Pandemic is testing the government today; policy will, tomorrow

Well it goes without saying that the Covid-19 crisis has put the current government through its biggest test thus far. At a time when countries who are much more advanced than us in medical as well as general economic terms are barely holding up against the pandemic, underdeveloped countries like ours with limited fiscal and administrative capacities were bound to struggle – big time. How well we’ve responded as a country under the given context, I’ll let you be the judge. 

But in this piece, I want to focus on another puzzle facing the government – something that will be an equally big test in the aftermath of this pandemic, if not bigger; what do we do with the returnee migrant labourers? We simply do not have enough jobs in the country to accommodate this influx of returnees tomorrow.  

Of the 4.5 million Nepali migrant labourers (officially) toiling abroad, many are running a risk of losing their jobs. As global economy comes to a halt, host nations to our migrant labourers are facing a drop in demand, which is  further triggering layoffs.

Here at home, as per the last Living Standards Survey, the bottom 80% of the population (in terms of income) spends more on consumption than what they earn. This likely means one of two things— either their consumption is fueled by remittance, or by informal sector income. In any case, that gives us a rough idea as to the extent of economic crisis we are looking down the throat of. 

This is, as much of a challenge, an opportunity to break the vicious cycle of the joblessness in the country, labour migration and over-regulation that Nepal has been undergoing for many years now. Say, if 20% of the 4.5 million migrant labourers return and 10% of those think of starting a business in Nepal, that is close to 100,000 new enterprises and potentially millions of new jobs in the economy. 

Let’s also factor in the fact that these returnees will be coming back with a lot of new skill sets and ideas they’ve learned in their host countries. We should look to leverage that as opposed to employing this exile-like treatment towards them as evidenced by government’s non-response to stranded Nepalis’ cries for help. 

Government has many problems to deal with already, and creating another millions of jobs through “proper planning” does not look plausible even in the medium to long term, at this rate. Thus, one of the best things the government can do to help these people and help the economy is by laxing a number of business regulations – mostly market entry and tax regulations. This is the time for the state to show that it trusts its citizens and is looking to create opportunities for the people, rather than take a defensive stance behind the veil of unnecessary regulations.

 A few things to consider below:

    • Establish the local government as the sole authority to register Micros Small and Medium Enterprises
    • Waive the provision of submitting schemes for Small and Medium Enterprises
    • Waive capital-based business registration fees. 
    • Ensure that a business can be registered within one day. 
    • Introduce flat tax system for MSMEs so that they can easily comply.
    • Ensure that taxes can be filed in a day
    • Ease alternative investment mechanisms like venture capital and equity finance
    • Innovations move faster than government. Accept it, and facilitate innovative ideas instead of barring entry in the garb of 25 or even 50-year-old legislations. 

If you read that, here is a little treat to lighten yourself in this lockdown.

Akash Shrestha

Akash Shrestha is a researcher at Samriddhi Foundation where his focus areas are investment laws, public enterprises and education.

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