KATHMANDU, July 19: Lack of clarity on the policy of foreign direct investment (FDI) and procedural flaws existing at the bureaucratic and political fronts has appeared as a major hindrance to attract foreign capital, said experts.
Speaking in a virtual interaction organized by the Society of Economic Journalists-Nepal on Monday, experts maintained that this should be immediately addressed to draw more foreign capital in Nepal. According to them, the country has so far failed to maintain a conducive environment to attract FDI despite some efforts made by the government.
Although the government has adopted policies to welcome FDI and come up with a number of measures like implementing a single window system, enactment of Foreign Investment and Technology Transfer Act and showcasing of mega projects by organizing Nepal Investment Summit, the FDI inflow so far has appeared dismal. Nepal Rastra Bank records show that the amount of net FDI that the country received in the first 11 months of last fiscal year went down by 13.4 percent to Rs 16.20 billion.
Ram Sharan Mahat, former Finance Minister and a leader of Nepali Congress, said there is a need for selecting a contractor on a competitive basis to ensure implementation of projects of national interest. Mahat inferred his dissatisfaction with the process of awarding the contract of Budhi Gandaki Hydropower Project to a Chinese company.
Radhesh Pant, former chief executive officer of Investment Board Nepal, underlined the rent seeking behavior at the government level while endorsing mega projects as one of the problems. Giving examples of the failure of Arun III Hydropower Project and Dangote Cement in the past, Pant said lack of ownership at political level and failure to disseminate right information at the local level are among other issues related to the foreign investment of mega projects.
Kumar Pandey, a hydropower expert, said the tendency of creating extreme bargain points by vested interest groups through conveyance of negative messages among the local people has affected the investment environment in the country. He stressed on the need to make clear demarcation on the areas that should or should not be opened for the FDI. “In addition to this, proper planning and preparation of projects is necessary before showcasing them to prospective foreign investors,” Pandey said.
Ramesh Maskey, an expert at Nepal Academy of Science and Technology (NAST), said all the stakeholders including local people should be involved from the phase of feasibility study of projects than making them involved only at the implementation stage.