Nepal receives FDI commitment of Rs 22.33 billion in first half of current FY

Published On: January 18, 2024 08:00 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, Jan 18: Foreign companies have pledged to invest Rs 22.33 billion in the first half of the current fiscal year.

According to the Department of Industry (DoI), a total of 226 foreign firms expressed their commitment to inject the aforementioned amount in Nepal. The amount is 29 percent more than the investment committed by the foreign firms in the same period last year. During mid-July and mid-January of the fiscal year 2022/23, Nepal received commitment for foreign direct investment (FDI) worth Rs 17.30 billion.

The pledged amount this year was however lower than the amount in the review period of the fiscal year 2021/22 when investors pledged FDI worth Rs 30.56 billion.

In one month between mid-December and mid-January this year, the DoI approved FDI of Rs 1.72 billion committed by 27 foreign firms. It included investment in 22 small enterprises and five medium level firms.

In the first half of the current fiscal year, investors have pledged FDI for a large number of small firms. While the foreign investors expressed their interest to open 211 small firms, they made commitments for only three big firms and 12 medium level firms.

The DoI records show that the foreign investors are largely attracted to start their businesses in the tourism sector of Nepal. Out of the pledged number of firms, 45 percent included tourism-related businesses. Similarly, 37 percent were related to the service sector, 10 were manufacturing, three percent were information technology, two percent each in infrastructure and agriculture and one in mine-based industry.

In the review period, Nepal issued business visas to 1,356 potential investors. The number was 1,011 in the same period last year.

The records with Nepal Rastra Bank show that the realization of FDI is pretty low compared to the pledged amount by the foreign firms. Few months ago, the government announced to streamline the process by approving foreign investments of up to Rs 500 million through the automatic route in order to simplify the procedure for foreign investors.

Meanwhile, foreign investors repatriated a total of Rs 2.577 billion from the country during mid-July and mid-January this year. Of the amount, Rs 1.041 billion was repatriated as royalties while the remaining amount of Rs 1.536 billion was taken away as dividends out of the profits made by the FDI-based businesses.