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🇳🇵 Nepal /Economy & Trade

Nepal’s industrial slowdown deepens as new factory registrations fall

From Kathmandu Post · () English

Summarized and contextualized by DistantNews.

At a glance

News Official statement Context piece
  • Nepal's industrial sector faces deepening strain as new factory registrations, utilization, and credit growth decline.
  • Industrialists cite policy uncertainty, land issues, and inadequate government support as key reasons for the slowdown.
  • Manufacturing's contribution to Nepal's GDP has fallen significantly over recent decades, raising concerns about the investment climate.

Nepal's industrial sector is showing increasing signs of weakness, with a notable drop in new factory registrations, reduced factory utilization, and slower industrial credit growth in the first half of the current fiscal year. These trends highlight ongoing concerns about the country's investment climate and the pace of industrialization.

We must have committed great sins in a previous life to have ended up running industries in this one.

— Hari Bhakta SharmaExecutive director of Deurali Janata Pharmaceuticals and former president of the Confederation of Nepalese Industries, reflecting frustrations widely shared across Nepal’s manufacturing sector.

According to a recent report from Nepal Rastra Bank, only 461 new industries were registered nationwide between mid-July and mid-January. This figure represents a significant decrease of 120 registrations compared to the same period in the previous fiscal year, when 581 industries were registered.

Industries have been operating at less than half of their installed capacity for a long time. Problems that existed when factories were established remain unresolved.

— Anjan ShresthaPresident of the Federation of Nepalese Chambers of Commerce and Industry, describing the state of Nepal's manufacturing sector.

Industrial leaders attribute this downturn to persistent structural challenges. These include policy instability, difficulties with land acquisition and forest clearance, labor issues, and a perceived lack of sufficient government support for the manufacturing sector. Hari Bhakta Sharma, executive director of Deurali Janata Pharmaceuticals and former president of the Confederation of Nepalese Industries, expressed deep frustration, stating, “We must have committed great sins in a previous life to have ended up running industries in this one.”

Market demand has not recovered sufficiently. There is also fear among business owners because law enforcement agencies are increasingly detaining entrepreneurs.

— Anjan ShresthaPresident of the Federation of Nepalese Chambers of Commerce and Industry, explaining factors contributing to the industrial slowdown.

These sentiments are echoed by Anjan Shrestha, president of the Federation of Nepalese Chambers of Commerce and Industry. He noted that industries have been operating at less than half their capacity for an extended period, with long-standing problems remaining unresolved. Shrestha also pointed to a weak market demand recovery, fear among business owners due to increased detentions by law enforcement, and uncertainty surrounding industrial land leases affecting approximately 700 industries. This environment has made entrepreneurs hesitant to expand or make new investments, leading many to adopt a wait-and-see approach.

Under such circumstances, entrepreneurs are reluctant to expand or make fresh investments.

— Anjan ShresthaPresident of the Federation of Nepalese Chambers of Commerce and Industry, commenting on the current business environment.
DistantNews Editorial

Originally published by Kathmandu Post. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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