June 12: Slowing down of economic activities seems to have taken the toll on private sector investment. Data related to the registration of new companies, which showed continuous rise in the last two years, now show a significant decline in the current fiscal year, indicating that the morale of entrepreneurs and investors has deteriorated.

By mid-March of the current FY, the number of company registration decreased by 30 percent compared to the same period of last year. Entrepreneurs say that even though they have made new plans, they are in the wait and watch stance to invest. A total of 15,187 new companies were registered till mid-March of the current FY in the Office of the Company Registrar, against 21,902 registrations in the last FY.

According to the Economic Survey 2079/80, registration of new companies, which had been increasing since the FY 2070/71, decreased in the FY 2076/77. It again picked up pace in the following two years and declined again in the current FY.

The Company Registrar's Office staff said that their workload has decreased this year. Mahesh Baral, registrar of the Company Registrar's Office said that there has been a decrease in company registrations this year. “The crowd in the office has decreased. When the registration is low, the subsequent work also automatically decreases. Perhaps due to the current economic situation, there is no enthusiasm for registering new companies,” he said.

The data released by the National Statistics Office in early May also showed that the growth rate of five sectors of the economy (mining and quarrying, industry, construction, trade, transport and warehousing) was negative.

Another employee of the Company Registrar's Office said, “In addition to registration, updating work has also decreased, while the works related to share price have reduced by 90 percent.”

A certain amount is offered when registering a company which must be deposited in the bank when buying the shares. The employee assumed that the businessmen did not have any money and did not come to the office for the works related to share price.

Majority of investors have stopped registering new companies as well as expanding their investment portfolio. An entrepreneur said, “It is not possible for businessmen to register new company and expand investment in more areas with a solo effort. Some businessmen can do it, but the majority of them operate by taking loans up to 70 percent from the bank.” He added that investors are not interested in new companies and new investments.

They say that the banks don’t give them loans. “Even if they do so, the interest rate is in double digits. We are unable to sell goods in the market. All these factors have compelled us to focus on sustaining our business rather than establishing a new one.”

According to the Company Registrar's Office, altogether 307,735 companies have been registered as private and public companies so far.