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Promoting Foreign Investment in Nepal: Prospects and Challenges

Basudev Sharma Poudel1

Abstract
FDI is an important source of capital for economic growth in developing countries. It provides a
package which constitutes new technologies, management techniques, finance and market access
for the production and movement of goods and services. However, attracting FDI is a major
challenge for host countries as it faces the challenge of identifying the major factors that motivate
and affect the FDI location decision. The main FDI location factors are cost factors, market
factors, infrastructure, technological factors, political and legal factors and social and cultural
factor. Despite several conflicting circumstances, Nepal is attempting to sort out overarching
issues of FDI concerning with economic development. That's why Nepal is at a point wherefrom it
can excel for economic goals via FDI. The set trends illustrate that various indicators pertaining
to FDI in the country has been improving since peace process was begun in 2006. This analysis
comes to conclusions that the country owns unique advantages and, thereby, opportunities of FDI
useful for the countrys prosperity. Yet FDI in the country is not free of challenges, thus, that
need to be timely addressed with prudent measures.

Key word; FDI, TNCs, LDC, SEZ

Introduction
Foreign Direct Investment (FDI) is generally considered as a useful means so as to
energize an economy. One common view is that FDI helps accelerate the process of
economic development in host countries (Hanson, 2001, p1).However; FDI is not free of
disputes. Despite of all controversy, FDI has been a major economic policy issue for the
great majority of nations around the world. The increasing mobility of international firms
and the gradual elimination of barriers to global capital flows have stimulated
competition among governments to attract foreign direct investment. FDI per se is one
manifestation of globalization and the world economy over the past two decades. FDI is
an important indicator to boost the economic growth of Nepal. FDI was identified as a
medium in order to acquire skills, knowledge, technologies and to internationalize
1

Mr Poudel is a Under Secretary, Ministry of Finance Privatization cell /GoN in Kathmandu. A gold Medalist in
M.Phil in management. P.Hd Scholar in Faculty of Management Tribhuvan University , Kathmandu, Nepal

1
Electronic copy available at: http://ssrn.com/abstract=2128969

business and at the same time to reduce debts.McKern (1996), Kathuria (1998, 2000 and
2001) and Noorbakhsh et al., (2001) believed that foreign direct investment does not take
place automatically in a nation. Whereby, inflow of foreign direct investment should be
encouraged.

FDI, also known as (international) direct investment, forms part of the capital account of
the balance of payments. Direct Investment is defined as an investment that adds to,
deducts from, or acquires a lasting interest in an enterprise operating in an economy other
than that of the investor where the purpose is to have an effective voice in the
management of the enterprise. According to the IMF, FDI is the category of international
investment that reflects the objective of obtaining a lasting interest by a resident entity in
one economy, in an enterprise resident in another economy.

Foreign direct investment was considered as a medium for acquiring skills, technology,
organizational and managerial expertise. Unfortunately, the recent bulk of the inflow has
been directed to only a limited number of countries. Mohd Ridauddin Masud et al (2009)
claimed there were four elements that encouraged the inflow of foreign direct investment
to the host country, which was the component of investment, origin of foreign investor,
economic sectors and investment income generated. The openness of the economy with
the rest of the world has significant liberalization in terms of trade. The open economic
encouraged more confident investment. Other than trade liberalization, financial
liberalization was also important to sustain capital inflows.

Countries do welcome FDI for its various potential benefits. These include employment
creation, capital accumulation, transfer of technology, improved provision of services and
increased competition (UNCTAD, 2006: p1). Contrary to such positive views, skeptical
views run against FDI. Skepticism suggests inward FDI can also impose costs in the form
of displacement of local firms and workers and possible monopolistic practices, and there
can be valid economic rationales for restricting inward FDI (ibid, p1). Staying away from
economic rationales, political and social views do hold high handedness in denouncing

2
Electronic copy available at: http://ssrn.com/abstract=2128969

FDI. There may also be non-economic reasons for limiting foreign ownership and
control, relating to national security or economic nationalism (ibid, p1).

Current financial and economic crises erupted since 2008 have downplayed the agenda of
investment attraction through liberalization and protecting foreign investors. With this
respect, Nepalese case per se is a unique as its agenda for economic transformation has
been shadowed in a hazy and hostile political situation. This process emerged when the
country posed years of internal war which shattered the mission of inviting FDI. The
situation is further complicated by protracted transition in which major two tasks constitution making and peace process - are not concluded yet.

At a time the country is striving for strengthening its infant republican democratic
system, political and economic agenda should go hand-in-hand. Whatever the nature or
size of system the country is going to switch over to, the future state will have to
ultimately deliver in economic term to common people. If delivered the peace dividend,
the system-in-design will sustain and vice-versa. Keeping it in mind, a sound
preparedness is a must in the direction of economic prosperity. Alleviating poverty in a
period of ten years in Nepal may require at least 8 per cent of sustained growth in GDP.
On top, growth has to be converted into inclusive growth as long as possible. Such
quantum and nature of growth is attainable only when FDI boosted investment will come
true.

It is an irony that the size of FDI to Nepal has been a meager for a long time, on one
hand. On the other, China and India have been enjoying one of the highest chunks of
global FDI. Now the time has come for Nepal to make an honest introspection and
retrospection so that a set of prudent and pragmatic measures could be designed
accordingly for both policy as well as operational levels in the times ahead.

Objectives of the Study


This paper aims to meet the following objectives:
1. What are the main trends observed in the FDI to Nepal?

2. What are the major prospects for FDI in Nepal?


3. What are the chief challenges to be dealt by Nepal?
Trend of Global FDI
Recent years have painted somewhat negative sort of picture of FDI at global level.
Following statement of World Investment Prospects Survey (2010-2012) is the
manifestation of the current pessimistic scenario:
Faltering profits, reduced access to financial resources, and declining market opportunities,
as well as the perceived risk of a possible worsening of the global economic downturn are
among the reasons for a fall in FDI flows, as witnessed in 2009. Falling FDI in turn also
raises concerns among host countries especially those in the developing world that rely on
international investments to finance their domestic growth and employment creation
(UNCTAD, 2010: p3).

Like trade, foreign direct investment (FDI) has occurred throughout history. From the
merchants of Sumer around 2500 BCE to the East India Company in the 17th century,
investors routinely entered new markets in foreign dominions. In 1970 global FDI totaled
$13.3 billion. By 2007 it was nearly 150 times higher, peaking at $1.9 trillion. The
economic crisis slashed global FDI flows by about 40% in 2009, affecting all economies,
sectors, and forms of investment. FDI in developing economies fell 35% in 2009,
compared with 41% in high-income economies. Most indicators signal that FDI will be
higher in 2012 than in 2011. The recovery in FDI is good news for economies suffering
from the global economic downturn and seeking to stimulate economic growth.Statistical
data shows that the level of FDI was continuously increasing during 1990-2008, but the
directions and amount of such inflows differs significantly between the countries.
European countries proved to be successful in attracting FDI. According to UNCTAD
(2007) total FDI inflow in the world was 945.8 billion USD, of which developed
countries received 590.3 billion USD which is 62.4 % of the total FDI inflow in the
world, whereas in the same year developing countries received FDI only 314.3 billion
USD. It was only 38.6 % of the total FDI inflow in the world. Even that one can observe
a slight drop in total amount of FDI inflows in the world in 2008 developed countries
continuously dominate over the developing countries in attracting the FDI.

Statistical data shows that the level of FDI was continuously increasing during 20032007, but the directions and amount of such inflows differs significantly between the
countries. European countries proved to be successful in attracting FDI. According to
UNCTAD (2007), in 2005 total FDI inflow in the world was 945,8 billion USD, of which
developed countries received 590,3 billion USD which is 62,4 percent of the total FDI
inflow in the world, whereas in the same year developing countries received FDI only
314,3 billion USD. It was only 38,6 percent of the total FDI inflow in the world. Even
that one can observe a slight drop in total amount of FDI inflows in the world in 2008
(Table 1) developed countries continuously dominate over the developing countries in
attracting the FDI.

