Nepal’s investment climate has improved, officials say
The government has announced that it would finalise all the projects that are selected by the investors by May. The Nepal Investment Summit is part of the effort to address what the government says is a funding gap in transport, energy, industry, agriculture, and health and education infrastructure over the next decade.
The much-hyped Investment Summit will begin tomorrow as the one-year-old communist government led by KP Sharma Oli hopes to woo investors by presenting $30billion worth of potential projects to plug the country’s infrastructure funding gap.
Most of the foreign investors, who have confirmed their participation in the capitalist jamboree, are from Nepal’s immediate neighbours China and India. Among the 600 foreign delegates and investors from 40 countries, 265 are from China (225 from the mainland) and 120 from India.
“Nepal has held two investment summits in 1992 and 2017, but this one will be different,” said Finance Minister Yuba Raj Khatiwada, addressing a pre-summit briefing on Wednesday. "There will be 77 projects, including 27 from the private sector, for investors to check out. We will tell them what kind of returns they can expect by investing in them.”
When asked how the government would respond if the Netra Bikram Chand-led Communist Party of Nepal engages in violent activities ahead of the summit, Khatiwada said that security had been beefed up. “It’s not a hidden fact that we are one of the poorest countries. If such activities spread, our future generation will be pushed further into a poverty trap. Such activities will not bring investment.”
The government has announced that it would finalise all the projects that are selected by the investors by May. The Nepal Investment Summit is part of the effort to address what the government says is a funding gap in transport, energy, industry, agriculture, and health and education infrastructure over the next decade.
According to National Planning Commission's estimates, Nepal needs investments equivalent to 8 to 12 percent of its Gross Domestic Product until 2020 to adequately develop its infrastructure. Transport infrastructure alone needs to see an eightfold increase in the level of investment from the current Rs44 billion to an estimated Rs370 billion.
The government has amended three vital pieces of legislation—Foreign Investment and Technology Transfer Act, Public Private Partnership and Investment Act and Special Economic Zone Act—to simplify the process for foreign investment. “We are also in the process of amending the Foreign Exchange Act, implementing hedging funds and gearing up for Nepal’s credit rating,” the finance minister said.
According to the government, the Cabinet has approved 'one-stop service' at the Ministry of Industry, ensuring approval for foreign direct investment within a week. “All these reform measures, we think, will be vital in attracting foreign investment in a sustainable way,” said Khatiwada.
When reporters pointed out that foreign investors had committed investments worth $13.50 billion during the last investment summit in 2017, and only a small fraction of that amount was realised, Bhawani Rana, president of the Federation of Nepalese Chambers of Commerce and Industry, said that the investors had stayed away basically due to an unstable political situation and energy deficit.
“Now, things have changed a lot. We have a government with a two-thirds majority,” Rana said. “So, we want to tell the foreign investors that the investment climate has improved.”
Nepal experienced a long spell of political instability that hindered economic progress. A decade-long Maoist insurgency from 1996 to 2006 caused 17,000 deaths. Nepal was battered by natural disasters, most recently the 2015 earthquake and a subsequent blockade at the southern border. The earthquake killed nearly 9,000 people.
According to the World Bank's Systematic Country Diagnostic report, Nepal’s growth was much lower than that of other economies in the region during the last 20 years, growing at an average rate of 4 percent annually.
According to Investment Board Nepal, the key figures participating in the event are Union Minister for Investment and Foreign Economic Relations of Myanmar U Thaung Tun; Hartwig Schafer, World Bank vice president for the South Asia Region; Shixin Chen, vice president of the Asian Development Bank; Keiko Honda, chief executive officer of the Multilateral Investment Guarantee Agency; Hans-Peter Lankes, vice president of Economics and Private Sector Development at International Finance Corporation; and Dong Lee, vice president of the Investment Operations Department at the Asian Infrastructure Investment Bank.
Sangam Prasain is Business Editor at The Kathmandu Post, covering tourism, agriculture, mountaineering, aviation, infrastructure and other economic affairs. He joined The Kathmandu Post in October 2009.
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