In Kathmandu’s busy streets, where flags and banners fill the sky, business owners are focused on one thing: stability. Nepal has seen 12 prime ministers since becoming a federal democratic republic in 2008. This frequent political change has left entrepreneurs seeking only one thing—consistency. Whether it’s a king or an elected leader, stability is now the most valuable asset for businesses in Nepal.
Political Instability and Its Impact on Business
Political instability in Nepal directly affects businesses. With every new prime minister, policies shift. What worked under one leader is often reversed by the next. Tax incentives, trade rules, and regulations change, leaving businesses uncertain about the future.
A hotelier in Thamel shared, “We’re not worried about who leads. We just want stable decisions that help our businesses grow.” The lack of consistency makes it difficult for companies to plan for the long term, forcing them to react to changes rather than strategize.
Migration and the Economic Toll of Instability
Political instability also affects the labor market. In 2023, over 600,000 Nepalis left for jobs abroad, mainly to Malaysia, South Korea, and the Gulf. Some estimate the actual number is higher. For many, leaving Nepal has become a better option than staying, as the country struggles with economic uncertainty.
Remittances from Nepali workers abroad reached nearly $11 billion in 2023, accounting for over 25% of Nepal’s GDP. These funds support families, education, and infrastructure. However, this dependence on remittances shows the lack of local job opportunities. Entrepreneurs are increasingly looking beyond Nepal’s borders for trade, investment, and regional partnerships, especially with India.
India: Nepal’s Largest Trading Partner
India remains Nepal’s largest trading partner. In 2022-23, India accounted for 64% of Nepal’s total trade, valued at $8.85 billion. Despite this, many entrepreneurs believe the potential for growth in trade with India is not fully realized.
Two new international airports in Pokhara and Bhairahawa are underutilized, despite significant investment. Entrepreneurs cite restrictions in aviation as a major roadblock. Himalayan Airlines, with Chinese investors, has not been allowed to fly to Indian cities. Nepal has requested new air routes to improve connectivity, but progress has been slow due to security concerns near the Indian airbase in Gorakhpur.
Currently, all international flights into Nepal must go through Simara, increasing fuel costs and operational inefficiencies. An aviation executive noted, “We understand the concerns, but there’s room for flexibility that can benefit both countries.”
Trade Barriers and Visa Challenges
Trade on land is also complicated. Indian vehicles entering Nepal face minimal fees and little paperwork. However, Nepali vehicles entering India must deal with complicated procedures, including prior approvals and multiple layers of documentation.
Visa delays and heightened scrutiny at Indian airports add to the frustrations for entrepreneurs who rely on smooth cross-border trade. These challenges make it harder for businesses to thrive in a competitive regional market.
Looking Ahead: The Need for Political and Economic Stability
For Nepal’s business community, stability is essential for growth. Entrepreneurs are hopeful that with more consistent governance and improved cooperation with India, the country can move past these challenges. Political stability will allow businesses to plan for the future, creating a more predictable environment for investment and job creation.
Political stability is crucial for Nepal’s business growth. With more consistent policies, improved infrastructure, and better regional partnerships, the Nepali economy can become more resilient. Entrepreneurs are looking for a stable environment where they can thrive, and this is key to Nepal’s economic future.
