Business Environment in Nepal
The business environment in Nepal has emerged after the political revolution and restoration of democracy in 1990 by adopting liberal and open market economic policy. This has changed the experience of the political, economic, socio-cultural, and technological environment of Nepal. This created new threats and opportunities in business activities. And the Government of Nepal has adopted the liberalization policy and emphasis has given to private entrepreneurship.
Before the liberalization policy, Nepal Government has adopted mixed economic policies where both private and state industries are equally involved in economic activities. However, there were some restrictions to private sector businesses to enter in some basic and core industries.
After liberalization, many public enterprises have been privatized to minimize the role of government in business activities. On 23 April 2004, Nepal becomes the 147th member of the World Trade Organization (WTO), which has totally changed the economic environment. As a member of WTO, Nepal can not restrict the entry of foreign goods and services, which has created many challenges to domestic industries.
According to Doing Business Report and World Bank Review, of 2020 Nepal has been ranked at 94th position out of 190 economies scoring 63.2 points. In 2019 Nepal was at 110th position scoring 59.7 points.
Emerging Business Environment in Nepal
Following are the emerging business environment in Nepal,
#1 Emergence of Open Market Economy
After the restoration of democracy in 1990, Nepal Government adopted a liberal and open market economy policy. This policy has been given economic freedom to private entrepreneurs by minimizing administrative hurdles in licensing, registration, incorporation, etc.
Now, private entrepreneurs and enterprises have the freedom to choose the line of business on the basis of their interest and capability with nominal administrative formalities. Besides, privatizing many public enterprises the government has withdrawn the monopoly power of public enterprises in distribution and production.
#2 Increasing Roles of Private Sector
Due to the open market economy, the role of private sectors increased in economic activities. They have started to play major roles in the economic development of the nation. After government termination the monopoly power of public enterprises in hydropower, telecommunication, water supply, airlines, etc. Private sectors started investing in both general and core business activities.
#3 Private Investment in Infrastructure Development
Open market economy encouraged private sectors towards the infrastructure development of Nepal. Private companies including foreign investors started to invest in the infrastructure area of the nation consisting of hydropower, telecommunication, transportation, water supply, health, education, etc. Such investments help to boost the economy of the nation.
#4 Emergence of Multinational Companies
The economic liberalization policy of the government and WTO agreement has created opportunities for multinational companies to perform business activities in Nepal. They involve in commercial, industrial, and also in auxiliary services through a joint venture with Nepalese entrepreneurs. Generally, they involve in banking, finance, insurance, soft drink, cold drink, hotel industries, education, telecommunication, hydropower, etc.
Some examples of multinational companies in Nepal are Unilever Nepal, Dabur Nepal, Coca-Cola, Pepsi, L.G. Television, Wai Wai Noodles, Nabil Bank, Standard Charted Bank, Himalayan Bank, etc.
#5 Growth of Service Sectors
There has been a rapid growth of service sectors in Nepal in recent years. Businesses are diverting from the manufacturing sector to the service sector. New enterprises involving to perform business in the service sector. Service sectors consist of a hotel, restaurant, transportation, telecommunication, newspaper, email and internet, computer software, e-commerce, education, health, radio, and television, etc.
#6 Development of Information Technology (IT)
The use of IT resources consisting of computer programs, e-mail, internet, network system, e-commerce, fax, etc. increases the working efficiency of business organization. Many business organizations like banks, finance companies, educational institutions, hotels restaurants, telecommunications, airlines, manufacturing, and trading organizations are using IT resources to increase their working speeds. Besides, NGOs and INGOs are also in front of using IT resources.
Therefore, at present information technology has become a great force to boost up the economic activities of the nation Nepal.
#7 Emergence of Consumrism
Consumerism means promotions of customer interests towards the business organizations providing their expected goods and services. The open market policy has developed a competitive environment among the manufacturers and suppliers and has provided a selection facility to customers. More products in the market available, the easier for customers to switch from one product to another. Thus business organizations have developed different strategies to draw the attention of customers and to satisfy them.
Liberalization policy has facilitated the availability of foreign goods and services in the Nepalese market. And customers can purchase goods and services on the basis of their needs and requirements. Nowadays computers, refrigerators, cycles, motorcycles, rice cookers, washing machines, cooking gas, etc. have become the basic needs for everyone.