Foreign direct investment has grown dramatically worldwide over the last decade.
Inflows of foreign direct investment into developing countries grew by an average of 23
percent a year during 1990-2000 (IMF, 2003). In addition, foreign direct investment was
now the largest and the most stable source of private capital for developing countries and
also economies in transition, which accounting for nearly 50 percent of all capital flows
(Kraay, 1998). However, less developed countries have greater expectation on foreign
direct investment.

Global foreign direct investment (FDI) flows rose moderately to $1.24 trillion in 2010, in
(table 2) but were still 15 per cent below their pre-crisis average. This is in contrast to
global industrial output and trade, which were back to pre-crisis levels. UNCTAD
estimates that global FDI recovered its pre-crisis level in 2011, increasing to $1.41.6
trillion, approaching its 2007 peak in 2013. This positive scenario holds, barring any
unexpected global economic shocks that may arise from a number of risk factors still in
play.

Year
2005/07
2007
2008
2009
2010

Table 2: FDI Flows and Stock Inflow


In billions US dollars
Annual percent changes
1472
1971
0.34
1744
-0.12
1185
-0.32
1244
0.05

Source: UNCTAD, weblink: www.unctad.org/fdistatistics

For the first time, developing and transition economies together attracted more than half
of global FDI flows. Outward FDI from those economies also reached record highs, with
most of their investment directed towards other countries in the South. Furthermore,
interregional FDI between developing countries and transition economies has been
growing rapidly. In contrast, FDI inflows to developed countries continued to decline.

Some of the poorest regions continued to see declines in FDI flows. Flows to Africa, least
developed countries, landlocked developing countries and Small Island developing States
all fell, as did flows to South Asia. At the same time, major emerging regions, such as

East and South-East Asia and Latin America, experienced strong growth in FDI inflows.
International production is expanding, with foreign sales, employment and assets of
transnational corporations (TNCs) all increasing. TNCs production worldwide generated
value added of approximately $16 trillion in 2010 about a quarter of global GDP.
Foreign affiliates of TNCs accounted for more than one-tenth of global GDP and onethird of world exports. State-owned TNCs are an important emerging source of FDI.
There are some 650 State-owned TNCs, with 8,500 foreign affiliates across the globe.
While they represent less than 1 per cent of TNCs worldwide, their outward investment
accounted for 11 per cent of global FDI in 2010. The ownership and governance of Stateowned TNCs have raised concerns in some host countries regarding, among others, the
level playing field and national security, with regulatory implications for the international
expansion of these companies.
The global financial crisis and subsequent economic downturn led in 2008-2009 to rapid
and significant contraction in international trade and investment. But the first half of 2010
has seen a gradual though cautious upswing in global consumer demand, investor
confidence, and economic activity. The resurgence of international commerce and
investment is creating new opportunities for companies and countries alike. The factors
driving investment decisions by multinational corporations are changing. When seeking
business opportunities, companies are now more concerned about financial and political
risks, with a focus on stable and predictable business environments. In response,
governments everywhere recognize that their chances of attracting more foreign
investment depend on making their investment climates more competitive.

The Investing across Border (IAB) indicator measures FDI regulation in 4 specific policy
areas. They aim to complement existing measures of the quality of business
environments. A company seeking to expand its global presence will assess its options
before deciding on a location for its investment. One of the first determinants of location
is whether the company is allowed to enter and operate in a specific market. Though most
economies have liberalized and opened most sectors to foreign investment, some
industries continue to be protected from foreign competition. IABs investing across

sectors indicators find that while primary and manufacturing sectors are mostly open,
some industries such as media, transportation, energy, and telecommunications remain
restricted in many economies. Some of the more restrictive economies include large ones
such as China, Mexico, the Philippines, and Thailand.

Even if a foreign company can enter a particular sector, it may face other barriers to
market access and operations. Onerous start-up procedures, excessive licensing and
permit requirements, and time-consuming export and import processes are among the
factors that can make an economy less attractive to foreign investors. IABs starting a
Foreign Business indicators show that in some economies foreign companies must
complete lengthy procedures to obtain investment approvals, adding weeks and
sometimes months to the start-up time. In other economies the procedures can be done
online and take only a few days.

South Asian Experience


As evident from the table below, Nepal seems to be low performer amongst other
competing countries in the South Asian countries. Only in 1999/2000 and 2007, it got a
bright picture, whereas the rest years it was grappled with appalling prospects. As per the
UNCTADs World Investment Prospects Survey 2009-11, India stands among the fivemost attractive place for FDI globally.
Table 3: Inward FDI Flows
$ million

as a % of gross fixed cap formation

1999-00

2005

2006

2007

2008

1999-00

2006

2007

2008

India

1705

7606

20336

25127

41554

1.9

6.9

6.5

9.6

Pak

463

2201

4273

5590

5438

5.1

16.1

18.3

18.3

Sri Lanka

159

272

480

603

752

6.8

7.5

7.3

Bangladesh

218

845

793

666

1086

2.9

5.3

5.9

Maldives

14

15

15

2.8

2.9

2.5

Nepal

-7

0.9

-0.3

0.2

NA

73

30

0.4

1.2

10.9

3.9

Bhutan

Source: UNCTAD: World Investment Report 2009

Apart from India, the other big countries in South Asia namely Pakistan, Bangladesh and
Sri Lanka have also benefitted from FDI flows. Yet investment flows into Nepal, Bhutan
and Maldives have so far been meager.
Trends in Nepal
This analysis observes following trends mainly seen in recent FDI of Nepal.
1. Increasing number of FDI related projects
The table 1 shows that till the year 2002 the number of FDI induced projects
witnessed series of ups and downs. However, a steadily growth was observed since
2005 and that trend continued till 2009. In the subsequent years, the number of FDI
related projects slightly plummeted to Rs 179 from Rs 205 million. By and large,
since 2005 the line of trend has shown a new hope which was lost amidst conflict run
in the country.
2. Rolling back the cost of projects
The table 1 highlights that the year 1993 was the period when one of the largest
amounts invested ever. On the contrary to that, the following years except 1997 saw
series of downfall in the investment. The momentum again rolled back in 2008, 2009
and 2010. The situation of later years seems to be encouraging.
3. Rising the total fixed cost
Just like the acceding case of total project cost, 1993 was the year when a big surge in
fixed cost was witnessed. Similarly, 2008 and afterwards a rising trend in the fixed
cost was seen. But the data shows a distressing situation in between the year 1993 and
2008. However, a happy note is that since 2008 a rising fixed cost is in effect.
4. Growing foreign investment
Except the year 1993 the rest all years covered in this study witnessed a constant
fluctuation in foreign investment, including little ups and downs. However, since
2007 onwards an encouraging course has substituted the situation.
5. Slow going employment opportunity
The year 1993 is marked as the highest scoring period with respect to generating
employment opportunities as an outcome of FDI in the country. However, it remained
short-lived as the following years failed to sustain the gained momentum. Breaking

the embarrassment continued till 2005, the year 2006 brought back once again the
hope. The largest number ever of employed man power was in 2008 when employed
figure grew up to 12480.
Table 4: Foreign Investment Projects in Nepal up to 2067/09/28 BS (Rs. in millions)
============================================================================
Fiscal Year
Total Project
Total Foreign Employment
In AD
No.
Est Cost
Fixed Cost
Investment
============================================================================
Up to 1990
95
7722.98
6549.23
868.92
20658
1991
24
1179.16
965.27
501.57
4130
1992
58
7101.33
6120.28
1110.25
7219
1993
55
15379.89
13822.37
3350.14
12716
1994
22
2258.47
2025.34
515.10
2890
1995
39
8910.55
8202.26
2208.23
6177
1996
46
3815.16
3356.29
757.16
5949
1997
88
11647.93
9712.39
3315.98
9246
1998
66
2933.73
2581.25
1150.86
2750
1999
52
4868.00
3820.63
2178.98
2521
2000
95
5094.39
4061.94
1494.33
6792
2001
94
7228.00
4345.59
3136.62
6434
2002
60
2876.81
2446.66
1361.40
3065
2003
81
4562.68
3133.24
1773.13
2072
2004
68
3206.98
2726.72
2108.95
5833
2005
106
2644.02
1791.11
2398.64
4955
2006
130
4371.04
3694.91
3377.54
7649
2007
194
8213.65
6385.36
6541.95
7532
2008
225
18038.82
14761.09
8389.33
12480
2009
205
9168.45
8170.48
4057.60
8824
2010
179
12568.18
13461.91
9295.75
8999
=====================================================================
Total
1986
143847.72
122180.13
59923.76
149109
=====================================================================
Source: Department of Industry, Nepal 2011

