Kathmandu, June 21 -- making is generally the fundamental objective of any private enterprise, but for many entrepreneurs in Nepal now, safeguarding themselves, their investments and their businesses has become a more pressing concern than pursuing growth.

Business leaders say a combination of sluggish economic activity, weak market demand, regulatory uncertainty, ongoing disputes involving industrial estates and dedicated power lines, as well as increased scrutiny under anti-money laundering and asset disclosure rules has pushed the private sector into a defensive position.

Although commercial banks are awash with liquidity and lending rates have fallen to historic lows, credit demand remains subdued. Economists and business leaders in...