“Nepalese Business Situation in Ethical Context”

Business ethics refer to the moral, rules and belief that businessman follow while conducting
business through the help of stakeholders. Business ethics are moral principles that guide the way
a business behaves. Acting in an ethical way involves distinguishing between "right" and "less
right" and then making the "right" choice. Business ethics provide competitive advantage to the
business firms. It is a good business investment that generates trust and confidence between the
parties. A general perception persists that a business has to be conducted unethically to be
successful, i.e. by evading taxes and fooling customers. It is a short cut to making instant money,
this mass misperception about business is doing more harm to the society than to businesses
themselves. Nepalese business firms have not completely adopt ethical business practices. Most
of the business organization are of small scale in Nepal and they lack awareness and understanding
of business ethics. These organizations are slowly marching towards adoption of business ethics.

Ethics and governance have become topics of concern throughout the world both in the corporate
and academic sectors. But the issue of business ethics gained importance after liberalization and
globalization which shifted the private sector to the center of developmental strategies even in
socialist and communist countries. With liberalization and globalization came a wave of
democratization associated with universal election and the power of money to decide the outcome.
The vicious circle that it has created among the electorate, politics and businesses has aroused
increased concern about its ethicality all around the world including Nepal. Previously business
ethics was in the domain of corporate governance only. The ethical issues were limited. But in
recent years the scope of ethical practices has broadened and has become universal and diverse.
The customers choose products and services based on their perceptions of the ethical / unethical
practices a company follows. It is no longer just based on the evading of taxes and / or fooling of
customers in terms of poor quality- it also depends on any infringement of the rights of any of the
stakeholders.

Business ethics should be based on culture of particular country. Ethical perception are normally
situational and vary with culture. For example: If we are operating our business in Hindu country
then our ethics should comply with the culture of that country. Malpractice, corruption, bribing in
the public domain as seen lately in Nepal has also raised suspicion about business ethics as there
is a general belief that these can happen only in collusion with the private sector. The recent
election including that of parliament and provinces would have cost the exchequer approximately
Rs 50 billion and an equal amount would have been spent by the candidates and the parties also.
This enormous spending disproportionate to our income definitely impacts the ethical workings of
any institution including businesses not only in Nepal but everywhere in the world. Businesses
have to be resilient to survive. Hence their response is dictated by circumstances. Internal change
is more convenient than trying to resist external factors. In this struggle, businesses are forced to
succumb to unethical practices.

Nepal’s private sector business too is no less in disrepute. The private sector business is often
accused of smuggling, black-marketing, and adulteration, selling fake products, collusion, cartel
ling and outright bribery. We have now health, education and transport mafias. Our finance and
cooperative sector is riddled with thugs and swindlers.

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the Birjung Chamber
of Commerce and Industry (BCCI), Hotel Association Nepal (HAN), Nepal Gas Dealers’
Association (NGDA), and Nepal Association of Foreign Employment Agencies (NAFEA) are
some of the leading business associations that have endorsed the Code of conduct (COC). A
recently conducted survey of Kathmandu-based companies entitled ‘Ethical Business Practice in
Nepal’ by National Business Initiative has found only 7 per cent of the companies following
business ethics, while 41 per cent of the sample were found weak in this. Likewise, 52 per cent of
the sample was found to have attempted to implement the COC and partially following it.

Last year, we saw how FNCCI – an apex body of the private sector business – dragged into
controversy when a more than three decades old corruption case related to its president got
reopened. Similarly, media got rocked when the police nabbed the fugitive directors of the Unity
Life Insurance who swindled, from 400,000 members, billions of rupees through their Ponzi-like
scheme. The Nepali media is constantly rocked by corporate scandals, sleaze and system failures.
In the past, we have seen how a booming private sector carpet industry collapsed after being
charged with unethical practices like the use of child labour, infringement of labour rights and
environmental concerns. Nepal’s private sector business is constantly facing ethical dilemmas.
One way to deal with business ethical dilemmas is to prepare future managers through proper
education and training.
National Business Initiative (NBI) seeks to strengthen the role and capacity of the Nepalese Private
sector to contribute in sustainable peace in Nepal. One of the main focus areas of NBI involves
promoting responsible business practices integrating social, environmental and economic concerns
through good stakeholder relations, Corporate Social Responsibility and Code of Conducts. The
Inclusive Development of the Economy (INCLUDE) program and NBI are partnering in the joint
objective to promote CSR in Nepal for more than 3 years now. As a milestone in the partnership
between INCLUDE and NBI, a national Code of Conduct on ethical business practices has been
officially launched in 2013, which was widely appreciated by both the private and the public
sector. Currently, in order to promote ethical business practices, the national level Code of Conduct
is being adapted to the specific needs of 3 business sectors; dairy, construction and leather footwear
and goods. DIA (Dairy Industry Association), FCAN (Federation of Contractors’ Association of
Nepal) and LFGMAN (Leather Footwear and Goods Manufacturers’ Association Nepal) have
already expressed their commitment to implement code of conduct through MOU with NBI.

Some examples of ethical companies of Nepal are as Nepal Telecom, Ncell, Chaudhary Groups ,
NMB Bank, Standard Chartered Bank Nepal, Everest Bank, CE Constructions, Surya Nepal, Asian
Paints, Bhat-Bhateni Super Market, Bottlers Nepal, Muktishree Group, Panchakanya Group these
businesses in Nepal have integrated CSR and share their profit with the society and getting engaged
in multiple areas of social well-being.

Business ethics is important for the survival and growth of businesses as only then will they attract
young entrepreneurs. Today’s youth do not want to be encumbered with the shackles of unethical
practices and its consequences. They love transparency. In order to encourage transparency and
ethical conduct, a multi-pronged approach will have to be taken. On the one hand the business
schools will have to incorporate business ethics in their curriculum, on the other hand the political
system will have to be cleaned of unethical practices. Non-discretionary laws, fair codes of
conduct, alert judiciary, watchful media and civil society will go a long way to check unethical
practices in public services.

At the corporate level, the Board of Directors must be aware of the necessity of taking corrective
measures to create a business environment which is compatible with a country’s legal frame work
under which the managers can work more transparently and the stakeholders get correct
information. To ensure effectiveness, the quality of the members of the board, their role and
disclosure checklists are being made mandatory. However at the end, it is on the shareholders who
have to be alert to check and prevent any unethical practices in their enterprises. The board and
management should always be segregated so that the code of ethics can be effectively
implemented. All business decisions include ethical dimensions. Businesses have to recognize that
it is in their own interest to sustain the businesses through profits which must be made compatible
with a sense of responsibility towards individuals as well as society.

Nepalese business are slowly understanding the importance of business ethics and contributing
towards the development of society. If proper rules and regulation are enacted and strictly
implemented development of Nepal will pace up. Various measures like Formulating code of
conduct in running the business and strictly following it, Ethical reporting and auditing
mechanism, controlling corruption in business firm, strictly implementing consumer protection
laws, Generating awareness in customers will help in increasing ethical practices in context of
Nepal.