FNCCI calls for constitutional amendment to recognize private sector as ‘Partner in Nation Building’

KATHMANDU: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has formally submitted a comprehensive set of proposals for constitutional amendment, urging the government to recognize the private sector as a “partner in nation building” and to restructure key economic, legal, and governance provisions to create a more investment-friendly and growth-oriented constitutional framework.

The suggestions were presented during a consultation with a committee formed to prepare a discussion paper for amendments to the Constitution of Nepal, 2015. FNCCI President Anjan Shrestha said the proposals aim to remove structural constraints in the current constitutional framework that hinder economic activity and private sector expansion.

According to the FNCCI, the objective is to create a more dynamic, inclusive, and competitive economic system that supports sustainable development and positions the private sector as a central driver of national prosperity.

Private Sector as a Constitutional Development Partner

One of the core demands of FNCCI is the constitutional recognition of the private sector as a “major partner in national economic development” within the directive principles of the state.

The federation argues that the current constitutional structure does not adequately reflect the role of the private sector in driving investment, employment, innovation, and economic growth.

FNCCI has proposed that public-private partnership (PPP) should be explicitly recognized as a foundational pillar of economic development in the Constitution.

Proposal to Replace “Socialism-Oriented Economy”

FNCCI has strongly recommended revising the constitutional economic framework outlined in the preamble and directive principles.

It has proposed replacing the existing concept of a “socialism-oriented economy” with a model described as a:

“competitive, open-market economy with social justice”

The federation argues that the current three-pillar economic policy structure and socialism-oriented framework should be removed, and replaced with an innovation-driven, inclusive liberal economic system.

It further recommends that Nepal’s economic model should emphasize private-public collaboration and market competitiveness, while ensuring social justice safeguards.

Stronger Protection of Property Rights

FNCCI has also proposed major revisions to Article 25 of the Constitution, which guarantees property rights.

Key recommendations include:

• Compensation based on fair market value before acquisition of private or public property for national interest
• Provision for independent review by a valuation committee if affected parties dispute compensation
• Inclusion of industry and business security rights as fundamental rights under Part 3 of the Constitution
• Explicit constitutional guarantee of privacy and protection of private property

The federation argues that clearer property rights are essential to encourage long-term investment and reduce legal uncertainty for businesses.

Commercial Court Within Supreme Court

To address commercial disputes more efficiently, FNCCI has proposed establishing a commercial court within the Supreme Court system.

The aim is to ensure faster resolution of business-related disputes, reduce litigation delays, and improve investor confidence in Nepal’s judicial system.

The federation believes that a specialized commercial judiciary structure would strengthen contract enforcement and reduce risks in business transactions.

Trade Union Reform Proposal

FNCCI has also raised concerns regarding trade union practices under Article 34 of the Constitution, which guarantees the right to labor.

It argues that trade union rights should not be unlimited and proposes that:

• Trade unions should operate independently without affiliation to political parties
• Labor rights should be balanced with industrial productivity and business sustainability
• Union activities should be clearly regulated to prevent excessive interference in management

The federation emphasizes that labor rights must be protected, but within a framework that supports industrial harmony and economic efficiency.

Tax, Licensing, and Administrative Reforms

The FNCCI has recommended significant reforms in taxation and business regulation, including:

• Revision of local government tax authority under Article 228
• Implementation of a single-window tax and licensing system
• Elimination of double or multiple taxation by federal, provincial, and local governments
• One-time licensing approval system to avoid repetitive administrative procedures

The federation argues that fragmented taxation and licensing systems increase the cost of doing business and discourage investment.

Private Sector in Directive Principles

FNCCI has called for a major revision of the Constitution’s directive principles relating to economic policy.

It recommends explicitly recognizing:

• Protection of private investment and business assets
• Equal promotion of domestic and foreign investment
• Private sector as a key partner in national development

The federation also stresses the need to balance domestic investment priorities with foreign direct investment (FDI) promotion to ensure capital inflows and technology transfer.

Land, Natural Resources, and Industry Expansion

The FNCCI has also raised concerns over land ceilings and restrictions on industrial expansion.

It has proposed:

• Relaxation of land ceiling laws for industrial development
• Special provisions for the use of forests, mines, and natural resources for industrial purposes
• Reform of land laws affecting real estate and industrial projects

According to FNCCI, current restrictions limit large-scale industrial investment and hinder infrastructure and manufacturing growth.

Streamlining Governance Structure

The federation has also criticized Nepal’s three-tier federal governance system, arguing that it has led to:

• High administrative costs
• Overlapping responsibilities
• Delays in project implementation
• Weak coordination between government levels

It has called for restructuring the governance system to make it more efficient and financially sustainable.

Business Protection in Legal Proceedings

FNCCI has proposed reforms in handling economic and criminal cases involving businesses.

Key suggestions include:

• Avoiding criminalization of business disputes
• Prioritizing financial penalties over punitive imprisonment
• Ensuring bail provisions in economic cases
• “First hearing, then arrest” principle in business-related disputes

The federation argues that businesses should not be treated as criminal entities in cases of economic disputes or losses.

Call for Insolvency Law

FNCCI has strongly recommended the introduction of a comprehensive Insolvency Act in Nepal.

The federation notes that under international conventions on civil and political rights, businesses facing losses or closure often lack a clear legal exit mechanism in Nepal.

It argues that entrepreneurs operating loss-making or closed industries currently face legal and financial deadlock without structured resolution pathways.

The proposed insolvency framework would allow:

• Orderly restructuring or closure of failing businesses
• Legal protection for entrepreneurs
• Transparent settlement of liabilities

Push for Structural Economic Reform

FNCCI’s stance represent one of the most comprehensive private sector-driven reform agendas in recent years, calling for deep constitutional changes across economic policy, governance, taxation, judicial systems, and business regulation.

The federation argues that without structural reforms, Nepal’s economic growth will remain constrained by legal rigidity, administrative inefficiency, and investment uncertainty.

The government is currently reviewing the proposals as part of broader discussions on potential constitutional and policy-level reforms aimed at strengthening economic growth and improving the investment climate.