I believe that you missed (#10) a very significant "investment unfriendly" Nepal government action: Tax Deduction at Source (TDS). In most countries taxes are paid on profits with very lenient allowances for expenses. But because of corruption among politicians, and the underlying distrust of the government, even normally law-abiding Nepalis tend to hide taxable income and avoid paying taxes.

TDS was an answer to this, but since income is reduced so is business liquidity, and thus, entrepreneurial ability to take risks is likewise reduced. The Ministry of Finance is extremely slow at refunding overpayment of taxes, if such a process even exists. Recent inquiries at the ministry indicates that the hole process of recording and tracking TDS payments is fundamentally flawed.

RC
Kathmandu



I agree that Nepal's policies are unfriendly to investors (#10). Nepal must travel extra miles to attract Foreign Direct Invest-ment (FDI) to rejuvenate its moribund economy. We must stop reciting the liberalisation hymns and get down to serious task of correcting our labour laws, and provide attractive incentives to potential inves-tors. Enron and the privatisation of BPC should be eye-openers. India's honesty and sincerity also counts a lot for Nepal's industrialisation. Kodak is an example of how New Delhi should not work. The sooner our hakims in Singha Durbar move to correct these ills the better it will be for falling FDI flows into Nepal.

Gaurav Sharma
Kathmandu