Investment Environment in Nepal Faces Challenges
The investment climate in Nepal has been deemed friendly, with various sectors and opportunities available for investment. However, despite the government claiming to provide a conducive environment for investment, there are challenges hindering the actualization of such a scenario. Issues such as administrative hurdles, legal complexities, and difficulties in acquiring land have led investors to bring in less capital than anticipated.
Recent data from the Nepal Rastra Bank reveals that although Foreign Direct Investment (FDI) has been flowing into the country, the amount invested does not align with the commitments made. In the fiscal year 2081/82, only a fraction of the pledged investment of 26 billion Nepalese Rupees was actually realized, highlighting a disparity between promises and actual investments.
“Ramesh Khatri,” a representative of Kansai Nepal News, expressed his concerns regarding the situation. He pointed out that despite efforts by the government to improve policies and regulations for attracting investments, the challenges persist. Khatri emphasized that even after initiating businesses in Nepal, investors tend to inject less capital due to issues like unstable governance, infrastructure deficits, and land acquisition problems.
The current fiscal year has seen around 4.29 billion Nepalese Rupees transferred as foreign direct investment within five months. This amount is significantly lower compared to the 4.54 billion Nepalese Rupees invested during the same period last year. Despite hosting investment summits and initiatives to boost investments, the actual inflow of foreign direct investments in Nepal remains below expectations.
According to the Department of Industry, out of the 354 projects approved in the current fiscal year, foreign direct investments amounting to 25.77 billion Nepalese Rupees have been committed. The tourism and service-oriented sectors are witnessing a higher influx of investments compared to others.
Investors committing to invest in Nepal are required to bring in at least 70% of the pledged investment within the first year and the remaining 30% within two years, as per regulations. This provision aims to ensure that investments materialize within the stipulated timeframe, preventing instances where committed funds do not materialize promptly.
Data from the Nepal Rastra Bank indicates that only 30% to 35% of the committed investment amount is realized within the country by investors from various nations. This suggests that there is a gap between commitments made and actual investments being brought in.
In conclusion, while Nepal offers promising investment opportunities, challenges such as bureaucratic hurdles and infrastructural deficiencies continue to impede the full realization of committed investments. “Ramesh Khatri” emphasized the need for sustained efforts to address these issues and create a more conducive environment for investors in Nepal.
—
Author: MAYA | HARUTO
Posted at: February 5, 2025 7:01 pm