Subekshya BC
Introduction
Entrepreneurship is the dynamic process of identifying new opportunities that creates value with innovative solutions for problems prevailing in the market. It also involves taking financial risks to establish new ventures with creative and strategic thinking. It has the potential to create economic as well as social impact in the life of an individual and the economy at large. It is an essential part of the market economy where entrepreneurs produce new goods and services that fit the wants and needs of the people.
An integral part of the market economy is competition. Competition between the entrepreneurs ultimately benefits the consumers while also incentivizing entrepreneurs to excel and innovate. Competition leads to higher quality and lower prices. Their innovation may lie in reducing cost or using technology to produce new goods and services own when creating their own brand. Entrepreneurs with their leadership and perseverance lead a business that creates jobs and contributes to the economic development. They pay taxes to the state and contributes to the country’s gross domestic product.
Development of laws related to entrepreneurship
Industry Council was established for the first time in Nepal on 9th Mangsir 1992.[1] Later, bodies such as the Agricultural Council, Nepali Textile and Elam Prachar Adda, Khani Adda were also established. These bodies were not established through an act but were only established by a decision, so they cannot be taken as legal body or entity.[2]
The company law was first enacted in 1993 to facilitate the businesses and industries in Nepal. The then Prime Minister Yudhishthir Rana had established the Biratnagar Jute Mill in Biratnagar in 1993. It is also the first industry of Nepal. In 2003 (1946), the Golchha Group established Raghupati Jute Mills in Biratnagar which is considered to be the first private sector industry of Nepal.
Until the time Raghupati Jute Mills was established, the prestigious American and European industries had not yet entered Japan, the second-largest economy in Asia. Only after the 1950s did companies from Europe and the United States begin to move to Japan. China and India adopted policies to attract European and American companies to their countries only in the 1990s. It was only in that decade that those countries firmly implemented the plan to introduce foreign investment (FDI) in their country. Nepal, which opened up its industry before China and India planned to bring in FDI, has lagged far behind in terms of bringing in foreign investment.[3]
The then Minister of State for Finance, Mahesh Acharya, presented the budget for the fiscal year 2048/49 on May 27, 2020. This budget marks the formal institutional beginning of economic liberalization in Nepal. It was the beginning of the first phase of economic reforms in Nepal. Since then, there has been an increase in the number of industries and private sector involvement.[4] Former Deputy Chairman of the National Planning Commission and economist Bishwa Poudel credits this policy to the establishment of many industries in Nepal and to the transformation of the country by the entry of the private sector in privatization, education, health, insurance, finance, water resources, etc.
The then government announced to promote private investment and foreign investment through industrial policy. Accordingly, the government issued a new company act in 2053. Compared to the old Companies Act, the Companies Act 2053 made some simplifications by changing the provisions regarding the company registration process and the general meeting. The Act removed the provisions by which Office of the Registrar of Companies could exert unnecessary control and interference in the company It also gave importance to the company’s transparency and institutional governance.
The Companies Act 2063 implemented by repealing the Companies Act 2053 currently binds the operation and formation of companies. Amendments were made to facilitate foreign investment, attract private sector investment in the banking and financial sector, insurance sector, hydropower, hotel, tourism, manufacturing, agriculture sector, etc.[5] Various bodies are currently working on business registration and operation to facilitate entrepreneurship in Nepal. Investments and capital-intensive industries can be registered and operated at the local level, the provincial government and various bodies of the federal government.
Entrepreneurship in religious literature and documents
The theme of entrepreneurship is deeply intertwined with Hindu principles in ancient texts and traditions. In Nepal and Asia, since ancient times, religious texts and principles have been considered as a means of controlling moral and ethical behavior. Dharma (duty) and Artha (prosperity) are two of the four aims of life in Hindu philosophy. Responsible management of property and wealth is considered part of religion. [6]
The Vedas provide a nuanced understanding of wealth, or Artha is viewed not only as personal property but as a resource that carries responsibility towards the community and the larger ecosystem. It encourages entrepreneurs to build businesses that thrive financially and contribute positively to society.[7]
The Mahabharata, especially the Bhagavad Gita, offers profound leadership teachings that resonate with contemporary entrepreneurship. Lord Krishna’s teachings on Nishkama Karma (selfless action) advocate doing duty without attachment to results. This philosophy can shift modern leadership away from short-term gain to a more visionary and sustainable approach. Under this, entrepreneurs can foster a corporate culture that prioritizes collective growth and long-term value over immediate profit.[8]
The history of entrepreneurship in Nepal
In ancient times, entrepreneurship was eminent in Nepal. Entrepreneurship was promoted for the development of rural and urban economy. The traders of the Newari community, especially in the Kathmandu Valley, were renowned for their business acumen and entrepreneurship. They were known as skilled craftsmen for their rich tradition of Nepalese handicrafts, including metalwork, woodwork, textile weaving and pottery. They often run small-scale businesses and sell their products in local and international markets.