6. Urban-centric FDI
Table 5 shows that FDI in Nepal varies district wise. The table of up to fiscal year
067/068 depicts a very uneven picture of FDI hosted by various administrative districts.
In a case of hosting FDI above Rs 2000million, Kathmandu is the front-runner which is
followed by seven other countries. The others include Lalitpur, Kaski, Rupandehi, Parsa,
Makawanpur, Dhading and Bara. In quantum, a huge variance was observed between the
districts located in the KathmanduValley and the other districts. Out of the total FDIalone
Kathmandu based two districts scores 44.93 per cent, while the later group possesses only
55.07 per cent.Likewise the stated eight districts invited 68.38 per cent whereas the rest

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other districts could attract the remaining 31.62 per cent of the total FDI.By and large, the
FDI is glued with a certain urban centers that cater a huge number of customers.
Table 5: Districts hosting FDI up to 2067/068
No
1
2
3
4
5
6
7
8
9

District

Amount in (mill)and Percent


23477.00 ( 34.49%)
7101.97 ( 10.44%)
4130.58 (6.06%)
2958.59 (4.34%)
2052.85 (3.41%)
2321.73 (3.41 %)
2171.00 (3.19 %)
2072.08 (3.04 %)
21,764.17 ( 31.62%)
68,049.97 (100)

Kathmandu
Lalitpur
Kaski
Rupandehi
Parsa
Makawanpur
Dhading
Bara
Others
Total

Source: Department of Industry/GoN, 2011

7. Source of FDI
Source wise Nepal has India, China, South Korea, Japan and Canada in the list of such
five countries which account 67 per cent share in the total invested FDI, while 22 per cent
was invested from the group of traditional OECD countries. India and China, amongst the
five countries, are the countries having much greater share than the rest three countries.
Having compared to the case of other SAARC countries, location factor seems to be
strong in practices. Location factor in the FDI is an interesting part to be studied over.
Table 6: Sources of FDI
Share of 5 top investors in Individual South Asian Countries (%)

Host Country

India

Bangladesh

Pakistan

Year

Top 5 Countries

2006 &

Mauritius, UK,

2007

Singapore, US, NRI

2005 &

US,UK,Egypt,

2006

UAE,Norway

2006-7

US,UK,

& 2007-

UAE,Netherlands,

Switzerland

Nepal

2005-08

Sri Lanka

2002

India, China, South


Korea, Japan, Canada
Malaysia, Singapore, UK,

Share of top 5

Share of traditional

No of identified

countries (%)

OECD countries (%)

source countries

66.1

27

100

68

51.2

31

64.1

60.5

33

67

22

25

62

NA

NA

11

India, USA

Sources: BOI: Pakistan and Bangladesh; DOI Nepal; SIA India; ESCAP (2003): Srilanka

8. The volume of FDI: size of industry and type of investment wise


Annex 7,looking at the FDI up to 2067/68, illustrates a picture thatthe size of investment
is greater for both equity investment and technological transfer vis--vis for technological
transfer. Likewise, small sized industries accounted higher number of projects as
compared to medium and large sized industries. It is a clear manifestation that small
industries attracted bigger number whereas medium and big industries attracted smalleras
compared to the earlier.

9. The volume of FDI: sector wise


Annex 8 succinctly sheds light on the fact that the largest sector hosting FDI is
manufacturing that accounts Rs 58,291.54 million. That is followed by electricity, water
and gas that accounts Rs 38,718.70 million whereas third positioned hotel and resort,
fourth positioned service industry and fifth positioned construction sectors account Rs 21,
318.54 million, Rs 18,320.53 million and Rs 6,124.92 million respectively. The rest are
taken by some other sectors.

Prospects of FDI in Nepal


Despite contesting views on impact of FDI, on certain areas FDI has been seen to have
stimulated domestic investment. One study carried out by Research and Information
System in 98 countries covering the 1980-98 period depicts that in Asian countries such
as Bangladesh, Korea, Nepal, Sri Lanka and Thailand, FDI has had a positive effect on
FDI by crowding in domestic investment. The same study continues to demonstrate that
of the 107 countries surveyed, FDI has had a positive effect on domestic investment in 22
countries (OECD, 2002: p4).

Peace process undergoing in the country is already felt to be resulting in a great


implication for FDI. As the table 1 suggests, the year 2006 and afterwards almost all
potential sides of FDI have been improved. Number of projects, committed total cost,

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committed fixed cost, size of foreign investment and employment opportunities all were
arisen. These vividly signal that the prospects for FDI in the country is getting more and
more optimistic day by day as peace process is gradually consolidated. By this, one
assumption seems to be pretty valid that once peace process concludes, FDI will bring in
multiple positive implications. Thus, the undergoing peace process and prospects for FDI
are interlinked.
Nepals economy is badly crippled over the last one decade; however, a big opportunity
is awaiting the country at its door-step. Despite the size of its own market is limited for
surging its volume of trade, two giant markets of the world, i.e. Indian and Chinese, are
just in arm reach. To access the markets, because of the proximity the transaction cost for
Nepalese goods and services is lowered that of the other countries. Besides, being Nepal
a Least Developed Country (LDC) Nepalese goods and services are granted zero-tariff
market access in those markets. With the advantage of this General System of
Preferences (GSP) facility, Nepalese goods and services do enjoy better cost
competitiveness. It is an obvious hypothesis that lower cost is meant higher trade
prospects.

One recent phenomenon is that in the current era business and investment is gradually
shifting to East and South countries from West and North countries. The North countries
represent developed and the South countries represent developing as well as LDC group
of countries like Nepal. Part of the reason for this shift is lower labor cost in the South
vis--vis that of the North countries where it has always been on rise due to hit-syndrome
to be appeared in economy. Besides, chance of trickle down in investment from China
and India to Nepal seems to be encouraging in the years ahead. By these virtues, Nepal
could greatly entice FDI in the forthcoming times.
As the Law of Comparative Advantages, as propounded it by a classical economist
David Ricardo (1772-1823), argues every country has look at its own prime advantages.
Ricardo insisted there is mutual benefit from trade (or exchange) even if one party (e.g.
resource-rich country, highly skilled artisan) is more productive in every possible area

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than its trading counterpart (e.g. resource-poor country, unskilled labourer), as long as
each concentrates on the activities where it has a relative productivity advantage
(Wikipedia).While applied the law in the Nepalese case, natural endowment is such one
example wherein the country is blessed with many advantages. As Nepal Trade
Integration Strategy (NTIS) 2010 has succinctly identified, there are 19 areas in which
the country is much richer than other competing countries. This list includes cardamom,
ginger, honey, lentils, tea, noodles, medicinal herbs/ essential oils from agro food
category. Similarly, handmade paper, silver jewelry, iron and still, pashmina and wool
products are included from craft and industrial goods category. Likewise, tourism, labor
services, IT and BPO services, health services, education, engineering, hydro-electricity
are selected from services sector. Finally, transit trade services between Tibet and India,
sugar, cement, dairy products and transformers are picked up as other potential export
sectors (MoCS, 2010, p.10). In these sectors, Nepal could excel provided that suggested
matrix of the NTIS 2010 are implemented to ensure competitiveness.FDI can be easily
attracted to invest in these sectors since that are salable in destination markets.

