Nepalese Political Environment: Issues and Problems
politics and business are closely related to each other. The political environment consists of the political conditions and events that affect the business sectors. It creates opportunities as well as threats. The following are some of the issues of the political environment in Nepal that have a direct or indirect bearing on the growth and development of business in Nepal.
1. political instability:
The political forces provide both opportunity and threat to business organizations. A stable political system helps in the growth, development, and expansion of business, whereas an unstable political system results to threat and risk to a business.
Political instability creates policy instability which adversely affects the development of business sectors. Over the last 28 years, three general and two constituent assembly elections were held and over 20 governments were formed. Political instability has been a major reason of poor law and order conditions in the country. Anarchism is pervasive. The forced donation, kidnapping, threatening are common due to poor implementation of law. The business sector is targeted by different political groups.
2. Lack of broader vision on political parties:
The mainstream political parties in the country are not able to deal with the existing political situation in the country as they voice differently. Erosion of ideology, exclusion of people’s interests, and internal factionalism remain the dominant trends among the political parties in Nepal. They suffer from the lack of broader vision, policy, and programs that are essential for good governance, political stability, and economic development. Due to this, the confidence level of the private sector is at a low level. Reconciliation among the parties is the need of the day to take Nepal ahead.
3. Poor understandings among the political parties:
In Nepal, the level Of understanding and trust among the political parties is very low. It has resulted in political as well as policy problems. Building political consensus among the parties is difficult even on national issues. The political parties do not have uniform opinions regarding the development of the country. Coalition culture is very weak. No coalition governments have completed their full tenure. It creates political instability in the country, which weakens democracy. This has adversely affected the business sector in Nepal.
4. Lack of democratic thought:
Democracy is defined as the government by the people and for the people. In a democracy, the supreme power is vested in people and exercised directly by them or by their elected representatives under a free and fair electoral system, We have been exercising democracy in the country over the last 28 years. Many of the mainstream political parties are in existence since the period. However, they are found very weak in developing democratic norms, values, and thoughts within them. Hence, democracy is limited in paper only in many instances. This has adversely affected the business sector in Nepal.
5. Belongings to the new constitution:
The constitution of Nepal-2072 has been promulgated and enacted. It has declared Nepal as the federal republican state with the provision of seven states. It has been expected that the constitution would be a milestone in bringing peace and prosperity to the country. However, some political parties mainly based on Madhesh are protesting against some provisions of this constitution. Over 50 people lost their lives in the protest. The political crisis is deepening. The government as well as other political parties should be serious to solve this crisis.
6. Lack of good governance:
Good governance is about the best possible processes for making and implementing decisions. Good governance has several principles, such as accountable, transparent, follow rules of law, responsive, equitable and inclusive, participatory, and effective, Poor governance has been a traditional problem in Nepal. According to Transparency International (2015), Nepal ranked 130th out of 168 countries in Corruption Perception Index. However, it dropped to 131st in 2016 although it scored two more points in the index, It shows the low level of governance in Nepal.
7. Labor force as a political force:
In Nepal, workers in different sectors are organized under different trade unions. The unions are politically motivated. In almost all the cases, they represent certain political ideologies. The trade unions are mushrooming. In some cases, the interunion conflicts create some serious problems in the organizations. Since they act as political forces, they fail to address labour issues constructively and professionally. Such politicizations of labour unions have resulted in inter union and employee-employers conflicts that significantly reduce productivity along with losses of working hours. This trend of the employee unions can hinder the good governance. Collective bargaining in Nepalese organizations is commonly focused on demanding additional facilities, mostly wages and other fringe benefits. In many cases, the workers are found to come up with strange demands.
However, they affect the policy issues significantly and impact the government business relations. In Nepal, it is found that over unionization of labour has continued alarming foreign investors and discouraging local investors to venture into new industries. Hence, labour problems is said to be one of the major causes of poor business environment in Nepal. Another labour sector issue being intensely discussed these days is the merger of trade unions. The trade unions are demanding amendments in the Labour Act to maintain cordial industrial relations.
8. Over-dependent private sector:
The private sector should take a leadership role for the development of business sector in the country. However, they are found over dependent to the government basically in building infrastructures required for the development of business. The private sector in Nepal blames the government on ground of good governance as well as other issues. They should also think what they have contributed to the nation. In many instances, they are questioned on account of tax payment, social responsibility and labour issues.
9. Divided Employers’ Associations:
Employers’ associations are the organized body of the business sector. They influence the government rules, policies, and decisions through lobbying. They represent the private sector and provide constructive information and advice to the government. In Nepal, the Federation of Nepalese Chamber of Commerce and Industry (FNCCI), the Nepalese Chamber of Commerce (NCC), and the Confederation of Nepalese Industries (CNI) are the main employers’ associations.
The employers’ associations in Nepal are found to be influenced by politics. They are divided on political issues. They are not able to create a close relationship with the labor unions and employees as well as the government.
