Doing Business in Nepal : Not a rosy picture

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Doing Business in Nepal : Not a rosy picture

Starting a Business: Starting a business in Nepal has now become more time consuming and costlier than what it was a decade ago. In the Starting a Business sub-index, the country ranked 107 among 190 countries in 2019, whereas the country was in 87 spot among 183 countries in 2010. In 2014, Nepal ranked at 97 in Starting a Business. The position in 2019, however, is an improvement over 2017 and 2018 editions of EODB index, when Nepal ranked 109 in both iterations of the index. Over the last one year, the government has worked to ease the problems related to documentation in setting up business by introducing online registration of firms.

Dealing with Construction Permits: In EODB 2019, Nepal ranked 147 in this sub-index, an improvement of nine spots from 158 in 2018. However, the issues related to construction permits have not eased compared to five years ago when the country ranked 105 in the Ease of Doing Business 2014.

Getting Electricity: Nepal ranked 137 in this sub-index in 2019 Report which is a decline of four spots from 133 in 2018. This indicates businesses still face difficulties in getting connected to the power supply line and receiving necessary services from the Nepal Electricity Authority (NEA). Getting electricity used to be much easier for businesses five years ago as Nepal had ranked 98 in this sub-index of Ease of Doing Business in 2014.

Registering Property: Nepal slipped four spots in this sub-index from 84 in 2018 to 88 in 2019. In 2010, the country ranked 26 in this sub-index. Despite this decline, the country’s score of 64.86 is above the South Asia regional average of 46.91. Nepal has fared better than India in registration of property as the South Asian economic giant ranked 166 in the sub-index.

Getting Credit: Nepal slipped nine spots in Getting Credit to 99 in 2019 from 90 in 2018. Despite the fall, the country’s score of 50 in this sub-index is above the South Asian regional average of 47.50. The rank of Nepal in getting credit is also an improvement over its rank of 113 in 2010. The country’s best performance in Getting Credit was in 2014 when it was 55 in the sub-index. Protecting Minority Investors: Nepal’s slip of 10 notches in this sub-index to 72 in 2019 from 62 in 2018 indicates problems in maintaining good corporate governance in business firms in the country. Though Nepal’s rank is above Bhutan (ranked 125), the country’s score of 58.33 in this sub-index is below the South Asian average of 61.67.

Paying Taxes: Nepal ranked 158 in Paying Taxes which was the country’s lowest rank among the 10 indicators in the index. The country’s decline of 12 spots in this sub-index from 146 in 2018 indicates taxation has become more difficult in Nepal and the government needs to resolve this issue. Nepal’s score of 52.87 in this sub-index is well below the South Asian average. Nepal’s best performance in Paying Taxes was in 2014 when the country ranked 124, whereas in 2010, the country was in 126 spot.

Enforcing Contracts: The 154 rank of Nepal in Enforcing Contracts among 190 countries shows the country is yet to make significant improvements in reducing the time and costs involved in resolving commercial disputes as well as in the quality of its judicial process.  The fact that Nepal’s position in Enforcing Contracts has declined over the last decade is a reminder of the deterioration in the legal process and court procedures for businesses in the country over the past one decade. Interestingly, Nepal has fared better in Enforcing Contracts compared to India and Sri Lanka. Also, Nepal’s score of 45.62 is above the South Asian regional average of 43.44.  In 2018, Nepal ranked 153 in this sub-index, which was 139 in 2014 and 122 in 2010.

Resolving Insolvency: Nepal’s impressive performance in reducing time and cost of insolvency proceedings to achieve better outcomes involving domestic legal entities has reflected in its rank of 83 in the Resolving Insolvency sub-index. Though it is a decline of seven spots from 76 in 2018, Nepal has made significant strides in addressing insolvency related issues compared to 2014 when the country was ranked 125. 

Trading Across Border: Nepal is also well positioned in Trading Across Border as the country ranked 82 in the sub-index. Though it is a six spot decline from 76 in 2018, Nepal’s score of 77.17 in 2019, which is above the South Asian Regional average of 62.75. It shows the country’s attempts to reduce time and cost associated with logistical processes for export and import of good has produced effective results. In 2014, Nepal was ranked 177. 

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