Submit your Article

Nepal, a landlocked country situated between two major economies—India and China—faces numerous developmental challenges. Among them, the growing influence of informal trade stands out as a major obstacle to economic growth and institutional stability. While formal trade is regulated, taxed, and contributes to the state’s capacity, informal trade operates outside the law. It includes activities that are unregistered, untaxed, and often illegal. Over time, this shadow economy has become deeply embedded in Nepal’s economic structure. In many ways, Nepal suffers more from the harmful effects of informal trade than from any shortcomings in formal trade.

Informal trade in Nepal takes many forms. It includes the smuggling of goods such as gold, fuel, medicines, money laundering and electronics across open borders. It also includes unregistered businesses, undocumented labor, and transactions carried out entirely in cash to avoid tax and regulation. Nepal’s long and porous border with India, combined with difficult-to-monitor terrain in the north, makes informal trade easy to conduct and hard to control. On the domestic front, many small and medium-sized enterprises operate without any legal registration. As a result, they fall completely outside the formal economic system.

The scale of informal trade in Nepal is vast. Estimates suggest that the informal economy may account for 35 percent—40 percent of the country’s GDP and more than 80 percent of total employment. This means a large portion of Nepal’s economic activity is hidden from the state. It does not contribute to taxes, cannot be properly measured, and creates unfair competition for businesses that do comply with the law. While formal trade has its own inefficiencies—such as bureaucratic delays, red tape, and occasional corruption—these can be addressed through policy reforms. Informal trade, by contrast, creates deep and lasting damage that is harder to fix. It undermines public revenue, weakens institutions, and limits Nepal’s ability to plan and deliver services.

Addressing the informal economy is not simple, but it is necessary. A multi-pronged approach is needed—one that focuses on simplifying formal procedures, using technology, building trust, and offering real incentives for businesses and workers to shift into the formal system.

One of the first priorities should be to make it easier for small businesses to formalize. Many avoid registration simply because the process is slow, complex, and costly. Nepal should adopt a digital, one-window registration system that reduces paperwork and lowers barriers to entry. If formality becomes easier and less expensive, more businesses will join.

Another key step is improving border management. Nepal cannot control smuggling effectively using traditional methods alone. New technologies such as automated scanners, GPS tracking, and electronic cargo systems should be introduced. Just as important is cooperation with neighboring countries. Shared data and joint monitoring can help prevent illegal trade across borders.

The informal economy also depends heavily on cash, which makes transactions untraceable. Promoting digital payments is a powerful tool to reduce this dependence. However, digital infrastructure alone is not enough. The government must also invest in public awareness, digital literacy, and incentives to encourage both consumers and businesses to use digital platforms.

To support this shift, the state should reward those who comply. Businesses that register and follow regulations should receive benefits—such as tax breaks, better access to finance, and eligibility for government contracts. This changes the perception of regulation from being a burden to being a business opportunity.

Labor reform is another vital area. Most informal workers in Nepal lack legal contracts, benefits, or protections. To bring these workers into the formal economy, Nepal must design labor policies that fit the needs of small enterprises. Portable social security schemes, flexible contracts, and minimum wage protections should be introduced even for small and transitioning firms.

Overall, the informal economy reflects not just illegal behavior, but deeper problems in Nepal’s institutions and systems. It is not enough to use force or punishment. What Nepal needs is transformation—simple, transparent, and fair systems that encourage people to participate legally. Informality is often a result of necessity, not criminal intent. That’s why the government must respond with practical solutions that make formalization more attractive and accessible.

In conclusion, while informal trade may provide income and survival for many, it does long-term harm to Nepal’s economy. It limits tax collection, distorts markets, and weakens the foundations of good governance. Compared to formal trade, whose problems can be corrected through reform, informal trade creates much deeper challenges. If Nepal wants to build a resilient and inclusive economy, it must take bold steps to reduce the size and influence of its informal sector. By simplifying procedures, using technology, and offering clear incentives, the country can bring more of its economy into the formal fold—and unlock its full potential for growth and prosperity.

On September 4, 2025, the Government of Nepal decided to block social media platforms that have not been registered in Nepal. The decision has created a wave of divided opinions - some people argue that this is the right move to ensure accountability from social media platforms, while many civil society organizations, digital rights advocates, and concerned citizens have condemned it as a regressive step against digital freedom.

