Emerging Issue of Political Environment in Nepal, Political Instability, Economic Factor, Traditional Hostilities and Terrorism, Labour Condition

Political Instability

Once upon a time, our country, Nepal, was referred to as a peaceful, secular country without any form of prejudice (caste, language, sex, etc.). When our Great King Prithvi Narayan Shah first began, our political leaders seemed to be making jokes about it. Due to political unrest, everyone is solely concerned with their own personal lives and issues.

Politicians only abide by their demands for their own benefit; but, when it comes to the public, they consistently make empty promises intended to deceive. Politicians' main interest is keeping their seats in the higher positions. When the election is drawing close, they prowl around like a fox in search of votes, yell at the defenseless populace to comply with their demands, and after they win the election, they forget everything. The most crucial and essential prerequisite for a favorable business climate is to establish environmental stability. Political stability and policy stability are two ways to look at environmental stability. Political instability is the likelihood that a politically irregular occurrence may take place.

Everyone is egotistical. Politicians spend countless hours in meetings and thousands of conversations, but neither of them can focus on a single conversation. The government also lacks certainty. Health, education, and other areas are poorly administered. The frequency of shifts in power is one indicator of political unrest. Political risk does not necessarily increase as a result of political instability, though. However, the business community, including corporations, thinks that increased political unpredictability leads to unstable policies. Businesses, especially those engaged in agriculture, commerce, and finance, can only thrive in an environment where the government is stable and its policies are evolving gradually.

Over the past 18 years, it has been noted that the government in Nepal only held onto power for a relatively brief time. Three general elections and one election for the Constituent Assembly were held during this time, and as many as 18 governments were established successively. Therefore, if we can foster unity among one another, then only some improvements will occur; otherwise, the only thing we can do is pray to God.

Economic Factors

Political risk can also be indicated by some economic aspects. The most important economic indicators of an economy's overall health are inflation, the balance of payments, deficits or surpluses, and the growth rate of per capita income. A country is less likely to see political and social unrest, which will inevitably hurt business firms, the better its economic future is.

Nepal is going through an extremely challenging economic period. Business operations are being substantially impacted by numerous local and global variables. After NRB involvement, the public sector banks that were in a serious crisis are now steadily recovering. There was a lot of tension recently among the business and deposit communities due to Bangladesh Bank's abrupt bankruptcy. There is a severe financial crisis as a result of the scandals and corruption prosecutions brought against politicians, senior bureaucrats, and executives of several public sector organizations. Month after month, their operating losses get worse. Some of these structures are about to fall apart.

These issues have received extensive media coverage. As a result, both the public and the commercial sector are less inclined to do business with these government agencies. Nepal's small economy is unable to withstand such severe shocks. All of these incidents have had a detrimental effect on the business climate.

Traditional Hostilities and Terrorism

Business is hampered by long-standing animosities between nations and communities. Similar to that, terrorism might exist. If so, can the company safeguard its people and assets? The security situation in Nepal is very precarious and alarming.

In Nepal, terrorist attacks are become commonplace. Criminal gangs and fake revolutionaries both use kidnapping and murder as their primary methods of operation. Businesspeople, government employees, and wealthy peasants frequently receive quite significant sums. The victims are frequently businessmen. The looting of banks and companies is a topic frequently covered in the newspapers. The infrastructure of industrial facilities is being destroyed as they are being targeted and bombarded.

There has been an increase in Nepal Bandha, Valley Bandha, Chakka Jam, Dharna, and other forms of agitation. The protests in Nepal have a significant impact on commerce and economic activity. During the previous seven months, the highways were shut down for 486 hours (Kantipur, August 14, 2007). Trade, transportation, and tourism are conceivably the most impacted industries. Similar to this, local conflicts and accidents frequently impede the free flow of traffic on highways. The propensity to use the road and disrupt traffic in order to pressure people into meeting demands of all kinds has increased costs, decreased competitiveness, and slowed the normal expansion of economic activity.

The situation for commercial firms is complicated. Even if the full-scale conflicts are over, there are still many things that are the same. Outside of the major political parties, there are still armed splinter organizations battling for religious freedom. The same holds true for further autonomous ethnic and religious groupings. Naturally, this lawlessness has damaged enterprises and curtailed all kind of economic activity, and wealthy rural residents are moving to towns and cities in search of safety. Agriculture and economic activity have drastically decreased as a result of this rural migration.

Labour Conditions

Investors might hold off because of the labor situation. There may be issues with low labor productivity, high labor expenses, or militant labor unions. Business organizations take special effort to understand the make-up of the available labor force in the nation. Are workers in high or low demand? What talents are in demand? What views do people have toward employment, social status, working women, and labor organizations? Labor is a political force, especially in developing nations, and in some of those nations, it is a political party. The majority of labor laws in many nations are enacted by the government rather than being negotiated by labor unions and corporate entities.

Various newspapers that were published in 2007–2008 described the escalating agitations and their effect on the Nepalese economy as follows:

• The unrest in Nepal's factories has gotten worse. Trade unions' demands for pay increases and better working conditions led to the closure of nearly fifty industries in the eastern Terai region.
• After intense union pressure to improve facilities and working conditions, multinational companies including Coca-Cola, Carlsberg Beer, as well as more than 30 local manufacturers in southern and central Nepal, had to shut down their operations.
• The anti-outsourcing movement effectively put an end to the cable service, a significant tourist draw and source of income. Many additional firms are probably going to be impacted further by this.
• The government has been unable to convince the union leaders to pursue negotiations as a means of resolving the conflict between labor and management.

The power of trade unions in Nepal is also explained by their impact on political parties. Therefore, the unions are powerful enough to considerably obstruct management at work. They have sufficient political clout to thwart any attempts by the government to substantially alter the relationship between management and labor.

Reference:

• Pant, P. R. (2009). Business Environment in Nepal (SIXTH ed.). Kathmandu, Nepal: Buddha Academic Publishers and Distributers.
• wikipedia.org/wiki/Politics_of_Nepal