Study Reveals Deep, Long-Term Impact of Recent Unrest on Nepal's Private Sector

A study has revealed that the unrest that occurred on Bhadra 23 and 24 last year has had a profound and long-term impact on Nepal's private sector.

According to a study conducted by Clickmandu.com on Sunday titled 'Private Sector Morale and Investment Climate,' the private sector suffered direct physical damage amounting to approximately 34 billion rupees during the two days of events, while the damage to investor morale and the business environment was many times greater.

A report analyzing the structural, institutional, and practical role of the private sector and the impact of the unrest brought out these alarming facts.

Psychological Damage Deeper Than Physical Loss

The report characterized the damage to businessmen's confidence and morale as 'extremely alarming' compared to the physical damage.

The study stated, "While the direct physical damage and indirect economic damage (approximately 81 billion rupees) are seen to affect the Gross Domestic Product by up to 5 percent, the trauma inflicted on the business community is irreparable."

The study showed that many business owners are going through 'post-traumatic stress' after watching businesses built with their own investment and hard work destroyed before their eyes. Extreme pessimism and a sense of inferiority, such as "Doing business in Nepal was a mistake," were found to have developed in many. 98 percent of business owners reported that their morale was affected from mild to severe, and the conclusion was drawn that the private sector's confidence has reached its lowest point in history.

Plight of 121 Billionaire Businessmen

One hundred and twenty-one billionaire businessmen investing in sectors such as industry, finance, energy, and tourism in Nepal participated in this study. More than 50 percent of the participants have investments exceeding 5 billion rupees.

Forty-six percent of the surveyed business owners suffered direct physical damage.

Their total physical damage reached 25 billion rupees, with an average damage of 440 million rupees per business owner. More alarmingly, 21 percent of the business owners had their personal homes and vehicles attacked, not just their business establishments.

Investment Climate and Future Concerns

According to the study, 97 percent of business owners admitted that the investment climate in Nepal is weak. Business owners complained that insecurity has increased due to the wrong narrative established by the media, politics, and the education system, viewing businessmen as 'profiteers' or 'exploiters' instead of 'champions of economic development.'

However, despite this, investors have not completely fled. Only 8 percent in the survey stated they would 'not increase investment under any circumstances.'

The fact that 70 percent of business owners are in a 'wait-and-see' mode and 21 percent are still willing to invest further indicates that some hope remains in the Nepali private sector even in a weakened state.

Government 'Band-Aid' But Lack of Justice

Business owners felt some relief that the government attempted to maintain law and order immediately after the unrest and that the Finance Minister and others listened to the private sector. The report termed this a 'band-aid.'

However, the report noted that the tendency to protect perpetrators instead of taking action, even when complaints with evidence were filed against those involved in vandalism and arson, has made a mockery of the rule of law and hindered the recovery of business morale. The study concluded that it will be difficult for the eroded business confidence to return based on assurances alone until the protection of private property and the end of impunity are ensured.