Luring Chinese Investors


Nepal is in dire need of more foreign direct investment (FDI) in varied potential sectors to support the ailing economy by creating additional jobs and boosting exports. Although the nation’s economy has been going through different challenges in the post-COVID situation, the government has aimed at achieving an ambitious six per cent economic growth during the current fiscal year. The country had to suffer a budget deficit in the last fiscal year owing to low revenue collection. The nation’s foreign trade has shrunk in the first two months (mid-July to mid-September) of the current fiscal year as well with a decline in imports and exports. This indicates that the government may have to scramble for meeting the target of revenue collection in the current year as well. However, the country recorded a significant increase in the inflow of remittance in the first month (mid-July to mid-August) of the current fiscal year. 

The government has been doing its bit to attract more FDI from different countries, including China and India. In recent years, the country has come a long way in terms of luring FDI. It has also made all-out efforts to improve the business environment through one-door service centre and adoption of policy reform initiatives and energy assurance. However, much remains to be done to take the potential investors from different countries into confidence.  In their effort to bring in more Chinese investments into Nepal, a Nepal-China Business Summit was jointly organised by the Federation of Nepali Chambers of Commerce and Industry (FNCCI) and China Council for the Promotion of International Trade (CCPIT) in Beijing on Sunday.  The event holds a lot of significance as it has been organised during Prime Minister Pushpa Kamal Dahal Prachanda's official visit to the northern neighbour.  Prime Minister Prachanda and Nepali private sector leaders have urged the Chinese businesspersons and investors to invest in Nepal as the country possesses huge investment prospects.

Addressing the Business Summit, the Prime Minister called on the Chinese investors to grab the opportunities Nepal has offered in many areas of business and investment, with the country offering the lowest corporate tax in the region. The two nations have focused on enhancing the economic cooperation through the promotion of business exchanges. He further said that Nepal is an attractive destination for FDI as the nation has the proximity to the world's two growing markets. Chinese investors could invest in infrastructure, energy, agriculture, tourism, Information and Communication Technology (ICT) and other service sectors. Chinese investments matter most for Nepal in view of their potential to fill technological and strategic gap. Despite physical proximity between Nepal and China, the two nations need to strengthen business cooperation through upgrading infrastructure and minimising technical barriers.

The bilateral relations between Nepal and China have been consolidated based on mutual interests and benefits. No doubt, China has now become the largest FDI source for Nepal, and the second biggest trade partner. Around 16 per cent of the total imports of Nepal come from China. Meanwhile, Vice-Minister of China's Ministry of Commerce, Li Fei, said that China has wanted to promote high quality industrial development in Nepal and support in agriculture and tourism sectors. Li assured that he would encourage Chinese businesses to invest in textile, food processing and other businesses in Nepal. The event that has brought scores of Nepali and Chinese businesspersons together is expected to help boost Chinese investment in Nepal. China aims to support in increasing the traffic capacity of the Araniko Highway, improving Rasuwagadhi Highway and accelerating the feasibility study of the cross-border railway. 

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