Question 1

What is IBN?

Accepted Answer

Investment Board Nepal (IBN) is a high-level government agency established to facilitate public-private partnership and private investments, particularly foreign direct investment (FDI) in Nepal. It was established through the Investment Board Act, 2011 and was reconstituted by introducing the Private Public Partnership and Investment Act (PPPIA) in 2019. The IBN is responsible for approving investment of USD 60 million or above for infrastructure development and provides hand holding facilities to investors in Nepal.

Question 2

What is the structure of IBN?

Accepted Answer

Right Honorable Prime Minister heads the IBN board as its Chairperson and the Honorable Minister for Finance is its Vice-Chairperson. The Chief Executive Officer (CEO) is the board’s member secretary and is appointed by cabinet through a competitive process for a tenure of four years. Click here to know the composition of the board.

Question 3

What are the IBN’s mandates?

Accepted Answer

The PPPIA provides two broad mandates to IBN: (a) To act as the national investment promotion and facilitation agency, providing ‘one-stop service’ for private sector investors, (b) To approve FDI of NPR 6 billion or above, carry out project studies, develop and manage (both solicited and unsolicited) projects under the public-private partnership (PPP) or private investment model as per the prevailing Act. The IBN also approves investments for the development of energy projects with a capacity of 200 MW or above.

Question 4

What is OIBN?

Accepted Answer

The Office of the Investment Board Nepal is the secretariat for the Investment Board Nepal (IBN), and is headed by its Chief Executive Officer (CEO) who is appointed through a competitive process for a period of four years. The OIBN has a team of people who are assigned for specialized services to investors. The OIBN has separate units for looking after private public partnerships (PPP), investment promotion, stakeholder engagement, and environmental and social compliance, among others.

Question 5

What are the projects being handled by IBN?

Accepted Answer

Click here to know the key PPP and private investment projects being handled by IBN at present.

Question 6

What are the hydropower projects that are under IBN jurisdiction?

Accepted Answer

Following are the hydropower projects, being handled by OIBN:

 	Arun- 3 Hydropower
 	Upper Karnali Hydropower
 	Upper Marsyangdhi-2 Hydropower
 	Tamor Hydropower
 	Lower Arun Hydropower
 	West Seti + SR 6 Hydropower

Question 7

How much FDI has been approved by IBN till now?

Accepted Answer

For information on the total amount of FDI approved by IBN, click here.

Question 8

How does the FDI approval process work at IBN?

Accepted Answer

Click here to see the FDI approval process at IBN.

Question 9

Does IBN provide one-stop service to investors?

Accepted Answer

Yes. IBN facilitates one-stop-service for investors. It has set up a separate one-stop service unit to provide the following activities:

 	To carry out activities regarding registration, approval, establishment of the company, renewal, transaction approval, etc. through the development of one-stop-service to facilitate investors
 	Issue recommendation letter to the relevant agency for project development
 	To provide Permanent Account Number (PAN) to investor
 	To recommend and facilitate FDI approval and repatriation based on prevailing laws
 	To facilitate for necessary industrial infrastructure required for project development
 	To facilitate foreign investor and foreign workers for obtaining visa and work permit as per existing law
 	To provide investment-related notices and information through the establishment and operation of an investment portal
 	To conduct/facilitate/recommend activities such as capital increment, the addition of objectives, change in objective, ownership transfer and relocation of a company established under existing law for project development
 	To recommend and facilitate all activities essential in relation to project development and management
 	To provide service to investors through development on one-stop-service
 	To carry out activities as assigned by IBN

Question 10

Do investors have to pay for the one-stop service facilities?

Accepted Answer

No, IBN does not charge investors for one-stop service facilities.

Question 11

Who qualifies for the one-stop service facility at IBN?

Accepted Answer

IBN provides one-stop service to any foreign/national investors who are willing to investment in Nepal.

Question 12

How can I access the one-stop service?

Accepted Answer

In order to access the one-stop service from IBN, any national/international investors can either write to IBN Office at info@ibn.gov.np or visit the IBN Office.

Question 13

How can I apply for investment at IBN?

Accepted Answer

Any potential investor is required to submit a project investment application at IBN. Following is the process of application at IBN.  IBN also manages solicited projects, for which there is a standard procurement process, and the investors have to participate in the process. Click here for the process for solicited projects.

Question 14

Do I have to physically be present to apply at IBN?

Accepted Answer

No, any investors can apply online at info@ibn.gov.np with the specified fee. Click here for the processes for solicited and unsolicited application at IBN.

Question 15

What are the necessary documents that I am required to produce for an unsolicited projects?

