English - Support to Participatory Constitution Building in Nepal ...
English - Support to Participatory Constitution Building in Nepal ...
English - Support to Participatory Constitution Building in Nepal ...
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Private sec<strong>to</strong>r <strong>in</strong> post-conflict state build<strong>in</strong>g4. Government-private sec<strong>to</strong>r relationshipAlthough governments after the 1990 movement gradually promoted theprivate sec<strong>to</strong>r, their policies were not clearly or consistently re<strong>in</strong>forcedby subsequent ones. Little was done <strong>to</strong> address fundamental issues, likeloss-mak<strong>in</strong>g public enterprises and a highly bureaucratic adm<strong>in</strong>istration.The lack of clear signals <strong>to</strong> the private sec<strong>to</strong>r about the extent and natureof policy reforms, as well as the <strong>in</strong>consistency of these policies, resulted<strong>in</strong> an uncerta<strong>in</strong> f<strong>in</strong>ancial environment. In the meantime, practices like ahigh level of non-perform<strong>in</strong>g loans, excessive government <strong>in</strong>volvement<strong>in</strong> the bank<strong>in</strong>g sec<strong>to</strong>r, weak corporate governance and organisationalculture and unwanted political <strong>in</strong>terventions, <strong>to</strong> name a few, cont<strong>in</strong>ueeven <strong>to</strong>day. There is an urgent need <strong>to</strong> undertake important measures<strong>to</strong> strengthen the f<strong>in</strong>ancial system. After all, a competitive, efficient andhealthy f<strong>in</strong>ancial system is vital for enhanc<strong>in</strong>g growth, efficiency andma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g the stability of the economy.The governments’ cont<strong>in</strong>ued failure <strong>to</strong> provide adequate support andprotection, even <strong>in</strong> the post-conflict situation, has been a major constra<strong>in</strong>tfor a more active <strong>in</strong>volvement of the bus<strong>in</strong>ess community <strong>in</strong> development,so claim the private sec<strong>to</strong>r ac<strong>to</strong>rs. As a result, private <strong>in</strong>ves<strong>to</strong>rs’ confidence<strong>in</strong> the stability of government policies and the capacity of the government<strong>to</strong> provide support and protection is very low. Such low confidence onthe government has, it is believed, discouraged new <strong>in</strong>vestment andencouraged capital flight.The fact that last two governments <strong>in</strong> <strong>Nepal</strong> have been both led by the twobiggest communist parties has not been, it appears, a particular problemfor the private sec<strong>to</strong>r so far. The primary reason beh<strong>in</strong>d this is that bothof these governments have more or less adopted a similar and positiveapproach <strong>to</strong>wards the private sec<strong>to</strong>r like the previous governments. Theyhave clearly stated time and aga<strong>in</strong> that private enterprises are economicnecessity <strong>to</strong> br<strong>in</strong>g about the economic transformation the countryneeds and are essential for development. However, the parties havelooked ambiguous and uncerta<strong>in</strong> at times. Certa<strong>in</strong> youth w<strong>in</strong>gs and tradeunions appear <strong>to</strong> be driven by an anti-corporate ideology, and the partyleadership appears <strong>to</strong> have lost control of their actions. This has led <strong>to</strong>deterioration <strong>in</strong> labour relations, which <strong>in</strong> turn have <strong>in</strong>tensified problemsof low motivation and poor discipl<strong>in</strong>e among employees. Such fac<strong>to</strong>rshave not only lowered the morale of the domestic private sec<strong>to</strong>r ac<strong>to</strong>rs,but have also withered away foreign direct <strong>in</strong>vestment (FDI) from <strong>Nepal</strong><strong>in</strong> the recent years.52