News Analysis: Nepali industrialists see prospect of increased FDI amid improving business climate

by Prithvi Shrestha

Kathmandu, May 27 : Nepali industrialists have expected a surge in foreign direct investment (FDI) in Nepal in the coming days as the country is heading toward political stability after recent national elections.

After 16 years, the ruling party has had the absolute majority in the parliament which will contribute to the political stability in Nepal. The country is load-shedding free now after suffering power cuts up to 18 hours a day until a few years ago and industries are running in largely peaceful environment due to improved labor relations.

Nepal has also introduced new Industrial Enterprise Act, the Special Economic Zone Act and the Foreign Investment Policy, seeking to create more friendly investment environment.

Besides, the policies and programs of the Nepali government presented at the parliament by Nepali President Bidya Devi Bhandari on May 21 aims to achieve a double digit growth in the next five years from current 5.9 percent by attracting investment in the areas of agriculture, energy, transport, physical infrastructure, information technology, tourism and civil aviation. which are termed as the key areas driving economic growth in the country.

Nepali industrialists said these factors have made Nepal’s business climate favorable for investment although there are issues related to good governance and corruption.

Hari Bhakta Sharma, president of the Confederation of Nepalese Industries (CNI), a group of large and medium scale industries, told Xinhua on Saturday that Nepal’s current investment climate should be considered the best in recent years.

“I think foreign investors will seize this opportunity,” he said.

Sharma said that he sees the prospect of increased foreign investment in general and from China in particular.

“China has resources, technology and experiences to develop big infrastructure projects such as railways and hydropower projects,” he said.

China has contributed around 58 percent of FDI commitment out of the total 137.30 million U.S. dollar pledged by foreign investors during the first half of current fiscal year that began in mid-July 2017, according to Nepal’s Department of Industry.

Kishore Kumar Pradhan, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the apex private sector body of Nepal, also told Xinhua that the government’s policies and programs have offered opportunities for foreign investors in various areas particularly the infrastructure sector.

“We have not seen much foreign investment in the infrastructure sector except in hydropower sector,” he said.

With two international airports under construction, the country is expected to witness a surge in tourist arrivals which, in turn, requires more investment on tourism infrastructure.

Former FNCCI President Pashupati Murarka told Xinhua that Nepal is in urgent need for governance reforms after the situation has been improved in the areas of politics, power availability and labor relations.

“The government must be able to ensure that the rule of law prevails so as to attract large-scale foreign investment in the country which is necessary to achieve economic prosperity,” he said.

He also stressed on settling the issue of taxation to be imposed by the central, provincial and local governments. “Multiple taxations must be avoided if we have to attract more investment either from within the country or outside,” he added. (Xinhua)