Narrowing the Trust Deficit

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Narrowing the Trust Deficit

Nepal has long held its image as a country where there is a high level of trust between the people, a factor which has helped to define the Himalayan nation in the global arena. However, this reputation of the country is being gradually eroded. Currently, there is a deficit of trust between the government and the private sector. Both sides are full of complaints against each other.

Several factors have served to drive the private sector and government apart. From issues related to taxation, to market inspection and handling of legal complaints lodged against businessmen, the differences between the government and the private have grown wider.  Take the arrest of industrialist Dr Roop Jyoti who was later released from police custody. The case lodged against him was not a criminal case; it was a civilian case, yet Dr Jyoti was treated like a criminal and the actions of the authorities were condemned by various quarters of society. In recent years, several businesspersons have been arrested and released later after the authorities were unable to prove the charges filed against them. This shows the government is not being careful enough when handling legal matters, which has further eroded the business community’s trust in the government.  Similarly, the government is at loggerheads with the private sector over taxation related issues. In the last few years, taxation has become a major concern for the people. The current government is on a tax hike spree, forcing both businesspersons and general consumers to shoulder additional tax burdens. Besides, the provincial and local governments are also levying various taxes on their own, further complicating matters. Members of the business community complain that the increase in tax rates have added to their business costs that are ultimately passed onto the general consumers. Nevertheless, government officials claim the increase in tax rates is necessary for taxation reform.

The protests organised by construction entrepreneurs, demanding the scrapping of the recently established state-owned construction company and amending some provisions of the Public Procurement Act is another example of growing distrust between the government and the private sector. Contractors say that the government is not ready to address any of their demands and that they are being forced to take the issue to the streets. On the other hand, government officials argue that operating a state-owned construction company is ‘international practice’ and that the entity will not be scrapped. The list of contentious issues is becoming longer which shows the deepening of distrust between the government and the private sector.

In developed countries, both the government and the private sector listen to each other’s concerns seriously and act accordingly, which helps to enhance the level of trust between the two sides. Primarily, this is due to the legal system and facilitative regulatory institutions that have evolved over the last many years.We also need a system which is defined and legally binding so as to build the trust. There should be a mechanism where the private sector’s complaints are lodged and addressed. The government should be able to present a valid rationale behind its decisions and actions. Trust is something which takes a long time and sincere efforts to build and re-build. Nepal is at a critical juncture in its history where it needs investments and growth of the business sector to secure a better economic future for the country’s people. To realise the country’s economic ambitions, it is important that both sides come together to work for an environment which helps develop a higher level of trust.

Madan Lamsal
[email protected]

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