March 31, 2019 02:25 AM NPT
Prime Minister K P Sharma Oli made all the right noises about Nepal’s need for foreign investment on the opening ceremony of Investment Summit on Friday. He presented the case of Nepal confidently, exuberating enthusiasm while addressing the delegates and the investors. The prime minister told the investors what actually they wanted to hear. He spoke of government’s commitment to “protecting investment with assured profit.” He assured rule of law and declared that “any attempt to disrupt law and order will be firmly and resolutely dealt with”, he informed the delegates about “policy consistency” and “legal, institutional and procedural reforms” Nepal has made through new laws to create conducive environment for foreign direct investment. He briefed about two key legislations—Foreign Investment and Technology Transfer Act and Public-Private Partnership and Investment Act—which will make doing business in Nepal easy. He assured repatriation of earning or equity, that processes and procedures to invest in Nepal have been simplified and process relating to land acquisition, company registration, environmental assessment and infrastructure development made easy. He announced that Nepal offers “attractive incentive package in terms of corporate taxation, import duties, and export facilitation” adding that labor cost in Nepal is competitive and low and that Nepal’s strategic location between the world’s two largest markets offers great incentive to the potential investors. In other words, the prime minister has clearly communicated that Nepal is the safest country for investment and now is the right time. This is how it should be.
It is positive that multilateral organizations like World Bank and Asian Development Bank have also expressed commitment to increase their support. The representatives of these organizations also praised Nepal’s political stability and pointed that Nepal has all the conditions needed for investment at the moment. We need to be able to capitalize on renewed optimism among foreign investors. The Summit was indeed a success because over a dozen Memorandums of Understanding (MoU) on a number of investment projects have been signed and it has also sent the message to the foreigners that this is the right time to invest in Nepal. The summit concluded on Saturday with signing of 15 MoUs with/among investors for various projects for investments in sectors, mainly in energy and logistics. This is a small feat but it will mean nothing if Nepal cannot capitalize on this positive environment. As such, the real work to translate those deals into reality should begin from right now.
The Summit this year was different from the past summits in that interested investors have agreed to do MoUs instead of just announcing the pledge of certain amount, which is what had happened in the first summit in 2017. In the previous summit, for example, over 1,300 billion rupees pledge was made in the form of letter of intent but only little of it has been materialized so far. The 2019 Summit has marked a shift from this practice, which is good. But Nepal needs to at least few things right away. We need to be openly listening to genuine concerns and interests of genuine investors and also address them. And then we also need to constantly follow up on the understandings and deals reached during the summit. In the interview with us on the eve of summit, Finance Minister Yubaraj Khatiwada had talked about setting up a mechanism for follow up on MoUs. That’s exactly what we need to do from today itself. By reviving optimism and bringing in many foreign companies to do the MoUs, the government has set the right tone for investment. But only constant follow up along with continuation of policy reforms can take us to success. Government agencies need to work hard to achieve success on that front.