Reducing Regulatory Barriers

On the 4th and the 5th of November, 2018, Samriddhi Foundation hosted a Consultation Meeting at Hotel Himalaya, Kupondole on reducing regulatory barriers in Federal Nepal. The dialogue focused on alternatives for policy reform on three major indicators:

1. Starting a Business

•Currently one of the major problems in business registration is bureaucratic hurdles. Even within the same government office, an entrepreneur has to move from one desk to another just to get signatures from different government officials. In order to solve this problem, provision of submitting the required documents at a single desk should be made. The process of verifying the documents and getting them stamped and signed should be responsibility of the concerned government office.
•Centralized regulation is also one of the key reasons which has led to increase in cost of starting a business. The government agency responsible for company incorporation i.e. Office of the Company Registrar is located in Kathmandu. Therefore, people from outside of the Kathmandu have to travel all the way to Kathmandu just for incorporation of the Company. This has resulted into wastage of a lot of time and money of the entrepreneurs.

•Companies Act has already specified how a company should be managed and regulated. Therefore, it is not necessary for businesses to prepare Memorandum and Articles of Association. Therefore, the provision of having to prepare these documents could be fully eliminated or at least these documents could be substituted by a single document which is easy to prepare without professional help.
•For company incorporation, an entrepreneur initially has to file application online and again he/she has to submit the physical copies of the documents as well. This has led to duplication of the work consuming more amount of time of the entrepreneur.
•Full implementation of electronic registration could save a lot of time and money to the entrepreneurs, specifically benefitting the ones who are far away from the capital city. Currently, even though infrastructure for use of digital signature has been built in the government agencies responsible for registration of businesses, it has not come into use. The major reason behind this is the lack of technical human resource who can administer the use of digital signature.

2. Trading across Borders

•Time, process and cost required for cross border trade depends upon the product being traded and the corridor from which goods are traded. There is no uniformity.
•The Government has introduced the provision of Electronic Tracking System for Nepal bound cargoes from Vishakhapatnam port. It is believed that the use of Electronic Tracking System will significantly reduce time and cost for Nepalese importers. This system should be replicated for the imports made through other ports as well.
•Regarding documents required for cross border trade, there are several documents which are demanded by the transit providing country i.e. India. This has resulted into increase in time and cost required for documentary compliance. Matters like these could only be solved through bilateral agreements on easing trading procedure with India.
•Manual inspection of containers is one of the reasons which has caused delay in custom procedure. Automation of inspections at border custom by making effective use of scanners could expedite the custom procedure.
•Improvement of Raxual- Birgunj dry port is of high priority to Nepal. But, this comes under no priority of India. As Indian side shows no interest, we are not able to improve the condition of this dry port.

3. Contract Enforcement and Resolving Insolvency

•The lack of a specialized commercial court is the major drawback in both ‘Contract Enforcement and Resolving Insolvency’. Efforts need to be focused on establishing a commercial court with efficient human resources. The judge appointed at the existent commercial bench are transferred frequently prohibiting them to build sectoral expertise. Therefore, there must be a time ceiling for the judges to hold the position at the court.
•Likewise, the judges and the lawyers need appropriate skill sets to tackle the cases. Not just the lawyers, but also the judges need to be competent in the commercial law practices. The judges hearing the commercial matters should have a sound understanding of the markets and the businesses in practice. Thus, there must be ongoing judicial trainings in commercial law to conduct efficacious trials from part of both lawyers and judges.
•The Unified Directive issued by the Nepal Rastra Bank that governs the Blacklisting policy needs to be revised providing them with the option of a ‘clean slate’. Therefore, certain criterions need to be established so that the parties who have been blacklisted can de-list themselves from the same.
•The backlog in the judiciary system results in the delay of proceeding and increases not only the direct costs (court fees and attorney fees) but also surges the transaction costs (time spent in court, cost of preparation, bribes). Thus, the dispute resolution mechanism needs to be streamlined. Also, Arbitration needs to be improved in terms of cost efficiency, effectiveness and expertise to fasten the judicial proceedings.
•The Court Management System needs to be integrated to better the existing services at all levels of the court. Even though the presence of the web portal and the mobile application in the Supreme Court have added to the ease and accessibility of data, these services haven’t been passed down to the lower tiers of the judiciary.