Govt has the key role to bring the crisis-prone economy back on track

Never before in the history of FNCCI, has new leadership in the apex body of the Nepali private sector been forced to face turbulence like in the present. With the country’s facing big external and internal macroeconomic headwinds, the newly elected executive committee of FNCCI headed by President Chandra Prasad Dhakal has a difficult road ahead of it to lead the business community which has faced a series of economic shocks since the last three years.

After assuming his office on April 16, the newly elected President Dhakal has been focusing on working with the government to take the economy out of the slump. In a conversation with the HRM, he talked about how FNCCI envisions bringing the derailed economy back on track. Excerpts:

Q: You have assumed the leadership of FNCCI at a time which is proving very difficult for the country. What will be your role to help take the economy out of the slump?
A: The country’s economy is really in a difficult state. The latest growth projection of the National Statistics Office (NSO) indicates a disappointing situation. Economic activities are very sluggish currently. Even, the government is facing problems to provide salaries to civil service employees.

However, as a private sector leader, my role is limited. Government and regulatory bodies have major roles in revamping the economy and bringing it back on track. They should take the private sector into confidence by creating an environment conducive to doing business, reviving economic activities, bringing investment, and accelerating growth and development.

Q: What are your current priorities and plans to support the ailing private sector? How do you envision making the private sector capable to face future challenges?
A: The private sector’s contribution is quite huge to Nepal’s economy. It contributes more than 80 percent to the national GDP, government revenue and employment. Therefore, until and unless the government acknowledges the importance of the private sector and brings them into confidence by providing an encouraging environment to expand their businesses, there is no way out to get rid of this crisis-prone economy.

I mentioned five major areas of intervention during my speech at the oath-taking ceremony for restoring this sluggish economy back on track.

The first and foremost is the common understanding of all the economic stakeholders, government, development partners, regulatory bodies, economists, and the private sector about the current economic situation. For this, I have proposed to have a national economic symposium on the current economic situation, which will discuss the present economic situation and find a way out that would bring all of us on the same boat.

Second is the creation of a conducive business climate. This is the preliminary requirement for fostering any businesses in the country.

Third is the public-private partnership. We need huge investments in large infrastructure projects. For this, we want the government’s partnership in soliciting funds for large infrastructure projects.

Fourth is the production of skilled human resources. Skilled human resources are the foundation of any country’s development and prosperity. And, fifth is the creation of encouraging environment boosting psychology of the private sector providing social recognition and respect.

These are a few of the many agendas and issues that we need to address to make a friendly environment for investment in the country.

Q: How will you work with the government and the country’s political leadership to make them understand the problems faced by the business community and persuade them for policy departures? 
A: The government has the key role to bring the crisis-prone economy back on track. The government must create a conducive business climate to foster and grow the private sector so as to expand businesses, create jobs and collect revenue. As the private sector’s contribution to national economic activities stands quite high, it is the government’s role to gain their confidence, boost their morale and trigger growth and development.

As a leader of the private sector, I would convince them that none of the countries in the world have developed without proper growth of the private sector and their investment. Therefore, the government and private sector should go hand in hand, facilitating one another, helping one another, and supporting one another so as to take mutual benefits of development and prosperity.

I often mention that the private sector is the partner of the government. The revenue and taxes paid by the private sector to the government are the major sources of development and recurrent expenditure for the government. I would try my best to convince the political parties that the private sector can only grow if there is an environment for business. This may be improved by amending policies and laws, building large infrastructure, or simply boosting morale.

Q: How serious have you found the country’s political leadership about resolving the economic problems?
A: After the new leadership in FNCCI was elected, we paid courtesy calls on the Prime Minister, chairpersons of major political parties, the finance minister, and the central bank governor, among others. All of them are well aware of the present economic situation and quite serious about it. They also have committed to go hand in hand with the private sector to bring normalcy back to the economy.

Q: What is the role of the FNCCI leadership to help the government to get the derailed economy back on track? What problems FNCCI has identified in this regard?
A: As we have been saying that the current economic problem is the impact of the Covid-19 pandemic, the Russia-Ukraine war, and the control measures taken by the regulators in fear of Sri Lankan economic trouble. The overreaction of the regulators might have shrunk the economic activities, which finally led to the current problem. The government and the regulators have to play a key role in bringing the derailed economy back on track. The government and regulators should create a conducive environment by bringing new measures and policies for fostering business and economic activities.

Our role will be to support them by expanding businesses, creating more jobs, and paying more tax and revenue. I already mentioned five key areas of intervention for the immediate recovery of the economy. I believe if these issues were addressed properly, the economy would move ahead smoothly and take the right direction for the time being.

Q: Many see the current crisis also as an opportunity for kickstarting the next generation of structural reforms in the economy. How do you view this proposition? What role FNCCI will play in this regard?
A: Of course, for the long-term solution to the current economic problem, we have to carry out structural reforms. There are age-old policies, guidelines, and laws that are controlling businesses. Such rules need to be amended to suit the present-day and future needs.

As the leading private sector organization, FNCCI will lobby the government and regulators to bring in new programs and policies that would drive the private sector and attract more investment.

Q: It has been seen that FNCCI has become weak as a lobby as it was in the 1990s and early 2000s to make things happen for the private sector. Is it so?
A: I do not think so. FNCCI has not become weak. It has become further stronger. Its national and international network has expanded further. Government and regulators have also started to pay heed to the advice of FNCCI.