KATHMANDU, Aug 29: Foreign direct investment pledges went down by a whopping 77.5 percent in the last Fiscal Year 2015/16 compared to 2014/15.
According to data of Department of Industry (DoI) compiled by Nepal Rastra Bank (NRB), the country received FDI commitment of Rs 15.4 billion in the last fiscal year compared to Rs 67.42 billion in 2014/15.
Similarly, the number of projects that foreign investors have committed to bankroll in the review period also declined to 341 joint ventures, down from 368 projects in the previous year.
Leaders of private sector say that the failure of the government to create conducive environment has been discouraging foreign investors. "We are not surprised by the decline in the foreign investment pledge. The problems like policy inconsistency, political instability, power and fuel shortage, labor unrest, have to be resolved first,” Pashupati Murarka, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said. “Foreign investors would not invest here unless we have investment friendly environment here.”
In what seems to be an indicator of growing economic clout of China in the country, FDI pledge from the northern neighbor jumped to Rs 6.21 billion with 125 projects in the last fiscal year from Rs 4.33 billion with 153 projects in the previous year.
India, which has been at the top until recent years, slipped to the second position in the last fiscal year as FDI pledges from southern neighbor went down to Rs 1.94 billion from Rs 3.47 billion in 2014/15. The number of ventures that Indian investors pledged to finance has also come down to 23 from 25.
FDI investment from the UK, the US, South Korea and other countries have increased to Rs 2.08 billion, Rs 701 million, Rs 435.6 million and Rs 3.56 billion, respectively, in the last fiscal year. Investors from these countries had made commitment to invest Rs 1.25 billion, Rs 597.5 million, 348.6 million and Rs 2.6 billion, respectively, in the previous fiscal year.
While the number of projects related to manufacturing, tourism and energy declined, the commitment for service sector projects has increased in the review year.
According to the data, projects approved in the last fiscal year are expected to generate direct employment opportunities for 11,426 people. Earlier in the previous year, the approved FDI pledges had estimated to create 13,158 jobs.