Policy wise Nepal has already been a liberalized economy. Accession to WTO in 2004,
membership of BIMSTEC, becoming a part of SAFTA, new Trade Policy 2009, new
Industrial Policy 2010, Nepal Trade Integration Strategy 2010 are some instances of a
liberalized economy. In recent days, at high level the country has held Bilateral
Investment Promotion and Protection Agreement (BIPPA) and Double Taxation
Avoidance Agreement (DTAA) agreements with India in 2011 during the visit of Nepals
PM to India. One more agreement Nepal signed on Trade and Investment Framework
Agreement (TIFA) with the United States in 2010. Such arrangements are potential in
sending around good gesture and instilling confidence in prospective foreign investors so
as to feel them stepping into the country. They themselves are self-explanatory stating to
what extent Nepal is opened up along with treasury of tremendous opportunities. In terms
of tariff rates in-effect, the country is more liberal vis--vis many developing world. With
these credentials, foreign investors have leverage enough for profitability.
In institutional front, in the later days Government of Nepal (GoN) is underway of some
headway. The major initiatives include:

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a) Formation of Board of Investment


In pursuit of expediting the investment process with a new vigor, a separate Board is
placed in the system. A set of beauty lies with this newly placed institution. First, it is
free of regular bureaucratic configuration and procedures. Second, it is headed by the
Prime Minister of the country. Third, it is represented by leaders of all big ministries
and agencies, hand-in-hand, by business leaders from various umbrella associations
of business sector. Last and the least, the way it has been designed it is looked as pool
with sound professionals who know every bit and pieces of investment compared to
ordinary bureaucrats.

b) Declaration of Nepal Investment Year (2012/2013)


In view of creating a big momentum for investment in Nepal, the GoN has declared
Year 2012/2013 as the Nepal Investment Year. To make its grand success, the
government has formed following sub-committees and fixed their coordinators at a
very high level:
i) Program

PMO Secretary

ii) Investment promotion

FNCCI President

iii)Investment sector identification

CEO of Board of Investment

iv) Act, rules, and policies revision

Vice Chairman of NPC

Challenges in Nepal for FDI


Nevertheless the country enjoys very bright prospects; so far it is not free of challenges.
The major are as follows:
1. Scenario as per World Investment Prospects Survey
Looking at the indicators applied in the World Investment Prospects Survey 2007-2009,
war and political instability factor scores the most critical threat which is followed by
other such compounding factors as changes in investment regime; global economic
downturn and financial instability (Please refer the following table).

15

Table 7: Major threats to global FDI flows in 2007-2009


Not important Important
12
60
13
32
15
57
22
50
24
52

1. Financial instability
2. War and political instability
3. Change in investment regime
4. Global economic downturn
5. Perceived corruption

Very important
27
55
28
27
24

Sources: World Investment Prospects Survey 2007-2009, UNCTAD, p.2

Contextualizing the same factors into Nepalese case, data depicts that conflict and
turmoil political situation turned Nepal began sliding down its once rising FDI. This
situation per se seems self-evident that FDI in the country is hugely challenged by war
and political instability factor.

2. Transitional politics
Ending more than a decade long war, Nepal in 2006 stepped into new republican system.
However, its peace process is taking longer time than it had been expected at its outset.
As it happens elsewhere in a situation of big transition, the total environment in the
country is not yet out of fragility for the same reason. Obviously, in such times political
agenda vis--vis economic agenda gets smaller space while prioritizing public policies.
The government seems to have beheld a great amount of passion for economic agenda; as
a result, positive message is spread up to prospective investors. However, they are still
concerned with the amount of uncertainty associated with the transitional politics. In such
a circumstance, feeling of insecurity is stemmed from uncertainty.

3. Acute power crisis


For a couple of years, the country is under the grip of acute and pathetic power crisis. It
has resulted in, on one hand, a force shift towards diesel option for meeting the powergap
in business sector, on the other, a continuous down turn in the countrys cost
competitiveness for the fact that cost of production has risen. Unless the solution of this
power crisis devised, the situation would go daunting against prospective investors.

4. Good governance

16

For years and years, the countrys governance has been rated one of the low performing.
Several global indices; such as being undertaken by Transparency International on
corruption issue, the World Bank on Doing Business related issue, and Global Economic
Forum on Global Competitiveness; all consistently echo the voices painting the country
as a least merit holder. There are many studies that iterate good governance as basic
condition to lure possible investment. This argument is further strengthened by
globalization of investment for the reason that the investors enjoy boarder less world so
as to flyany distance. In such backdrop, one has to be competitive enough with better
governance vis--vis other countries competing for the same opportunity.
5. Implement ability of the policies
Policies and institutional bases alone are not sufficient condition of attaining the set goals
for FDI. Many internationally carried out implementation research works have come to a
conclusion that a big part of success largely depends on a country specific implement
ability. From this vintage, bureaucratic attitude and readiness to cope the agenda, their
capacity to perform, coordination between different ministries and agencies involved,
resource commitment are some instances relevant to Nepalese case. In this, a happy
marriage between government-to-government (G2G) and business-to-business (B2B)
approaches can be extra mileage to go for. On top of these all, a persistent and visionary
leadership, which is business friendly, is the highest order of implement ability. In short,
implement ability is what Nepalese in dire need of.
7. Labor unrest and law and order
In the past, the situation associated with the issue had been very daunting for the FDI in
Nepal; however, speedy progress in this regard would better enable the FDI. Besides, no
anymore occurrence of similar case will have to be allowed to repeat. By this, a positive
signal about FDI-friendly environment the country could set forward and spread around.
8. Higher transaction cost in trade
Nepal, as being a Least Developed Country (LDC), is suffered from difficult geographical
terrain, uncompetitive transport sector, unreliable transport infrastructure and weak
telecommunication services, weak industrial infrastructures, i.e. Special Economic Zone
(SEZ), ICDs (Inland Container Depot)/ Container Freight Station (CFS). These have

17

cumulatively made the transaction costs in Nepal far greater than that of other neighboring
countries.

Conclusion
Despite various inter-locked issues, controversies and transitional political circumstances,
Nepal is well positioned among low-income economies to move emphatically on
development policy and spending priorities during the next decade. The country is
bountiful of numerous positive attributes. Trade policy and Trade Strategy has succinctly
identified sectors having comparative advantages. Prudent monetary, fiscal and trade
policies have created a modern and stable macroeconomic framework with the potential
to create a dynamic, competitive, and investment attracting economy in the decade ahead.
Above all, conclusion of political settlement, labor unrest and power crisis are the critical
factors. However, political agenda and economic agenda have to move in a best
synchronized way. Provided the conditions, a potential influx of FDI is at the countrys
door step but due to knock its door. Towards end this, political, business, bureaucratic
leaders are required to come closer and act in a business-friendly chorus. The whole
gambit of course ends with aggressive marketing that Nepal is ripe for hosting FDI.
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Kathmandu: SAWTEE
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Paper Series, No 9 Feb 2001, New York and Geneva: UNCTAD and Center for
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Theory and in Practice, London, Thousand Oaks and New Delhi: Sage Publications

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19

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20

Annexure
Annex 1: Industries Approved for FDI Districtwise( Upto F.Y. 2067/68)(Rs. mln.)

