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Difficult Days Ahead
Despite the 12-point agreement between the seven political parties and the Maoists and the subsequent one-month extension in the ceasefire by the latter, the business community cannot expect for easy days ahead, at least in the near future.
Though the agreement has spelled down commitment of the Maoists to multi-party democratic system and rule of law, it is silent about whether the Maoists have changed their view about the free market economy and freedom to choose one’s own profession and pursue individual economic prosperity.
More importantly, the agreement has said that the parties and Maoists will intensify their agitation against the present government. The agitations so far from both of the sides in this agreement have always created one or other type of obstacle in doing business. The agreement does not assure the business community that the nature of the agitation in the coming days will be different from that of the past.
A stable political environment wished by the business is still a distant dream even when the present government and the opposition come to a compromise. Even if everything goes as outlined in the road map made public by the parties and the Maoists, at least two years will be needed to hold the elections to the constituent assembly. Then the period between the finalization of the new constitution and formation of new government under the new constitution is likely to be full of conflicts and the duration of such period will depend on various unpredictable domestic and international factors.
This indicates that the coming few years are not likely to be good for new investments. However, if the agitations by the opposition are going to be peaceful without causing obstacles to do business, the existing industries would be able to operate in higher capacity and more people will get employment. If the opposition is careful about it, it would be beneficial for themselves as it will help them to widen their support base among the people. But nothing has been committed by them so far in this regard.
The problems forthcoming are not only from the struggle to be waged by the opposition. The government too is likely to strike heavily on the business. As the foreign assistance has declined over 40 percent in the first four months of the current fiscal year as compared to the same period last year, and the collection of revenue has increased only marginally while the state expenditure has been ever increasing, the government is hard pressed to increase the revenue collection. To meet the resource shortfall, the government machinery is likely to be stricter in tax collection and may go to the extent of extortion. Most likely, the revision that is due on mid-January on the Fiscal Ordinance will contain some increase in the tax rates and change in the tax collection rules to make them more draconian.
Considering these facts before making any long-term decision may be for the benefit of the entire business community.
Another problem likely to crop up is in the transit facility through India to trade with the third countries. The silence from both the Nepali and Indian government about the outcome of the Joint-Secretary level meeting early December in Kathmandu regarding the automatic renewal of existing transit treaty between the two countries indicates to impending more difficulties as experienced in 1989 when India unilaterally halted providing the transit facility to Nepal.
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