FDI investment worth Rs 400 billion on various projects ongoing: IBN CEO
KATHMANDU, Feb 3: Back in March 2017, Nepal received foreign direct investment pledges amounting to $13.51 billion and many hoped something big was going to happen in the country. But after two years, FDI inflow from those commitments remains negligible and the inflow process has been sluggish.
FDI inflow in the first five months of the fiscal year is 40 percent lower than in the same period the previous fiscal year.
Though it's too early to conclude that investors are fighting shy of the two-third majority communist party government, economists say this is not a positive signal at a time when the government has an ambitious target of higher economic growth and generation of employment to keep the youths in the country .
“Investors seem in a wait and see mode as we have a communist party government and they have better alternative destinations to invest in,” said Swarnim Wagle, former vice chairman of the National Planning Commission.
“Investors look for lucrative returns, low costs and a better environment for doing business but we are slipping in the indicators for business environment and corruption perception. " he said.
Maha Prasad Adhikari, CEO of Investment Board Nepal which organized the summit in 2017, does not agree with Wagle. Investors are confident and the process of bringing in the investments already committed is unfolding, Adhikari said.
“Out of the commitments received in 2017, FDI investment worth Rs 400 billion in total in various projects is ongoing," he said, adding,"These things take time as investors have to do their homework.”
Adhikari cited the initial progress in investment worth Rs 22 billion in solar power by Dolma Impact Fund, homework for building the Nagdhunga Dhulikhel metro projects, and awarding of licenses for hydropower plants to foreign investors as a few examples of the progress tracked by IBN on those investment commitments.
The country received FDI of Rs 6.78 billion in the first five months of the current fiscal year compared to FDI inflow of RS 11.12 billion in the same review period last year. Adhikari argued that the annual foreign direct investment flow has been encouraging every year and expressed hopes for an inflow spurt in the remaining period of current fiscal year to surpass the previous yearly figure.
FDI inflow was Rs 17.51 billion in the previous fiscal year and Rs 10.6 billion in fiscal year 2016/17.
Meanwhile, the government has already announced it is to host another investment summit in 2019, on March 29 and 30.