RSP Chairman Rabi Lamichhane Demands Urgent Action on Nepal's Ailing Capital Market and Economy

The Nepali capital market, a crucial barometer of the nation's economic health, is currently grappling with a profound crisis of confidence, prompting a high-level intervention from Rastriya Swatantra Party (RSP) Chairman Rabi Lamichhane. In a recent candid meeting with veteran financial journalist and investor Tilak Koirala, Lamichhane expressed serious concern, stating, "This won't do anymore," and pledged immediate action to address the pervasive investor discontent and the broader economic stagnation.

Koirala, representing the sentiments of millions of investors, highlighted the significant trust placed in the RSP during the last elections. He reminded Lamichhane that an estimated 7 million individuals, directly or indirectly linked to the capital market, had overwhelmingly voted for the RSP, drawn by its capital market-friendly manifesto and promises of reform. However, four months into the current government's tenure, led by Finance Minister Dr. Swarnim Wagle, these hopes have largely been dashed, replaced by a deepening sense of frustration and despair among investors.

Despite the banking sector currently experiencing abundant liquidity and historically low-interest rates—conditions typically conducive to market growth—the capital market remains stubbornly stagnant. Koirala pointed out several critical issues exacerbating this crisis: the recent increase in capital gains tax, the imposition of VAT on high electricity consumption despite a significant surplus of over 1100 megawatts, and the persistent 25% tax on Non-Resident Nepali (NRN) investments, which continues to deter foreign capital inflow. Furthermore, he criticized the Finance Ministry and regulatory bodies for their bureaucratic inertia, delaying crucial decisions that could stimulate market demand.

A significant point of contention raised was Finance Minister Wagle's perceived dismissive attitude towards investor concerns. Koirala recounted a previous meeting with Dr. Wagle shortly after his appointment, where the Minister reportedly stated, "I am the Finance Minister for five years. I will work according to the manifesto at a leisurely pace over five years; nothing will happen now. NEPSE will be at an all-time high in five years." This long-term, hands-off approach, Koirala argued, has only deepened the market's woes, leading to a significant exodus of investors and a drastic reduction in daily trading turnover, now hovering around a mere Rs. 3 billion. Such low volumes threaten the operational viability of many brokerage firms and represent a substantial loss of revenue for the government.

Koirala drew parallels to the downfall of previous "expert" finance ministers, Dr. Yubaraj Khatiwada and Dr. Prakash Sharan Mahat, whose similar approaches alienated the market and ultimately contributed to their political decline. He warned that if the current trend continues, daily turnover could fall below Rs. 2 billion, jeopardizing the Nepal Stock Exchange's operational costs and potentially sparking widespread investor rebellion, especially with local elections approaching.

Another pressing concern highlighted was the "crisis of confidence" stemming from the Finance Minister's public statements, which Koirala described as "terrorizing" to ordinary citizens. He urged Lamichhane to rein in such rhetoric and actively engage with industrialists and business communities to rebuild trust, warning of the increasing risk of capital flight. While acknowledging the positive intent behind anti-money laundering efforts, Koirala noted their unintended consequence: scaring legitimate businesses and innocent investors more than actual culprits, who often escape early. He stressed the urgent need to halt this "terror" and foster an environment of trust for investment.

After listening intently for nearly 30 minutes, Chairman Lamichhane acknowledged the gravity of the situation. He questioned why these serious concerns had not been directly communicated to the Prime Minister and Finance Minister. Koirala explained that while the Prime Minister had shown some positive initiative, the line agencies and regulatory bodies fall under the Finance Ministry, rendering any efforts ineffective without the Minister's active engagement.

Lamichhane, recognizing the urgency and the political implications, declared, "The problems are serious. This won't do anymore. I will take immediate action." He requested Koirala to submit a concrete, actionable plan within three days, emphasizing that the party could not afford to ignore these issues, as opponents would capitalize on the discontent. He specifically mentioned the 2-3 lakh people actively trading online who could easily voice their frustrations on social media. Lamichhane assured Koirala that he would immediately convene a discussion with Dr. Swarnim Wagle to find solutions.

Encouraged by Lamichhane's decisive stance, Koirala subsequently submitted a 14-point plan outlining immediate government actions. The meeting concluded with a renewed sense of hope that the RSP's top leadership now fully comprehends the intricate challenges facing the capital market and the broader economy, and that Chairman Lamichhane's personal intervention will pave the way for meaningful and effective solutions. This political commitment is seen as a crucial step towards revitalizing investor sentiment and restoring dynamism to Nepal's financial landscape.