KATHMANDU, Sept 29: Foreign Direct Investment (FDI) in Nepal reached Rs 264 billion by the end of the fiscal year 2021/22. According to Nepal Rastra Bank (NRB), the total FDI increased by 16 percent compared to the fiscal year 2020/21.
The NRB, while releasing a survey report on FDI, disclosed that paid-up capital constituted 53.7 percent, reserves 31.7 percent, and loans 14.6 percent of the total foreign investments.
According to the NRB, there were 57 FDI projects in Nepal by the end of July 2022. Out of them, the highest amount of FDI came from India, which is Rs 88.59 billion, followed by China with Rs 33.45 billion, Ireland with Rs 20.90 billion, Singapore with Rs 16.7 billion, and St Kitts and Nevis with Rs 15.9 billion.
The majority of FDIs in Nepal, around 62.6 percent, is in the industrial sector, with 37.3 percent in the service sector. In the industrial sector, 32.8 percent of the total FDI is in the hydropower sector and 29.5 percent in the manufacturing sector.
Targeted efforts needed to further promote FDI in Nepal
Similarly, 25.6 percent of total FID is in the services sector including banks and financial institutions and insurance companies. It has been found that the foreign-invested manufacturing companies had a capacity utilization rate of 71.1 percent, with an overall profit rate of around 14.3 percent.
More commitment, limited inflow
Despite many commitments for foreign investment in the industry department, the actual inflow remains limited. According to the NRB, in the fiscal year 2021/22, the FDI was Rs 18.56 billion, with 88.5 percent of this investment allocated to the industrial sector, 3.5 percent to the service sector, and 7.9 percent to other sectors.
In the fiscal year 2020/21, Nepal received foreign investments totaling Rs 19.51 billion. Although there were substantial commitments for foreign investment in the industry sector, the actual inflow remained low. In 2019/20, foreign investments amounted to Rs 19.47 billion.
In the fiscal year 2018/19, about Rs 13.1 billion foreign investments were received. According to the bank, Rs 17.5 billion of foreign investment was received in 2017/18.
Similarly, Rs 17.5 billion were received in the year 2016/17, Rs 13.5 billion in the year 2015/16, and Rs 5.9 billion in the year 2014/15. Similarly, in 2013/14, Rs 4.4 billion foreign investments were received.
Survey report published
With the aim of collecting the necessary data related to foreign direct investment and assisting in the formulation of necessary policies based on the sectoral situation and trend analysis of such investment, the Economic Research Department of NRB has been conducting on-site surveys related to foreign direct investment and publishing a report every fiscal year.
In the fiscal year 2021/22, the department surveyed a total of 231 companies operating under foreign direct investment in Nepal and compiled the 'Survey Report on Foreign Direct Investment, 2021/22' based on the collected data and details.
