Government to set up Rs 500bn fund

Kathmandu, June 2

The government is preparing to set up an Industrial Development Fund of Rs 500 billion to promote large scale investment in the industrial sector of the country.

Initiating the process to form such a fund, the Ministry of Industry (MoI) recently sent a draft proposal to the Cabinet to set up the fund and is awaiting the latter’s endorsement.

MoI has also formed a steering committee under the coordination of Industry Secretary Shankar Koirala to study the fund formation process and finalise its protocol. The committee will also prepare a working guideline of the planned fund.

MoI plans to set up the Industrial Development Fund with contribution from the private sector, non-resident Nepalis (NRNs), joint-venture domestic companies, public and the government itself.

Purshottam Nepal, spokesperson for MoI, informed that the government plans to generate 24 per cent contribution in the fund each from domestic private sector, NRNs, joint-venture companies and the public. According to him, the government will only play the role of facilitator by making four per cent contribution to the fund.

“The annual budget for industrial sector is often low and investors usually face capital crunch for mega development projects. In such a context, Industrial Development Fund aims to generate funds for mega development projects in the country which is of utmost need,” Nepal said.

Informing that financial institutions in the country have not been able to issue large loans for big projects and their interest rates are also very high, Nepal said that the Industrial Development Fund will issue loans to mega investment projects at low interest rates.

However, MoI has said that the fund will target mega investments only in the industrial sector, not in infrastructural and other sectors.

Meanwhile, MoI has also informed that the Industrial Development Fund will be an autonomous body and will be operated by its own shareholders. Initially, MoI has planned for 10 shareholders in the fund — two each from NRNs, private sector, joint venture companies, public and the government.

Meanwhile, private sector leaders have said that the government should focus on the implementation part of its programme and ideas.

“Envisioning such a fund is certainly a good idea as it will address the financial crunch for big projects. However, the government had announced forming similar funds earlier which have not been implemented yet,” Bhawani Rana, president of Federation of Nepalese Chambers of Commerce and Industry, said.

The government had formed Economic Rehabilitation Fund of Rs 100 billion after the earthquake in 2015 targeting the revival of industries and businesses. However, the fund is yet to be brought into operation.