Summit Fosters Investment Environment

The 3rd Nepal Investment Summit that was held in Kathmandu from April 28 to 29 proved to be successful as it approved well over Rs. 9 billion foreign investment for four different projects. Organised with the theme of ‘Emerging Nepal’, the two-day Summit also boosted the confidence of hundreds of potential international investors. More than 2,500 participants from nearly four dozen countries, including China, India, the United Kingdom, the United States of America, Japan, Australia, the United Arab Emirates (UAE), Germany and Australia, attended the mega event. Of them, about 800 were potential foreign investors. The government had showcased as many as 152 projects for foreign investment.

Huge prospects

Situated between two Asian giants — China and India --, Nepal holds huge investment prospects. When the country is capable of manufacturing a variety of products and services, they could be exported to these neighbouring markets. It needs no mention that Nepal has been facing a widening trade deficit with many countries globally, with the nation’s economy becoming import-based. Now, it is essential for the country to intensify efforts geared towards substituting imports by increasing exports. This can be possible only through boosting production and exports. Because Nepal does not have the capacity to mobilise the required amounts of domestic investment, it has remained effortful in luring more foreign investment for its economy to grow. 

The nation is in need of a lot of foreign investment to boost the economy. The government aims to trigger economic growth and create more jobs by bringing in foreign investment. New development projects can be initiated in the country with foreign capital. The country can also expand the prevailing projects and upgrade infrastructures by utilising such capital. When economic activities are diversified, more people can get jobs and productivity is enhanced. With foreign investment, the country can also have an opportunity to increase its access to international markets. Even domestic firms can expand their customer base and surge their exports if they move ahead by collaborating with international investors. 

In addition, foreign investment can be instrumental in bringing new technology, expertise, and skills to the domestic economy. This definitely contributes towards increasing productivity and competitiveness. When new industries are established and novel products are produced, they can be helpful for minimising the nation’s dependency on a single industry or export market. So, this can help make the economy more resilient to any possible external shock. 

Having realised the need to attract more foreign capital, Nepal hosted the first investment summit in 2017 when investors from various countries pledged to invest US$ 13.5 billion for different projects. The second summit was organised in 2019 when Nepal received commitments worth about US$ 12 billion for 50 various projects. But most commitments did not materialise due to various reasons. Though the country aimed at organising such a summit every two years, the third summit has been held in a gap of five years. The outbreak of COVID-19 and other factors were responsible for the delay in holding the third summit. 

A large segment of working-age population in Nepal is its another strength for bringing in foreign capital and achieving higher economic growth. With the availability of cheap labour, investors can be motivated to start doing business here in the country. It goes without saying that the nation sends hundreds of skilled and semi-skilled workers to different countries, especially the Gulf Region and Malaysia. 

The Republic of Korea (RoK) has also become an important destination for semi-skilled and skilled workforce from Nepal. In recent years, Japan has emerged as another vital destination for Nepali students and skilled workers. Those who have worked abroad have supported the national economy through a transfer of knowledge and technology. 

What is more remarkable is that the Summit has brought all the major political parties of Nepal together. Top leaders belonging to the ruling as well as opposition parties appealed to prospective investors to invest in various sectors with confidence. While delivering his inaugural address, Prime Minister Puspa Kamal Dahal ‘Prachanda’ said that Nepal has been an appropriate investment destination with the nation offering boundless opportunities. He also said that the country has remained committed to a liberal economic policy and ensuring full security of investment. 

Chairman of the CPN-UML KP Sharma Oli and president of the Nepali Congress (NC) Sher Bahadur Deuba also called upon potential investors to invest in Nepal without any hesitation. They assured investors of better investment climate through formulation of more flexible policies and laws. There is no doubt that Nepal has failed to achieve expected economic development goals owing to a lack of adequate capital and suitable technology. Political stability and policy and legal consistency are also key to promoting investment.  

Until a couple of years in the past, labour disputes were obstacles to the promotion of investment. Trade unions used to go for strikes, disheartening investors and shying away potential investors from home and abroad. The successive governments seem to have been serious about resolving labour-related issues once and for all. They have amended various laws in order to resolve labour disputes. 

Amendment of laws

On the eve of the third Investment Summit, the president issued an ordinance to amend some laws in regard to investment facilitation on the recommendation of the government. Although the main opposition Nepali Congress criticised the government for evading the parliament, it extended its full support to the government’s initiative to attract foreign capital. The government also revised eight laws related to business and investment just prior to the summit in order to take the investors into confidence. It now needs to deal with all the barriers standing on the path to investment promotion. 

(The author is a former deputy executive editor of this daily.)