Kathmandu. KATHMANDU: The Confederation of Nepalese Industries (CNI) has taken the recently presented budget for the fiscal year 2083÷84 positively and expressed the belief that the effective implementation of the budget would prepare a basis to give a new direction to country’s economy.

Issuing a press release today, the CNI said that the budget will attract foreign investors along with domestic production. The decision to reduce customs duty on 273 items to differentiate one level on the customs duty on finished goods and raw materials for manufacturing industries will make domestic production competitive and help speed up industrialization, the statement reads.  The FNCCI believes that the abolition of excise duty on 360 items will help reduce the cost of production.

Similarly, the policy will encourage the private sector to ensure proper use of forest and natural resources, green industrialization, employment generation and import substitution. The Confederation has submitted a proposal to the government for the construction and operation of the industrial zone some years back.

According to the press release, the Confederation believes that revising the demand fee of electricity to enhance the competitive capacity of the manufacturing industries and providing discount on electricity tariff and allowing the industrialists to mortgage the structures constructed in the industrial zone, special economic zone and leased land for banking purposes will encourage industrialization.

“The provision of automatic refund of VAT and withdrawal of cases if additional 1 percent of the disputed tax is paid is very practical. Many industrialists and investors have been embroiled in litigation for years. This arrangement will provide them a big relief and will help them to focus on productive work, take back profits, facilitate the return of royalty, and the announcement will play an important role in attracting foreign investment and creating an investment-friendly environment.

Similarly, raising the limit of personal income tax to Rs 1 million and reducing the maximum rate by 10 percent was an important step for the economy.

“Employment linked production zones would be operated as models for the development and expansion of labour-intensive industries including agro-processing, tourism service and light production, investment promotion, economic reforms and easy service delivery,” the bill states.

Formulation of laws related to loan recovery, formulation, replacement or amendment to dozens of Acts, Rules, Procedures and Directives for the promotion of investment and tabling some Nepal Act amendment bills to immediately repeal 15 laws already announced earlier will encourage the investors.

The decision of dissolution and merger of government agencies will bring significant improvement in the government’s efficiency and cut down unnecessary expenditure, to make legal provisions for the projects approved by the Investment Board not to take approval from other bodies again, to revoke the license of the projects that have signed power purchase agreement but have not started construction and to make new PPA on the ‘take or pay’ method by canceling the license of the projects that have not started the construction, and to mobilize private investment in infrastructure. The Confederation believes that the use of offshore bonds, clean energy bonds, diaspora bonds and climate funds is trying to attract private investment for the project.

“To ensure financial access to small and medium enterprises, to secure loans for ‘first loss recovery’, to encourage capacity expansion and growth by providing ‘commercial revival loan’ to industries and businesses that have not been able to operate in full capacity due to lack of capital, and to provide electricity at subsidized rate by signing purchase guarantee agreement to promote ‘green urea’ production from the private sector,” the statement reads. The issues of making legal arrangements regarding corporate social responsibility of industries and establishing Nepal Enterprise Facility as a platform to integrate start-ups and small and medium enterprises into the national enterprise ecosystem are positive. Identification of ecologically suitable places and making arrangements for the supply of excavation and processing of stones, pebbles, and sand, physical and financial incentives to resorts and hotels targeting high value tourists, and health tourism branding will help strengthen the economy. ”

The Domestic Production Promotion and Protection Fee would help protect domestic industries and Nepali production, and the government could deduct the expenses of the industries for social responsibility programmes for income tax purpose, the statement read. However, the budget has complained that the issues of quality promotion and import of quality goods have been left out in the budget.

Similarly, the policy of not imposing limitations on the required land for manufacturing industries should be adopted. For this, it has been suggested to address the issue of not applying any provision related to demarcation to such land, stating that there will be no limit on the land of the approved industry as mentioned in its project or scheme.

Stating that it would be easier for the industrialists and the government to adjust the amount they have to pay to any body of the government and the amount that the government has to pay or return to that agency, the CNI has stressed on the effective implementation of the budget to achieve the seven per cent economic growth, promote investment and make the economy dynamic.