KATHMANDU, April 23: Nepal’s realization of foreign direct investment (FDI) is far lower than the amount pledged by the foreign investors, shows a report unveiled by Nepal Rastra Bank (NRB) on Wednesday.
The NRB’s Survey Report on Foreign Direct Investment in Nepal 2018/19 shows that Nepal received FDI commitment worth Rs 325.52 billion in the past two and a half decades (between 1995/96 and 2019/20). However, the country received only Rs 110.93 billion. This accounts for meagre 34.1 percent of the pledged amount.
The foreign investors concerned have to register their proposed projects with the Department of Industry while the government has set up a designated Investment Board Nepal to facilitate all foreign investors. Apart from amending a number of laws related to the sector, the government has been organizing Investment Summit time and again.
In addition, the government for the past few years has also been operating a one-stop service center to facilitate the potential investors in Nepal. Despite the number of efforts in place, the outcome is pathetic when it comes to the actual realization of the FDI in the country.
As per the NRB’s study report, Nepal has been the destination for foreign investment from 53 different economies as of mid-July 2019. In terms of total FDI stock, India stood in the top position with Rs.56.05 billion followed by China, Saint Kitts and Nevis, Ireland, and Singapore with Rs.27.56 billion, Rs.24.94 billion, Rs. 11.59 billion and Rs.8.73 billion, respectively.
Keshab Acharya, former economic advisor to the Ministry of Finance, said Nepal has been unable to attract big investors due to its small market size. “The issue of transit, a number of non-tariff barriers, poor infrastructure and the government's weak economic diplomacy are among the underlying factors that have been affecting confidence of all potential investors,” he said.