– This article was originally published by Prience Shrestha in the Himalayan Times on the August 18, 2019.
The new tabled Industrial Enterprises Bill 2019, under the act of the same name, is under discussion in the Federal Parliament, which, if passed will be the third amendment to the Industrial Enterprise Act in Nepal. Since the Industrial Enterprise Act was first incepted, it has continuously evolved to facilitate the Industrial landscape of the country.
Institutionalization of a one-window service centre for enterprises, validation of digital technology in fulfilling legal procedures, and introduction of vital arrangements in the Industrial sector amid the national transition to Federalism are few of the noteworthy provisions that have accompanied the revisions of the Industrial Enterprise Act till date. Regardless, there still remain issues in the clauses of the latest revision of the Industrial Enterprise Act that yet contradicts the formation of efficient market scenario that enables progressive enterprising culture. In fact, the issue that is the concern of this article may appear trivial in nature but it maintains strong relevance in enabling beneficial innovation in the Industrial sector of the economy.
The issue draws from the Article 3 of this Industrial Enterprise Bill 2075 that requires an enterprise to be registered by following the registration procedure provided in the bill. However, the issue is not uncovered until we reach the provision whereby the applicants willing to formally register an enterprise requires providing the exact address in where the very enterprise shall be based on. Such provision is witnessed in the Application form (A) provided in the Schedule-2 of the Industrial Enterprise Regulation drawn from the Industrial Enterprise Act for registering all classification of enterprises to be registered at either Department of Industry (DOI) or Department of cottage and Small Industry (DOCSI).
This clause may be subject to discretionary interpretation by the registering authorities as a requirement for enterprises to have a permanent address in order to get registered. And such an understanding on behalf of the regulators blocks or at least hinders the registration of mobile businesses that are often established at the scale of microenterprise or small business with one or couple mobile capacities. Such mobile enterprises without exact location of operation may be providing any kind of business services, and are a form of process innovation amid prevailing market competition to offer more convenience to consumers in retrieving general services. In fact, mobile businesses are currently emerging in both rural and urban settings of the country – mobile grain milling services running on tractors are revolutionizing service delivery for farmers of the rural agricultural plains and mobile household service providers are attempting to do the same in solving modern issues of urban living.
However, businesses relying on such concepts are subject to be denied of gaining legal registration on account of not meeting the criteria for submitting application for registration due to lack of specific business address. Such rigidity in limiting the nature of businesses that can be formally registered may have denied or shall eventually deny myriad of innovative business products or processes not previously thought of. And, it clearly defies the very purpose of enterprising and industrializing to leverage upon continuous innovations and improvements to benefit the society at large. In this particular case, such rigidity in registration criteria even contradicts the national goal to allow economically vulnerable group of people to uplift themselves through entrepreneurship, as mobile businesses that require minimal capital investment are mostly seen to be the business aspiration of entrepreneurs belonging to such groups.
As a resolution, the amendment should begin from the authority of this tabled Industrial enterprise bill to expand the horizon of the nature of business that is welcomed in the formal sector of the economy. As for now, offering an alternative to mandatorily require an exact location where an enterprise shall be based on can pave the path for the regulators of the Industries and Enterprises to welcome innovative breakthroughs in future. Such amendment can at least be made for the purpose of registering small and micro-scale enterprises at the DoCSI as it is believed to have more relevance to smaller-scale enterprises than medium and larger scale ones.
Amending the provision of registration by allowing innovating business ideas to the formal economy can significantly contribute to the economy of the country apart from benefiting the entrepreneurs, consumers and the society at large.