FDI pledges rise 22pc in 9 months

- POST REPORT, Kathmandu

Apr 25, 2014-

With a five-fold increase in investment pledges to the energy sector, the overall foreign Direct Investment (FDI) commitments in the first nine months of the fiscal year have surged 22 percent.

Nepal received FDI commitments worth Rs 18.10 billion in first nine months of the fiscal year, against Rs 14.87 billion in the same period a year ago, according to the Department of Industry (DoI).

DoI statistics shows the hydropower sector has attracted the highest FDI commitments, with investors pledging Rs 11.18 billion over the period. The sector had attracted investment worth Rs 2.65 billion in first nine months last year. Khadga Bisht, president of Independent Power Producers’ Association Nepal (IPPAN), said big commitments have come especially from India and China.

There has, however, been a significant decline in commitments in the services sector. The sector attracted investment pledges worth Rs 3.71 billion, against Rs 6.95 billion of the last fiscal.

According to the DoI, FDI commitments have also increased in agro and forest sectors. In agro-based industries, foreign investors pledged to invest Rs 793.8 million compared to last year’s Rs 387.6 million. Manufacturing and tourism are other two sectors that saw FDI commitments decline. The manufacturing sector, which had attracted FDI worth Rs 2.84 billion in the first nine months of the last fiscal, received Rs 1.44 billion this year.

Pashupati Murarka, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industries (FNCCI), attributed the decline in FDI pledges to weak performance of these sectors.

As the investment commitment rose, the number of projects, however, has declined. Foreign investors pledged investment for 199 projects this year, down from last year’s 213 projects.

The overall FDI pledge as of the third quarter is estimated to generate around 8,480 jobs.

Despite huge commitments to the energy sector, Bisht doubted whether the pledges would translate into actual investment. He said Nepal Electricity Authority’s (NEA) role would be crucial to convert these commitments into investment.

“NEA has been openly saying the demand has saturated and is unwilling to sign Power Purchase Agreement (PPA),” said Bisht. “This might create confusion among investors willing to invest in the hydropower sector.”

Murarka added the relatively stable political situation has made foreign investors interested in Nepal and the new government must capitalise on this opportunity.

Foreign direct investment Pledges

Sector    FY 2012-13    FY 2013-14

Agro and Forestry Based     Rs 387.6 million     Rs 793.8 million

Energy Based    Rs 2.65 billion     Rs 11.18 billion

Manufacturing    Rs 2.84 billion     Rs 1.44 billion

Mineral    Rs 596 million      Rs 261.41 million

Service    Rs 6.95 billion     Rs 3.71 billion

Tourism    Rs 1.33 billion     Rs 694.67  million

Total    Rs 14.87 billion     Rs 18.1 billion

Published: 26-04-2014 09:04

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment