December 2, 2018 04:30 AM NPT
KATHMANDU, Dec 2: Even though the government has been trying to court foreign investors into the country, foreign direct investment (FDI) fell in the first quarter of the current Fiscal Year 2018/19.
According to recent data of Nepal Rastra Bank (NRB), the country received a total of Rs 1.54 billion in FDI in the first three months of the current fiscal year, down by 74.6 percent from Rs 6.07 billion in the corresponding period of the previous Fiscal Year 2017/18.
Though political leaders along with government ministers have been making public commitments that they want to attract the FDI, there has not been much interest from foreign investors to come to pour their money in Nepal.
There is a huge gap between the amount of pledge for the FDI and the realization of the investment pledges.
Even the investment pledges worth US$ 13.74 billion during the First Investment Summit hosted by the government last year are yet to be materialized.
Private sector leaders say that the red tape has been discouraging investors to come and make investment into the country.
While the government enacted Foreign Investment and One-Window Policy in 1992, lack of basic infrastructure, assurance of investment protection and amendment to investment-related policies have been holding investors back to put their money into Nepal, they say.
Although the recent political stability in the country was expected to lure more investment in the country, investors are still reluctant to come to Nepal for tapping investment opportunities due to the lack of policy reforms.
The World Bank recently said that Nepal needed to make doing business easier. In its latest Doing Business Report released on October 31, the World Bank said that paying taxes was one of the key areas for Nepal to improve to make doing business easier. The recommendation was made to Nepal to improve the performance in the Doing Business ranking for the next year.
Nepal has slipped five spots down to 110th position in the World Bank's latest Doing Business report from 105th position.
Amid concerns that the government has done little to improve investment climate in the country, the Investment Board of Nepal (IBN) is holding the Second Investment Summit next year.
IBN officials say that they are preparing for another summit with a realization that such summit should be held frequently to project the country as an attractive investment destination.
The first Nepal Investment Summit held on March 2-3 last year had brought 500 participants, including over 250 investors from 23 countries. The participating foreign investors representing 26 companies from eight countries had even pledged through the letter of intent to invest $13.74 billion in 10 various sectors of Nepal.