Nepal Country Profile

Snapshot of the Nepal Country Profile


Nepal's unstable political situation in recent years is perceived by companies as a major constraint to business and has resulted in a low growth rate. Corruption is the second biggest obstacle to business as both petty corruption in the issuing of licences and grand corruption are endemic. High ranking officials and business-people with political connection virtually enjoy impunity from corruption charges. The Department of Industry has attempted to diminish red tape and occasions to extort bribes by operating the One Window Committee, a one-stop shop portal for foreign companies. The system is reportedly far from streamlined, though. Private sector corruption in form of kickbacks and facilitation payments is also wide-spread in Nepal.

Positive developments in relation to corruption and investment:

  • The law stipulates that the burden of proof falls on the accused in corruption cases.
  • A private sector anti-corruption legal framework was recently established by the Competition Promotion and Market Protection Act from 2006.
  • In 2007 a new procurement law has been enacted. The act explicitly addresses conflict of interest and provides for periodical rotation of public procurement officials. The act also includes a debarment system of companies guilty of corruption or other anti-competitive practices. Information about public tenders can now be accessed on the Public Procurement Portal.

Risks of corruption:

  • Laws and regulations pertaining to property registration, ownership and transfer are unclear, and the interpretations of these laws are highly inconsistent. Lawsuits concerning property rights can take years to settle.
  • Public procurement is reportedly rife with corruption in the form of commissioning of agents, padding the costs by buying from specific companies, using money on unnecessary travel and consulting projects, giving gifts to public officials as appreciation of their services, etc.
  • Whistleblowers are protected by law, but flaws in its enforcement often result in retaliation by their superiors.
  • In the Power Department, linesmen, metre readers, and billing employees are identified as the major actors in corruption.