21

No. of

Total

Total

Foreign

Total No. of

Industries

Project Cost

Fixed Cost

Investment

Employment

District

Dhankuta

46.62

37.62

0.00

120

Ilam

145.00

117.90

145.00

188

Jhapa

13

1036.14

663.90

278.35

3284

Morang

26

3403.83

2687.41

1661.47

4795

Okhaldhunda

250.00

245.00

19.00

122

Sankhuwasabha

500.00

488.00

500.00

250

Saptari

410.00

384.00

282.40

144

Siraha

2494.00

2230.07

1913.20

702

Solukhumbu

2959.17

2856.59

926.13

198

10

Sunsari

20

2324.17

1693.97

1252.25

3111

11

Taplejung

12.10

10.14

11.90

44

12

Bara

43

7265.35

5752.70

2072.08

4424

13

Bhaktapur

46

1958.25

1213.12

762.23

3739

14

Chitwan

48

3440.17

2752.25

1128.36

7581

15

Dhading

2405.89

2351.70

2171.00

721

16

Dhanusha

291.04

249.71

165.52

292

17

Dolkha

5800.20

5281.03

1505.73

325

18

Kathmandu

1176

53018.67

43890.58

23477.00

67891

19

Kavre

51

1780.94

1493.79

1121.92

4472

20

Lalitpur

261

10250.57

8047.69

7101.97

14422

21

Makwanpur

49

4720.38

3594.07

2321.73

4355

22

Nuwakot

220.58

193.65

110.70

665

23

Out Of Valley

24.34

21.22

24.34

70

24

Parsa

41

3393.32

2387.50

2052.85

5586

25

Ramechhap

291.34

237.89

262.21

200

26

Rasuwa

2622.40

2522.28

1236.43

176

27

Rautahat

559.18

509.18

44.06

589

28

Sindhuli

9.00

7.70

9.00

105

29

Sindhupalchowk

6832.73

6603.59

1292.08

2892

30

Terai Region

60.00

55.00

16.00

97

31

Arghakhachi

1342.09

199.27

449.60

331

32

Gorkha

704.09

648.32

75.23

758

33

Kalikot

0.00

1800.00

1520.00

125

34

Kapilbastu

421.71

206.42

307.81

300

35

Kaski

116

12308.46

11665.90

4130.58

5145

36

Lamjung

343.93

311.25

124.15

513

37

Manang

915.00

898.00

203.00

289

38

Manang,Tanah

75.00

69.75

47.01

635

39

Mustang

461.74

449.11

1.07

115

22

No. of

Total

Total

Foreign

Total No. of

Industries

Project Cost

Fixed Cost

Investment

Employment

District

40

Nawalparasi

21

2771.18

2373.76

513.40

2904

41

Palpa

330.00

183.38

304.90

136

42

Parbat

1100.00

1089.00

1.50

2614

43

Rupandehi

29

5630.09

4603.14

2958.59

3104

44

Tanahu

89.02

73.20

37.50

237

45

Undefined

251.67

154.37

37.00

146

46

Banke

16

513.83

404.44

152.43

1393

47

Bardiya

57.88

50.96

29.14

264

48

Dang

259.90

218.40

199.90

1078

49

Humla

41.00

37.20

19.24

96

50

Rolpa

32.22

28.31

29.00

156

51

Surkhet

3587.00

2819.40

2187.00

229

52

Achham

571.18

550.68

418.18

411

53

Baitadi

80.00

71.80

65.00

365

54

Darchula

34.00

32.00

2.94

60

55

Doti

10.00

7.20

10.00

33

56

Kailali

919.04

868.81

192.80

929

57

Kanchanpur

13

776.37

695.11

147.72

1466

58

Kavrepalanchock

30.00

28.00

20.40

40

2108

152181.75

129116.39

68049.97

155432

Total

Annex 2: Number of Industries Approved for Foreign Investment by


District (F.Y. 2067/68)
S.N.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

District
Ilam
Jhapa
Morang
Siraha
Sunsari
Taplejung
Bara
Bhaktapur
Chitwan
Dhanusha
Dolkha
Kathmandu
Kavre
Lalitpur
Makwanpur

No. of
Industries
2
2
3
1
5
1
1
6
1
1
1
122
3
35
4

Total
Project Cost
145.00
50.00
1314.98
1800.00
210.00
10.00
8.30
133.77
10.00
206.48
200.00
3763.87
495.00
598.95
314.50

Total
Fixed Cost
117.90
32.00
1179.93
1570.00
134.20
9.10
5.50
116.60
9.00
188.01
195.00
3222.82
411.50
448.09
236.77

Foreign
Investment
145.00
50.00
1314.98
1800.00
205.00
10.00
8.30
65.32
10.00
103.24
200.00
3623.38
495.00
486.15
314.50

(Rs. mln)
Total No. of
Employment
188
188
62
194
214
44
23
158
36
125
100
5979
282
1943
268

23

16
17
18
19
20
21
22
23
24
25
26

Nuwakot
Parsa
Kapilbastu
Kaski
Manang
Nawalparasi
Palpa
Bardiya
Dang
Baitadi
Drcula
TOTAL

1
2
1
8
2
1
1
1
1
2
1
209

10.00
561.54
10.00
81.90
915.00
8.50
300.00
6.00
2.40
60.00
34.00
11250.19

8.90
249.75
9.10
71.94
898.00
7.00
160.00
5.40
1.95
55.00
32.00
9375.46

5.00
561.50
10.00
76.00
203.00
8.00
300.00
6.00
2.40
45.00
2.94
10050.71

34
54
31
269
289
20
112
30
21
163
60
10887

24

Annex 3: Number of Industries Approved for Foreign Investment by


Country & Category (Upto F.Y. 2067/68)
Country

Australia

Austria

Azerbaijan

Bangladesh

Belgium

Bermuda

Bhutan

Brazil

Bri.Virg.Is

Canada

Category
Agriculture
Energy Based
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Service
Tourism
Total
Agriculture
Construction
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Manufacturing
Tourism
Total
Manufacturing
Service
Tourism
Total
Energy Based
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Agriculture
Energy Based
Manufacturing
Service
Tourism

No. of
Total
Total Fixed
Industries Project Cost
Cost
3
51.60
47.00
1
131.00
125.00
6
53.84
43.84
17
162.46
124.15
7
65.02
60.12
34
463.91
400.11
5
128.44
88.37
4
30.48
26.47
6
46.64
43.62
15
205.56
158.46
1
7.40
6.70
1
2.50
1.90
2
9.90
8.60
1
10.00
7.50
1
9.88
7.44
9
430.09
195.05
9
47.01
37.91
6
23.17
15.21
26
520.15
263.10
1
9.00
4.60
8
34.10
24.12
2
10.67
9.38
11
53.77
38.10
4
1987.96
1687.68
2
7.29
6.35
6
1995.25
1694.03
1
5.10
2.10
1
5.00
2.52
1
17.16
15.96
3
27.26
20.58
1
500.00
488.00
2
21.07
7.50
1
10.00
9.00
1
10.00
8.70
5
541.07
513.20
1
415.15
358.45
1
48.22
22.08
1
2276.41
2255.65
3
2739.78
2636.19
1
10.00
9.10
3
4265.05
4192.15
5
722.61
629.29
10
52.91
36.67
6
31.30
25.56

Foreign
Investment
42.59
131.00
28.34
134.73
58.57
395.22
32.61
27.98
20.78
81.36
7.40
2.50
9.90
5.00
9.88
199.02
33.26
17.50
264.66
9.00
25.65
7.19
41.84
113.62
4.65
118.27
0.50
1.68
1.43
3.61
500.00
4.43
6.40
10.00
520.83
28.87
22.00
910.57
961.43
10.00
1445.00
642.92
37.61
31.01

(Rs. mln)
Total No. of
Employment
108
22
408
301
135
974
366
87
108
561
27
23
50
100
20
3310
202
534
4166
88
199
48
335
1415
59
1474
0
12
86
98
250
221
30
23
524
108
0
910
1018
44
469
966
325
122

25

Country

Category

Total
Agriculture
Construction
Energy Based
Manufacturing
China
Mineral
Service
Tourism
Total
Tourism
Colombia
Total
Service
Congo
Total
Service
Croatia
Total
Service
Cyprus
Total
Service
CzechRepublic
Total
Agriculture
Construction
Manufacturing
Denmark
Service
Tourism
Total
Service
Dutch
Total
Manufacturing
Ecuador
Total
Manufacturing
Egypt
Service
Total
Manufacturing
Finland
Tourism
Total
Agriculture
Construction
Manufacturing
France
Service
Tourism
Total
Agriculture
Construction
Energy Based
Germany
Manufacturing
Service
Tourism
Total
Service
Ghana
Total
Guatemala
Manufacturing

No. of
Total
Total Fixed
Industries Project Cost
Cost
25
5081.87
4892.78
17
193.30
163.84
7
361.21
257.71
8
4754.68
4498.31
126
4760.23
2997.89
29
651.60
559.10
106
2008.13
1716.67
108
818.39
705.79
401
13547.54
10899.31
1
2.40
1.50
1
2.40
1.50
1
2.50
2.10
1
2.50
2.10
1
2.50
2.10
1
2.50
2.10
1
1000.00
974.00
1
1000.00
974.00
1
3.50
2.50
1
3.50
2.50
1
110.00
98.00
1
42.00
34.60
7
558.02
491.38
5
12.40
9.20
6
38.27
33.38
20
760.69
666.56
1
18.90
13.90
1
18.90
13.90
1
2.50
1.30
1
2.50
1.30
1
10.00
6.00
1
10.00
8.50
2
20.00
14.50
2
10.00
6.86
3
15.00
12.90
5
25.00
19.76
1
7.00
4.90
2
65.04
51.24
15
299.68
247.45
8
45.31
36.82
23
179.82
157.35
49
596.85
497.77
4
111.42
98.09
2
59.25
43.90
6
1361.00
1302.90
15
234.12
147.70
28
274.36
233.04
24
324.17
299.00
79
2364.31
2124.64
1
6.50
6.18
1
6.50
6.18
1
10.00
5.00

