Sectoral Dimension Of Nepalese Economy-Industry

                                                                 1. Background

Industrialization is taken as one of the most vital indicators of economic growth and prosperity of the nation. Therefore, today's main necessity is to support industrialization by establishing industries based on agriculture and local resources in rural sector and establishing and developing industrial zones in urban areas. The government has promulgated New Industrial Policy, 2009 to develop industrial sector and to provide protection and facilities to the investors. It is expected to foster industrial friendly environment in the country.

2. Objectives

·           To increase national income and employment opportunities by increasing export of industrial product through promotion of qualitative and competitive industrial production and productivity.

·           To attract domestic and foreign investment by creating strong investment foundation through developing necessary productive manpower and managerial capability for industrial development.

·           To increase the contribution of industrial sector in achieving balanced regional development and emphasize in maximizing the use of local resource, raw materials, skill and means.

·           To create productive self-employment by developing entrepreneurship to backward, poor targeted group through micro enterprises

 

3. Issues and challenges

ü  Though there are plenty of industrial development potentialities in the country, the country is unable to tap adequate benefit from this sector

o     Due to lack of appropriate managerial skills and knowledge

o    No proper substantial guarantee of industrial security

o    No appropriate environment created for internal and external investment.

o    Inconvenient environment caused hurdle in industrial development and lack of skilled manpower, no diversification in exportable products

o    No adaptation of new technology, minimum ability to adapt the technology affected to productivity increment,

o    No implementation of industrial friendly labor policy, irregular supply of electricity, mistrust and misunderstanding between business owners and laborers are main hindrances to industrial development.

o    Similarly, scarcity of infrastructure in rural sector, inadequate access of micro entrepreneur to the microfinance institutions,

o    Difficulty of access to micro entrepreneur in forest-based resource, no clarity in legal provisions, unavailability of appropriate technology for qualitative product, weak forward linkages to market, lack of confidence of entrepreneurs, lack of formal recognition of micro entrepreneurs to move forward in an organized way etc. are main problems and challenges of micro enterprise sector.

o    In addition, difficult geographical structure, excessive competitive environment created by globalization and economic liberalization, increasing affordability in existing development of information and communication technology to make industrial products more qualitative and competitive seem great challenge

4. Strategy

o    Focus on physical infrastructure, policies formulation and implementation necessary to small, medium and large industries that have to be operated in nation.

o     Expand micro enterprise at the national level by targeting poor and backward classes, and conflict-affected groups through using credit facilities of microfinance institutions, extending market for agricultural, non-timber forest and other natural resource, and utilizing traditional skills.

o    Make industries competitive and capable for maximizing the contribution of industrial sector in national economy through appropriate means, resources and facilities, production materials, energy, infrastructure and service delivery by ensuring necessary reforms in policies to improve investment environment.

o     Encourage non-resident Nepalese (NRN) to invest in Nepal for the protection, diversification, and promotion of foreign investment

5. Working Policy

v  Industrial Manpower Development Academy under separate legal provision to unify various training centers to produce necessary manpower and capacity improvement to industrial development will be established.

v  Present Industrial Zone Management Limited will be upgraded into national level Industrial Management Authority by a separate law to operate necessary programs for promoting competitive capacity of the industries established in the industrial zones by reforming management of the industrial zones.

v  A separate National Productivity Council will be established by institutional strengthening of the present National Productivity and Economic Development Center to work as research, advisory, training and capacity development work for increasing the productivity.

v  A one point service center in the Industry Department will be established to deliver facilities, concessions, and infrastructure services made available by laws on timely manner without any difficulties. The duty, responsibility and authority of the service center will be managed by law.

v  Improved industrial relation will be considered as strong basis of industrial development for the increment of productivity. A flexible labor policy will be set to establish a harmonious relation between employer and labor along with implementation of worldwide accepted standards in social security for existing working manpower with a view to creating and ensuring additional employment opportunities.

v  To support for extending relation of forward and backward linkages in the production process, managerial alternatives will be adopted in contract manufacturing, contract farming, agro-based industry, franchising and ancillary buy back etc.

v  To support for promoting, developing and extending of the micro enterprises and cottage and small industries necessary legal provisions and institutional framework and infrastructure will be made.

v  Industrial Centers will be developed by establishing community or cooperative, micro-enterprises, cottage and small industrial-villages to provide enterprise development services to the production oriented industries in the rural areas.

v  Micro Enterprise Development Program, which is functioning to support reducing poverty, will be internalized and expanded.

v  Gender balance, inclusion and involvement of the youths of the conflict affected family will be emphasized to implement micro enterprise development throughout the nation within the Plan period by developing capacity of implementing institutions and supporting institutions and strengthening co-ordination between the concerned entities.

v  Micro enterprises for the targeted groups will be upgraded on the basis of the access of appropriate technology and the development of value chain relation.

v  Institutional and functional system will be modernized through learning, research and consultation process to increase the productivity of micro and small industry sector with the active participation of concerned institutions.

v  The Cottage and Small Industry Development Committee will be included within the organizational structure of Micro Enterprise, Cottage and Small Industry Promotion Board to be established for promotion, development, and expansion of micro, cottage and small industry.

v   Capacity building activities will be implemented as a campaign for imparting industrial skill, entrepreneurship, and managerial skill along with creating self-employment and attracting creative youth entrepreneurs in industrial business.

v  The services provided by the Micro Enterprise, Cottage and Small Industry Fund at present will be expanded and made effective.

v   Legal and institutional arrangement will be made to develop, manage and operate special economic zone and infrastructure through government, public private partnership and the private sector alone.

v  The export-oriented industry, industry that is established in special economic zone, industry in priority and the industries that are established in least-developed, under-developed, and less-developed areas will be given additional facilities and concessions as an incentive.

v  Technical and financial assistance will be provided to those industries which uses environment friendly technology in their own efforts and save energy.

v   While formulating and refining the macroeconomic policy, revenue policy, local tax and other sectoral policy, system will be adopted that do not go against current industrial policy. And while providing protection, facilities and concessions to the industries, adjustments will be made with the provisions of multilateral and regional agreements will be taken into consideration.

v  To strengthen industrial security system, industrial security force will be formed and mobilized in an effective way.

v  Necessary arrangements will be made to solve the problems related to the sick industries and to identify, revitalize and reconstruct the sick industries by arranging necessary provisions in the laws.

v   With the involvement of the private and cooperative sector, Investment Promotion Fund, Technology Development Fund, Micro-enterprise Development Fund, Sick Industry Revitalization Fund, and Industrial Investment Protection Fund (for providing compensation to nonbusiness/non-commercial risks) will be established and operated.

v  The industries, which will uses local resources, raw materials, skills, labors and technologies will be encouraged to establish and operate.

v  Necessary institutional mechanism will be made and activated to create an investment friendly environment by making harmonious relation between the private and the public sector.

v  Non-residence Nepalese will be encouraged to invest in Nepal to protect, diversify and promote foreign investment.

v  Industrial Investment Promotion Unit will be established as per requirement in the Nepali Embassies or Missions abroad that contributes more direct foreign investment.

v  No discrimination will be made between domestic and foreign investments except in the social protection for the people living below the poverty line and backward areas and group, and positive discrimination adopted for supplying necessary goods and services.

v  Policy will be adopted that will not cut the facilities and concessions ensured by the prevailing system related to the Non-resident Nepalese. And Non-resident Nepalese and Nepalese-origin foreigners who have invested in Nepal will be treated as foreign investment and facilities will be provided accordingly.