PESTEL Analysis of Nepal

Presented by:
Amish Dhungel
 PESTEL analysis describes a framework of macro-
environmental factors used in the environmental scanning
component of strategic management. (wiki)

The relevance of PESTEL model for a country analysis

is to audit its contemporary environment and assess
potential changes and prepare accordingly so that the
country will be better positioned than its competitors to
respond to changes.

PESTEL Analysis
Political Environment
Analysis of Nepal

Presented by:
Amish Dhungel
 Federal Democratic Republic of Nepal
Government: Parliamentary republic
Absolute Monarchy:
1726-1950 (Shah Dynasty, unification)
Rana rule
Democracy in Nepal:
Tri-party agreement in New Delhi (1950), Dawn of Democracy
End of democratic practice in 1960 by King Mahendra
Constitutional monarchy installed on 1990 by King Birendra
Maoist insurgency from 1996 to install Republic in Nepal
Royal Massacre in 2001
Dismissal of democratic experiment in 2005 by King Gyanendra
2006 April revolution jointly by Seven party coalition together with Maoist, reinstate of
Parliament
May 8, 2008 Nepal was declared as Federal Democratic Republic

Political Environment
Analysis of Nepal
 Was never colonized.
Instable government. No government since 1991 have
survived for more than two years.
23 governments over last 23 years.
Ease of doing business: 105 (World Bank)
Corruption Perception Index: 116/176(Transparency
International)
Women representation in Parliament: 33.33%

Political Environment
Analysis of Nepal
 Executive power vested in government headed by Prime
minister.
Head of state is President.
Legislative power is vested in Government and the
parliament.
Independent judiciary.
Nepali congress (socialist-democracy), UML, UCPN-
Maoist as major political parties. 139 political parties
registered for 2nd CA election

Political Environment
Analysis of Nepal
 Commission of Investigation for Abuse of Authority
(CIAA) in practice since 2007

Political Environment
Analysis of Nepal
 Constitution drafting on its way
Government strong commitment for optimum growth of national production
More liberal economic policies in line to free market
Fine-tuning of monetary policy
Recognized the role of private sector
Government investment only in infrastructure
One window policy for FDI via Investment Board
Trade policies promoting exports and reducing of trade imbalance
Quantitative restriction and import licensing system abolished
Simplified export procedures
Rapid financial reforms, enabling JV Banks etc

Things are Changing

Socio-Cultural Environment Analysis of
Nepal
 Area: 147,181 sq. km. ; world's 93rd largest country by land mass and the
41st most populous country.
Located in the Himalayas and bordered to the north by of China, and to the
south, east, and west by the Republic of India.
Kathmandu is the nation's capital and largest metropolis. Renowned for its
splendid Himalayas.
 Total Population: 26,494,504 (2011 census)
Gender distribution:
Male Composition: 49%
Female Composition: 51%
Age groups: 0-14 (39.35%
15-59 (54.15%
60+ (6.5%)
Geographical regions: Mountain: 6.73%
Hill: 43%
Terai: 50.27%
Population growth rate: 1.35

Demographic status
 Religion: Hindu 81%, Buddhist 9%, Muslim 4.4%, Kirat 3.1%,
Christian 1.4%, other 0.5%, unspecified 0.2%
123 mother tongues, Nepali being the national language is
spoken by 44.6%.
Literacy rate:75.10%
Staple food: Rice, vegetables, lentils and pickles, dhido
( traditional food)
Deep rooted caste system still prevailing in some parts of
country
Upper class
Middle class
Lower class

Brahmin
Chhetri
Baisya and,
Sudra

Nepal is a melting pot of many races and tribes.

There are around 101 ethnic and caste groups.

