FDI commitment declined 60 percent during mid-July and mid-November

Kathmandu / Dec 15: The commitment for foreign direct investment (FDI) declined by almost 60 percent in the first five months of the current fiscal year compared to the same period last year.

According to the Department of Industry (DoI), Nepal received commitment for FDI worth Rs 12.22 billion during mid-July to mid-November, while the figure was Rs 29.95 billion in the corresponding period of the fiscal year.

The DoI officials said a fall in FDI commitment could be due to worsened macroeconomic indicators of the country in the past one year along with the economic slowdown in a number of countries. Last year, Nepal suffered depleting foreign currency reserves along with high financial sector instability.

In the review period this year, the foreign investor pledged the aforementioned amount for 108 projects. Of them, one was for large firms, while 19 were for medium level and remaining 88 were for small firms.

According to the DoI, 49 of the registered firms were related to the service sector including 47 firms in tourism business. Likewise, seven were in manufacturing, four were in information technology and one in infrastructure development. These firms pledged to provide employment to 6,353 people.

Recently, the government adopted a flexible policy to attract more FDI amid ongoing slump in domestic investment. On October 14, the government lowered the minimum threshold required for FDI. The minimum limit has now been reduced by 60 percent to Rs 20 million from Rs 50 million earlier.

The DoI records show that Nepal has registered a total FDI of Rs 431.49 billion as of now. The investment has been committed for 5,641 projects.