Wednesday, February 15, 2012

Major constraints faced by firms operating in Nepal

Though based on data from 2009, here is a snapshot of the major constraints faced by firms operating in Nepal. These problems are still persistent. See all of the survey results here and the Enterprise Survey report here.

A majority of the firms identified political instability as the main constraint to sound business environment in Nepal. For firms in South Asia and low income countries, political instability is not that big of a constraint as it is to Nepalese firms. However, electricity is a bigger constraint to firms in South Asia than it is for Nepal (as perceived by firms). Interestingly, for other constraints the proportion of surveyed Nepalese firms think the constraints faced by them are not as pressing as those thought by firms in the region.

Now, the surveyed firms think that power outages is eating up their strength and revenue. Manufacturing firms are losing 28.2 percent of annual sales due to power outages. For retail sector, it is 25.6 percent. A recent study by the central bank found that the average capacity utilization of industrial sector in the last fiscal year was 54 percent, thanks to persistent power outages and labor problems.