April 27: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), an umbrella organization of the private sector, has suggested the government to make arrangements to provide loans to manufacturing industries at 2 percent interest rate. 

As the budget announcement for the upcoming fiscal year (FY 2022/23) is approaching, the federation has suggested the government to adopt export-oriented policy and to end undeclared power curs faced by the industrial sector.

The federation put forward those suggestions during a pre-budget discussion organized on Tuesday. On the occasion, FNCCI vice president Dinesh Shrestha said that concrete reforms were needed in the revenue system. He said that 80 percent of the taxpayers at present have paid only 20 percent of the total tax. According to Shrestha, the government should create a favorable environment for paying taxes and this would prevent tax evasion. "There has never been a study on how much taxes should be raised," he said, "It is necessary now." 

On the occasion, FNCCI Tax and Revenue Committee Chairman Sandeep Kumar Agrawal presented the paper on behalf of the FNCCI. He stressed on the need to come up with short, mid and long term plans to increase capital and for import substitution. He claimed that the prices of commodities have gone up worldwide and the rate of imports will continue to go up. 

"We have estimated that the remittance inflow will be Rs 1 trillion this year," he said, "Apart from this, 30 to 40 percent of the remittances are still coming through informal channels, and an attractive policy is needed to bring it through the formal channels." 

The federation has suggested revising the Nepal Integrated Trade Strategy (NTIS) for export promotion. Stating that the current arrangement of export refinancing is impractical, the federation asked to maintain the term of such loan for at least 3 years. 

The private sector has demanded cash incentives for shoe and sole manufacturers. 

Stating that the exporters have to go to the central bank and other banks to get the cash subsidy for export, Agrawal demanded the money to be transferred to their account as soon as the export is done. 

According to the federation, there are many problems such as environmental impact assessment for the establishment of industries. While declaring industrial villages, the FNCCI has suggested the government to take into consideration the situation after decades. 

Furthermore, the federation has also demanded to bring a policy of giving tariff exemption to those who consume more energy. The suggestion has also laid emphasis on providing cheap electricity to the export-oriented industries. In addition, it has been mentioned that skilled manpower has to be imported from outside while the manpower produced by the Council for Technical Education and Vocational Training (CTEVT) have not been linked with the entrepreneurs.