From my standpoint, while regulation is necessary, blocking platforms undermines the very freedoms we are trying to protect.

Registration is necessary - but blocking is not the answer

To put it straight: the debate is not about whether social media platforms should be registered in Nepal or not. They should be. These platforms are global companies making significant profits, also via operating in Nepal. Like any other company working here, they must comply with Nepali regulations, ensure transparency, and clearly state how and why they are collecting and using the data of Nepali citizens. That expectation is fair and necessary.

However, blocking access to unregistered platforms is not the right way forward. Social media has evolved into more than just entertainment or casual networking - it has become a central place for people to express themselves, connect with communities, access information, promote businesses, and even mobilize for social causes. For many, these platforms are now tied to their daily lives, their livelihoods, and their freedom of expression.

Cutting off access does not solve the underlying problem; it only punishes ordinary users.

The role of social media platforms

It is also true that social media platforms have a responsibility. If the Government of Nepal has been repeatedly asking them to register and they have not complied, these companies should at least provide a formal response or clarification. Ignoring regulatory requests only deepens mistrust and leaves citizens caught in the middle of a standoff between government and corporations.

Why blocking is a problem

Blocking social media platforms creates several issues:

Restriction of freedom of expression: Social media has become one of the most accessible means of voicing opinions, especially for young people, marginalized groups, and most people. Blocking platforms limits these freedoms.

Impact on small businesses and creators: Many Nepali entrepreneurs, artists, and small businesses rely on social media for promotion and sales. Blocking platforms threatens their livelihoods.

Disruption of information access: Social media is also a primary source of news and information. Shutting platforms risks creating an information vacuum, where misinformation and rumors can spread even faster.

Loss of connection for families: The Public relies on messaging apps and social media to stay in touch with family members living abroad or in distant parts of Nepal. Blocking these platforms directly affects family communication and emotional well-being.

Negative signal to the global community: Such a move portrays Nepal as hostile to digital rights and freedom, which can harm its reputation internationally.

It is true that the Government of Nepal has the authority to regulate companies operating within its borders. Demanding registration is within its rights, and restricting services for non-compliance is legally possible. But the way this authority is exercised matters. Choosing to block entire platforms is a policy decision - one that is not the most effective or rights-respecting. Smarter alternatives that protect both regulation and citizens’ freedoms are required to be considered.

What should have been considered

Instead of blocking access, the government could have taken more constructive steps:

Dialogue and Negotiation: Establish structured discussions with platform representatives, civil society, and experts to find workable solutions for registration and compliance.

Transparency in Process: Clearly communicate to the public what the requirements are, why they matter, and how citizens’ rights will be safeguarded.

Rights-Based Approach: Ensure that any regulation respects the constitutional right to freedom of expression and aligns with international human rights commitments.

Conclusion

Yes, platforms should register and comply. But blocking them for non-compliance is a disproportionate punishment that hurts ordinary Nepalis more than the companies.

Platforms must be accountable and transparent, but accountability cannot come at the cost of citizens’ digital freedoms. Blocking platforms is a blunt and regressive tool - it restricts expression, impacts livelihoods, and risks isolating Nepali citizens in the digital age.

A Question of democratic values: At its heart, this debate is not just about regulation, it is about the kind of digital future Nepal envisions. Are we moving forward on our constitutionally recognized democratic path, where freedom of expression and access to information are respected? Or slipping into a more control-oriented and regressive approach? Blocking platforms may seem like a quick solution, but it risks eroding the very democratic principles Nepali people have worked hard to build.

As a country, Nepal needs smarter, more balanced solutions - ones that demand responsibility from tech companies while also protecting the rights of the people who use them every day.

If China wants to promote a new world order based on cooperation, respect and the rise of the Global South, then the optics at Tianjin’s Shanghai Cooperation Organization (SCO) summit did not help. “We should advocate for equal and orderly multipolarisation of the world, inclusive economic globalisation and promote the construction of a more just and equitable global governance system,” President Xi Jinping of China said.

