Ambiguous polices reflected in the investment-related bills must be overcome to attract more foreign direct investment

A couple of bills related to foreign direct investment (FDI) contradict each other due to sheer lack of coordination between the Ministry of Finance and Ministry of Industry, Commerce and Supplies. The Foreign Investment and Technology Transfer Bill (FITTB) and Public Private Partnership and Investment Bill (PPPIB) seem to contradict each other when it comes to attracting investment amounts and issuing licences for the development of hydropower projects under the FDI. These two bills were recently tabled in the federal Parliament with a view to getting them passed through the House well before the second Investment Summit scheduled to be held on March 29-30 in Kathmandu. While the FITTB has authorised the Industry and Investment Promotion Board to approve FDI above Rs 5 billion and up to Rs 10 billion, the PPPIB proposes that FDI worth more than Rs 6 billion needs to be approved by the Investment Board Nepal (IBN). Another contradictory provision in the PPPIB is that it has authorised the IBN to issue generation licence for hydropower projects with a capacity of more than 200 MW. It contradicts a provision of the Electricity Act, which allows the Energy Ministry to issue licence for all of hydel projects.

The private sector has termed it policy inconsistency, resulting in a setback to attract more FDI in the productive and the energy sectors, both of which may be instrumental to generating more employment opportunities. The government is working hard to formulate suitable laws with a view to attracting more and more FDI so that the ballooning trade deficit and balance of payments can be reduced to a great extent. Potential foreign investors have been calling for suitable laws, which may allow them to repatriate their profits after some time of investment in the country. The IBN, which is authorised to issue licence for hydel projects exceeding 500 MW, is at loggerheads with the Energy Ministry. Such policy ambiguities will only add confusion to the potential investors. Customs officials also face difficulties to give clearance to goods imported for such projects.

As the government embarks on holding the second Investment Summit, security could also be a major concern for the investors. The recent coordinated attacks on Ncell’s office and its 21 towers across the country have sent a wrong message that Nepal may not be safe for FDI. Against this backdrop, the government must assure the potential investors that full security would be provided to their investment and personnel. If the government is really serious about attracting FDI, it must take stern action against those who carried out the senseless acts of terror. And by the time of the summit, all the laws dealing with FDI must also be compatible with each other. The government must set up a one-window system to provide the potential investors all facilities related to survey, agreement and investment permission of the project. The prevailing culture of red-tape must come to an end once and for all if we are serious about attracting FDI. Ambiguous polices reflected in the two crucial bills should be overcome before they are passed through the federal parliament. The line ministries must work in tandem to make the bills investment-friendly.

Let the Act prevail

Kathmandu is an urban nightmare, with its unplanned cityscape, where houses, more often than not, do not follow the prescribed building code. As both individual houses and business complexes strive to earn a little more rent, the greed is pushing their height to new levels, much against the limit fixed by the government. It is against this background that officials of about half a dozen agencies inspected a commercial complex under construction inside the buffer zone of Basantapur Durbar Square, a UNESCO World Heritage Site, on Tuesday to remind it to keep the height at no more than 35 feet.

The builder, Business Associates Pvt. Ltd., had made a commitment to stick to the Ancient Monument Preservation Act, which caps the height of buildings at 35 feet. But why it is trying to circumvent the regulation is anyone’s guess. The authorities must show no leniency should the builder insist on going any higher. Otherwise, it will be difficult to deter other builders in and around the monumental zone frequented by thousands of foreign visitors every day. It may not be possible for the authorities to bring order to the entire city, but it must do so at the heritage sites through strict implementation of the regulations.