To facilitate this integration, the government will introduce comprehensive amendments to existing legal frameworks governing foreign investment approvals, investment accounting, profit repatriation, and capital gains tax. This landmark policy is projected to inject significant foreign liquidity into the domestic market, vastly increasing its depth and stability.
- Structural Reforms and Market Modernization
To bring Nepal’s capital market in line with international benchmarks, the budget outlines a sweeping restructuring of regulatory bodies and market operators:
- Institutional Overhaul: The Securities Board of Nepal (SEBON), Nepal Stock Exchange (NEPSE), and CDS and Clearing (CDSC) will undergo comprehensive operational improvements and restructuring.
- Activating Institutional Investors: Pension funds, insurance companies, and mutual funds will be incentivized to take a more active role, shifting the market dynamics away from heavy retail reliance.
- Financial Innovation: The government plans to introduce new financial instruments, including derivatives, to develop the bond market and provide robust risk-management tools.
- Policy Stability and Investor Protection
Recognizing that market confidence relies on predictability, the government has pledged a stable tax policy to foster a genuinely investment-friendly environment.
To safeguard investor interests, the budget outlines plans to enhance the capacity of regulatory bodies to crack down on market irregularities, specifically targeting insider trading and stock manipulation.
- Boosting Entrepreneurship via SME Support
In an indirect boost to capital formation, the budget introduces a 'First Loss Recovery' loan security provision for Small and Medium Enterprises (SMEs). By mitigating lending risks, this initiative will grant smaller businesses easier access to vital capital, fostering a stronger pipeline for future public listings.
