Upholding the values of a democratic nation dedicated to the creation of inclusive and broad based economic growth,
Recognizing the need for creating an economic system that enables the private sector to grow and create wealth,
Sharing the common vision of graduating from ‘Least Developed Country’ status by 2022, of enabling economic growth to create better opportunities for employment in Nepal,
We, the representatives of, Government of Nepal, private sector, development partners and civil society have joined hands and deliberated on Nepal’s Economic Reform Agenda on 24th, 25th and 26th of February, 2014.
Learning from the experiences shared by panel of international experts on economic reform conducted by various countries around the globe,
Adhering to the principles of creating a level playing field for market participants,
Distinguishing agriculture, tourism and energy as the priority sectors for Nepal’s Economic Reform, hereby declare that,
We will work together to realize the following overall and sectoral reforms in 2014:
Overall Reform Agenda
1. In order to create a shared vision and create an environment of policy stability that is crucial for attracting investment, we propose to get this declaration be a basis for ‘minimum common economic agenda’ of Nepal.
2. In order to improve the overall investment environment, we will prioritize entry/exit procedural reforms and eliminate regulatory processes that add to the cost of doing business and do not add value to the regulatory information gathering process specifically in the sectors of agriculture, tourism and energy.
3. In order to create at least 50,000 additional jobs by the private sector in the areas related to agriculture, energy and tourism of Nepal by 2015 and gather capital for large scale projects in agriculture, energy and tourism, we will identify and work with local and global investors to execute at least 4 different large scale projects in each sector.
4. In order to accelerate the process of reforms, we will work to table draft legislations related to the economy including Energy, Agriculture and Tourism at the legislature and work on getting them passed with required adjustments and updates. We will work on adopting the Energy Development Strategy, Tourism Development Strategy and Agriculture Development Strategy within the next six months with appropriate action plans for respective stakeholder agencies.
5. In order to bring in the second generation reforms that will enable private sector led growth, we will create a high level mechanism including members from the civil service and the private sector to identify regulatory burdens and propose solutions such that we can move up 10 places in the ‘Doing Business Rank’ by 2016. The report will be produced by the end of 2014 and we will work on the reforms proposed by such mechanism for the next two years to achieve our goal by 2016. Inter-agency coordination between various government agencies will be crucial for these reforms. Therefore, in order to carry forward the recommendations made by the High Level Committee, an Implementation Monitoring Committee comprised of the Secretaries of the concerned Ministries will be formed under the Chairmanship of the Chief Secretary of the Government of Nepal.
6. In order to strengthen public institutions, improve the service delivery and facilitate the businesses institutional reforms will be started immediately.
Sectoral Reform Agenda
Agriculture reform agenda
7. In order to facilitate economies of scale and thereby providing incentive for private sector participation and ensuring food and nutrition security in the country by increasing production and productivity, we will review the existing land management systems and bring about regulatory framework that allows for contract farming and effective utilization of land. In terms of using land effectively, priority will be given to projects that adopt a value chain approach and help reach out a wide network of beneficiaries in the form of small farmers.
8. In order to facilitate the commercialization of agriculture, we will assess existing policies and programs on their effectiveness in terms of costs and reach to the targeted beneficiaries. In doing so, we will work on improving mechanisms such that they do not distort the market dynamics but create a level playing field. One such measure of increasing effectiveness may be voucher schemes that target end recipients while creating a space for private sector participation. High priority will be given to review of programs, policies and regulatory framework in agricultural inputs and produce market.
9. In order to encourage private sector investment in agriculture, we will work for increasing public spending in agricultural infrastructure development including but not limited to irrigation, agriculture roads, warehouse and storage facilities, local market centers and research and extension targeted to commercial agriculture. While developing these infrastructures, priority will be given to public private partnership. Public spending in research of commercial agriculture will be increased and private sector participation in extension services for commercial agriculture will be facilitated. Specific expenditure on agriculture infrastructure, research and extension for commercial agriculture will be made public in the upcoming budgets.
10. In order to develop human resource capacity needed for commercialized agriculture, we will work on increasing public spending and enabling private sector investment in technical, vocational and academic education related to the demands of a commercialized agriculture market. These will translate to specific short term and long term training programs, additional educational institutions providing agricultural studies in their curricula and a review and adjustment of the existing agriculture curricula to meet the future demands of a commercialized agriculture sector. To this end, we will work on adding adequate additional technically trained human resource through public spending targeting youth. We will encourage more institutions to run agricultural courses in the days ahead.