Foreign
Investment
2166.54
181.08
336.93
1072.94
2454.49
640.60
1545.08
805.05
7036.17
2.40
2.40
2.50
2.50
2.50
2.50
304.00
304.00
3.50
3.50
44.00
4.10
99.59
12.40
33.27
193.36
18.90
18.90
2.50
2.50
10.00
2.00
12.00
4.55
10.00
14.55
7.00
18.33
144.74
27.23
112.55
309.85
14.24
58.90
452.30
101.63
106.62
193.02
926.72
1.95
1.95
2.50

Total No. of
Employment
1926
627
431
530
10336
3993
4279
3129
23325
7
7
28
28
15
15
235
235
12
12
50
74
566
84
156
930
80
80
45
45
98
0
98
91
58
149
27
169
1004
210
626
2036
287
137
207
1293
1140
784
3848
0
0
84

26

Country

Holand

Hong Kong

Hungeri

India

Iran

Ireland

Israel

Italy

Japan

Kazakistan
Kyrgystan

Lebnon

Category
Total
Tourism
Total
Construction
Manufacturing
Service
Tourism
Total
Tourism
Total
Agriculture
Construction
Energy Based
Manufacturing
Mineral
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Agriculture
Construction
Energy Based
Manufacturing
Service
Tourism
Total
Service
Total
Manufacturing
Service
Total
Service
Tourism
Total

No. of
Total
Total Fixed
Industries Project Cost
Cost
1
10.00
5.00
1
7.00
0.00
1
7.00
0.00
2
83.88
39.85
5
387.72
262.58
7
430.03
202.25
5
959.91
933.67
19
1861.54
1438.34
1
10.00
8.90
1
10.00
8.90
7
792.91
343.06
17
2246.19
1614.33
12
8336.00
9810.31
296
29492.51
21023.28
6
4477.02
3632.50
112
12355.13
10016.43
51
5025.25
4678.73
501
62725.01
51118.64
1
4.80
3.00
3
6.90
5.55
3
12.50
6.80
7
24.20
15.35
1
5.00
1.00
3
14.50
11.20
2
704.40
668.40
6
723.90
680.60
2
603.00
501.88
5
44.80
34.21
5
33.40
30.55
12
681.20
566.64
6
156.54
119.97
3
21.00
18.75
10
1246.16
1161.73
19
1423.69
1300.45
4
176.60
157.85
1
30.45
22.20
1
275.00
270.00
31
560.04
347.11
52
600.24
491.65
65
1552.69
1424.68
154
3195.03
2713.48
3
15.40
13.03
3
15.40
13.03
1
5.00
2.80
3
31.50
29.25
4
36.50
32.05
1
2.00
1.60
1
5.00
3.90
2
7.00
5.50

Foreign
Investment
2.50
1.79
1.79
59.55
155.58
279.17
246.54
740.84
5.00
5.00
416.81
1876.32
5146.55
14687.28
2260.70
6485.21
1517.43
32390.31
4.80
6.90
8.00
19.70
1.50
14.00
325.47
340.97
72.50
35.45
31.30
139.25
139.98
11.45
113.20
264.63
44.50
10.98
21.00
147.21
219.69
727.87
1171.24
15.40
15.40
3.00
19.50
22.50
2.00
5.00
7.00

Total No. of
Employment
84
0
0
236
852
609
919
2616
29
29
784
830
1222
36142
1521
11781
4127
56407
32
49
51
132
40
76
204
320
68
218
119
405
188
83
245
516
454
348
0
1800
1353
2728
6683
67
67
50
125
175
15
34
49

27

Country
Libiya

Malaysia

Mauritius
Mexico
N. Korea

Netherlands

New Zealand

Norway

Pakistan

Panama

Philippines

Poland

Russia

Category
Manufacturing
Total
Agriculture
Manufacturing
Service
Tourism
Total
Energy Based
Manufacturing
Total
Tourism
Total
Service
Tourism
Total
Agriculture
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Agriculture
Construction
Energy Based
Manufacturing
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Manufacturing
Total
Agriculture
Manufacturing
Service
Tourism
Total
Energy Based
Manufacturing
Service
Tourism
Total
Service
Portugal
Agriculture
Manufacturing

No. of
Total
Total Fixed
Industries Project Cost
Cost
1
5.00
2.80
1
5.00
2.80
1
5.00
4.20
2
70.59
51.64
6
456.31
441.08
4
159.34
148.30
13
691.24
645.22
3
900.00
879.00
2
2080.00
2030.87
5
2980.00
2909.87
2
17.93
16.35
2
17.93
16.35
1
44.82
41.20
2
20.00
17.60
3
64.82
58.80
2
59.45
41.10
3
984.59
816.26
17
119.55
85.09
12
145.83
133.62
34
1309.42
1076.07
1
248.46
200.00
4
14.18
10.76
4
33.99
28.94
9
296.63
239.71
1
6.00
5.10
1
158.55
154.01
3
7580.00
6292.41
2
236.11
185.05
1
60.93
60.93
4
75.00
69.30
12
8116.59
6766.80
7
282.24
201.02
5
1866.62
1665.03
3
20.59
17.72
15
2169.45
1883.77
1
83.28
65.17
1
83.28
65.17
1
10.00
9.00
5
1154.18
989.53
1
2.50
2.00
4
14.43
9.15
11
1181.12
1009.68
1
84.94
84.00
1
4.78
1.55
1
2.50
2.00
4
46.00
41.00
7
138.22
128.55
1
2.50
2.00
1
2.50
2.00
1
8.00
7.00
4
93.08
54.87

Foreign
Investment
5.00
5.00
1.50
64.24
20.10
159.34
245.18
765.00
2080.00
2845.00
15.33
15.33
12.55
20.00
32.55
18.27
386.08
93.73
90.81
588.89
0.00
12.74
17.33
30.07
6.00
62.46
933.23
10.94
54.70
68.50
1135.83
118.29
25.32
6.13
149.73
24.98
24.98
10.00
72.35
2.50
12.43
97.28
5.00
2.39
2.50
45.50
55.39
2.50
2.50
6.00
42.23

Total No. of
Employment
80
80
33
184
109
118
444
558
334
892
35
35
71
76
147
428
405
1760
453
3046
1851
73
145
2069
50
25
394
119
0
138
726
2288
57
58
2403
121
121
35
1452
40
106
1633
16
23
38
117
194
23
23
15
412

28

Country

S. Africa

S. Korea

Singapore

Slovenia

Spain

Sri Lanka

Sweden

Switzerland

Syria

Taiwan

Tchad
Thailand

Category
Service
Tourism
Total
Manufacturing
Service
Tourism
Total
Agriculture
Construction
Energy Based
Manufacturing
Service
Tourism
Total
Agriculture
Energy Based
Manufacturing
Service
Tourism
Total
Service
Total
Construction
Manufacturing
Service
Tourism
Total
Service
Total
Agriculture
Manufacturing
Service
Tourism
Total
Agriculture
Energy Based
Manufacturing
Service
Tourism
Total
Service
Total
Manufacturing
Service
Tourism
Total
Service
Total
Energy Based
Manufacturing
Service

No. of
Total
Total Fixed
Industries Project Cost
Cost
9
135.42
111.55
4
18.30
15.77
18
254.80
189.19
1
10.00
7.20
2
27.50
22.00
2
9.80
8.64
5
47.30
37.84
3
19.95
15.55
4
243.49
209.83
2
5388.12
5370.99
31
1879.44
1593.85
57
517.25
406.35
52
295.31
244.25
149
8343.56
7840.81
1
7.50
6.50
1
530.00
518.00
4
44.86
31.70
8
276.37
242.70
9
2057.60
1989.44
23
2916.32
2788.34
1
4.19
3.94
1
4.19
3.94
2
75.40
37.50
2
10.00
5.20
2
7.60
6.40
7
61.02
53.94
13
154.02
103.04
4
89.15
65.10
4
89.15
65.10
1
3.30
0.99
1
1.50
1.01
4
16.70
14.76
2
8.90
6.50
8
30.40
23.26
1
6.00
4.50
1
23.44
22.94
9
365.48
311.51
8
44.78
29.20
12
294.77
296.89
31
734.48
665.05
1
2.50
2.10
1
2.50
2.10
4
106.60
72.10
1
50.11
40.83
4
258.04
247.50
9
414.75
360.43
1
2.50
1.86
1
2.50
1.86
1
70.00
65.00
6
410.12
290.68
2
6.25
4.61

