EDITORIAL: Allay FDI Fears
Published: December 22, 2016 5:08 am On: Opinion
In order to attract FDI as per the expectation, the government should convey the message that foreign investment policies are clear, stable and investment-friendly Nepal is preparing to host a two-day Nepal Investment Summit on March 2-3 next year with a view to attracting over $1 billion as foreign direct investment in the country. The Ministry of Industry (MoI) which is the main organizing line ministry is now seeking suggestions from all stakeholders and diplomatic fraternity for the summit which the ministry hopes to boost Nepal’s image as a major destination for FDI. All diplomatic issions based in Nepal have expressed commitment to make the summit a success and have also given the government recommendations on some key areas about ‘dos and don’ts’.
The Nepal Investment Board (NIB) which is mainly responsible for bringing in FDI has not been able to hold even a single board meeting since the formation of the Pushpa Kamal Dahal-led government. It is the PM who chairs NIB board meeting and identifies areas where FDI is to be roped in. As a result of this, decisions related to major projects have been stalled. It is unclear how the Nepal Investment Summit will become a success when the NIB itself has been dormant for long as the PM is busy dealing with political issues.
In a meeting held by the MoI diplomats representing foreign embassies in Nepal suggested that the government should first remove the legal barriers on taxation, repatriation of profits from the FDI and other unclear FDI policies if the government were to encourage foreign investment in the country. They also stressed the need to come out with a clear policy on labour law and labour policies because this lack of clarity mainly hinders the FDI in the country. Ambassadors from the USA and Japan have advised the concerned ministry to make foreign investment-friendly policies and laws so that businessmen from their countries can be lured to make investment in Nepal’s potential areas such as hydroelectricity, tourism and other infrastructure projects that may generate enough employment opportunities as well as generate revenues to the national coffers.
The government has been saying that the domestic and foreign investors will be given equal treatment in terms of government facilities. But the foreign investors appear to be scary about making investment in Nepal due to prolonged political instability, frequent labour strikes and inconsistent investment policies. In order to attract FDI as per the expectation, the government should convey the message that foreign investment policies are clear, stable and investment-friendly, no matter whoever comes to power. The government should also best utilise its honourary consuls in different countries to promote investment. Making strong political commitment for FDI is not enough. It must be translated into action. At the same time, the government must identify the potential areas where and how it wants to encourage FDI. The planned summit itself is a good initiative at a time when no major foreign investment has arrived. A well-thought out plan is imperative to remove the legal barriers on taxation, provision of repatriation of profits made from such investment. The government should also assure potential investors that their investment will not face danger in Nepal which has seen a lot of political and labour unrest.
The government carried out raids on some health facilities, such as private clinics, diagnostic centres, and hospitals, in the Kathmandu Valley in recent times and found that most of them had been operating without government registration. Unregistered health units are illegal and they are liable to action. Besides, they have been evading taxes and it is more difficult to make unregistered firms accountable because they do not exist in the government’s books and they are not transparent either. But those already operating such health facilities illegally should have been brought to book. According to the Ministry of Health, over sixty per cent of the private clinics, hospitals, nursing homes, laboratories, and diagnostic centres operating in the Valley are still unregistered. Even some of the registered ones have let their registration lapse without renewing it for years. The reports of the tests conducted at many of such facilities are reported to be unreliable. All this has happened mainly owing to an utter lack of a sense of duty among the health officials.