The state of Nepali economy

On January 7, a group of unidentified men vandalized an SUV that Rajan Singh Bhandari, the CEO of Citizens Bank International, was traveling on in Kathmandu. 

On March 22, another group of people attacked BK Shrestha, the managing director of Hotel Radisson. 

Although both of these prominent personalities in the Nepali business community did not sustain any major injuries, the attacks reflect the security situation in the country which has become a major concern for businesspersons and investors. 

Successive governments that ruled Nepal over the years have all talking about mobilizing domestic and foreign investment to create jobs, raising people´s living standards and making the country economically prosperous. But they have so far failed to improve the country´s law and order situation, which is a basic minimum to boost investor confidence.

What is even more upsetting is that some of the leading political parties are directly engaged in polluting the business and investment environment.

In late December and early January, the Mohan Baidya-led Communist Party of Nepal -Maoist demanded millions of rupees from the business community as donation to hold its general convention. At around the same time, Unified Communist Party of Nepal (Maoist), a ruling party at that time, launched a similar extortion drive citing it needed close to Rs 50 million to finance its convention. 

When a major party in the ruling coalition -- whose senior member held the prime minister´s post at that time -- engages in such dirty tactics to extort money, what can the business community expect from others? 

The Nepali business community is already knee-deep in problems. 

Take for instance power cuts of up to 18 hours per day that have prevented many industries from operating at full capacity. Then there are the frequent government changes that lead to frequent changes in policies. Add to these the security issue and the private sector starts losing investment appetite.

Little wonder, the contribution of private investment to GDP fell to 15.3 percent in the fiscal year to mid-July 2012 from 18 percent five years ago, when the decade-long insurgency came to an end and Maoist combatants entered mainstream politics.