Nepal revives Industrial Security Force to boost investor confidence

Nepal is reviving the concept of an Industrial Security Force to bolster security for industrial firms and rebuild investor confidence, a move prompted by recent significant damage to businesses. The government launched the Private Investment Protection and Promotion Strategy on July 30, which includes re-establishing this force to safeguard industrial and business assets.

The Industrial Security Force was first conceived in September 2012 as a response to a rise in kidnappings, killings, threats, and extortion targeting industrialists and businessmen in the post-conflict era. Militant labor organizations also posed a threat to factory operations. However, in early 2020, Armed Police Force personnel deployed under this initiative were withdrawn from industrial areas and redirected to border security due to COVID-19 concerns. They were never reinstated.

Recent events have underscored the need for enhanced security. In September of the previous year, the Gen Z movement resulted in extensive damage to industrial establishments and businesses nationwide, with losses estimated to exceed Rs84 billion. More recently, on July 30, protesters in Golbazar, Siraha, vandalized and set fire to several shops. These incidents have discouraged potential investors and created a climate of fear for existing businesses.

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The strategy has been prepared and implemented following the damage caused to private-sector businesses during last September’s Gen Z movement. The action strategies include protecting and promoting industries and businesses and attracting investment. Besides, the recent Tarai movement has also caused damage to businesses.

Prime Minister Balendra Shah's administration has prioritized this strategy, which also calls for a new industrial policy to guarantee security. Industrial corridors, zones, special economic zones, and industrial villages will be declared peace zones to prevent undesirable activities. Netra Prasad Subedi, joint secretary at the Ministry of Industry, stated, "The strategy has been prepared and implemented following the damage caused to private-sector businesses during last September’s Gen Z movement." He added, "There are challenges to protecting private-sector properties. We have the strategy now to protect them. This is the beginning."

Despite these measures, the private sector's morale remains low. A World Bank report indicated that investor confidence has been weakened by the unrest, impacting private investment. The revival of the Industrial Security Force is seen as a critical step toward creating a more stable and secure environment for businesses in Nepal.

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There are challenges to protecting private-sector properties. We have the strategy now to protect them. This is the beginning.