Foreign investment pledges in the first nine months of 2018-19 shrank sharply to one-third of the amount pledged during the same period of the previous fiscal, despite a 17 percent rise in the number of projects.

According to the figures released by the Department of Industry, foreign investors made investment commitments totalling Rs11.57 billion during the period mid-July to mid-April of the current fiscal year.

During the same period in 2017-18, investment pledges amounted to Rs35.35 billion. The department registered 268 projects with foreign capital during the review period, up from 229 last year.

According to the department, foreign investment pledges plunged due to lack of mega projects like hydropower plants in the review period. Binod Prakash Singh, director general of the department, said foreign financiers seemed to be have been attracted more towards small schemes this year.

Singh said the steep decline in investment pledges was also a reflection of the reluctance of investors to put money in hydro projects. According to the department’s statistics, none of the foreign investors proposed to invest in the energy sector while the country received investment proposals of Rs22.3 billion in the energy sector during the same period in the previous fiscal year.

The proposed projects aim to generate 9,202 jobs. The number of projects and the volume of investments are expected to increase after the regulation related to the Foreign Trade and Technology Transfer Act is issued, Singh said. “The improved investment environment resulting from the introduction of amended laws to facilitate foreign investment is also expected to drive inflows of foreign investment in the future,” he said.

Tourism and the service sector accounted for the largest portion of investment pledges. Investors proposed to invest Rs3.76 billion in 87 tourism businesses and Rs1.85 billion in 85 service enterprises.  

An increase in the number of hotel and restaurant projects pushed up the volume of proposed investments in the first nine months of the fiscal year. “Foreign investors might have become attracted to the sector due to the expanding tourism business in the country,” said Singh.

Agriculture, forestry, information technology, manufacturing and mining were other key attractions for foreign investors. Investors from 30 countries proposed to invest in Nepal during the review period.  

Financiers from India, China and Singapore topped the list of potential investors. Indian investors are planning to inject Rs5.59 billion in 45 projects, up from Rs3.99 billion in 35 projects last year. Chinese investors have proposed investments totalling Rs2.31 billion in 110 projects.

The statistics show a sharp drop in investment pledges from the northern neighbour. Investment pledges from China stood at Rs28.82 billion during the same period last year. Investors from Singapore proposed to make investment totalling Rs1.5 billion in five projects.