FDI realization stands at 15 percent of commitment in 11 months of current FY

Published On: July 13, 2024 09:40 PM NPT By: Republica | @RepublicaNepal

KATHMANDU, July 13: Nepal realized only 14.99 percent of the foreign direct investment (FDI) commitments from mid-July 2023 to mid-May 2024. Data from the Department of Industry (DoI) and Nepal Rastra Bank (NRB) show that the country received less than 15 percent of the committed FDI.

Between mid-July and mid-May of the current fiscal year, the DoI recorded investment commitments totaling Rs 54.86 billion. However, NRB's data shows that only Rs 8.16 billion of FDI was actually received.

NRB's data also reveals that while Rs 8.24 billion in foreign investment entered the country, the investors took back Rs 73.9 million in return. The NRB's monthly report indicates that the amount received during this period is 75.6 percent higher than the corresponding 11 months of the previous fiscal year.

In mid-May alone, the country received FDI commitments of Rs 11.294 billion. The highest investment commitment was Rs 13.44 billion in mid-April, while the lowest was Rs 345 million in mid-January.

Following the third investment summit in April, the DoI implemented a system for foreign investment approval through an automatic route. Under this system, both domestic and foreign investments can be made in industries with total capital of up to Rs 500 million without any hassles through the online system. There is no minimum limit for investment in information technology-based industries. In mid-May, Rs 8.279 billion in commitments were received through the automatic route. The DoI noted that foreign investment commitments have increased since the introduction of this system.

Despite the rise in FDI commitments following the third investment summit, actual FDI inflow remains low. Economist Keshav Acharya remarked that although the investment summit in April initially boosted confidence among traders and businessmen, this confidence has since waned.

NRB's data shows that the highest FDI inflow was Rs 2.65 billion in mid-July, while the lowest was Rs 271 million in mid-October. In mid-May, the country received FDI of Rs 1.18 billion.

The NRB's data underscores the disparity between foreign investment commitments and actual inflows. Stakeholders point out that there is no policy requiring all committed foreign investments to be realized within the same period.