Welcoming the New Constitution

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Welcoming the New Constitution

Nepal has finally got the much awaited New Constitution. And the business community has wholeheartedly welcomed it, as did a vast majority of the Nepali people. Though most of the region known as Terai-Madhes is reeling under violent protests against the New Statute and the business community, too, is not happy with a number of provisions of the Constitution, the welcome accorded by the business community in general deserves some positive evaluation.  

Terai-Madhes is the major business region of the country (besides Kathmandu and Pokhara that are both in the mid-hills) with most of the factories and major import-export points located there.  So, any disturbance in that region causes lots of trouble to the business community.  To make the situation worse, the region has been unstable for about two months now with factories closed and the supply lines severely disrupted. 

Neither are the provisions of the new constitution business-friendly. The constitution says the state will follow a policy of gradually transforming into a socialist system. And there are other provisions to clearly indicate that the economy and society will be state-controlled. 

For example, the guiding principles of the state, as incorporated in the new constitution, want the state to impose ‘progressive taxation’, encourage ‘increased participation of the labour force in the corporate management’ and ‘harness the country’s  water resources by encouraging domestic investment’. 

While the workers’ right to form trade unions and engage in collective bargaining is enshrined under a separate point in the constitution, no similar right is accorded to the employers and/or investors who have to rely only on the right of association to form their own union. In another point, the constitution grants Cooperatives a status equal to the private sector and it is no secret that cooperatives are used frequently by socialist philosophers and governments to undermine the private sector. 

Still the private sector has welcomed the new constitution mainly because it is hoped that it will bring stability. It’s hoped the Constitution will end the political uncertainty and resultant policy uncertainty of the last one decade or more. As the new constitution has been adopted by over a 90% majority of the Constituent Assembly elected by the people, it is supposed to be a document of national consensus.  

Though various provisions of the constitution are not so conducive for business, still it is an acceptable document. Given that an overwhelming number of the Constituent Assembly members belonged to communist parties of different hues and even the centrist party Nepali Congress is heavily influenced by leftist ideology, the provisions that are now enshrined in the constitution should be viewed as “very good”  if not “excellent”. The risks were so high that we could’ve got a very leftist constitution. 

Finally, business can flourish even under a dictatorial communist regime, as is seen in China, as long as there is political certainty and policy predictability. If the new constitution of Nepal too brings about such an environment, there is no reason why it should not be welcomed. 

Pray that the current national political leadership that pushed the constitution through the Constituent Assembly garnering over 90% support is able to also convince those groups that are agitating in Terai-Madhesh. If that happens, the Nepali economy will really flourish as the constitution has ample provisions to guarantee the rule of law. There are good provisions for a strong judicial system and the limits on the freedom of the press and economic freedom are not so stringent as was feared till a month or so ago.

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