Private sector development policy in the offing

The government is mulling over introducing a Private Sector Development Policy (PSDP) in a bid to foster and deepen the capacity of the private sector after more than two decades of adopting open market economy.
"We have started consultation meetings with umbrella organizations of the private sector such as Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Nepalese Industries (CNI) to prepare a draft of the policy," Anil Kumar Thakur, joint secretary at the industry ministry, told Republica.
The government´s preparation to formulate the policy stems from the realization of the importance of the private sector in strengthening the industrial sector and ultimately achieving sustainable economic growth. "The initiative has been taken based on a concept note that the World Bank prepared for us in 2010 for private sector development in the country," Thakur added.
Under the new policy, the government plans to formally recognize the importance of the private sector, give emphasis and pledge support for the capacity development of the private sector. It will also cite responsibility and accountability of the private sector apart from incorporating aspects in which the government and private sector can work together for country´s development.
"Presently, we have asked both FNCCI and CNI to submit their ideas and action plans so that they could be referred as bases for drafting the new policy," Thakur said.
Referring to the slowdown of the industrial sector and its contribution in the gross domestic product (GDP), Thakur said that the government is working to identify the ways for reviving the industrial sector.
According to the statistics compiled by the Ministry of Finance (MoF), the contribution of industrial sector was limited to just 6.2 percent in the fiscal year 2011/12. The contribution of industrial sector in the GDP is constantly decreasing from fiscal year 2001/02.
"Fresh investment is declining from domestic as well foreign investors," Thakur said. "We are hopeful that the new policy we are working on will give new direction to private sector growth and strengthen their capacity to contribute more to the national economy.”
According to Thakur, the policy will incorporate provisions to protect private sector and also pledge necessary incentives in order to make it more vibrant. However, it has yet to be clear what sort of incentives will be incorporated in the policy. "The incentives will be worked out once we receive proposals from the private sector," said Thakur.
The Ministry of Industry has received assistance from International Finance Corporation (IFC) - a private sector lending arm of the World Bank - to prepare the draft.