11. In order to increase investment of private sector in commercial agriculture, we will work on developing and implementing incentive mechanism for high value products where Nepal can have a competitive advantage.
Energy reform agenda
12. In order to resolve the immediate gap of electricity demand and supply and encourage efficient use of energy, demand side management will be given priority. Following Nepal’s commitment to climate change conventions, specific incentive and packages will be developed and offered to industries that practice energy efficient processes and technology including industries that practice cogeneration. We will introduce these incentive packages in the upcoming budget of fiscal year 2015/16.
13. In order to encourage innovation in energy supply and increase in private sector participation in this sector, we will work on setting up an independent power trading company. The independent power trading company will provide a platform for trading energy between individual consumers and suppliers thereby reducing the fiscal burden of Nepal Electricity Authority (NEA). This kind of power trading company will require open access to existing transmission lines. Therefore, we will work on introducing ‘open access’ on existing transmission lines to the extent possible with a ‘wheeling charge’ to use these facilities. In addition, we will work on expanding transmission lines internally to help connect projects that are in the pipeline. All forms of energy suppliers including hydropower and solar power will be invited to participate in this power trading arrangement. This will also increase grid connectivity and contribution to national power structure by renewable sources such as solar energy. Construction of cross border transmission lines and framework for cross border power trade will also be accorded due priority to help increased exchange of power between Nepal and India.
14. We will expedite the passage of electricity related legislations in the legislature while incorporating the suggestions from concerned stakeholders that will provide conducive regulatory framework for the private sector to invest in the sector.
15. In order to increase private sector participation in efficient biomass energy production, existing incentive schemes will be revised to make them technology neutral. Incentive schemes will target end users while facilitating innovation in technology development of plants such as biogas plants and improved cooking stoves. This will help diversify current reliance on traditional sources of firewood and animal dung to sustainable sources such as biogas.
Tourism reform agenda
16. In order to increase private sector investment in tourism, we will work towards developing both tourism infrastructures where our performance lags behind significantly at the moment. We will specifically focus on up-gradation of Tribhuwan International Airport, construction of regional airports in Lumbini, Nijgadh and Pokhara. For the airport construction and operation, we will invite private sector participation by adopting the public private partnership model. These airports construction will be announced in the upcoming budget and private sector will be invited through open bids to participate in their construction and management. We will work on inviting the private sector through open bids for better management of services at Tribhuwan International Airport.
17. As air safety has become a major issue in the tourism sector, we will work on improving air safety through regulations and upgrading infrastructural facilities at existing airports. Specific programs on air safety will also be announced in the upcoming budget.
18. In order to promote conservation and expand tourism products with private sector involvement, we will work on developing a favorable framework for tourism development that complements not only conservation and bio-diversity but also allows us to earn revenue to make the conservation sustainable. This kind of framework will define specific rules and regulations under which we can invite private sector can participate in developing high value tourism products in the conservation areas. In developing such kind of framework, learning from experiences of countries that have already used this mechanism in tourism promotion will be used.
19. In order to increase our tourism receipts from the current 36 USD per capita to 60 USD per capita through expansion of products and services, we will work on choosing five strategic locations to develop them as tourist destinations by the end of 2016. In choosing these locations, we will work extensively on strategic studies that assess the market viability of these locations. We will ensure the inclusion of Lumbini, Janakpur, and three locations from far east and far west region in these five locations. Given our proximity to India and China and the increase in outbound tourists from these countries, we will target tourism development to this particular market segment. We will then work on framing targeted strategies for infrastructure development and market promotion of these destinations.We will also ensure the inclusion of existing sites that are vying for United Nations Heritage status in this expansion process and develop infrastructure to facilitate the process of acquiring UN Heritage status. We will adopt a value chain approach to the development of these destinations and ensure community involvement to enlarge the beneficiary group that results from this expansion.
Reiterating our commitment to economic reforms in Nepal, we hereby declare to institutionalize the Nepal Economic Summit as an annual event to be jointly organized by, the Government of Nepal and Federation of Nepalese Chambers of Commerce and Industry (FNCCI). The agenda set by the Summit will be taken forward by the Government and the private sector through joint forums like the Nepal Business Forum (NBF). We will also jointly organize Nepal Business Conclave as a medium to promote investment in the Nepalese economy.
Done on the 26th day of February of the year 2014 of the Gregorian calendar in Kathmandu, Nepal.