Foreign
Investment
59.25
18.30
125.78
10.00
27.50
9.80
47.30
19.95
196.38
2278.84
1051.73
435.48
338.51
4320.89
7.50
530.00
21.04
109.45
837.40
1505.39
4.19
4.19
53.98
6.25
7.60
39.40
107.23
47.41
47.41
3.30
1.50
13.90
8.90
27.60
4.20
0.25
58.65
29.85
238.30
331.25
2.50
2.50
35.15
10.50
128.97
174.62
2.50
2.50
21.00
90.64
2.66

Total No. of
Employment
279
87
793
33
25
79
137
65
463
242
1797
2436
1229
6232
45
110
82
483
1245
1965
0
0
138
38
46
143
365
99
99
35
12
105
71
223
52
8
124
129
315
628
17
17
206
0
390
596
18
18
22
666
16

29

Country

Category
Tourism
Total
Agriculture
Service
Tourism
Total
Manufacturing
Mineral
Service
Tourism
Total
Agriculture
Construction
Energy Based
Manufacturing
Service
Tourism
Total
Service
Total
Agriculture
Energy Based
Manufacturing
Service
Tourism
Total
Manufacturing
Total
Tourism
Total
Total

Turkey

UAE

UK

Ukraine

USA

Uzbekistan
Vietnam

No. of
Total
Total Fixed
Industries Project Cost
Cost
2
546.00
524.50
11
1032.37
884.79
1
10.00
9.00
6
28.20
22.12
2
10.00
7.20
9
48.20
38.32
2
278.54
87.24
1
34.00
32.00
1
823.20
170.00
1
500.00
444.50
5
1635.74
733.74
2
12.50
11.75
2
230.00
210.50
2
1800.00
1782.00
27
1966.55
1563.34
30
254.70
201.12
40
420.60
381.83
103
4684.35
4150.54
2
91.70
83.25
2
91.70
83.25
6
63.90
51.58
1
4760.00
4680.00
50
3413.36
2603.34
76
3704.20
3363.65
41
1951.00
1861.91
174
13892.46
12560.48
1
10.00
7.50
1
10.00
7.50
2
24.60
22.80
2
24.60
22.80
2108
152181.75
129116.39

Foreign
Investment
2.00
116.29
10.00
28.20
22.50
60.70
80.00
2.94
403.37
400.00
886.31
12.50
75.00
145.66
857.40
205.09
244.06
1539.71
16.40
16.40
28.85
1071.00
1475.87
1930.00
450.17
4955.90
10.00
10.00
24.60
24.60
68049.97

Total No. of
Employment
455
1159
50
114
61
225
398
60
139
124
721
52
145
2657
3276
1188
1260
8578
52
52
156
1240
4885
3168
2838
12287
52
52
55
55
155432

