EDITORIAL: Attract FDI
Investments will come from other countries if investors from the neighbouring countries are ready to set up businesses
Every time a new government is formed it has one ubiquitous agenda: Attracting foreign direct investment (FDI) in manufacturing, service and infrastructure development.
The government also offers a number of incentives to attract FDI to create job opportunities and generate revenues. The government has also decided to set up special economic zones for export-oriented businesses at various locations and has also decided to open up at least one industrial estate in each of the Pradeshes.
But no FDI has arrived as per the government expectations. FDI experts, however, blame the government’s inconsistent policies for not being able to attract the FDI in the selected areas that can help drive the country’s economy.
Let alone attracting FDI from other countries, even the investors from the neighbouring countries who have already invested here are reluctant to pour in more money in business, service and infrastructure.
There are some issues that need to be resolved once and for all to attract FDI in those sectors. Investments will come from other countries if investors from neighbouring nations are ready to set up businesses.
The major hurdles frequently raised by the investors and multinational companies are related with dividend repatriation, labour problems, intellectual property rights, mismatch on duty structure, limited trading permission and unavailability of energy and poor infrastructure.
These are the areas that the government needs to address first before expecting any FDI. New investors who want to make investment in Nepal are also watching closely those investors who have already had business ventures here for sometimes.
The investors often complain that the authorities demand proof of financial investment for dividend repatriation even if they comply with the rules. The procedures for dividend repatriation must be simplified to attract FDI in selected areas.
Limited trading facility is another area the multinational and joint venture companies want to redress. The government allows the joint ventures to import high quality products only once a year. The joint ventures should be allowed to import such products equivalent to the percentage of their turnover.
Another area the multinationals and JV point out as the major barrier for investment is the lack of investment-friendly labour laws. The existing labour law must be of international standard in which interests of the workers and investors are well-protected.
Unnecessary demands from the workers beyond the financial capacity of the investors, prolonged labour strikes, lock up of the factories and services are the major obstacles that have hampered the investment environment.
The intellectual property right is also another issue that needs to be protected by law at par with global standard or World Trade Organisation. No FDI can be expected in the country unless the perennial shortage of energy is addressed.
Most industries which consume a large amount of electricity have installed expensive diesel-powered captive plants which escalate the cost of production.
The government’s plan to provide dedicated transmission lines to the major industrial corridors has also not been fully implemented due to the shortage of energy during the dry season.
The construction of the Kathmandu View Tower is to start from next week. The building is to be of 12 storeys.
For the purpose of building this tower the Old Bus Park has been temporarily shifted to the Khulamanch. The Kathmandu Metropolitan City has awarded a contract to a construction company.
This project is ambitious for it would be the tallest tower in Kathmandu.
The construction works had officially started on August 14 of this year. The building of the tower would be completed in three years if everything turns out well.
The construction company would be operating the building for a period of 30 years after building the tower.
A survey has been conducted and the side clearance has also been done. No doubt, once this tower is built it would be a site to have a bird eye’s view of the valley. It would not only be an attraction for tourists but also for the Nepalis.
However, there are many skeptics who do not believe that the tower would be built within the time allocated. The KMC deserve some credit for planning to build the tower.
But the KMC should be doing urgent reconstruction works after the damage caused by the major earthquakes.