FNCCI on the ‘Verge of Collapse’, Paralysed by factional politics as budget season demands private sector leadership

KATHMANDU: At a time when Nepal’s federal budget is being drafted at full speed and demands robust engagement from the private sector, the country’s apex business body—the Federation of Nepalese Chambers of Commerce and Industry—appears deeply fractured, consumed by internal power struggles rather than policy leadership.

Instead of shaping fiscal priorities, lobbying for private sector-friendly reforms, or presenting a unified economic vision to the government, FNCCI has been bogged down in election-driven factionalism. Insiders and observers describe an institution increasingly disconnected from the evolving policy landscape, raising serious concerns about its relevance in Nepal’s economic governance.

Budget Window Missed Amid Internal Infighting

With the government actively preparing the national budget, this period typically serves as a critical window for structured dialogue between policymakers and private sector representatives. However, FNCCI’s leadership has failed to capitalize on this opportunity.

Rather than engaging the government on key economic agendas—investment climate, industrial policy, infrastructure bottlenecks, and regulatory reforms—the federation’s leadership has been locked in internal disputes. Analysts suggest that the organization currently lacks both a coherent policy vision and a unified mandate.

There is a growing perception that the new government is operating far ahead in terms of policy direction, while FNCCI struggles to establish meaningful “policy chemistry,” weakening prospects for effective public-private collaboration.

Legacy Political Linkages Under Scrutiny

Critics argue that FNCCI’s internal dysfunction reflects deeper structural issues—particularly its historical alignment with traditional political power centers. The ongoing disputes have reinforced perceptions that sections of its leadership remain closely tied to legacy political parties, undermining institutional independence.

Previously, policy frameworks were often shaped through informal coordination between government and private sector elites. However, with tighter regulatory discipline from the current administration, FNCCI leadership appears disoriented—described by insiders as “directionless,” unable to adapt to a more rules-based policy environment.

Marathon Meeting Exposes Deep Divisions

The depth of the crisis was evident during Wednesday’s Central Executive Committee meeting, one of the longest and most contentious in FNCCI’s history. Originally scheduled for 1 PM and expected to conclude within hours, the बैठक stretched over seven-and-a-half hours without consensus.

The विवाद centered on whether to grant membership to 18 sectoral associations—a politically sensitive issue with direct implications for upcoming FNCCI elections.

As discussions repeatedly failed to produce agreement, FNCCI President Chandra Prasad Dhakal ultimately intervened, announcing a unilateral decision to conclude the meeting.

Leadership Rift Goes Public

The decision triggered immediate dissent. Senior Vice President Anjan Shrestha exited the meeting, formally registering a “note of dissent” and boycotting the post-meeting dinner hosted at a restaurant owned by Executive Committee member Pashupati Dev Pandey.

This public fracture at the top leadership level signals a deepening institutional crisis, with internal trust eroding rapidly.

Election Arithmetic Driving Policy Positions

At the heart of the dispute lies electoral calculus. The 18 associations in question are seen as potential vote influencers in the upcoming leadership contest, particularly in the object-based cluster.

One faction, led by vice-presidential contender Hemraj Dhakal and supported by candidates such as Naresh Lal Shrestha and Jyotsna Shrestha, pushed for granting both membership and voting rights.

Opposing them were leaders including Anjan Shrestha, Shiv Prasad Ghimire, Prabal Jung Pandey, and Sur Krishna Shrestha, who argued against granting membership, citing non-compliance with eligibility criteria.

The controversy was further complicated by the earlier position of former FNCCI president Shekhar Golchha, who had recommended against granting membership due to unmet standards.

Heated Exchanges and Institutional Breakdown

Sources indicate that the meeting saw multiple heated exchanges. District and municipal vice-presidential candidate Kalpana Gaire warned that personal rivalries between top leaders risked “holding the federation hostage.”

Her remarks reportedly triggered a sharp reaction from Anjan Shrestha, reflecting the tens permeating the meeting.

Meanwhile, Executive Committee member Lilendra Pradhan raised broader governance concerns, questioning why scrutiny was limited to the 18 associations. He argued that all 120 existing member organizations should be subject to uniform evaluation, highlighting inconsistencies in membership standards.

Allegations of Power Retention

Adding another layer of controversy, some members indirectly accused President Dhakal of prolonging the dispute to extend his tenure—citing remarks attributed to former FNCCI president Anand Raj Mulmi.

Dhakal firmly rejected the allegations, stating that his priority was a “graceful exit” through resolution of legal complications rather than tenure extension. He urged members to adopt flexibility and prevent institutional weakening due to prolonged legal disputes.

Final Compromise—But Not Consensus

After hours of deadlock, a middle-ground proposal emerged: grant membership to the 18 associations but withhold voting rights until they complete a three-year renewal process under the new statute.

While some members agreed—conditional on assurances that legal disputes would not escalate—Anjan Shrestha maintained his hardcore stance, insisting that membership should not be granted at all due to non-compliance.

With no consensus in sight even by 8:30 PM, President Dhakal enforced the compromise as a final decision, formally ending the meeting. Anjan Shrestha’s dissent underscores that the issue remains politically unresolved despite administrative closure.

Structural Implications for Nepal’s Private Sector

The episode underscores a deeper institutional crisis within FNCCI:

• Policy Vacuum: Absence of a unified private sector agenda during a critical budget cycle
• Governance Breakdown: decision-making driven by electoral arithmetic rather than institutional principles
• Credibility Risk: Weakening of FNCCI’s standing as a policy partner to government
• Reform Deficit: Inability to transition from informal influence to rules-based engagement

At a time when Nepal’s economy requires coordinated public-private strategy to navigate fiscal constraints and stimulate growth, FNCCI’s internal paralysis raises fundamental questions about its capacity to lead.

The federation that once shaped economic policy discourse now finds itself struggling to manage its own internal contradictions—just as the nation’s economic direction is being decided.