Labour unrest pushing investors to real estate business

Vice-chairman of the National Planning Commission Yubaraj Khatiwada said on Sunday that entrepreneurs were running away from labour intensive industries to the real estate sector due to a bad business environment. "Real estate is not a real asset, but it has become a financial asset and liquid," he said, during the validation meeting for the creation of Nepal Business Forum (NBF), a public-private partnership mechanism.

Saying that the upcoming interim plan would focus on productive employment, the growing investment in unproductive sectors instead of productive and labour-intensive ones was a major concern of the government. He admitted that labour-related problems were one of the major bottlenecks to attracting investment in labour-intensive industries.

Representatives from the business community hailed the government's efforts to make a mechanism of the public and private sectors to address problems of the private sector, but they remained sceptical if such a mechanism would also ensure a good investment climate.

Vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pradeep Jung Pandey categorically termed labour problems, poor infrastructure and strikes as major bottlenecks for bettering the investment climate in Nepal. Narendra Kumar Basnet, senior vice president of the Confederation of Nepalese Industries, also stressed the need for joint efforts on the part of both the government and the private sector to increase investment in the country.

During the meeting, Pratap Kumar Pathak, secretary of the Ministry of Industry, presented the concept paper of the NBF as per which it would be headed by the prime minister and represented by ministers, secretaries, the private sector and civil society. However, some participants questioned the effectiveness of the NBF under the leadership of the prime minister considering the ineffectiveness of many mechanisms headed by him. Donors including the World Bank's International Finance Corporation (IFC), the United Kingdom's Department for International Development and the Norwegian aid agency have pledged support for this initiative.

Irina Neiderberger, investment climate programme manager at IFC, said that if all the factors that contribute to a sound investment climate were good, Nepal would have been the centre of attraction for foreign and domestic investors. "Although Nepal has a very good record in registration of new industries, other factors are not so good," she added.
Source:eKantipur