Nepal | May 20, 2019

Government yet to set minimum threshold for FDI

Sujan Dhungana

We are facing problems in approving small-sized investment projects

Kathmandu, April 19

The government’s claim of having strengthened its mechanism to facilitate investments sounds hollow, as the approval of foreign direct investment from the Department of Industry, which is authorised to approve FDI up to Rs 6 billion, has been temporarily suspended since the government is yet to determine the minimum threshold for foreign investment in Nepal.

The Foreign Investment and Technology Transfer Bill, which was authenticated by President Bidhya Devi Bhandari on March 27, has a provision which states that the government will set minimum threshold for foreign investment and publish it in the Nepal Gazette. However, failure of the government, especially the Ministry of Industry, Commerce and Supplies, to timely determine the minimum threshold for foreign investment has barred DoI from giving nod to overseas projects for the last three weeks.

“The new Foreign Investment and Technology Transfer Act has asked the government to set a minimum threshold for foreign investment and this is yet to be done. In such a context, we are facing problems in approving foreign projects, especially small-sized investment projects,” said Binod Prakash Singh, director general at DoI. He said the department had already requested MoICS to set the minimum threshold for FDI soon.

Prior to enforcement of FITTA, there was a minimum threshold of Rs 5 million for foreign investment. DoI has recommended that MoICS should set a minimum threshold of Rs 70 million for foreign investment.

However, Singh said DoI would approve projects worth above Rs 1 billion through ‘departmental decision’ and would not wait for the minimum threshold determination.

Meanwhile, Industry Secretary Yam Kumari Khatiwada claimed that MoICS had already started the process of setting the minimum threshold for FDI and promised that the threshold issue would not hit the approval process of mega foreign projects from DoI.

“After consulting stakeholders, we have set a threshold for foreign investment and sought a nod from the Ministry of Finance. Following a ‘go ahead’ from MoF, we will present the minimum threshold recommendation at the Cabinet and publish it in the Nepal Gazette,” informed Khatiwada.

Similarly, Khatiwada also promised that the government would soon bring FITTA guidelines and ensure that all provisions introduced by FITTA enter the implementation phase.

As per the new legal provision, DoI has been authorised to give approval to foreign projects of up to Rs 6 billion, while projects of above Rs 6 billion need approval from Investment Board Nepal.


A version of this article appears in print on April 20, 2019 of The Himalayan Times.


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