The stakeholders on Monday, November 18, stressed the importance of innovation in small enterprises and startups to tackle challenges after Nepal gains the developing country status in two years.
Nepal is set to graduate from the least developed country (LDC) category in November 2026.
The speakers made the remarks during the FNCCI Innovation Dialogue in Kathmandu. Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the country’s top private sector body, had organised the event in collaboration with iHub Kathmandu with the theme “Preparing Businesses for LDC Graduation through Innovation".
FNCCI President Chandra Prasad Dhakal said the government and private sector need to collaborate to minimise the impact on micro, small and medium-sized enterprises (MSMEs) after the graduation.
Read: Impending LDC Graduation Poses Threats to Nepal's Pharmaceutical Industry: Study
Growing international challenges will make things worse for MSMEs, which have been struggling amid reduction in domestic demand. Investment in innovation is must to scale up their competitiveness, according to Dhakal.
“Since Nepal will lose certain trade benefits after the transition, it is crucial to identify areas of innovation and comparative advantage to remain competitive,” said Dhakal.
With the graduation, Nepal will lose preferential trade benefits such as duty-free exports to the European Union and other developed nations.
Nepal has already met the criteria for the promotion in terms of Human Assets Index and Economic Vulnerability Index in 2015 and 2018.
Speaking at the event, Madhu Kumar Marasini, Secretary at the National Planning Commission, stated that as Nepal is set to advance into the developing country category, preparations should be made to avoid future setbacks. The private sector needs to take the initiative to face the upcoming challenges, he added.
Read: Comprehensive Strategy Needed to Mitigate Post-LDC Graduation Challenges: Study
Currently, 46 countries, including Nepal, are listed in the LDC category. Besides Nepal, other South Asian countries in the list are Bangladesh, Bhutan, and Afghanistan.
Earlier in 2020, the World Bank had upgraded Nepal from a low-income to a lower-middle-income country.
Krishna Bahadur Raut, Secretary of the Ministry of Industry, Commerce, and Supplies, assured policies would be reformed to support innovation. “Efforts are underway to amend old laws to make them more business-friendly,” he said.
Read: 'Nepal will Face Challenges in Adjusting to LDC Graduation'
Similarly, industrialists and entrepreneurs emphasised the need to simplify the tax system in order to make it more business-friendly and transparent. They also stressed the need to introduce reforms that would allow for a more streamlined process for business renewal.
Establishment of SME Development Center at FNCCI
During Monday’s event, Marasini, Raut and Dhakal jointly launched the SME (Small and Medium-sized Enterprise) Development Centre at FNCCI. Beside providing the necessary skills, technology, and training for business operations, the centre will also assist entrepreneurs with market and financial management, and business strategies.
The centre is expected to help implement modern production techniques and assist in accessing domestic and international markets for SMEs by facilitating their participation in trade fairs, exhibitions, and other business promotion activities.
“It will also help entrepreneurs with business registration, licensing, tax-related information, and compliance with government regulations,” he added. “The centre will help identify new business opportunities, encourage innovation and research, and foster networking and collaboration among SMEs.”
