Nepal | July 06, 2020

Better investment climate stressed

Himalayan News Service
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Kathmandu, October 20

As the government has expedited reforms in the legal front to improve the investment climate and very recently some crucial industrial and financial bills have been endorsed from the Parliament, these steps will boost investors’ confidence, said Alaina B Teplitz, ambassador of the United States to Nepal.

The Parliament recently endorsed Special Economic Zone Act and Industrial Enterprise Act, which are important laws to attract investment in the industrial sector. Some other laws like Company Act and Foreign Investment and Technology Transfer Act are in the process of being amended. The laws that are going to be amended or the new ones that will be introduced should be more investor-friendly to attract more foreign and domestic investment, according to Ambassador Teplitz. “Subsequently, strong and efficient regulatory mechanism, simplified procedures and transparency are required to attract investment to rejuvenate the country’s sluggish economic expansion.”

Talking on draft of Foreign Investment and Technology Transfer Bill that was shared by Ministry of Industry, Ambassador Teplitz opined that the provision of dividend repatriation provisioned by the draft bill is not friendly for foreign investors.

As per the draft bill, foreign investors in Nepal can repatriate only 75 per cent of the dividend to their country of origin. She said the law should ensure that foreign companies can repatriate all the profit they earn here.

“Investors come here to invest and set up businesses and generate employment and contribute to the economy. They need to feel certain that they can repatriate their entire profit so that they can make investments somewhere else as well,” she said, adding, “If a cap is levied on dividend repatriation in expectation of possible reinvestment, it might be a losing cause for the country.”

On the other hand, there are also procedural hassles on dividend repatriation of foreign companies, which is why foreign investors have been seeking a reliable and time-bound process on it. “Investors should feel safe about their investment if the country wants to attract them,” according to Ambassador Teplitz.

The ambassador further said that the US government through a separate act — Trade Facilitation and Trade Enforcement Act — has extended duty-free quota-free facility to 66 Nepali products in the US market to support Nepal’s sustainable and inclusive economic growth. The law is expected to come into force from 2017 and has also paved the way to attract investment from the US for production of those goods that have received preferential treatment.

Likewise, the US government through Millennium Challenge Corporation is supporting the government to overcome the infrastructure bottlenecks, which are considered to be the major barriers to be competitive in production. Low cost of production is a fundamental aspect in alluring investment from across the globe.

 


A version of this article appears in print on October 21, 2016 of The Himalayan Times.


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