Kathmandu, November 9

At a time when the government has announced reforms on legal and administrative fronts to create a conducive environment for investment, stakeholders have said that such reform initiatives should be coupled with political stability, reliable supply of energy, good labour relations and other essential elements to be competitive in production and service delivery, which in turn would help attract foreign direct investment (FDI).

As Nepal sorely lacks investment in every sector, from production sector to infrastructure, the country has been witnessing lower economic growth since long. Minister for Industry Nabindra Raj Joshi, today, said that Nepal should build its competitive strength to lure foreign investors by ensuring the security of their investment.

Speaking during the ‘Seminar on Foreign Direct Investment’ organised by Society of Economic Journalists Nepal (SEJON), Minister Joshi informed that the ministry has been collecting suggestions from all stakeholders based in various parts of the country on the draft of Foreign Investment and Technology Transfer Bill. He said the Ministry of Industry is preparing to submit the bill after incorporating relevant suggestions to the Cabinet for approval before submitting it to the Parliament.

Also speaking during the programme, leaders from the three major political parties — Nepali Congress, CPN-UML, Unified Communist Party of Nepal (Maoists) — also pledged to do their bit to discourage politically motivated trade unions to hold protests, end the donation drive and strikes that are ruining the investment climate in the country.

Surendra Pandey, former finance minister and leader of CPN-UML, said that FDI is critical for a country like ours, and that foreign investment in industrial sector and infrastructure could transform the country’s economy.

Unified Communist Party of Nepal (Maoists) leader Barshaman Pun opined that the country should welcome FDI in sectors where investment from Nepali investors is insufficient. “We should also protect the investment of Nepali investors who are making significant contribution to the development of a particular sector,” he said.

NP Saud, leader of Nepali Congress, highlighted that FDI growth in Nepal has remained stagnant because of insurgency, transition, rampant power cuts and labour unrest. As the country has promulgated the constitution recently, the country should now leap towards economic prosperity by building better environment for the expansion of businesses as well as economic activities.

Economist and former vice chairman of National Planning Commission Shankar Sharma said that FDI would also bring technology and technical know-how in the country, which in turn would provide necessary impetus to boost the country’s flagging production sector.

The country had introduced Foreign Investment and Technology Transfer Act for the first time in 1992, which attracted many multinational companies to Nepal, like Colgate Palmolive, Unilever Nepal, Surya Tobacco, Dabur Nepal and TeliaSonera, among others. However, the country has been unable to draw substantive FDI and the firms set up with foreign investment have not reinvested in Nepal. Recently, huge amounts of FDI have been pledged in cement plants and power sector but have not been materialised. To materialise those commitments, the country needs to come up with substantive reforms so that investors can be sure of competitive cost of production, according to Hari Bhakta Sharma, president of Confederation of Nepalese Industries (CNI).

Reform in tax regime is also critical to create conducive environment for investment. He suggested the government to table other pending bills that are strongly related with foreign investment, namely, labour bill, social security bill and anti-dumping bill at the earliest to the Parliament.