### **E. Intellectual property rights**

To promote private equity funds in the country, Nepal should modernize its Patent, Design and Trademark Act 1965 to incorporate WTO trade-related intellectual property rights (IPR). Nepal’s legal framework for IPR is found in the Patent, Design, and Trademark Act 1965 and the Copyright Act 2002. However, the law does not meet modern standards for trade-related intellectual property rights. International trademark holders have complained that that they are unable to protect trademarks which are well-known in international markets, despite Nepal being party to several IPR related conventions: i) Paris Convention for the Protection of Industrial Property (June 22, 2001); ii) Convention Establishing the World Intellectual Property Organization (February 4, 1997); and iii) World Trade Organization (WTO) - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) (1994) (April 23, 2004). Nepal also adopted The Competition Promotion and Market Protection Act in 2007 which governs anti-competitive practices, monopolies, fair competition, and mergers and acquisitions However, this Act has not been effectively implemented or enforced in practice.

## **V.**

# **Business-Enabling Environment**

In addition to the legal and regulatory environment, the task team has analyzed several other factors that affect PE/VC investment in Nepal. These factors impact a fund’s ability to operate during different phases of its lifetime, including fund-raising, investment entry, management of portfolio companies and investment exit. Table 3 provides a summary of the task team’s findings.

In general, there is substantial room for improvement in business environment in Nepal, which currently ranks as number 107 (out of 190) in the World Bank Doing Business ranking. While this is better than the rankings for India (130) and all other south Asian countries except Bhutan, on a broader international basis it is an unsatisfactory result. Nepal’s position also deteriorated from 2016 to 2017. Five components of the Doing Business survey are particularly relevant for PE/VC: enforcing contracts, resolving insolvency, paying taxes, protecting minority investors and getting credit. In contract enforcement Nepal scores very poorly (rank 152), due to the long timing, high cost and poor quality of its judicial process. Tax payments are equally time and process-intensive, resulting a low rank of 142. Getting credit (rank 139) is negatively affected by the lack of credit information and a credit bureau. Nepal scores better in minority investor protection (rank 63) and resolving insolvency (rank 89).

**Table 3: Business-Enabling Factors**

|**Factor**|**Investment Drivers**|**Bottlenecks in Nepal**|
|---|---|---|
|Political stability|<br>Stable political situation is key<br>to investor confidence|<br>Investor concerns remain<br><br>Nepal held local level and national<br>elections in 2017 and a new government<br>is being formed. Local level elections<br>were held in three phases -- on 14 May,<br>28 June and 18 September, 2017.<br>National elections were held in two<br>phases on November 26 and December<br>7, 2017.<br>|

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