KATHMANDU, Nov 21: The gap between foreign direct investment (FDI) commitments and actual inflows has continued to widen as Nepal struggles to convert pledged investments into real projects.
Data from the Department of Industry (DoI) and Nepal Rastra Bank (NRB) show a significant mismatch between committed and realized FDI. According to DoI records, Nepal received FDI commitments worth Rs 35.13 billion in the first three months of the current fiscal year, up from Rs 16.46 billion during the same period last year.
However, NRB figures reveal that the country received only Rs 1.18 billion in actual direct investment under the balance of payments heading for the same period—far below the amount pledged by foreign investors.
Take holistic measures to boost FDI in Nepal
Following the third investment summit in April 2024, the DoI introduced an automatic route for foreign investment approval. Under this system, both domestic and foreign investments of up to Rs 500 million can be made online without procedural hurdles. There is also no minimum investment requirement for FDI in information technology–based industries. The DoI says FDI commitments have risen notably since the system was introduced.
Despite this, realization remains low. The NRB’s Survey Report on Foreign Direct Investment in Nepal 2018/19 shows that Nepal had realized only 34.1 percent of pledged FDI. Government data indicates that from mid-July 2023 to mid-May 2024, the country realized just 15 percent of committed FDI.
Nepal recorded its highest-ever FDI commitments in fiscal year 2024/25. Yet actual inflows were less than one-fifth of the pledged amount. According to the NRB, net FDI inflows stood at Rs 12.02 billion, compared to commitments of Rs 64.96 billion last Fiscal Year (FY).
Experts say Nepal continues to face longstanding challenges in converting commitments into tangible investments due to structural barriers, legal hurdles, weak intellectual property rights enforcement, and political instability. The situation has further deteriorated following recent Gen Z–led protests and incidents of violence that damaged several FDI-backed businesses, according to economists.
Nara Bahadur Thapa, former executive director of NRB, told Republica that Nepal may not see encouraging FDI inflows in the near future, as several foreign investors suffered property losses during the recent unrest. “If the new political environment ensures reduced corruption and greater regulatory transparency, it could help restore investor confidence,” Thapa said.
