KATHMANDU, Jan 6: The government’s recent decision to allow foreign direct investment (FDI) in primary agriculture production has invited a controversy.
In 2019, the government enacted Foreign Investment and Technology Transfer Act that had barred the FDI in primary agriculture production including poultry farming, fisheries, bee-keeping, fruits, vegetables, oil seeds, pulse seeds and milk industry, among others.
However, the Cabinet meeting held in late December decided to open the currently banned sectors of primary agriculture production for the FDI. At a time when the federal parliament has been dissolved, the KP Oli led government tactfully amended the clause in the Act and removed the restriction in context of imposing ‘conditions.’
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By publishing the amended Act in Nepal Gazette on Monday, the government has now welcomed foreign investors in the primary agriculture sector, the sector on which the country is mostly self reliant. “These foreign companies, however, have to export at least 75 percent of the produce,” reads the government notice in the Gazette.
The private sector has long been urging the government not to allow the FDI particularly in primary agriculture production. According to them, numbers of multinational companies including Amul, the Indian dairy giant, have been eyeing to capture the Nepali market in the name of injecting foreign investment.
In the past few years, the government in a number of attempts has been trying to open up FDI for the dairy sector, which has been struggling to achieve self-sufficiency and enhance quality largely due to low returns.
Pralhad Dahal, General Secretary of Nepal Dairy Association, said the government has turned flexible bowing to the interest of the foreign sector. “Although it has fixed some threshold, the foreign companies are likely to take over the market share of the domestic producers in lack of effective government monitoring mechanism,” Dahal said.
According to Dahal, around Rs 85 billion is being invested in the farm business that includes Rs 4 billion in bee-keeping, Rs 11 billion in fisheries, Rs 30 billion in animal feed and Rs 40 billion in poultry. These sectors have been providing jobs to around 1.5 million people.
Deepak Prakash Bhatta, expert of foreign affairs, said the government’s ad hoc decision will hamper huge investment in farm sectors of the agrarian country. “Instead of utilizing the skills and experience of the migrant workers back in farm business of the country, the government’s step will adversely affect the development of the sector,” he said.
