FNCCI provides various suggestions to NC for upcoming budget

KATHMANDU, APRIL 28: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has provided several suggestions to the Nepali Congress (NC) regarding the budget for the upcoming fiscal year 2025/26.

At a budget interaction event organized by the Nepali Congress Party’s Industry and Commerce Department in Kathmandu todat, FNCCI President Chandra Prasad Dhakal recommended that the largest political party in the Parliament, NC, include aspects such as the expansion of an open economy with social justice, structural reforms for a new phase of economic improvement, promotion of the private sector and investment growth, governance enhancement, revenue mobilization, and the effectiveness of public expenditure as its objectives and priorities.

Based on the studies conducted across the country, the FNCCI highlighted political and policy instability as a major barrier to the expansion of industries and businesses, urging that policy stability should be prioritized. Dhakal called for declaring the upcoming decade as an “investment decade” and urged the establishment of a unified investment policy for its implementation.

"Many countries have achieved economic progress by stabilizing policies and institutions. Thailand is an example of this. Therefore, we request the NC, as the largest party, to initiate efforts for a cross-party agreement to ensure policy stability and strong institutions. All parties should agree to refrain from policy changes for at least the next decade to end the misinterpretation of laws and conflicting legislation," said Dhakal.

He also pointed out that the inability to allocate capital expenditure over the past two decades has been the biggest issue in Nepal’s budget process. He stated that only about 17% of the budget is typically allocated for capital expenditure, and only about 60% of that is spent, which has hindered the country's expected development, created a lack of market demand, and affected the private sector's business.

The FNCCI recommended that the budget for the next two years should ensure that capital expenditure is not reduced, and that actual expenditure should not increase by more than 15%.

To reduce general frustration and attract more youth into business, the FNCCI suggested ensuring governance through the highest use of technology, including the creation of a system where all business operations can be conducted through a citizen app, eliminating the mandatory renewal process and allowing businesses to renew based on their tax payment.

Additionally, to enhance governance, the FNCCI recommended putting an end to outdated laws, preventing sudden legal changes, and using the current fiscal year’s policy and program as a starting point for these reforms.

Given the economy’s dependency on remittances, the FNCCI also pointed out concerns that, according to various studies, the demographic advantage that Nepal had post-2045 might not last long, and the remittance-dependent economy faces increasing risks. Dhakal emphasized the need for the upcoming budget to promote the second phase of economic reforms.

According to a study conducted by the FNCCI and the World Bank, the private sector contributes to 81% of the economy and provides 86% of employment. Dhakal urged all parties to publicly acknowledge the importance of the private sector and create an environment where entrepreneurs and businesses are respected and encouraged to thrive.

Presenting data showing a 4% average economic growth rate over three decades, declining job opportunities, and the fact that nearly 6 million people are working abroad, Dhakal further highlighted that exports have tripled and imports have increased ninefold since 2004. "The upcoming budget should focus on leveraging the agriculture, tourism, energy, and information technology sectors, promoting import substitution and export growth, and creating employment within the country."

The apex body of the Nepali business fraternities also recommended strengthening border security cooperation with neighbouring countries to control unauthorised trade, as well as creating a unified non-tax revenue umbrella law, as the non-tax revenue laws are currently scattered across different statutes.

The Nepali Congress organised this event to gather suggestions from the private sector, with the participation of party president and former Prime Minister Sher Bahadur Deuba and other senior officials.