Finance Minister Bishnu Paudel presented the yearly budget plan for fiscal year 2021/22 on Saturday. The Oli government targeted young businesses in the country with two major announcements this year: an income tax exemption for the next five years and a seed capital loan of up to Rs 2.5 million at a 1% interest rate using their business proposal as collateral.
In addition, Rs 1 billion has been set aside to establish a challenge fund in order to encourage foreign investment in Nepali startups and to facilitate policies. The startup community, on the other hand, does not appear to be very enthusiastic, casting more doubt on its effectiveness. In addition, many business entrepreneurs are perplexed by the application procedure and requirements.
The budget announcement has not pleased Saugat Basnet, the founder of Sikumna. Every year, the yearly budget is published, and funds are distributed to all sectors, he says, adding that it is frustrating to see just half of the projects or works done effectively at the end of the fiscal year.
“The question remains on its implementation,” Basnet asserts. If the government can successfully implement this, it will undoubtedly be highly useful to us and a good step forward for companies like ours.”
“I also doubt if ordinary citizens like us can acquire that loan, and if we do, how long it will take to acquire it is also a question,” he adds.
“It is a good step,” says Suraj Raj Pandey, a co-founder of Fibro, “but it is not the first time that the budget has been so promising.”
An announcement is less essential to him than execution. “In the context of Nepal, that appears to be highly improbable. However, I am hopeful that this will be implemented, as SMEs and startups are in desperate need of assistance as a result of the Covid-19 crisis.”
Niraj Khanal, a startup enabler, agrees with Pandey and adds that money of various sizes and titles, such as challenge funds and seed capital loans, have been granted in prior budget plans as well. “It isn’t something new. As a result, there is skepticism about its execution, as there has been in the past.”
There is a lack of clarity
Meanwhile, Saugat Basnet claims that the statement does not clarify how to take advantage of the promised chances and that there is no mechanism in place to do so in the future. “How to apply for the loan, where to apply, what the implementation body and mechanism are, if any kind of references (source/force) are required to apply, what the eligibility criteria are, how long the application process will take, how feasible and viable the application process is, how much time it requires: nothing is clear yet.”
Basnet is also supported by Pandey and Khanal.
Khanal also claims that no orders for carrying out the plans have been issued. He also worries who would receive the investment or loan because there is no clear definition of who or what constitutes a startup. Khanal is concerned that this will lead to conflict.
“There is a lot of bureaucratic trouble even while processing the application, and there is no assurance of the loan or fund. It’s difficult to decide whether startups should run the administrative business or focus on the application in such a situation.”
Similarly, Pandey wonders, “What should a startup do?” Should it concentrate on product development and other aspects, or should it get involved in the excruciatingly long application process?”
There are no expectations
Despite agreeing with the premise of the announcement, most startup entrepreneurs are skeptical of its implementation. Ram Sharan Bikram Thapa, a co-founder of Skill Sewa, however, is dissatisfied by the budget proposal. “We were so excited about their (the government’s) loan announcement last year that we prepared extensively and applied. “After that, we genuinely don’t have any expectations from this budget and system,” he says. “The assistance was a far-fetched dream, but they didn’t even call or talk about these things.”
“The startup community still cannot trust the government’s statements and actions,” Khanal says. As a result, many entrepreneurs have low expectations of the system.”