Accepted Answer

For an unsolicited project, investors are requested to submit:

 	Company profile including a financial statement for the last 5 years,
 	Project concept and plan,
 	Technical details and specification,
 	Details of project feasibility/survey/detailed design,
 	Project economic/technical/environmental feasibility,
 	Project implementation method and work schedule,
 	Business plan and basic financial statement,
 	Source of investment and financial arrangement,
 	Social/economic contribution of the project, and
 	Other relevant information (if any)

Question 16

What is an unsolicited project?

Accepted Answer

Unsolicited projects refer to investment projects conceptualized and developed solely by the private sectors. Private projects can be fully owned by private parties in Nepal.

Question 17

How does IBN negotiate projects?

Accepted Answer

IBN has a standard process for negotiating projects. First, all conditions are mentioned in the EOI and RFP documents and project negotiations follow them. IBN signs a Project Development Agreement (PDA) for PPP projects and a Project Investment Agreement (PIA) for private investment projects. The PDA negotiation team comprises up of:

 	Joint Secretary, Investment Board Nepal: Coordinator
 	Project Manager assigned by Investment Board Nepal: Member
 	Under Secretary- Technical, Investment Board Nepal: Member
 	Under Secretary (Legal), Investment Board Nepal: Member
 	Officer, Investment Board Nepal: Member Secretary

Question 18

How does IBN collaborate with provincial and local bodies?

Accepted Answer

IBN coordinates with provincial and local governments on various issues including the development of potential PPPs and private projects, promoting such projects, and managing the stakeholders in such projects in the provincial and local units they are located in. Apart from these, IBN collaborates with provincial and local governments to build their capacity.

Question 19

What are the promotion initiatives that IBN has carried out so far?

Accepted Answer

IBN has organized two highly successful investment promotion summits in 2017 and 2019 with significant participation from global and national investors. Over a period, IBN has coordinated with diplomatic missions and various multi-lateral agencies to organize various investment promotion events at home and abroad. Besides, IBN has provided technical support for investment promotion activities at the local level to attract investment.

Question 20

How does IBN promote investment in Nepal?

Accepted Answer

IBN organizes investment summits normally two years interval and supports other government agencies as well as the private sector in their investment promotion initiatives.

 	Nepal Investment Summit 2017
 	Nepal Investment Summit 2019
 	Nepal Infrastructure Summit 2017
 	Nepal Infrastructure Summit 2019
 	Tilottama Investment Summit 2019

 In addition, IBN carries foreign investment promotion in various countries in collaboration with the diplomatic mission of foreign countries and development partners.

Question 21

How are PPP projects procured by IBN?

Accepted Answer

Firstly, IBN calls for an expression of interest (EOI) from potential investors. The EoIs are then screened based on a set of criteria. IBN then issues a request for proposals (RFP) notice to qualified investors for the submission of a detailed project proposal. Finally, IBN conducts a comprehensive review of the proposals received before recommending the most competent investor to the IBN board meeting for final selection.

Question 22

What are PPP projects being handled by IBN?

Accepted Answer

IBN has been overseeing various PPP projects. Some major PPP projects in advance stage implementation are:

 	Arun-3 Hydropower Project
 	Upper Karnali Hydropower Project

Question 23

What are private projects being handled by IBN?

Accepted Answer

IBN has been overseeing some private investment projects in advance stage of implementation:

 	Hongshi Cement Private Limited
 	Huaxin Cement Private Limited

Question 24

How does IBN identify PPP projects in Nepal?

Accepted Answer

IBN has developed a project bank for PPP projects in coordination with relevant government agencies and the private sector. Projects are recommended to the IBN board meeting for final approval. The identification and approval of projects are based on the priority sectors envisaged by the PPPIA 2019.

Question 25

How is the FDI Process in Nepal?

Accepted Answer

Click here for process of FDI in Nepal.

Question 26

Do investors need to get approvals from any other government agencies?

Accepted Answer

Investors need to get approval from other government agencies as well. But, the Government of Nepal has created a one-stop service unit to provide such services to investors. IBN and the Department of Industry has been serving as the one-stop-services in line with their legal mandate.

Question 27

How long does it take for an investment approval in Nepal?

Accepted Answer

In the case of investments below NPR 6 billion, the foreign investment approving agency is the DOI. The DOI decides on an application for investment within seven days of submission of it.

While the foreign investment approving agency is IBN, in the case of investments above NPR 6 billion. IBN take decision on an application within 15 days from the date of receiving it. IBN’s approval follows a due diligence process carried out by a screening committee at the IBN Office.

Question 28

Are there documents related to foreign investment approval available online in Nepal?

