Doing Business In Nepal: Ins and Outs of Opening a Private School in Nepal

Education Rules, 2002, and amendments following it necessitate presenting seventeen different documents to establish and run a private school in Nepal.  The process to prepare all these documents involves reaching out to a number of government offices to get approvals. This article intends to talk of the time and cost factor associated with it, at length. To view snapshot of registration process, click here!

Firstly, a school needs to be registered as a company and acquire a certificate that proves successful registration of a company which takes around 3 days and requires a registration fee in accordance to capital invested. But similar to other legal procedures in place in Nepal, common men fail to comprehend the technicalities, and turn to a law professional.  One usually hires an external lawyer which could take up to 5 days for a charge of Rs.5000-10000 as lawyer consultant fee. After obtaining registration certificate from the Office of Company Registrar, Personal Account Number (PAN) registration is required which adds up one more day.  Next is to obtain a recommendation letter from VDC/municipality.

In order to ensure the so-called “friendly competition,” it is necessary to obtain letter of approval from two similar schools which adds up more than a week. If we dig down a little into this requirement, this holds the potential to creating a syndicate, and a cartel in the education system in the country. For a person running a company, the lesser the number of competitors, the higher the prospect of profits. When law requires any new entrant to get permission from the existing players, the existing players can very well collude and bar new entrants from entering the industry. With possible new entrants at check, the existing players can then manipulate the fees, facilities, teaching standards and everything else that they are responsible for providing.

Coming back to the registration process, when the DEO calls for letter of application, one needs to submit the application form which costs RS.1000 along with all other stipulated documents before end of Poush (December). Within three months of submission of form, the DEO sends a school inspector to inspect the doc­uments and infrastructure of the said school, the school management board and other facilities to be provided by the school, who then, submits the report to the DEO. Once the decision is made, the DEO calls the founder of the school to officially grant  permission to operate said school, 30 days prior to the commencement of new session.

Thenafter, one needs to make a certain amount of security deposit at one of the stipulated banks. After submission of the deposit slip, the DEO gives the permission to establish and run the school. The total time consumed to obtain all the documents is 23-25 days and an additional 3 months (of waiting for a process that is concluded in 1 day) to acquire permission from the DEO, and the total cost incurred to register a school is minimum Rs. 56,000 and increases upon the type of school and level being registered.

However, DEO does not inform those schools which have not been granted permission to operate. One needs to follow up with DEO to know the verdict and the reasons for not granting approval are also not specified.

Interviews with school-heads during the research saw a number of them reflecting on the cumbersome and generally long process of opening a school with a sense of need for change. Instead of approaching OCR, DEO, VDC/municipality, SMC in order to collect documents, it would rather be easy if the government followed a one stop policy and made SMC as the only institution to grant the permission. The procedure of having to obtain letters of approval from the VDC and other schools is the most complained about step by the applicants as it is very time consuming and having to take approval letter from three places deems unnecessary.  Plus, it takes three months for the DEO to give its decision. It is also necessary to clear out issues on why a school is being rejected as it gives direction to where the applicant needs to reform in order to apply next year.