Investment Summit – Foreign Policy FDI

Investment Summit – Foreign Policy FDI

CESIF Nepal Blog / Article, Good Governance, Thematic Areas Leave a Comment

The government appears to be investing a lot of energy and focus on the upcoming investment summit to be held in late March. However, the policies and practices adopted by the government in recent months have been giving the wrong messages, raising further questions about the investment climate in Nepal.

The first question is about government efficiency and corruption. While the Prime Minister is intent on delivering development and good governance, the government’s performance so far has not been positive. Too many instances of corruption, mismanagement, and violation of fiscal discipline have led to systemic failures. The donors are also raising more questions about corruption and the government’s efforts to restrict the space for the civil society,

The second question is about government policies and rule of law. The government’s economic policies and practices have generated a number of negative indicators, raising questions about the relationship between the state and the free market. In trying to regulate the market too much, the government has been unable to sustain the trust of the business community and the investors. Given its communist legacy, and infatuation with Chinese model of governance and economic policies, the government appears to be adopting tighter regulations. While the governments intentions may be good—it is under pressure to deliver development and prosperity—its operational style and policies are generating more and more distrust.

As the government seeks to improve the government’s image tarnished by allegations of inefficiency and corruption. PM K P Oli is seeking to reshuffle the cabinet to gain trust of donors who have so far shown lukewarm response to the summit. Unless the government shows sincere efforts to earn the trust of the private sector and the civil society, the growing distrust will spill over to the international community. The best strategy, therefore, is for the government to convince the domestic investors and the civil society about its democratic credentials, especially regarding due process, rule of law, and freedom of expression, and relations with the market.

Author: Ajaya Bhadra Khanala

Photo: Prabhat Jha

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