27th September 2025, Kathmandu
The recent GenZ movement in Nepal, while driven by a call for good governance and systemic change, has left a scar on the nation’s industrial landscape.
Nepal’s Economic Crossroads Shifting
Widespread attacks on public and private infrastructure have severely shaken the confidence of entrepreneurs, highlighting the urgent need for robust government action to restore stability and refocus the economy.
Mr. Raghunandan Maru, President of the Nepal Cement Producers’ Association, offers a clear assessment: “Remittance Alone Cannot Run the Country; We Must Focus on Production and Job Creation.” His insights underline the critical juncture Nepal’s economy faces—a necessary shift from being primarily remittance-dependent to a growth model anchored in industrial output and domestic employment.
The Aftermath of Unrest: A Crisis of Confidence
The GenZ movement, despite its positive aspirations, resulted in significant destruction, including high-profile targets like the Bhat-Bhateni Superstore. This vandalism has deeply impacted the investment climate:
Eroded Morale: For entrepreneurs, the security of investment is paramount. The attacks instilled widespread fear, making industrialists hesitant to commit new capital.
The Backbone is Shaken: Maru emphasizes that industry is the backbone of the economy. Instability directly translates to a slowdown in industrial growth, trade, and overall national progress.
Hope for the Future: Despite the setback, the industrial sector remains hopeful that the newly formed government will enact investment-friendly policies, a clear roadmap, and guarantee a secure operating environment.
The Core Challenge: Remittance vs. Production
The interview highlights Nepal’s fundamental economic vulnerability: an over-reliance on foreign remittances. While remittances provide essential foreign exchange, they are not a sustainable foundation for long-term growth.
Youth Migration Drain: The continuous outflow of youth, driven by a lack of opportunities at home, is a deeper issue than the recent unrest. This migration depletes the domestic workforce, leading to a fall in both production and consumption.
The Necessity of Economic Activity: Maru firmly states that a country is sustained by economic activities—namely, production, employment generation, and consumption—not just the flow of external funds.
A Call for Decisive State Action: To retain youth and revitalize the economy, the government must introduce practical incentives such as startup loans, capital subsidies, and tax exemptions to ease domestic investment and entrepreneurship.
Obstacles to Industrial Growth: Red Tape and Inflexibility
A major impediment to industrial development is the cumbersome bureaucratic and regulatory environment:
Complexity and Delays: Nepal’s laws have made “Ease of Doing Business” an elusive concept. Processes like obtaining mining permits or environmental clearances can drag on for 2–3 years, a stark contrast to neighboring countries.
Investment Discouragement: The halting of major projects, such as hydropower developments inside national parks due to court orders, severely discourages large-scale, long-term investors.
The Path to Reform: Simplification is urgent. Maru recalls the comprehensive 447-page Economic Reform Commission report by former Finance Secretary Rameshore Khanal, underscoring that implementing such plans is crucial for economic transformation.
Reviving the Cement Industry: Policy Stabilization and Demand
The cement sector, a critical indicator of national infrastructure spending, is currently struggling with low demand and high operating costs:
Capacity vs. Consumption: Monsoon demand is less than half of the production capacity, leading to a large stock surplus and financial strain.
Government Action is Key: To boost the industry, the government must accelerate capital expenditure and infrastructure projects. A strategic move like replacing bitumen roads with more durable concrete roads would provide a major boost to domestic cement consumption.
Tax Relief Needed: The sector is burdened by taxes that hurt its competitiveness, notably the 5% green tax on coal (increasing production costs and reducing export viability) and the shift to a percentage-based excise duty.
Maru advocates for the scrapping of the green tax and special relief measures, such as interest subsidies and bank loan rescheduling, for affected industries to help them bounce back.
Conclusion: A Historic Opportunity for Change
Nepal’s current economic challenges, magnified by social unrest, present a clear, unavoidable choice. The country can no longer defer fundamental policy reforms.
The path to stability and sustainable growth lies in a decisive partnership between the government and the private sector. By prioritizing policy simplification, job creation over migration, and production-based economic activity, Nepal can rebuild investor confidence and harness its full potential for a prosperous future.
The cooperation among the Prime Minister, the Ministry of Industry, and the Ministry of Finance is seen as the first positive step toward this essential, long-term recovery.
For more: Nepal’s Economic Crossroads Shifting