Nepal and China sign BRI Cooperation Framework

Kathmandu / Dec 04: Nepal and China have officially signed the BRI Cooperation Framework during Prime Minister KP Sharma Oli’s visit to China. This development formally further advances Nepal’s involvement in the Belt and Road Initiative (BRI), a programme China proposed and Nepal initially signed in 2017.

The signing was delayed on Tuesday due to disagreements over terminology to be used in the draft. The debate centred on whether to include the term “grant” in the financial cooperation modality. Following further discussions, a consensus was reached on Wednesday, with both sides agreeing to use the term “aid assistance financing.”

A senior Nepali official involved in the talks said that discussions have finally concluded leading to an agreement on the framework. Initially, the Nepali side proposed ‘grant financing cooperation modality,’ which was amended by the Chinese to ‘assistant financing modality.’ Eventually, the term ‘aid assistance financing’ was agreed upon by both parties.”

On Nepal’s side, the negotiations were led by Prime Minister Oli’s economic and development advisor Yubaraj Khatiwada and Foreign Minister Arzu Rana Deuba. High-ranking officials from China’s Ministry of Foreign Affairs represented the Chinese delegation.

This agreement marks a significant step in Nepal-China relations, paving the way for enhanced economic cooperation under the framework of the BRI, a major programme introduced by Chinese President Xi Jinping.

Government, private sectors pledge reforms for foreign investment

The government and private sectors have committed to continuous reforms to attract foreign investment, including Chinese investment, in Nepal.

During Prime Minister KP Sharma Oli’s offical visit to China, the Nepal-China Business Summit was jointly organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the China Council for the Promotion of International Trade (CCPIT), and the Embassy of Nepal in China.

The summit emphasised policy and procedural improvements while advocating for investment expansion and trade facilitation.

The summit, aimed at promoting bilateral trade, developing the tourism sector, and attracting Chinese investment in Nepal, was graced by Prime Minister KP Sharma Oli as the chief guest. He highlighted that the investment climate in Nepal is improving and urged investors to explore opportunities in the country. Acknowledging the historical ties between Nepal and China, he emphasised that these mutual relations have fostered economic development.

Prime Minister Oli underlined the priority given to cooperation between the government and the private sector in fostering a conducive business environment. He described the private sector as the backbone of the economy and reiterated the government’s commitment to protecting both domestic and foreign investments. Additionally, he commended FNCCI for its initiatives in promoting investment, tourism, and exports internationally.

While acknowledging China as Nepal’s largest investor and second-largest trade partner, he expressed concern over the trade deficit between the two countries. Highlighting the market potential for Nepali agricultural products in China, he called for efforts to facilitate trade.

Speaking at the summit held at CCPIT headquarters in Beijing on Wednesday, Chinese Vice Minister of Commerce Ling Ji noted the long-standing relations between China and Nepal and the increasing economic activities. He mentioned China’s growing investments in Nepal and assured further expansion in the future, according to press note issued by FNCCI president Dhakal’s secretariat.

Vice Minister Ji pointed out that China is Nepal’s second-largest trade partner and committed to facilitating transit for Nepal to trade with other countries via Chinese routes. He mentioned that Nepal would benefit from China’s decision to provide duty-free access to products from least developed countries starting December.

China is Nepal’s largest committed investor and the second-largest in actual investments. Vice Minister Ji expressed China’s willingness to collaborate with Nepal in tourism and agriculture and suggested encouraging more airline companies to expand services between the two countries.

This is the second edition of the summit, following a similar one organised in September 2023. FNCCI President Chandra Prasad Dhakal, addressing the summit, outlined the initiatives taken to improve the business environment over the past year. He highlighted that, at FNCCI’s request, the government had amended eight investment-related laws and prepared a bilateral investment agreement draft.

FNCCI president Dhakal also announced Nepal’s first credit rating, ranking second-best in South Asia after India, which he said had created a secure environment for investors. He emphasised the need for proactive government and private sector efforts to enhance border infrastructure and establish direct flights between China and Nepal at Bhairahawa and Pokhara airports.

The FNCCI president highlighted ample investment opportunities in hydropower, tourism, manufacturing, and IT-enabled services in Nepal. He noted that tourism infrastructure, such as cable cars, theme parks, and resorts, has significant potential for foreign investment. Stating that Nepal is an attractive destination for Chinese tourists, he urged the Chinese government to prioritise Nepal in its tourism agenda.

FNCCI’s request led to the formation of a High-Level Economic Reform Commission, and FNCCI President Dhakal, as a member, pledged to work towards enhancing the domestic business environment. He assured continued support for investors through FNCCI’s FDI Help Desk.

Dhakal welcomed China’s announcement to provide duty-free facilities to products from least-developed countries, effective December.

CCPIT Vice President Zhang Shaogang recognised FNCCI as a longstanding partner and emphasised the summit’s importance in boosting bilateral trade. He assured CCPIT’s cooperation in increasing Chinese investments in Nepal and importing Nepali products. He also announced upcoming economic partnership programmes in collaboration with FNCCI.

Investment Board Nepal CEO Sushil Gyawali highlighted Nepal’s investment potential and the board’s role in facilitating Chinese investments.

Manoj Paudel, Chairperson of FNCCI’s Foreign Investment and International Relations Forum, identified opportunities in hydropower, tourism infrastructure, manufacturing, and services in Nepal. He noted that Nepal’s abundant natural resources and young workforce provide a comparative advantage.

The summit saw the participation of 120 Chinese entrepreneurs and around 50 Nepali entrepreneurs representing FNCCI, the Confederation of Nepalese Industries, and Nepal Chamber of Commerce. High-ranking officials from both governments also attended, along with members of the Prime Minister’s delegation. A business-to-business meeting was held prior to the summit, according to the press note.

This was the fourth international summit organised by FNCCI in the past 18 months. Similar conferences were previously held in Beijing, New Delhi and Dubai in collaboration with CCPIT, Confederation of Indian Industry, and Dubai Chambers.