And yet, looking at the group picture of all the world’s leaders attending the conclave, I could not help but feel some form of sympathy for United Nations Secretary-General Guterres. He was relegated not at the center of the group, close to the host, President Xi. Rather you could notice him on the far right, the last person in a long row, very far from the real fulcrum of power projection during the ceremony.

I found this quite disrespectful for the United Nations and the role that they have been playing to promote multilateralism. This is especially true if you look at the track record of Guterres, an old style European socialist with a progressive mindset, who has always been trying to highlight the role of the Global South. The Global Times, the most influential English language media of China and the global megaphone for the Chinese Communist Party, wrote in its editorial the following: “President Xi pointed out that this summit carries the important mission of building consensus, unleashing cooperation momentum, and mapping out a blueprint for development.”

China is the second most powerful nation in the world with one of the most fascinating civilizations. Over the last two decades, it has greatly consolidated its rising status of a global power, a position that is now undeniable as Beijing is directly challenging Washington. With what is happening at the White House under a president who is, simply and plainly speaking, unfit to lead the highest office of the country that happens to also be the leader of the so-called Free World, it is natural that China is exploiting the situation.

In a certain way, it is positive for the world to have a truly multilateral order in place where countries like China, India, Indonesia, Vietnam, Saudi Arabia, Mexico and Brazil, just to mention a few rising nations, can take a leading role. I must say that leading always implies a huge responsibility and I wish that democratic principles and respect for human rights that, let’s not forget, are universal and not a western construct, could be applied to everything and everywhere. Unfortunately, it is not the case. Yet despite the differences, nations can talk and dialogue with each other even if they disagree. The use of the force should always be the very last resort and territorial conflicts should not find space in our times.

Yet Russia continues with its aggression in Ukraine and it seems disinterested in any real peace initiatives. In this scenario, it is a good thing that India and China are finally back to talking to each other and are trying hard to reset their bilateral relationships. I would wonder if the same speed of reconciliation and re-approchement between Delhi and Beijing had occurred if Kamala Harris were in the White House.

Probably the answer is yes because it is inevitable that both nations must learn to co-live in the same region but not at this velocity and depth. “Right choice for India, China to be ‘friends’, President Xi told PM Modi of India with the latter also stressing the importance of cooperation between the two countries. “We are committed to take forward our cooperation based on mutual trust, respect and sensitivity,” were the words of Modi.

Together, these two nations can truly inject a new impetus to global cooperation led by the South but as I was saying, aspiring to lead the world comes with big responsibility. President Xi is correct at deploring, as he did in his speech at the SCO, a unilateral world order where someone can bully others. This is what the White House has been doing not only against China and India but also with the Europeans and Canadians, the closest allies of the USA.

Over the past decades, China has been supporting a multitude of infrastructure around the world through its Belt and Road Initiative. This is something extremely positive even though there have been many concerns, some of which valid while others blown out of proportion, about the sustainability of the loans coming from Beijing.

Something Nepal has been fully aware of, as Kathmandu has been negotiating with its northern neighbor with due respect but also self-confidence and readiness to defend its national interests. It is apparently clear that with the void being created in Washington, China can assert itself and project its strengths, confidence and a new vision of the world. But Beijing should do more on a global level, building stadiums, hospitals, legislature building and railways is not enough.

Can President Xi assert his influence to nudge President Putin of Russia to truly seek to put an end to the war in Ukraine? Can China reassure its partners in the West that its long-sought process of reunification with Taiwan would only happen peacefully and without the threat of use of force?

Barring a few nations, no one is disputing the one-China policy but the current status quo is better than potential bloodshed in the South China Sea. In addition, many western nations have serious concerns about China’s campaign of overt and covert influence in their democratic systems.

I am at risk of being hypocritical here because, critics might say, this is exactly the same playbook that the Americans—and to a lesser extent—the Europeans have been using since the end of the second world war and certainly we cannot erase from history the scourge of colonization. As President Xi reminded the world from the stage of Tianjin that China is no more ready to accept double standards, he must himself set the high standards.

The Global Times reported that the Chinese president, during his meeting with UN SG Guterres, said that “history has revealed that multilateralism, solidarity and cooperation are the right answer to global challenges”. Therefore, it would be a great gesture for China to uphold a new world order by elevating the role of the United Nations, including by proposing new initiatives that can truly create a level playing field.

