Nepal’s business confidence ‘improves’

BUSINESS confidence in Nepal has improved in the last six months, an FNCCI Business Confidence Survey has shown. The Business Confidence Index (BCI) improved to 49.5 percent, up 9.8 percentage points compared to the figure in November, 2012, when first such survey was carried out. The business confidence, however, is still in the negative territory, as a score below 50 percent indicates low confidence. The survey says businesses confidence is the lowest for the manufacturing sector, while service and agriculture sectors are more confident and optimistic on the economic situation of the country. FNCCI Vice President Pradeep Jung Pandey said the increase in business confidence could be the result of the improvement in the peace process, timely announcement of the budget and people’s expectation for timely election. “Although it is a sign of improvement, it is not enough to enhance the business environment of the country,” he said. Governance has been identified as the most critical challenges that the economy is facing, followed by political instability, energy crisis and corruption, according to the survey. In the last survey, governance was the fourth most challenging area for businesses. The survey was carried by FNCCI with the support of the USAID funded Nepal Economic, Agriculture and Trade (NEAT) Activity on 420 respondents from three sectors - agriculture, service and industry. The survey also attempted to reveal disintegrated findings for 10 different indicators — production, employment, cost of production, profitability of the company, export, import, overall business environment, ease of obtaining loan, inflation and the overall economy. On business environment, 50 percent respondents believe the business climate in Nepal will improve in the next six months, while 26 percent expect it to deteriorate. However, the manufacturing sector is not much convinced about the improvement in the business environment in the near future. Only 43 percent respondents from the manufacturing sector believe the business climate will improve in the next six months. Sixty-seven percent respondents are hopeful on expanding their production level, while 58 percent have expected an increase in the profit level in their businesses. Similarly, 67 percent said the cost of production could go up in the next six months, while 61 percent expressed that the inflation rate would rise during the period. More than 51 percent of the respondents showed confidence that the employment ratio would increase in the next six months. FNCCI Director General Hemant Kumar Dabadi makes a presentation on Nepal’s business confidence in Kathmandu on Thursday. POST PHOTO The Business Confidence Index improved to 49.5pc, up 9.8 percentage points compared to the figure in November, 2012