Kathmandu, April 10:

The total number of foreign direct investment (FDI) projects has increased to 1,062 as of March, 2006 amounting to over two billion rupees in capital investment on such projects. According to the department of industries (DoI), the number of FDI projects registered in 2005, alone had reached to 76 compared to 35 in the previous year.

Ashok Kumar Dahal, director of DoI, talking to The Himalayan Times, disclosed that FDI projects registered during 2005 were worth Rs 2,146 million in capital investment. Similarly, in 2004, 35 FDI-projects worth Rs 546 million were registered, said Dahal.

According to him, most FDI projects are in the service sector such as hotels, restaurants and IT sector. The major focus of service sector seems to be on IT as investors find the idea of making software programmes here and selling them in India and USA, lucrative.

Informed people have commented that it is quite costly in India and USA to buy software programmes made in those countries, but made-in-Nepal products are found to be cheaper.

Indian, South Koreans and American investors have invested in the IT sector here, informed Dahal. It shows that IT has become a lucrative FDI destination in recent years.

After Nepal adopted economic liberalisation in 1992, FDI projects in Nepal increased substantially, said Dahal. However, only about 80 per cent registered FDIs are in operation right now, he informed.

Most FDI projects are established in the Kathmandu valley which till now seems safer compared to other districts, said Dahal. It has also been found that even if investors register their companies here, some of them change their minds later on. Due to this, some projects are still in limbo, according to him.

As per the foreign investment and technology transfer act 1992, there is no bar for operating FDI projects in any districts and anyone can invest in any of the 75 districts of the country.

In most FDI projects, the majority of workforce consists of Nepalis. But at the management level, foreigners are involved, DoI official informed.

If all registered FDI projects could go into operation, a total of 140,831 people would be employed as per the initial projections. The highest FDI projects registered during 2001-02 numbered 96 and were worth Rs 7,917 million.

“The FDI projects’ capital investment ranges from five million rupees to Rs 50 million as per the latest records,” according to the DoI officials.