Nepal’s private sector, long constrained by decades of political instability, is once again voicing concern over an uncertain business environment despite initial optimism following the formation of a new government earlier this year.
For more than four decades, entrepreneurs and investors in Nepal have operated amid frequent government changes and shifting policy priorities. While successive administrations have consistently described the private sector as an “engine of growth,” business leaders say that, in practice, regulatory hurdles and inconsistent policies have often undermined that commitment.
That pattern appeared set to change after the emergence of the Rastriya Swatantra Party (RSP) as the largest political force in the March 5 election. The appointment of its senior leader, Balendra Shah, as prime minister on March 27, alongside noted economist Swarnim Wagle as finance minister, raised hopes of a more stable and business-friendly policy environment.
In the immediate aftermath of the election, private sector representatives expressed optimism that the new leadership would prioritize reforms to improve the ease of doing business, attract foreign investment, and strengthen domestic industries.
Business leaders have called on the government to introduce policies focused on investment security, tax reform, and infrastructure development. They have also emphasized the need to promote import substitution and boost export-oriented industries to reduce Nepal’s trade deficit.
However, that early optimism has begun to wane.
“Expectations were high that the new government would take decisive steps to support the private sector,” said a senior representative of a leading business association. “But so far, we have not seen meaningful progress.”
Concerns about the safety of businesses resurfaced following violent protests on Sept 8–9, during which several business establishments were selectively targeted. The incidents reignited fears among entrepreneurs about the security of their investments.
Business leaders say the previous administration, led by Sushila Karki, had been expected to address these issues but failed to deliver concrete solutions.
The current government, they argue, has yet to restore confidence.
Private sector representatives have also raised concerns over recent actions perceived as heavy-handed. These include the arrest of several business figures without what they describe as adequate preliminary investigation, as well as what they call “media trials” targeting specific entrepreneurs. Meanwhile, the Central Investigation Bureau (CIB) of Nepal Police has arrested businessperson Sekhar Golchha on Thursday.
“These developments have created an atmosphere of fear,” said another representative. “Due process and transparency are essential to maintain trust.”
Further unease has been triggered by reports that the government is considering amending existing laws to allow the Commission for the Investigation of Abuse of Authority (CIAA) to directly investigate corruption cases involving private sector actors.
Business groups argue that such a move would expand the mandate of the anti-corruption body beyond its traditional focus on public officials, potentially leading to regulatory overreach.
“There are already sufficient oversight mechanisms governing private sector conduct,” says a business leader.
As Nepal seeks to revive economic growth and attract international investors, analysts say that restoring confidence among domestic businesses will be critical.
Economists note that beyond rhetoric, the government will need to demonstrate consistency in policy implementation, ensure legal predictability, and maintain a clear distinction between regulatory oversight and undue interference.
For now, the private sector remains cautiously watchful—hopeful that the new leadership will translate its promises into concrete reforms, but increasingly concerned about signals that suggest otherwise.
