regulatory bodies. Even securing approvals for IPO issuances depends on these intermediaries. Tasks that should be straightforward are delayed unless unofficial fees are paid, yet tax offices refuse to recognize these expenditures. This reliance on middlemen creates an environment where corruption thrives, and progress stalls.

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5. Absence of an Industrial Ecosystem

The lack of a conducive industrial ecosystem is evident. Corruption runs deep, from bureaucrats to political leaders, leaving no room for addressing the challenges faced by entrepreneurs. Even when businesses comply with regulations and pay taxes, they operate at a loss due to a toxic environment where bribery and inefficiency are rampant. This absence of support discourages industrial growth and deters potential investors.

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The state has failed to prioritize reducing asphalt imports or promoting cement exports

6. Policy Deficiencies in Cement Usage

Although the government allocates budgets for constructing concrete roads, the lack of clear implementation guidelines leaves many projects incomplete. The state has failed to prioritize reducing asphalt imports or promoting cement exports. Cement could have been a significant source of foreign currency for Nepal, but government negligence continues to stifle this potential. The lack of a strategic approach has left the industry in a precarious position.

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7. Political Infighting and Entrepreneurial Struggles

Who listens to the struggles of entrepreneurs caught in the crossfire of political infighting? Despite enduring endless challenges, operating at a loss, and risking their families’ futures, the state provides no relief or support. Political instability, combined with a lack of leadership, has created an environment where entrepreneurial efforts are undervalued and often undermined.

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To foster an industrial-friendly environment, the government must ensure transparency in regulations, eradicate corruption, and inspire confidence in entrepreneurs

Dream or Cement Ruins?

The nation needs visionary leadership that understands the struggles of industrialists who drive economic growth. To foster an industrial-friendly environment, the government must ensure transparency in regulations, eradicate corruption, and inspire confidence in entrepreneurs. Without capable leadership and a strategic focus on industrial growth, the dream of national prosperity risks crumbling into nothing but ruins.