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Why is the summit promising?

Nepal offers a golden opportunity for investors to exploit rich water resources by exporting electricity to India and Bangladesh under the existing regulation.

Khabarhub

March 29, 2019

6 MIN READ

Why is the summit promising?

The past couple of days have witnessed heated media discussions on the two-day ‘Investment Summit Nepal-2019’ starting from today.

This is the second such summit preceded by the one held in 2017. The first summit had brought about 250 foreign investors securing letters of intent worth Rs. 13.74 billion.

The imminent summit is larger in scale in the sense that it is being participated by 600 investors from 40 countries. The summit titled ‘A Promising Investment Destination’, shall showcase a total of 77 projects in various sectors, worth $31.93 billion.

Criticisms facing the summit

Media is replete with a negative appreciation of the summit. Even before its commencement, the summit has invited a heap of negative comments. Many argue that it shall be a mere perfunctory summit for a number of reasons.

Others argue that the country is ill-prepared to invite Foreign Direct Investment (FDI) due to lack of friendly laws and regulations addressing prospective foreign investors. As such, it is too early to hold an ambitious investment summit.

The crux of all such arguments is that the country utterly lacks enabling investment environment. Security tops the list. Some point out that the violent activities by the ‘Biplav’-led Maoist outfit is ominous to an ideal investment climate in the country as it may gradually escalate to the level of violent Maoist insurgency (1990-2006).

Others argue that the country is ill-prepared to invite Foreign Direct Investment (FDI) due to lack of friendly laws and regulations addressing prospective foreign investors. As such, it is too early to hold an ambitious investment summit.

The inception

However, it should not be forgotten that efforts have been made to attract FDI in the country even before the 1980s, according to a Nepal Rastra Bank (NRB) report.

There were a few instances of foreign investment and technology transfer in the country before 1980. An investment promotion was meeting was organized in 1984.

Likewise, Nepal Investment Forum was held in 1992, according to NRB.

Investment Summit in the first week of March in 2017 had witnessed the commitment of USD 13.74 billion in ten sectors by 26 companies from eight countries.

Silver lining

As aforementioned, this summit is bigger in volume. Besides negative appraisals, the summit has some positive aspects as well. We are yet to see how the government shall resolve the issue of ‘Biplav’ outfit. Barring this, the investment climate seems to be improving in terms of policy and regulatory measures.

The government has made a number of improvement on laws and regulation in a bid to attract foreign investment. Some of them include that technology transfer is not a barrier for all types of industries in Nepal, laws have guaranteed repatriation in foreign currency, private sectors are allowed to develop and operate Special Economic Zones.

Similarly, companies can adopt “no work, no pay” system, and strikes and protests at companies are not allowed.

Regulations require a mandatory accident and health insurances for all employees and that companies are allowed to hire foreign nationals in managerial positions.

Nepal offers a golden opportunity for investors to exploit rich water resources by exporting electricity to India and Bangladesh under the existing regulation. One can dig gold in Nepal by investing in tourism, herb processing or the other number of projects being showcased at the summit.

Likewise, among other number of policy changes, investors are entitled to business and residential visas.

Nepal’s robust economic health can be another attraction for FDI. The country’s GDP growth rate has remained almost 5 percent in the past decade. It has witnessed a per capita growth rate of 8 percent in over a decade.

Similarly, the country has a foreign reserve to finance imports for up to 10 months. Besides, the country has 57 percent of the working age population.

Conclusion

Nepal is still a virgin land in terms of infrastructure development. The country requires a massive infrastructure development works to graduate to the level of a developed country.

Thus, it can be a fertile ground for countries statured with infrastructure development to not only try their technology and tools on the various infrastructure development of Nepal ranging from transportation to energy but also to reap benefits through investment.

Nepal offers a golden opportunity for investors to exploit rich water resources by exporting electricity to India and Bangladesh under the existing regulation. One can dig gold in Nepal by investing in tourism, herb processing or the other number of projects being showcased at the summit.

Yet, to truly realize the goal of this summit, the government needs to work in doing away with the hassles of red-tapism and corruption besides enacting more investment-friendly acts and rules.

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