Accepted Answer

Nepal Investment Guide 2020 is a comprehensive guidebook on Foreign Investment in Nepal. Followings are the key document to be referred by investors :

Foreign Investment and Technology Transfer Act, 2019

Industrial Enterprises Act, 2020

Public-Private Partnership and Investment Act, 2019

Public-Private Partnership and Investment Regulations, 2020

Question 29

Does IBN help foreign investors in exploring a suitable local partner in Nepal?

Accepted Answer

IBN does not find local partners for foreign investors. But, it can provide the best advice on the issue. It also organizes events in which foreign investors can meet suitable partners.

Question 30

Can I establish an industry in a Special Economic Zone (SEZ)?

Accepted Answer

Yes. To be designated for Special Economic Zones, the industry needs to be an export-oriented – 60% of the manufactured products needs to be exported to other countries starting from the second year of its operation. For more details, please contact visit: Special Economic Zone Authority.

Question 31

Which sectors are restricted for foreign investment in Nepal?

Accepted Answer

The Foreign Investment and Technology Transfer Act (FITTA) 2019 has listed the following industries in which foreign investment will not to be granted:

 	Livestock farming, fish farming, apiculture (beekeeping), horticulture, oil-bearing crop, lentil, dairy business and other areas of primary agricultural products,
 	Micro and cottage enterprise,
 	Personal service business (such as hair cutting, tailoring, driving etc.),
 	Industries producing arms and ammunition, gunpowder, explosives, nuclear, biological and chemical (NBC) weapons; industries producing atomic energy, radioactive materials,
 	Real estate business (excluding construction industry), retail business, domestic courier service, local catering service, money changer, remittance service,
 	Travel agency, guide, trekking and mountaineering guide, rural tourism including homestay involved in tourism,
 	Media (newspaper/magazine, radio, television and online portals) business, and business-related to motion pictures of a national language,
 	Management, accounting, engineering, legal consultancy service and language training, music training, computer training,

Other consultancy services with foreign investment owning more than fifty-one percent.

Question 32

What is the minimum threshold for Foreign Direct Investment (FDI) in Nepal?

Accepted Answer

The FITTA 2019 has set a minimum threshold of NPR 50 million for foreign direct investment (FDI) in Nepal.

Question 33

Are foreign workers allowed to work in Nepal?

Accepted Answer

Foreign workers can be recruited in the absence of a required skilled workforce in the local market for specific jobs. Foreigners can obtain various categories of visas such as non-tourist, business and residential visas during their stay in Nepal for official purposes.

Question 34

What are the tax rates, incentives and duties in Nepal?

Accepted Answer

The corporate tax rate in Nepal is 25%. But it is 20% in the case of special industries identified by the Industrial Enterprise Act and the Value Added Tax is 13%. Special duty reductions of five or ten percent are provided on imports from the Tibet Autonomous Region of the People’s Republic of China, member countries of the SAARC, and designated most-favoured nations. Companies are subject to fiscal incentives, changes in the import tariffs and other duties, and taxes are generally announced through the annual budget and later to be ratified by the Parliament before it is enforced. Exemptions and other incentives are also provided when industries fulfil certain criteria in terms of investment size, employment, sector etc.

On items that are commonly imported, duty is levied on an ad valorem basis i.e in proportionate to the estimated value of the goods or transaction concerned.  There are a few exceptions, where duty is based on quantity (volume or weight). The existing rates are 0-80% depending on the products. Most raw materials fall within the 0-10% duty-band, whereas finished goods and consumer items fall within the 5-30% duty-band.

Question 35

Are foreign investors allowed to repatriate their earnings back to their home country?

Accepted Answer

Foreign investors can repatriate their earnings once all the taxes are fully paid and all necessary legal obligations are met. Nepal Rastra Bank, the central bank of Nepal, grants approval for repatriation on the basis of recommendations from investment approving authorities.

Question 36

What incentives do investors receive if they want to invest in export-based projects?

Accepted Answer

Export-based projects are encouraged to establish themselves in Special Economic Zones (SEZ) because they come with a lot of benefits. Companies can enjoy income tax, customs duty, and dividend tax exemptions after fulfilling certain criteria at SEZs.

Question 37

Does the Government of Nepal provide viability gap funding in case of investment proposed in priority sectors?

Accepted Answer

Yes. The provision of viability gap funding (VGF) has been introduced in the PPPIA 2019. A decision on such a fund shall be taken by a committee set up at the Ministry of Finance on the recommendation of the investment approving agency. Such funds are available for construction, operation and expansion of the projects that yield positive returns in the long run and are important infrastructure projects, which seem not to be able to run in profit immediately.

Question 38

How does a project developer acquire private land in Nepal?

