FOREIGN INVESTMENT COMMITMENT RISES
August 1, 2015 Karobar
KATHMANDU, Aug 1
Foreign investment commitment in the last fiscal year is enthusiastic despite the earthquake on April 25 disrupting investment environment. Commitment of direct investment (FDI) for Rs 67 billion was received for small and medium sized projects in the fiscal year 2071/72, according to the Department of Industry. It is more than three times higher than Rs 20 billion of the preceding year.
The data, however, does not include the commitment received through the Investment Board (IB). Experts say investment has increased due to announcement of the second stage of economic reforms by the coalition government of Nepali Congress (NC) and CPN-UML after the second Constituent Assembly (CA) election. Director General (DG) at the department Maheshwore Neupane says while the data has improved in terms of number and amount, it cannot be termed adequate. “Investment environment had improved from the start of last fiscal year but there has been some disappointment after the earthquake,” he adds. He reasons that foreign investors are enthusiastic after NC and CPN-UML, that champion free market economy, formed the government after the second CA, and signs of drafting of the new constitution.
President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka says even domestic investors have been enthusiastic during the period especially in infrastructure and service sectors. He states foreign investment will arrive automatically if investment environment in Nepal were to improve just a bit. DG Neupane claims that investment commitment will rise further as the cabinet has already issued foreign investment policy with different facilities to attract foreign investment.
The policy has given top priority to generation and transmission of hydroelectricity, development of transportation infrastructure, agricultural, and food and medicinal herbs processing industries, tourism, mines and minerals based and manufacturing industries. “There will not be investment problem in Nepal if the government were to guarantee implementation of acts/regulations and policies prepared after a long homework to improve investment environment,” Murarka states.
Hydropower sector received 81 percent of the total commitment in the last year with commitment of Rs 54 billion received for five hydropower projects. “There is boundless potential of hydropower in Nepal. Investors are enthusiastic due to that,” General Secretary of the Nepal Chamber of Commerce (NCC) Kamalesh Kumar Agrawal says.
Tourism sector leads in terms of numbers with commitment of Rs 4.29 billion received for 130 projects. It is more than double of that received in the preceding year, according to DG Neupane. Commitment of Rs 5 billion has been received for 119 projects in service sector. It was Rs 2 billion for 58 projects in manufacturing sector, Rs 730 million for 39 projects in agriculture, Rs 19 million for six projects in mines and minerals. More investment has been committed even for construction sector.
President of the Confederation of Nepalese Industries (CNI) Narendra Kumar Basnyat says enough foreign investment will arrive if the government were to provide security for domestic investment. He opines that the new constitution must guarantee investment environment. The government has initiated the process of signing Bilateral Investment Promotion and Protection Agreement (BIPPA) with five countries including China, South Korea and UAE. DG Neupane says signing of Power Trade Agreement (PTA) with India and project development agreement (PDA) with different projects has also attracted foreign investment.
The department can approve foreign investment of up to Rs 2 billion, the Industrial Promotion Board for up to Rs 10 billion and the IB for more than that. The government has already opened an immigration unit inside the department premises to implement one-door policy. “The government has been doing its best to improve investment environment,” he adds.
A total of 3,220 projects with commitment of Rs 182 billion have been established with foreign investment by the end of last fiscal year, according to the department. Finance Minister Dr Ram Sharan Mahat has been urging donors for investment stating that lasting peace cannot be achieved in Nepal if high economic growth is not achieved by creating jobs inside the country. Big investment will be required to graduate Nepal to a developing country by 2022.
Countries like India, China, South Korea, France, Bangladesh, Japan, America, Australia and Canada have been investing the highest in Nepal. Around two dozen countries including Britain, Italy, Singapore Thailand and others are also investing. They have been showing interest in manufacturing, service, energy, agriculture and minerals sectors, according to Neupane. Nepal has received FDI from 83 countries until now.