Entrepreneurship in Nepal has developed at various stages influenced by political, economic and social factors. During the Licchavi period, Nepal was used as a trade route connecting India and Tibet, which contributed to the overall prosperity of Nepal. The economy was mainly based on agriculture. Agriculture, animal husbandry and trade were the pillars of the economy. Lichchhavi period is also considered as the golden age due to the presence of various handicraft traditions.
After the 15th century, various industries, trade centers, small businesses and abundant cash crops contributed to Nepal’s economic advancement. Kashmiri Muslims played a major role in the Tibet-Kathmandu-India trade, which greatly benefited Nepal’s economy. King Mahendra Malla of Kathmandu took permission from the Mughal emperor to mint coins, and his coins remained the official currency of transaction for centuries. Similarly, during the Shah era, small industries based on agriculture, were heavily traded in the Kathmandu Valley, including Palpa, Biratnagar and Doti.
Before the unification of Nepal, the market was limited. Unification marked the beginning of a wider market bought by increased mobility. It also led to competition and increased productivity.
The Company Act of 1993 was the first step in the development of entrepreneurship. It dictated things like where to register the company, how to run the company, and what the company could and could not do. After the formation of the Company Act, Nepal’s first “Joint Stock Company”, “Biratnagar Jute Mill” was established. Nepal Bank Limited, the first commercial bank in the country, was then established in 1994 AD.
With the establishment of democracy in 2007, the government spread its involvement in business with elaborate plans. The government started to open public enterprises. Similarly, during the time of King Mahendra, a five-year plan for industrialization was implemented from 2013. The objective of this scheme was to increase production and create employment opportunities, to provide fair opportunities to all the people to increase their standard of living, to provide necessary institutional incentives for successful implementation of development programmes, to conduct necessary economic surveys to prepare infrastructure for future planning. Before this, Mohan Shumsher had started a five-year plan but did not get the continuity.
Around the same time, various factories were opened with the investment of the Government of Nepal. For example, Birgunj Sugar Factory, Balaju Industrial Area, Janakpur Cigarette Factory, NIDC Development Bank Limited, etc. Nepal Industrial Development Corporation was established in 2016.
Prior to 1950 AD, Nepal’s economy was largely agrarian, with subsistence farming dominating the landscape. Entrepreneurship was localized during this period. Entrepreneurship focused primarily on agriculture, trade, and handicrafts within the community.
The period from 1950-1970 AD, following the end of the Rana regime and the establishment of a constitutional monarchy, saw early steps towards modern entrepreneurship. During the period 1970-1990 AD, Nepal followed a policy of import substitution and a controlled economic system. Entrepreneurship tended to be limited by bureaucratic constraints, regulations, and a state-led focus on development. From 2000-2010 AD, the culture of entrepreneurship grew in Nepal due to increased access to technology, rising literacy rates, and a growing middle class. Sectors such as IT, renewable energy, and hospitality expanded, but challenges such as political instability, infrastructural weaknesses, and regulatory issues remained.
The devastating earthquake in 2015 posed significant challenges for entrepreneurship, especially small businesses and startups. However, it has also stimulated innovation and resilience, with initiatives in disaster management, sustainable reconstruction, and social entrepreneurship.[9]
The Conclusion
Entrepreneurship is not a new concept to Nepal. Different periods in history had different phases of entrepreneurship development. However, due to political changes, instability and various crises, Nepal’s entrepreneurship is stagnant. Factors such as capital, innovation and freedom of action, taxation, regulation, management quality, and legal framework of the country and industries also play an important role in promoting entrepreneurship in the country.
There is a negative attitude towards entrepreneurship in Nepal. As a result, entrepreneurs are less motivated. Nepal has a diverse entrepreneurial landscape with a growing number of startups in sectors such as technology, agriculture, renewable energy, and tourism. The government has been supportive of entrepreneurship through policy reforms, start-up incubation centres and access to funding. These efforts combined with the principles of rule of law, limited government, free market, and strong property rights can ensure a transformation to an economy driven by entrepreneurship.
[1] https://www.onlinekhabar.com/2019/11/814045
[2] https://abhiyandaily.com/article/kmpnii-kaanuunko-vikaas
[3] https://www.ratopati.com/story/208247/nepal-industry-
[4] https://ideas.hriti.org/2024/03/06/economic-liberalization-in-nepal-2/
[5] https://abhiyandaily.com/article/kmpnii-kaanuunko-vikaas
[6] https://link.springer.com/chapter/10.1007/978-3-031-43386-3_27
[7] https://ansiandyou.life/integrating-ancient-wisdom-in-modern-entrepreneurship-lessons-from-vedic-teachings-and-spiritual-leaders/
[8] https://ansiandyou.life/integrating-ancient-wisdom-in-modern-entrepreneurship-lessons-from-vedic-teachings-and-spiritual-leaders/
[9] https://youtu.be/dyCyKBByung?si=MiUDsE4Dz4TX3d53