Class & caste structure

 The ethno-cultural groups maintain their unique life style,
language, customs, and rituals, food habits, dresses,
jewelry or ornaments and festivals.
The culture of Nepal is a assemblage of music,
architecture, religion and literature.
Music is associated with every event in Nepal, then be it
birth, marriage, festivals or national events.
 Business practices are influenced by traditional values.
Any business that is conducted against the cultural values may not
sustain.
Family patronage of business is wide spread.
Modernization and growth in information technology are helping
to break cultural barriers in Nepal.
With the growing literacy rate traditional way of doing business is
being gradually replaced.
Huge impact of tradition and culture in businesses. (eg. beef

products are not allowed).

Tourism industry is highly influenced by socio structure, culture

and traditions.
 89.2 percent are reported to be living in their own
dwelling units and 9.2 percent in rented dwellings
Majority (68.4 percent) of the households used wood as
fuel for cooking. Liquefied Petroleum Gas (LPG) use
was 12.3 percent
(25.4 percent) of households has a modern flushing toilet
and 23.4 percent have an ordinary toilet.
(28.3) percent have a mobile phone, 9.8 percent have a
fixed line telephone and 3.1 percent have a computer
 Median age of country's population: 21.6 years
People of all ages living with HIV (thousands) 2012,
estimate 49,000
Crude fertility rate: 2.4
Urbanized Population: 17.3 %
School enrollment rate: 135% (highest in South Asia)
Life expectancy at birth: 68 (highest in South Asia)

Socio-Cultural facts
TECHNOLOGICAL
ENVIRONMENT Analysis of Nepal
 Modern science entered with the introduction of
intermediate science education in Tri Chandra College in
1919.
Bachelors of science : Tri Chandra College, 1948
Masters of Science : Tribhuwan University, 1965
Institutions of Medicines, Engineering, Forestry,
Agriculture :TU, 1973
The 6th Five Year Plan(1980-1985), linked science and
technology activities with economic development
National Council of Science and Technology (NCST),
1976, now dismantled

A SHORT HISTORY OF
SCIENCE AND TECHNOLOGY
 Foreign Investment and Technology Transfer Act,
1992 (FITTA):
FITTA governs all matters relating to foreign investment
and technology transfer. This act states provision
regarding settlement of disputes related to investment
among the stakeholders.

It also clarifies the potential are where foreign investment

and technology transfer can be made. Similarly it also
states mentions the area where foreign involvement is
restricted. Like: cottage industry, arms industries, motion
pictures business, security printing etc.
 Science and Technology Policy, 2005
It focuses on Infrastructure development, human resource
development, R & D, etc. Furthermore it vision to build Nepal as
a developed, dynamic and prosperous state by raising the living
standards through the appropriate development and use of
science and technology.

National Policy on Technical Education and Vocational

Education, 1999
Information Technology Policy, 2002
 Research Centre for Applied Science and Technology
(RECAST), 1977
Nepal Academy of Science and Technology (NAST), 1982
Ministry of Science and Technology, 1995
B.P. Koirala Institute of Health Science
National Academy of Medical Sciences, Bir Hospital
National Agriculture Research Centre, 1991
Department of Forest Survey and Research, 1963
Department of Irrigation, Hydrology and Meteorology, 1967
Department of Plant Resources, 1957
TECHNOLOGY OF NEPAL AT GLANCE
RADIO
Government Owned FM- 1 (Radio Nepal)
Private Owned FM- 50
NEWSPAPER
Number of National Daily- 14
Government- Gorkhapatra and The Rising Nepal
Private- Kantipur Daily, THT, TKP
Number of Weekly Newspaper-15
 TELEVISION
Commenced in 1985 with Nepal Television
Government- 2 (Nepali TV and NTV Plus)
Private- 20 (Most preferred are Kantipur, Image Channel,
Avenues)

TELECOMMUNICATION
As per 15th July 2013
Population-26,494,504
User population-21,332,275 (80.51%)
 7%
4%

