Nepali Times
Strictly Business
Getting business like


According to Doing Business in 2005, a global report put out by the International Finance Corporation (IFC), the cost of starting a business in Nepal involves dealing with seven different procedures that take, on average, 21 days to be completed. Though both measures are lower than the regional average of nine procedures and 46 days, many small firms in Nepal do not even bother with the formality of registration.

That is because (and this is not quite in the report, which obtained its information primarily from Nepali lawyers who seemed to have furnished cautious explanations) apart from their reluctance to face the time-consuming bureaucratic hassles, business owners often have neither the extra cash with which to grease the palms of relevant officers nor the manpower needed to work the system. With this, the government loses revenue, the business owners remain cut off from easily accessible credit lines and other business-oriented formal facilities and an informal economy bulks up, occupying a share of almost 40 percent of Gross National Income, as in Nepal's case.

The IFC report details what different countries around the world have done to make it easy for their citizens to take risks to become entrepreneurs. Last year, the Portuguese Entrepreneurs' Association, for instance, opened 10 business help centres that act as 'single access points': places where representatives of various agencies gather to assist entrepreneurs complete the necessary paperwork. In Nepal there is no reason why the FNCCI and its district branches cannot double up as platforms to be such help centres for starters. After all, it's not only the established businesses that need to patronise FNCCI, all those interested in business should be able to find something of value for a fee at their local FNCCI chapters.

The report talks about putting forms on the www, thereby giving the same standard information to all new businesses. Such a process makes it easier for firms to submit documents online. Of course, the paper option will still be there for those without Internet access. In Vietnam and Moldavia, says the report, this web-based approach more than halved the time required to file business registrations. That is why, as talks related to e-governance once again heat up in Nepal in a run-up to January's CAN Info-Tech, Nepali software firms push the idea of putting relevant forms online to the Office of Company Registrar and other government bureaucracies.

The report also mentions that 43 countries have adopted statutory time limits on registrations. Of these, four have added a 'silence is consent' rule. The idea is that once businesses submit the paperwork, they are automatically considered registered after a few days. This method helps speed up the registration work by shifting power to start business from the hands of bureaucrats to those of entrepreneurs.

True, some Nepali academics given to expressing romantic notions about the supposed attractiveness of firms that make up our informal economy. But the reality is that's where the majority of our working poor toil - under unsafe working conditions without health insurance, pension benefits, procedures to file grievances and rights to form unions. The first step toward addressing their plight is to make it easier for the businesses they work for to be legally registered so that they become a part of the formal economy. Only then can our businesses be serious about growth, which ultimately benefits everyone by increasing employment levels and employees' incomes.

(11 JAN 2013 - 17 JAN 2013)