High-Level Commission Calls for Sweeping Legal and Institutional Reforms to Revive Nepal’s Economy

The High-Level Economic Reforms Recommendation Commission has submitted a landmark report to the government, urging an overhaul of outdated laws and restructuring of underperforming public institutions as part of a broader strategy to rejuvenate Nepal’s struggling economy. The report lays out a roadmap to create a more investment-friendly climate, enhance institutional efficiency, and reduce the cost of production, all essential for fostering sustainable economic growth.

The Commission has drawn attention to a host of antiquated laws that it argues have become impediments to economic dynamism. A total of 16 laws, some dating back to the 1950s and 60s, have been identified for repeal. These include the Black-marketing and Some Other Social Offenses and Punishment Act of 1975, the Income Ticket Charge Act of 1962, and the Import and Export Control Act of 1957. The report argues that these laws are no longer relevant in the current economic context and only serve to increase bureaucratic friction.

Recognizing the need to modernize Nepal’s legal framework in line with global standards, the Commission has also proposed consolidating overlapping acts. For example, it recommends merging the Immovable Property Reacquisition Act and the Land Acquisition Act to create a new “Private Property Reacquisition Act.” Similarly, it calls for combining the Patent, Design and Trademark Act with the Copyright Act to form a unified “Intellectual Property Right Conservation Act.” These steps, the Commission asserts, will streamline regulation and boost investor confidence.

Another significant recommendation is the proposed repeal of the Revenue Investigation Department. The Commission argues that the department has outlived its utility and that its responsibilities can be effectively absorbed by other existing bodies. Instead of maintaining overlapping structures, the focus should be on strengthening institutional capacity where it is most needed.

Public sector reform is another major pillar of the report. The Commission has recommended the closure of five defunct or loss-making state-owned enterprises including the Janakpur Cigarette Factory, Butwal Yarn Factory, and Nepal Orind Magnesite Pvt. Ltd. These institutions, it states, have failed to meet operational benchmarks and are draining public resources. The report advises that their physical assets be transferred to the government and repurposed for productive use.

In cases where public enterprises hold strategic potential, such as Hetauda and Udayapur Cement Industries, the Commission suggests a merger following a thorough asset and liability assessment. It recommends that remaining shares be divested to the private sector to infuse fresh capital and professional management. Nepal Airlines Corporation, another major state enterprise, has been earmarked for partial privatization. The Commission proposes bringing in a foreign strategic partner and even temporarily handing over management to international experts to improve commercial viability.

The report also calls for devolution in certain sectors. The Dairy Development Committee, for example, has been proposed for transfer to provincial governments. This move, the Commission believes, would promote better governance and localized economic engagement.

Beyond structural reforms, the Commission emphasizes governance changes in public institutions. It recommends revising the Company Act to insulate public enterprises from political interference and ensure timely audits. Institutions should be allowed to recruit competent professionals independently and should not rely on government loans to cover operational expenses like salaries.

The Finance Ministry, currently engaged in budget planning for the next fiscal year, has received the report with interest. Finance Minister Bishnu Prasad Paudel welcomed the recommendations and pledged to review and implement them in phases.

The report, submitted under the leadership of former Finance Secretary Rameswar Prasad Khanal, represents a bold attempt to tackle the entrenched inefficiencies and outdated legal mechanisms holding Nepal’s economy back. If adopted, the recommendations could mark a turning point in Nepal’s pursuit of structural economic reform and long-term competitiveness.