MOBILE
FIXED LANDLINE
OTHERS

89%

PENETRATION RATIO
 Column1

1%
4%3%
NCELL
NTC
Smart tel
49% UTL
43% Others

Market Share of Major

Players
 Column1

2% 1% 0% 0% GPRS
3% CDMA
ADSL
WIRELESS
CABLE MODEM
94% WIMAX

INTERNET USERS IN NEPAL- 26.1%

 Rich in many traditional technologies
Dominant in rural areas
Nepal possesses good technical know-how of traditional
technologies in the following fields-
1. Metallurgy, pottery
2. Architecture and construction
3. Textile manufacture, dyeing and printing
4. Paper manufacture
5. Food technology
6. Agriculture and water management
7. Medicines

STATUS OF TRADITIONAL
TECHNOLOGY
 Commencement of modern technology in Nepal from 1936
through Biratnagar Jute Mills
Second World War led to establishment of sugar, match,
cotton, plywood, and cigarette industries. Most declined
after the war.
The current status is indicated by the following scenario-
1. Growing use of modern technology
2. Skill base for modern technology
3. R and D spending
4. Transfer of technology

STATUS OF MODERN
TECHNOLOGY IN NEPALESE
INDUSTRY
 Low R and D for traditional technologies: Nepal
spends .34 % of GDP in Science and
Technological based research.
Entered internet revolution in 1993 when
Mercantile Office Systems introduced e-mail
services
Enacted Electronic Transaction Act, 2007

INFORMATION TECHNOLOGY IN
NEPAL
 Japan , World Bank, China, Switzerland, Britain, Australia etc.
have been major donor of technological equipment to Nepal.

Uses of information technology in Nepal

Information Management
Planning and control
E-commerce
E-education
E-banking
Ecological Environment
of Nepal
 Outline of Presentation:
5.1 Natural/Geographical profile of Nepal:
Physical profile
Mineral Resources
Flora and Fauna
Water resources
Agriculture
5.2 Ecological Factors Impacting Business:
Physical inputs
Transportation
Communication
Availability of Labor forces
Energy availability and Cost
5.3 Impact of Business on Ecology:
Waste materials disposal
Ecological consequences
Natural/Geographical profile of Nepal
Physical profile
Area: 147, 181 Sq. km
Seasons and Temperature
Geographical Regions of Nepal
Geographical division of Nepal
Geographical Percentage (%)
Regions Himalayan
Hilly
Himalayan 15
Region Terai
Hilly 68
Terai 17
Natural/Geographical profile of Nepal

Mineral Resources
Flora and Fauna
Water resources
Agriculture
Ecological Factors Impacting Business:
Physical inputs
Transportation
Communication
Availability of Labor forces
Energy availability and Cost
Impact of Business on Ecology:
Waste materials disposal
Ecological consequences
Legal Environment Analysis
of Nepal
 Business laws

Legal
environment of
business

Court s of law Law administrators

Legal regulations
. Partnership Act, 1964
If two or more person want to establish a firm to initiate
business, partnership firm can be registered.
Firm can be registered under Department of Commerce
(in Kathmandu valley) and Office of the Cottage and
Small Industries ( in outside the valley ) with the
recommendation letter of Chambers of Commerce.
Tax law is applicable and the firm should be renewed
each five years where the firm has been registered.
Private Firm Registration Act, 1958 (2014)
Recommendation letter is required from the Chambers of
Commerce or District branch of FNCCI to register the Private
Firm.
The license is issued for five years and should be renewed
after that period.
Trading business are registered under this act.
Company Act ,2006
The company must be incorporated in office of register
according to law.
It must include two to seven member
The MOA and AOA guides the operation of overall
company .
Labour Act,1992

Employment and job security, firing of employee

Working hours
Remuneration and yearly pay increment
Health and safety
Welfare provision

Labour related legislation

 Bonus Act ,1974
The bonus shall not exceed ten percent of net profit
The amount of bonus to an individual will depend on the
amount of monthly salaries and wages paid
 Mines and Minerals Act, 1985 (204
2)
All mineral products found inside the Nepal are the property of Government of
Nepal.

These are classified in two category Metal and Non Metal

Right to extraction of mineral product is with government. Permission can be

given to the private company as per their qualification and previous experience.

License shall be issued for a year and can be renewed. Government can cancel the
license if found the licensee doesn't work as per the law.