An example of good leadership on the part of China was seen during the recently held World AI Conference in Shanghai where the host nation proposed the establishment of a global AI body. This is what Guterres has been trying to promote for years and China could be a true force for good to counter the hegemonic model of AI development that the Trump administration is pursuing.

As a European living in Asia, I wish the EU could stand up on its own more strongly and promote its approach that while, far from being perfect, it is centered on the respect for human rights and democracy. Meanwhile, the rise of China and India are inevitable and should be welcome

In this context, with President Xi encouraging nations members of SCO “to oppose the Cold War mentality and bloc confrontation,” China is embracing a morally correct position. Yet will the big “dragon” further assert itself in a way that will truly respect and listen to other nations, especially those with a different political system from its own and search for a real “win-win”? Will Beijing truly espouse the UN as a global institution to co-lead the new form of multilateralism that is emerging?

Guterres, who strongly believes in the role of the Global South, should become a central ally to China’s new aspirations and vision of the world. And finally, let’s admit that the optics of that picture in Tianjin were bad.

It is my great honour to address the SCO Plus Meeting in Tianjin, a city that ever shines with beauty, culture and innovation. Let me extend warm greetings and best wishes of Nepali people for the success of this Meeting as well as continued progress and prosperity of all SCO Member States. My delegation joins me in expressing our sincere gratitude to the Government of China for the generous hospitality and excellent arrangements made for the meeting. We live in an age of extraordinary progress: in science, technology, and innovation.

Yet, this progress is overshadowed by deep fractures: widening inequalities, economic turbulence, climate emergencies, and conflicts that defy borders. In such a world, no nation can stand secure in isolation. No people can prosper in fragmentation. This is why multilateralism is an imperative of our time. Yet we must face a harsh truth. Rule based order has been challenged. Peace and justice remained elusive. Thus, multilateralism is in crisis. And this crisis is not only external. It also stems from its failure to deliver. Multilateral forums promise much. Too often, they deliver little. Promises without progress erode trust.

But abandoning multilateralism is not the answer. We need a revitalised multilateralism now. We must make the global governance system more effective and efficient by placing the United Nations at its core. In this context, the Global Governance Initiative (GGI) proposed by China would help strengthen the multilateral system by making it a more just, inclusive and equitable community with a shared future for humanity. The Shanghai Cooperation Organization will complement the spirit of revitalized multilateralism based on sovereign equality,

Further, there is an urgency for a revitalized SCO:

• More united,
• More integrated, and
• More resilient to tackle deepening geopolitical, economic, and ecological shocks that threaten our shared future

Nepal, a proud Dialogue Partner since 2016, looks forward to getting admitted as a full member. We cannot speak of peace without addressing regional security. Threats cross borders every day. Terrorism robs societies of safety and opportunities. Climate change multiplies risk. Nepal, with the Himalaya in its heart, feels its wrath directly. While our mountains serve as global climate stabilizers, they are being stripped of their snow reserve endangering the lives of billions living downstream. Emerging threats such as cyber-attacks, pandemics, ecological shocks are not confined to borders. With just five years left to achieve the Sustainable Development Goals, we are clearly off-track.

In these turbulent times, regional cooperation is a tool to tackle shared challenges—economic, technological, ecological. Nepal’s commitment to regional cooperation is steadfast, and our relations with SCO members are strong. The path ahead requires three shifts. First, from isolation to connectivity. We must foster regional peace, progress and prosperity through enhanced physical, economic, digital, socio-cultural and people-to-people connectivity. Second, from confrontations to consultations. Disagreements are natural, but disputes need not to be destructive. By embracing the Shanghai Spirit, we should step up dialogue and diplomacy to nurture deeper understanding.

Third, from competition to cooperation. The world needs more partnership not partition. By working together, regionally and globally, we can build a just, inclusive, and resilient order and achieve sustainable development. Such “whole of the world” coordination will ensure that no nation is left behind.

In conclusion, Nepal reaffirms its commitment to enhance regional cooperation within SCO. We support a rules-based, inclusive multilateral system for a sustainable future. Let us uphold the Shanghai Spirit. Let us strengthen friendships, partnerships, and good neighbourly relations. A resilient and prosperous SCO region is within our reach, when we are committed to act together.