Kathmandu, December 2

Nepal has received foreign direct investment (FDI) commitment of below Rs two billion ceiling for 139 new projects in the first quadrimester of 2016-17 — mid-July to mid-November.

According to the Department of Industry (DoI) — the government body authorised to approve foreign investments of up to Rs two billion — foreign investors have committed to invest in 139 projects in the country in the first four months by injecting Rs 3.48 billion in total.

Investment Board Nepal (IBN) approves FDI of above Rs two billion in the country.

In the corresponding period of fiscal year 2015-16, Nepal had received FDI commitments of below Rs two billion for 121 projects, which amounted to Rs 3.64 billion. This shows that though project-wise the FDI pledges have increased this year, commitments in terms of money has slipped.

For the entire fiscal year, 2015-16, Nepal had received such foreign investment commitments in 341 projects that amounted to Rs 15.13 billion.

DoI figures show that majority of FDI commitment received this year is in tourism and service sectors. According to the DoI data, foreign investors committed to invest in 65 tourism projects in Nepal and 51 service-related projects in the first four months of this year. Similarly, Nepal received foreign investment pledges in 19 manufacturing projects, three agro-based projects and one mineral-based project during the review period.

Though project-wise foreign investment commitment is more in tourism sector, service sector has topped the list in terms of monetary value. While total FDI commitment in the first quadrimester of this year amounted to Rs 1.12 billion in tourism sector, FDI pledge in service sector stood at Rs 1.31 billion.

Out of the total Rs 15.13 billion foreign investment commitment in 2015-16, Rs 7.93 billion was received in service sector and only Rs 1.9 billion in the tourism sector.

Though quadrimester's figure this year shows project-wise increment of FDI, private sector has opined that there is a huge gap between investment commitment and actual investment every year, and thus, focus needs to be given to realisation of investment pledges.

"Our government easily issues licences to investors, which has led to the trend of holding licence and seeking other opportunities without making any investments," said Hari Bhakta Sharma, president of Confederation of Nepalese Industries (CNI), adding that foreign investors are unlikely to inject investment in the risk-prone sectors in Nepal.

Thus, the government should promote local investment and entrepreneurship first as local-level investment is the driver of the national economy, according to Sharma.

Private sector has been saying that the realisation of FDI in Nepal stands at less than 20 per cent of the pledges the country receives every year.