Print Edition - 2014-11-24 | MONEY
Companies with FDI okayed to buy stake in other firms
Nov 23, 2014-
The Industrial Promotion Board (IPB) has said that Nepali companies with foreign investment would be permitted to buy shares in other domestic companies. A meeting of the IPB held on Sunday and chaired by Industry Minister Mahesh Basnet decided that such refinancing could be made in all the industries and sectors except in those where foreign investment is barred by law.
The Foreign Investment and Technology Transfer Act (Fitta) of 1992 has forbidden foreign investment in 21 sectors and industries including motion picture, travel agency, trekking agency, water rafting, pony trekking, horse riding, tobacco and alcohol, internal courier service, atomic energy, tourist lodging, poultry farming, fishery and beekeeping, among others.
Government officials said that the IPB’s move had opened the way for foreign capital to be re-invested within the country instead of being repatriated as dividends.
Bipin Rajbhandari, head of the Foreign Direct Investment (FDI) section at the Department of Industry, said the decision had allowed companies with FDI to make a share investment in other sectors, which is not the general practice presently. “Companies having FDI have not been prevented from buying shares by any of the legal acts. However, since the Articles of Association of such companies only state that they are designated to operate certain businesses, we have not allowed them to buy shares so far.”
The IPB meeting has also decided to recommend to the Cabinet to recognize casinos as an industry by publishing a notice in the Nepal Gazette. For the past 47 years, gambling houses have been operating after acquiring a permit from the Ministry of Culture, Tourism and Civil Aviation. The Ministry of Industry has maintained that since the operation of casinos is being regulated by the Casino Regulation 2013, the sector should be considered as an industry through Fitta.
Similarly, realising that Industrial Enterprises Act (IEA), 1992 has not been able to accommodate the tailoring business, the board has decided to urge the Cabinet to categorise it as a service industry. The IEA has classified industries into seven categories—manufacturing, energy-based, agro and forestry-based, mineral, tourism, services and construction.
None of the sectors has included the tailoring sector. “One of the oldest businesses in the country has not been identified under any of these sectors. Since the tailoring business serves customers by charging a fee, it should be classified under the services sector,” the IPB said. The decision states that such enterprises should possess a minimum of 10 sewing machines and foreign investment will not be allowed in them.
With regard to jute mills, the board meeting has decided to urge the Ministry of Finance to resume subsidising electricity to jute, steel and thread industries which had been stopped for the last few months forcing many jute factories in eastern Nepal to close down as they could not compete with India firms.
Published: 24-11-2014 09:28