Kathmandu, December 25
A study carried out by the National Planning Commission has said foreign investment should not be made in the primary sector of agriculture.
The study report on 'Foreign Investment Potential in Agriculture, 2022' released on Thursday suggested the government not to bring in foreign investment in agricultural produce. However, it can be used for storage, processing and marketing, it said.
"There is no need to bring in foreign direct investment in the primary sector of agriculture. Nepal's banks have adequately floated loan for this and the government has also continued discount in tax. There are also other policy benefits," the report mentioned, arguing that as the companies working in the primary sector of agriculture are not listed in Nepal Stock Exchange, such companies are in quest of foreign investment.
"Amid such a dire situation, it is not logical to float foreign investment in agriculture sector. However, it can be entertained for processing, storage and marketing to add value to the agricultural produce. Foreign direct investment is essential in cold storage, canning, processing, mill, etc. For this, a separate regulation is necessary on foreign direct investment in this sector."
The regulation to be framed to govern foreign direct investment in secondary sectors of agriculture should clearly mention the area where investment is permitted, according to the study report.
Similarly, clarity is needed on how investors will enjoy rights such as ownership of foreign land. The rights and benefits of farmers should also be incorporated in the regulation.
In recent years, the agriculture sector has shown declining contribution to the country's GDP. Although 66 per cent of population is said to be dependent on agriculture, production in this sector is not up to the mark.
Two years ago, the government had decided to allow foreign investment in agriculture, but the Supreme Court had issued an interlocutory order asking the government not to implement the decision. The case is still sub judice at the Supreme Court.
A version of this article appears in the print on December 26, 2022, of The Himalayan Times.
