Recent Trends & Emerging Business Environment in Nepal
For a long period of time, the Nepal Government has accepted the mixed economic policy where both
private and state enterprises have equally participated in economic activities. However, there were some
restrictions on private sectors in some basic and core industries. The Government has to protect the state
enterprises by providing subsidies and granting monopoly power in production and distribution in their own
sector of business.
After the restoration of democracy in 1990, great changes have been experienced in the political,
economic, socio-cultural and technological environment in Nepal. This event has created new opportunities
and threats in economic activities. The government has adopted economic liberalization policy and
emphasis has been given to private entrepreneurship. Besides, many public enterprises were privatized to
minimize the role of the government in business activities. Nepal has become a member of the World
Trade Organization (WTO) which has totally changed the business environment. The following are the
recent trend and emerging business environments in Nepal:
1. Emergence of Open Market Economy: After the restoration of democracy in 1990, the government has
adopted a liberal and open market economic policy. In this policy, economic freedom has been given to
private entrepreneurs by minimizing administrative barriers in licensing, registration, incorporation etc.
Private enterprises and entrepreneurs have got the freedom to choose the line of business on the basis of
their interests. Besides, the government has privatized many public enterprises and also withdrawn the
monopoly power of public enterprises in production and distribution.
2. Increasing Role of Private Sectors: The open market economy has increased the role of private sectors in
economic activities. They have started to play major roles in the economic development of the nation. They
invest not only in general lines of business but also in core areas of economic activities. The Government
eliminated the monopoly power of public enterprises in hydropower, telecommunication, water supply,
airlines etc.
3. Private Investment in Infrastructure Development: The free-market economic policy of the government
has also encouraged private investment in the infrastructure development of the nation. Private companies
including foreign investors started to invest in the 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 the 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 have participated
in commercial, industrial and also in auxiliary services through a joint venture with Nepalese entrepreneurs.
Generally, they invest in banking, finance, insurance, soft drink, cold drink, hotel industries, education,
telecommunication, hydropower etc. The developed concept of globalization and entering to WTO has
created a great scope of business for multinational companies in Nepal.
