Although Nepal has been receiving the FDI pledge in several sectors, the county has failed to materialise such commitments into reality
With the successful conclusion of elections for the three tiers of governments — federal, provincial and local — pledge of foreign investment in Nepal has surged in the first five months of the fiscal, hoping political stability. The Department of Industry (DoI), the government body authorised to approve foreign investment up to Rs two billion, states that Nepal received investment commitment worth Rs 15.72 billion, which is 256 percent more than what had been pledged in the same period of the previous fiscal year 2016/17. It was just Rs 4.41 billion investment commitment in the previous fiscal. Government officials have attributed the surge in foreign investment pledge to the positive vibes in the country which is poised for a stable government and investment-friendly environment. It is also noted that the country had received investment commitment worth US$ 14 billion at the Nepal Investment Summit held last year. However, Nepal failed to materialise the commitment made by foreign investors due to lack of progresses on several areas including labour law, clear provision of repatriation of profits made from the investment, smooth supply of energy and bureaucratic hassles at customs points.
DoI Director General Shankar Aryal has said recent political developments in the country have boosted the morale of foreign investors to make more investment in some big ticket projects such as cement, food processing and herbal medicines. In addition to these sectors, foreign investors have also shown interest in injecting money into manufacturing (Rs 7.17 billion), energy (Rs 2.12 billion) and tourism (Rs 1.25 billion) sectors during the first five months of the fiscal. During the last fiscal year, Nepal had received investment commitment of only Rs 954 million in the manufacturing sector. The DoI revealed that 46 foreign investors have shown interest in the tourism and service sectors and 26 others in the manufacturing sector.
Although Nepal has been receiving pledge of foreign direct investment in several sectors, the county has failed to materialise such commitments into reality. Receiving investment commitment is not enough. No foreign investment will come unless the government creates conducive environment for the same. During the Nepal Investment Summit last year, all major political parties had expressed firm commitment to support foreign direct investment. Despite the government’s assurances of protecting foreign investment by making reforms in the existing laws and giving it an equal treatment on par with the domestic investors, only US$150 million has been received so far in terms of foreign investment. This amount is quite negligible compared to the pledge of US$ 14 billion made during the investment summit. The government claimed that the investment summit was a grand success. But the government and its line agencies have failed to make adequate reforms in various sectors, including the law governing repatriation of profits from the investment. Political stability, regular supply of electricity, transport and communication facilities, investment-friendly labour law, hassle-free handling of cargo at customs points and competitive advantage of products are the prerequisites to attract foreign investment.
Cut the coal
A recent report published by the Department of Environment (DoEn) says excessive use of coal in brick kilns in the Valley is hugely contributing to air pollution. This is not good for the Valley denizens who are already choking due to exacerbated pollution due to vehicle emissions and dust. According to the DoEn report, 30 out of 110 brick kilns operating in the Valley were visited during its recent study and most of them were found to be using coal in large quantities, contributing significantly to emissions of carbon dioxide, particulate matter including black carbon, sulphur dioxide, oxides of nitrogen and carbon monoxide.
There is an urgent need to adopt new and cleaner technologies so as to reduce the level of pollutants. New technologies such as Vertical Shaft Brick Kilns, Tunnel Kilns and Hybrid Hoffman Kilns are substantially cleaner than the currently used Fixed Bull Trench Kilns. These improved technologies consume less energy and emit lower levels of pollutants and greenhouse gases. The dependency on coal must be reduced to keep the environment clean.
A version of this article appears in print on January 09, 2018 of The Himalayan Times.