Accepted Answer

Any project developer can acquire private land in Nepal in two ways:

 	The project developer can himself/herself acquire land based on a willing buyer willing seller approach
 	The project developer can request the Government of Nepal for the acquisition of private land, where all the acquisition costs are borne by the developer.

Question 39

How can a project developer lease forest land in Nepal?

Accepted Answer

For the acquisition of forest land, the project developer will need an approved Environmental Impact Assessment (EIA) report. For IBN projects, the developer requests the Ministry of Forest and Environment through IBN to lease the forest land as per the approved EIA report and/or Detailed Project Report (DPR).

Question 40

How does IBN facilitate land acquisition for private, forest and government land?

Accepted Answer

For IBN facilitated projects, developers request IBN for the acquisition and/or leasing of necessary lands and IBN on the behalf of the developer coordinates with relevant agencies to secure approval.

Question 41

How much land can a project acquire in Nepal?

Accepted Answer

A project can acquire land as stated in the approved EIA and/or DPR.  However, the maximum limit a person (including company) can hold land is defined by The Lands Act 2021. For anything above the ceiling limit, the company needs to request the Ministry of Land Management, Co-operatives and Poverty Alleviation for approval before acquiring land for the project.  The current ceiling limits are:

 	All Terai (Plain) Regions (including Inner Terai): 68,820 Square Meter
 	Kathmandu Valley: 12,718.50 Square Meter
 	All Hilly Regions Except Kathmandu Valley: 35,611.80 Square Meter

Question 42

What are the key acts/ laws governing land acquisition in Nepal?

Accepted Answer

Land Acquisition Act 2034
 	The Lands Act 2021
 	Forest Act 2076
 	Environment Protection Act 2076
 	Electricity Act 2049
 	Electricity Regulations 2050

Question 43

What are the key acts/laws concerning FDI in Nepal?

Accepted Answer

Foreign Investment and Technology Transfer Act 2019
 	Public-Private Partnership and Investment Act 2019
 	Industrial Enterprises Act

Question 44

What is the legal framework for ensuring equal treatment for investors in Nepal?

Accepted Answer

As per clause 45 and sub-clause (5) of the  Public-Private Partnership and Investment Act 2019, foreign investment projects shall be treated equally as any domestic industry in Nepal.

Question 45

Are foreign investors allowed to own a company in Nepal?

Accepted Answer

Yes. A foreign investor can own a company based on his/her equity investment. The ceiling of share ownership differs depending on the sector s/he wants to invest in.

Question 46

What are the visa provisions for foreign investor to reside in Nepal?

Accepted Answer

As per clause 52 of the Public-Private Partnership and Investment Act 2019, a non-tourist visa shall be provided for 6 months for foreign citizens to study, research and survey any approved foreign investment. Similarly, the foreign investor or one authorized representative and their family members shall be provided business visas to stay as long as investments continue in Nepal. Foreign employees of the project acquiring labour permits shall also be allowed to stay during their period of investment in Nepal.

Question 47

What are the corporate income tax rates in Nepal?

Accepted Answer

Corporate tax rates in Nepal depends upon the nature of the business entity and generally ranges from 25-30%. The normal rate for entities is 25%; rates for life insurance companies is also 25%, but rates for banks and financial institutions, general insurance, and enterprises involved in the petroleum business is 30%. Special industries, enterprises operating roads, bridges, railways hydropower stations, transmission lines, etc. on a BOOT basis are given a special rate of 20%.

Question 48

What is the legal framework that guarantees project security in Nepal?

Accepted Answer

To promote foreign direct investment (FDI) and reduce investment risks, the Government of Nepal approved the Hedge Fund Regulations 2019 on February 25, 2019. Similarly, the Public-Private Partnership and Investment Act 2019 has provisions to establish a Viability Gap Fund (VGF) for priority sector projects.

Question 49

What type of projects are covered by the Hedge Fund Regulations 2019?

Accepted Answer

Hydropower projects having a capacity of 100 MW or more
 	Transmission lines greater than 30 Km % 200 KVA
 	Railways longer than 10 Km and metro or monorail construction
 	Fast track constructions longer than 50 Km
 	Other projects specified by the Government of Nepal

Question 50

What are the provisions for avoiding dual taxation in Nepal?

Accepted Answer

The Government of Nepal has signed different treaties and agreements to avoid dual taxation. For instance, Nepal has signed BIPPAA with five  and DTAA with eleven countries.

Category: Consulting Staff

Mr. Tapendra Chand

Mr. Ujjwal Gajurel

Ms. Suvechha Nepal

Ms. Sujita Raut

Mr. Sourav Dhungana

Ms. Sita Rana

Ms. Shriju Dhakal

Mr. Sharad Sharma

Ms. Reshma Pandey

Mr. Ratish Basnyat