Let not issues facing Ncell be a setback to FDI in Nepal

'The government's inability to recognize Ncell for its contributions to Nepal's economy, job creation, revenue generation and growth of the telecommunication sector will certainly prove to be a big setback to potential foreign investors/investing firms in Nepal'

KATHMANDU: Ncell, the multinational telecom service provider, which has been in operation in Nepal since almost two decades, has been of late facing problems on multiple fronts. Not only has it had to face physical attacks at its offices and BTS towers in recent years, it is also going through hassles related to various tax issues.

Ncell became subject to criticism and assault especially after the company’s corporate deal with TeliaSonera in 2016. Back then TeliaSonera had divested its share in Ncell to Axiata in a Rs 144-billion deal. However, it never paid the necessary capital gains tax (CGT) then. At present, Ncell has already settled its CGT liability but had it paid the CGT in 2016 immediately after the takeover deal then the company would not have had to face the obstacles and criticism it is doing at the moment.

The last three-four years have been especially tough on Ncell as the company has had to face public criticism from various quarters and also has had to deal with several legal issues.

Disputes related to tax are inevitable in any country. But what is important is that all businesses should comply with the existing tax laws and if there are any tax disputes then those must be settled in a prompt and careful manner. However, even if a company does make mistakes the country’s administration and people must not always attack it physically or through court cases continuously.

Ncell has been in Nepal since the last two decades and has invested billions of rupees. This investment has not only generated employment to thousands of people but has also contributed tremendously in promoting and expanding the country’s telecommunication sector. Moreover, it has also been contributing billions in taxes to the government.

As per the National Contribution Report 2019-20 of Ncell, the company contributed Rs 32.62 billion to public finances in Nepal during the year, 3.8 percent of the total tax revenue of the government in the year. While Ncell has directly employed 543 people, indirectly the company is supporting livilihoods of 18,398 people across the country.

Hence, it is not wise on anyone’s part to consistently attack a company that has made major contributions for one single tax issue.

Though the CGT issue has been settled now, Ncell faced unwanted criticism and attacks when the issue was under investigation a few years ago. While attacks on different offices and BTS towers were frequent, the government even barred Ncell from expanding its market unless the CGT issue was settled.

To make things worse, some renowned political leaders even ran a campaign urging people to boycott Ncell and its services.

But such attacks have not stopped yet. Ncell has been dragged into different tax and other issues even after the CGT has been settled. Of late, the government is again reassessing the CGT liability of Ncell. These are legal issues and will definitely be settled in the future in a court of law.

However, the burning question is that how justifiable is it to constantly criticize Ncell by linking it to these tax issues. More importantly, what we need to be aware of is that how are the potential foreign investors going to view the Ncell tax issue, the pressure that the government is putting on Ncell and the guardianship that the government is failing to provide to Ncell? How secure will potential foreign investors feel after looking into how Ncell is being treated?

The government’s inability to recognize Ncell for its contributions to Nepal’s economy, job creation, revenue generation and growth of the telecommunication sector will certainly prove to be a big setback to potential foreign investors/investing firms in Nepal, say reputed industrialists here in Nepal.

“Investors are highly sensitive and they take attacks on FDI or multinational firms and the way the government treats them very seriously. As investment security and the government’s facilitation are the first things that an investor looks for, it is the responsibility of all to ensure that investment and investors in Nepal are secured and well recognized,” said an industrialist seeking anonymity.

More recently, Nepal Electricity Authority also cut power to the Ncell Data Centre in Pokhara. Could this issue not have been settled in a more amicable manner? How could the government not be aware that cutting off power to the data center could affect thousands of customers who are citizens at the end of the day?

The pertinent question is why and how Ncell, a multinational company, has frequently become headline news in the country. Is it all due to Ncell not complying with existing laws of Nepal or is Ncell facing intentional attacks?

A few government officials and political leaders have even raised questions over the unwillingness and failure of the government to facilitate and recognize Ncell for the contributions that it has made to Nepal’s economy, especially in the telecommunication industry.

“Ncell is one of the largest taxpayers but sadly, the government hesitates to even mention that fact. Along with criticizing a company for the mistakes that it makes and taking action as per existing legal parameters, the government should also facilitate, ensure security and recognize a company for the contributions it has been making,” opined former Finance Minister Ram Sharan Mahat, adding, “But in the case of Ncell, the government does not seem to have facilitated the company well.”

Besides being one of the largest taxpayers in the country, Ncell’s contribution to uplift and upgrade Nepal’s telecommunication market is phenomenal. The telecom company today occupies more than 40 percent market share in Nepal with more than 15.76 million subscribers and is the leading 4G internet service provider. Prioritizing on service expansion, the company has assured voice and data services to regions where the state-owned Nepal Telecom has not reached.

Even officials of Nepal Telecommunications Authority (NTA) – the telecom sector regulator – mention that Ncell has not been receiving necessary facilitation and recognition from the government, stakeholders and political party leaders. “In a sense, the telecom industry in Nepal stepped up to a new level after Ncell entered the market. Had Ncell not been here today, people probably would have had to use connections or beg the Nepal Telecom officials to avail a SIM,” an NTA official said seeking anonymity.

Citing that government officials, political parties and even the public are squeezing Ncell and putting the company under undue pressure constantly, the NTA official questioned, “What if Ncell quits Nepal under frustration after being unable to cope with the various pressures and hassles that the company has been facing since the last few years?”

Umesh Poudel |
Friday January 15, 2021, 03:01:17 PM |

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