EMERGING BUSINESS ENVIRONMENT IN NEPAL

For a long period of time, the Nepal Government has accepted the mixed
economic policy where both private & state enterprises are equally involved in
economic activities. However, there were some restrictions on private sectors in
some basic & core industries. The Government used to protect the state
enterprises by providing subsidies & granting monopoly power in production &
distribution in their own sector of business.
After the political revolution in 1990, great changes have been experienced in
political, economic, socio-cultural & technological environment in Nepal. This
event has created new opportunities & threats in economic activities. The
Government has adopted economic liberalization policy & emphasis has been
given to private entrepreneurship. Besides, many public enterprises have been
privatized to minimize the role of government in business activities. After
becoming the member of World Trade Organisation (WTO), economic
environment has been changed in Nepal.

Some challenges of business environment of Nepal

1. Emergence of open market economy: After the restoration of democracy
in 1990, government has adopted a liberal & open market economic policy.
In this policy, economic freedom has been given to private entrepreneurs
by minimizing administrative formalities and scope. Besides, the
government has privatized many public enterprises in production &
distribution.
2. Increasing role of private sectors: The open market economy has increased
the role of private sectors in economic activities. These sectors have started
to play major roles in the economic development of the nation. They invest
not only in general lines of business but also involve in core areas of
economic activities. The government has terminated the monopoly power
of public enterprises in hydropower, telecommunication, water supply,
airlines, tourism, etc.
3. Private investment in infrastructure development: The free market
economic policy of the government has also encouraged private investment
 in infrastructure development of the nation. Private companies including
foreign investors started to invest in infrastructure area of the nation
consisting of hydropower, telecommunication, transportation, water
supply, health, education etc. Such involvement of private entrepreneurs in
infrastructure development helps to boost economic development of the
nation.
4. Emergence of multinational companies: The economic liberalization policy
of the government has opened the door to multinational companies to
perform business activities in Nepal. They involve in commercial, industrial
& also in auxiliary services through joint venture with Nepalese
entrepreneurs. The developed concept of globalization & agreement with
WTO has created great scope of business multinational companies in Nepal.
5. Growth of service sectors: There has been rapid growth of service sectors
in Nepal in recent years. The business is diverted from manufacturing
business to service sector. These service sectors consist of hotel,
restaurant, transportation, telecommunication, newspaper, e-mail and
internet, computer software, e-commerce, education, radio and television,
health, etc. These service sectors have attracted huge investment in recent
years.
6. Development of information technology: The rapid development of
information technology has also affected the Nepalese business. Many
business organizations like banks, finance companies, educational
institutions, hotels & restaurant, telecommunications, airlines,
manufacturing and trading organizations use IT resources. Therefore , at
present information technology has been taken as an important
component of economic activities in Nepal.
7. Emergence of consumerism : The evolution of free market economy has
diverted the concept of seller’s market to consumer’s market. Open market
policy has developed a competitive environment among the manufacturers
and suppliers and has provided selection facility to the consumers. Business
organization have developed different strategies to draw attention of
customers and to satisfy them. Customers can purchase goods and services
on the basis of their needs and requirements. Since liberalization policy has
facilitated free excess of foreign goods and services in Nepalese market,
customers can purchase on the basis of their own choice.