The 96th session of the International Labour Conference, held in Geneva in 2007, adopted conclusions for the promotion of sustainable enterprises and identified 17 conditions of an enabling environment for sustainable enterprises. It envisages an environment conducive to the creation and growth of sustainable enterprises combines the legitimate quest for profit with the need for development that respects human dignity, environmental sustainability, and decent work. Federal Democratic Republic of Nepal is one of the countries that implemented the Enabling Environment for Sustainable Enterprises (EESE) process that was developed as the ILO flagship programme following the conclusion of the Conference. Based on the EESE methodology, there are four main segments analysed in this report: political, economic, social, and environmental elements. Tripartite constituents selected six countries (Bangladesh, Cambodia, India, Lao PDR, Sri Lanka, and Uganda) as comparator countries for Nepal. With the support of external researchers, and using the EESE questionnaire, a survey was conducted among 622 employers from the six districts including Kathmandu, Kaski, Rupandehi, Banke, Chitwan, and Morang. In recent years the Nepal government has taken initiatives in the direction of improving social dialogue to advance the labour and employment agenda. Nepal’s legal framework provides for the protection of human rights. However, human rights problems associated with caste, gender, and ethnic discrimination, genderbased violence, and unaddressed atrocities from the time of the civil war exist. Nepal Government needs to address the challenges of reducing widespread poverty, creating sustainable livelihoods, building human capacity, and creating efficient institutions of governance and regulation. There are challenges to the rule of law and the enforcement of property rights in Nepal. The bureaucracy and the legal system are also poorly resourced, and the still prevailing sense of political uncertainty makes the delivery of services and enforcement of regulations difficult. In 2017 the Nepal Government released a national intellectual property policy that provides a roadmap to developing an intellectual protection system that would also improve the investment climate in Nepal. Income, gender, and spatial inequities between rural and urban areas are rife in Nepal, and though the constitution goes a long way towards legislating against some of these, there is a lot of work to be done to achieve greater social justice and social inclusion. Women rarely have access to the same educational and employment opportunities as men. They face many challenges to participating in economic growth, including gender-based violence, lower incomes, and reduced participation in community planning. The informal economy, and indeed poverty, are highly feminised in Nepal. The Labour Act (2017) and The Contributions-based Social Security Act (2017) have provisions to help improve the enforcement of occupational safety and health standards and widen the coverage of social protection schemes for workers in both the formal and informal sectors. Nepal needs to focus on fostering small and medium sized industries because that is where most of the Nepali end up working, and the growth of these industries would herald the beginning of upward economic mobility for members of Nepali society. But SMEs face many issues in relation to their growth. SMEs in Nepal are predominantly young, with almost half of the informal firms being less than 4 years old. These firms feel corruption is a serious. Income, gender, and spatial inequities between rural and urban areas are rife in Nepal, and though the constitution goes a long way towards legislating against some of these, there is a lot of work to be done to achieve greater social justice and social inclusion. The stakeholders of MSMEs had recommended to set up a high level committee under the chairmanship of the secretary of Ministry of Labor, Employment and Social Security (MOLESS) to periodically evaluate the progress. The Nepal Insurance Board (NIB) and Central Bank of Nepal (NRB) should initiate programs to support farmers getting compulsory insurance for products and subsidized loans based on non-collateral based qualifications (such as completion of trainings or preparation of a viable project).

The Ministry of Culture, Tourism and Civilaviation and Nepal Tourism Board (NTB) should jointly conduct an integrated review of policies affecting important tourism subsectors, such as aviation, adventure tourism, expedition, hotel, travel, and trekking. The Ministry of Finance and NRB should simplify access to finance for tourism sector MSMEs, identify and provide subsidies for establishments that are now subjected to high corporate tax, and facilitate the procurement of long term loans. The Ministry of Communication, Information and Technology should segregate Telecom Information and Broadcast Policy from IT Policy and clearly define IT-enabled services (such as BPO, KPO, Outsourcing, and FDI) and provide them with legal definitions and benefits. FNCCI, CNI and other related institutions should work to exchange ideas between universities and the private sector. The Minitry of Industry and Commerce and Supply (MOICS) should introduce information technology based market analysis systems and allow easy access to firms so that they can analyze the market for their products.