‘Investment summits held in 2017 and 2019 failed to attract notable size of FDI’

KATHMANDU, Nov 28: While the government has stepped up its efforts to conduct another investment summit, experts and private sector stakeholders have criticized the government for failing to implement necessary provisions that were committed in the previous editions to attract the foreign direct investment (FDI).

The government has announced its plans to organize the investment summit on April 21-22, 2024. The investment summit this time will be different in the context that it will lay importance also on domestic investors and Non-resident Nepalis apart from the foreign investors, claims the Ministry of Finance.

For this purpose, a preparatory committee has been formed under the coordination of Finance Minister Prakash Sharan Mahat, while the chief executive officer of the Investment Board Nepal (IBN), Sushil Bhatta, has been appointed as the committee's member secretary.

Stakeholders, however, pointed out that the ad hoc decision of the government lacking proper preparation could result in poor outcomes in the upcoming summit as well. According to the stakeholders, the government has even failed to accomplish its promise of creating an environment for the ease of doing business through previously organized investment summits in March 2017 and March 2019.

Ram Kumar Phuyal, member of the National Planning Commission, said the investment summits of the past could not yield desired results as expected. He stressed on the need for assessing the weaknesses of the previous investment summits first.

Commerce Secretary Narayan Duwadi said the government has even failed to provide benefits to the investors as envisioned in the laws. “Unless the investors are persuaded, it will be difficult to attract new capital injection as per the expectation.”

Experts have expressed that the government should effectively implement a number of measures like hedging, credit rating of companies at speedy rate and issues related to land acquisition. “The promptness to implement measures should not be only on document, but needs to be made result-oriented,” said Radhesh Pant, former chairman of the IBN.

In the aftermath of the investment summit held four years ago, Nepal has amended laws pertaining to labor and technology transfer to improve the investment climate. However, a number of other laws related to the issues like intellectual property rights and repatriation procedures are still on the flip side.

In addition, the government has failed to create a favorable environment to reduce costs and minimize risks for businesses. This had led to a decline in actual realization of the FDI amount.

According to a FDI Survey conducted by Nepal Rastra Bank (NRB), there is a significant gap between approved FDI and actual net FDI inflows in Nepal. In 2021/22, the total actual net FDI inflow stood at only around 36.2 percent of total FDI approval. In addition, the net FDI inflows to Nepal decreased 4.9 percent to a mere Rs 18.6 billion in the year.

Hari Bhakta Sharma, former president of the Confederation of Nepalese Industries, also echoed that the government has failed to accomplish promises made in the past summits. “The lack of proper study ahead of the summit is likely to make the upcoming summit a failure too,” Sharma said.