KATHMANDU, Oct 5: The government has simplified the procedures for registration of foreign direct investment (FDI) of up to Rs 500 million, allowing the investors concerned to use automated routes for the process.
Publishing a notice in the Nepal Gazette on Monday, the government has implemented the clause in the Foreign Investment and Technology Transfer Act (FITTA) that talks on simplifying registration procedures for foreign investors. According to the Department of Industry (DoI), the provision has come into force since Tuesday.
Babu Ram Gautam, director general of the DoI, said the new rule will facilitate taking the FDI in the given criteria through a fast track system. “From now onward, foreign companies from across the globe can apply for both operating license and receiving approval via online platform,” Gautam said.
Nepal’s FDI Landscape: Issues and Solutions
The government has enforced a one-door policy to facilitate the FDI inflow in the country. According to the DoI, any FDI application that enters a one-door system will automatically be taken for approval.
The government has permitted FDI in seven distinct sectors. These include agriculture and forestry, infrastructure, information technology, manufacturing, service, energy and tourism.
According to the Public Private Partnership and Investment Act, the DoI approves investments including the FDI for up to Rs 6 billion, while the investments above Rs 6 billion need approval from the Investment Board of Nepal.
The FITTA was first introduced in 1992 and later revised in 2019 and in 2021. A 2021 revision to the FITTA requires foreign investors in Nepal to bring 70 percent of their proposed investment before commencement of operations, and another 30 percent within the next two years.
At a time when the country is struggling to attract a significant amount of FDI, the new provision is expected to help increase FDI by facilitating the process. Apart from lengthy approval process, issue of repatriation of profits, lack of risk management provision and poor implementation of laws related to intellectual property rights, among others, have been attributed to the low inflow of FDI.
