In fact, it cannot be denied that Nepal’s investment environment has alarmingly worsened in recent years. The massive surge of criminal activities and laborers’ militant attitude in industries is a major blow to domestic industries that are already bogged down by cut-throat competition from foreign products. On top of frequent strikes at factories on issues that often are unrelated to industries themselves, rise of extortion, intimidation, and abduction of industrialists and executives have even forced some leading domestic and multinational companies to postpone their expansion plans and withdraw investments in some cases.
The announcement of RJ Corp, one of the largest Indian investors in Varun Beverages – the maker of Pepsi soft drink in Nepal – that it is thinking of freezing further investments and halting production of Pepsi in Nepal due to unfriendly business environment is one such example. The worsening law and order situation in the country has greatly eroded investors’ confidence, forcing them to look for opportunities across the border. The latest World Bank survey also ranks Nepal’s business doing climate as one of the worst in South Asia. In addition, declining number of new enterprises and diminishing contribution of industrial sector to the national economy are some reflections of deep-seated problems of Nepal’s manufacturing sector.
Against all these backgrounds, it is good that the government has initiated actions to address one of the core problems faced by the business community. However, questions have already been raised over the effectiveness of the deployment made without proper law and preparation. Worries are high that the proposed formation of Industrial Security Force, a separate force specifically for industrial security, might come under question if APF fails to perform.
Moreover, the latest decision has only tried to address external threats but the government does not seem to be bothered to tackle internal problems—militant attitude of laborers that is fast brewing under the aegis of Nepal’s rigid labor law. Make no mistake that the latest initiative of the government without a positive change in labor attitudes will not ensure a conducive business doing environment.
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