KHATMANDU: Nepal has received foreign investment pledges for 379 new projects in the industrial sector in the ongoing fiscal (until July 7) against pledges for 348 such projects in 2016-17, thanks to endorsement of key investment-related legislations which have lured foreign investors to Nepal.
However, these foreign direct investment (FDI) projects are approved by Department of Industry (DoI), which is authorised to give a go-ahead to projects worth less than Rs two billion.
As per the statistics of DoI, the number of FDI projects in the manufacturing, service and tourism sectors has increased this year. While DoI had approved the FDI commitment for 126 tourism projects in 2015-16, the sector managed to secure investment pledges for 144 projects this fiscal year. Similarly, Nepal has received foreign investment commitment for 152 projects in the service sector in this fiscal against the FDI commitment for 145 projects in the sector in 2015-16.
Likewise, FDI commitment in manufacturing sector has also increased slightly this year. DoI has approved 55 FDI projects in manufacturing sector this fiscal year against 50 in the previous fiscal.
However, FDI pledges in the agro and forestry sectors have come down this fiscal to 18 projects from 22 projects in 2015-16. Meanwhile, DoI has approved FDI for seven information and technology projects this fiscal. DoI had not received any investment pledges of under the Rs two billion ceiling for such projects in 2015-16.
Meanwhile, DoI has received total FDI commitment of Rs 14.6 billion in the ongoing fiscal year (until July 7) against Rs 15.25 billion received in FDI pledge in 2015-16. This shows that though project-wise the FDI pledges have increased this year, the commitments in terms of monetary value have gone down.
Comparatively, tourism sector has received largest FDI commitment this year amounting to Rs 5.89 billion while construction sector has received the lowest FDI pledge amounting to Rs 10 million.
“The investment environment in Nepal is improving as the government has endorsed a number of key legislations related to investment and businesses and these legislations are business- and investment-friendly,” said Purshottam Nepal, spokesperson for Ministry of Industry.
The government had endorsed legislations like Foreign Investment and Technology Transfer Act (FITTA), Company Act, Industrial Enterprise Act, among others, in 2016-17.
On the other hand, industrialists said that the government should give emphasis on implementing these legislations effectively so that these investment pledges can be realised.
“Generally, only negligible portion of investment commitments are actually realised in Nepal. In a bid to encourage investors to actually invest, the government should implement existing legislations properly and assure investors of hassle-free business environment,” said Bhawani Rana, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).