Annex 4: Number of Industries Approved for Foreign Investment by


Fiscal Year & Category (Up to F.Y.2067/68)
Fiscal Year

Category

Fixed
Capital

Foreign
Investment

(Rs. mln)
Total No. of
Employment

Construction

52.71

43.81

6.00

103

Manufacturing

39

4702.74

3921.64

347.36

7894

32.36

22.37

13.58

1297

Tourism

11

314.99

283.78

82.63

1292

Total

58

5102.80

4271.60

449.56

10586

Construction

42.00

34.60

4.10

74

Manufacturing

16

750.11

570.65

84.03

6415

Mineral

826.80

755.10

28.70

1111

Upto Ashad 2046 Service

2046/47

Authorized
No. of Industry
Capital

30

Fiscal Year

2047/48

2048/49

2049/50

2050/51

2051/52

2052/53

2053/54

No. of Industry

Authorized
Capital

Fixed
Capital

Foreign
Investment

Total No. of
Employment

Service

85.97

73.55

9.54

1162

Tourism

733.32

705.69

272.14

753

Total

30

2438.19

2139.60

398.51

9515

Energy Based

23.44

22.94

0.25

Manufacturing

18

800.33

631.06

398.84

2679

Service

3.52

3.51

0.70

29

Tourism

36.27

33.23

6.49

258

Total

23

863.56

690.74

406.28

2974

Agriculture

10.94

9.98

5.43

35

Manufacturing

23

2672.77

2086.08

362.75

4485

Service

124.03

117.36

31.94

128

Tourism

700.43

688.68

197.72

967

Total

38

3508.17

2902.10

597.84

5615

Energy Based

6100.00

5589.00

736.50

2664

Manufacturing

38

4950.22

3963.69

779.92

8182

Service

3548.57

3427.77

1150.56

1012

Tourism

15

3287.44

3230.35

416.68

2015

Total

64

17886.22

16210.81

3083.67

13873

Agriculture

181.56

162.32

28.19

368

Construction

30.45

22.20

10.98

348

Manufacturing

20

2781.16

2328.39

980.90

3033

Service

241.04

189.13

61.56

233

Tourism

499.02

473.63

297.13

752

Total

38

3733.23

3175.66

1378.76

4734

Agriculture

28.40

22.75

12.80

65

Manufacturing

14

973.22

624.18

411.92

1774

Service

31.89

31.00

31.36

31

Tourism

593.77

569.93

21.51

516

Total

19

1627.28

1247.85

477.59

2386

Agriculture

74.90

67.16

26.97

270

Energy Based

4760.00

4680.00

1071.00

1240

Manufacturing

24

3040.07

2586.22

698.08

3102

Service

176.18

150.41

54.52

1690

Tourism

13

1996.32

1914.76

369.30

1730

Total

47

10047.47

9398.54

2219.86

8032

Agriculture

34.33

32.26

1.39

73

Construction

168.43

161.45

72.34

45

Manufacturing

28

2574.33

2006.74

773.88

5739

Category

31

Fiscal Year

2054/55

2055/56

2056/57

2057/58

2058/59

2059/60

No. of Industry

Authorized
Capital

Fixed
Capital

Foreign
Investment

Total No. of
Employment

Mineral

3.22

3.00

0.00

18

Service

27

3442.79

2398.57

1079.57

1957

Tourism

18

2336.15

2090.13

468.35

1515

Total

77

8559.25

6692.15

2395.54

9347

Manufacturing

25

1200.45

993.58

394.70

1855

Service

24

1031.08

898.54

431.54

598

Tourism

28

3337.85

3250.20

1174.04

1883

Total

77

5569.38

5142.32

2000.28

4336

Agriculture

11.40

10.00

4.70

Energy Based

2923.11

2766.61

525.65

108

Manufacturing

19

1566.61

867.37

734.20

1291

Service

15

487.53

445.83

201.95

187

Tourism

13

335.78

290.36

199.93

560

Total

50

5324.42

4380.17

1666.42

2146

Energy Based

146.96

141.88

22.04

27

Manufacturing

31

1306.60

722.12

490.98

3567

Service

22

846.29

702.19

736.51

498

Tourism

17

369.24

344.04

168.08

611

Total

71

2669.09

1910.24

1417.61

4703

Agriculture

10.00

9.75

10.00

31

Energy Based

2105.00

2047.91

395.60

352

Manufacturing

54

4024.02

2555.85

1816.01

5234

Service

19

883.28

672.32

343.08

579

Tourism

19

895.31

836.66

537.87

684

Total

96

7917.62

6122.49

3102.56

6880

Agriculture

76.62

60.99

4.90

144

Construction

90.00

81.00

69.00

285

Energy Based

84.94

84.00

5.00

16

Manufacturing

37

2643.94

1036.93

893.57

2285

Service

21

318.93

210.87

144.45

684

Tourism

13

104.10

85.80

92.73

317

Total

77

3318.53

1559.59

1209.65

3731

Construction

538.52

404.04

345.44

464

Energy Based

2574.45

1767.85

448.68

344

Manufacturing

27

660.67

442.04

335.66

1279

Category

32

Fiscal Year

2060/61

2061/62

2062/63

No. of Industry

Authorized
Capital

Fixed
Capital

Foreign
Investment

Total No. of
Employment

Service

12

987.19

858.36

565.61

944

Tourism

24

161.00

135.96

98.38

541

Total

74

4921.82

3608.25

1793.77

3572

Construction

53.88

14.69

53.88

Energy Based

734.40

719.28

41.43

Manufacturing

22

1179.59

841.06

925.05

276

Service

31

2241.56

2084.40

1622.35

1603

Tourism

23

114.31

116.43

122.09

261

Total

78

4323.74

3775.86

2764.80

2144

Agriculture

12.00

10.00

7.38

37

Construction

88.28

53.85

63.95

18

Manufacturing

25

887.09

527.49

1181.98

2072

Service

24

756.54

513.85

348.93

3195

Tourism

11

52.20

44.29

33.53

237

Total

63

1796.10

1149.49

1635.77

5559

Construction

81.30

63.00

28.23

112

Energy Based

251.00

223.00

156.00

136

Manufacturing

33

1472.62

944.70

924.47

2974

Service

40

2082.49

1876.57

1332.93

2739

Tourism

38

233.67

189.68

164.68

1397

Total

116

4121.08

3296.95

2606.31

7358

Agriculture

5.00

4.20

5.00

20

Construction

82.50

52.36

78.22

290

Energy Based

111.00

107.30

30.30

Manufacturing

44

1911.20

1333.73

1897.95

2796

Mineral

10.00

5.00

10.00

128

Service

81

990.79

898.25

938.20

2669

Tourism

55

315.08

249.72

267.12

1486

Total

188

3425.57

2650.56

3226.79

7389

Agriculture

11

127.20

99.79

107.35

377

Construction

13

2118.71

1584.80

1803.71

1143

Energy Based

7346.12

7287.59

2867.60

967

Manufacturing

51

3028.52

1920.23

1244.06

3775

Mineral

3630.00

2852.85

2230.00

722

Category

2063/64

2064/65

33

Fiscal Year

2065/66

2066/67

2067/68

No. of Industry

Authorized
Capital

Fixed
Capital

Foreign
Investment

Total No. of
Employment

Service

55

3370.03

2454.24

813.29

1513

Tourism

67

783.30

696.77

744.99

2180

Total

212

20403.88

16896.27

9811.00

10677

Agriculture

618.70

204.79

302.07

671

Construction

88.57

31.61

56.97

Energy Based

3519.77

3440.51

2244.72

1011

Manufacturing

48

1464.42

895.37

1178.26

2396

Mineral

17

479.00

417.20

474.00

2635

Service

78

2273.88

1645.70

1235.97

2587

Tourism

70

973.55

894.84

763.11

1800

Total

231

9417.89

7530.02

6255.09

11108

Agriculture

10.00

8.60

10.00

69

Construction

20.00

15.70

20.00

36

Energy Based

9961.05

9765.15

4747.00

493

Manufacturing

37

3751.50

3420.93

2605.35

1994

Mineral

100.00

87.85

94.00

514

Service

72

976.05

760.37

906.11

3205

Tourism

50

1035.17

929.39

717.53

1537

Total

171

15853.78

14987.98

9100.00

7848

Agriculture

23

473.36

393.03

367.12

1337

Construction

150.00

120.00

150.00

90

Energy Based

2018.00

1738.00

1227.00

577

Manufacturing

39

6269.01

5135.46

6135.92

3312

Mineral

113.60

102.60

67.54

446

Service

88

1020.92

783.33

918.81

3555

Tourism

47

1205.30

1103.05

1184.33

1570

Total

209

11250.19

9375.46

10050.71

10887

2108

152181.8

129116.4

68049.97

155432

Category

Grand Total

34

Annex 5: Number of Industries Approved for Foreign Investment by


Fiscal Year (Up to F.Y.2067/68)
Total Project Cost

Total
Fixed Cost

Foreign
Investment

(Rs. mln)
Total No. of
Employment

58

5102.80

4271.60

449.56

10586

2046/47

30

2438.19

2139.60

398.51

9515

2047/48

23

863.56

690.74

406.28

2974

2048/49

38

3508.17

2902.10

597.84

5615

2049/50

64

17886.22

16210.81

3083.67

13873

2050/51

38

3733.23

3175.66

1378.76

4734

2051/52

19

1627.28

1247.85

477.59

2386

2052/53

47

10047.47

9398.54

2219.86

8032

2053/54

77

8559.25

6692.15

2395.54

9347

2054/55

77

5569.38

5142.32

2000.28

4336

2055/56

50

5324.42

4380.17

1666.42

2146

2056/57

71

2669.09

1910.24

1417.61

4703

2057/58

96

7917.62

6122.49

3102.56

6880

2058/59

77

3318.53

1559.59

1209.65

3731

2059/60

74

4921.82

3608.25

1793.77

3572

2060/61

78

4323.74

3775.86

2764.80

2144

2061/62

63

1796.10

1149.49

1635.77

5559

2062/63

116

4121.08

3296.95

2606.31

7358

2063/64

188

3425.57

2650.56

3226.79

7389

2064/65

212

20403.88

16896.27

9811.00

10677

2065/66

231

9417.89

7530.02

6255.09

11108

2066/67

171

15853.78

14987.98

9100.00

7848

2067/68

209

11250.19

9375.46

10050.71

10887

TOTAL

2108

152181.75

129116.39

68049.97

155432

Fiscal Year

No. of
Industries

UPTO ASHAD 2046

35

Annex 6: Number of Industries Approved for Foreign Investment by


Country of Origin (Up to F.Y. 2067/68)
S.N.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39

Country of Origin
Australia
Austria
Azerbaijan
Bangladesh
Belgium
Bermuda
Bhutan
Brazil
Bri.Virg.Is
Canada
China
Colombia
Congo
Croatia
Cyprus
Czech Repbul
Denmark
Dutch
Ecuador
Egypt
Finland
France
Germany
Ghana
Guatemala
Holand
Hong Kong
Hungeri
India
Iran
Ireland
Israel
Italy
Japan
Kazakistan
Kyrgystan
Lebnon
Libiya
Malaysia

No. of
Industries
34
15
2
26
11
6
3
5
3
25
401
1
1
1
1
1
20
1
1
2
5
49
79
1
1
1
19
1
501
7
6
12
19
154
3
4
2
1
13

Total
Project Cost
463.91
205.56
9.90
520.15
53.77
1995.25
27.26
541.07
2739.78
5081.87
13547.54
2.40
2.50
2.50
1000.00
3.50
760.69
18.90
2.50
20.00
25.00
596.85
2364.31
6.50
10.00
7.00
1861.54
10.00
62725.01
24.20
723.90
681.20
1423.69
3195.03
15.40
36.50
7.00
5.00
691.24

Total Fixed
Cost
400.11
158.46
8.60
263.10
38.10
1694.03
20.58
513.20
2636.19
4892.78
10899.31
1.50
2.10
2.10
974.00
2.50
666.56
13.90
1.30
14.50
19.76
497.77
2124.64
6.18
5.00
0.00
1438.34
8.90
51118.64
15.35
680.60
566.64
1300.45
2713.48
13.03
32.05
5.50
2.80
645.22

Foreign
Investment
395.22
81.36
9.90
264.66
41.84
118.27
3.61
520.83
961.43
2166.54
7036.17
2.40
2.50
2.50
304.00
3.50
193.36
18.90
2.50
12.00
14.55
309.85
926.72
1.95
2.50
1.79
740.84
5.00
32390.31
19.70
340.97
139.25
264.63
1171.24
15.40
22.50
7.00
5.00
245.18

(Rs. mln)
Total No of
Employment
974
561
50
4166
335
1474
98
524
1018
1926
23325
7
28
15
235
12
930
80
45
98
149
2036
3848
0
84
0
2616
29
56407
132
320
405
516
6683
67
175
49
80
444

36

S.N.
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70

Country of Origin
Mauritius
Mexico
N. Korea
Netherlands
New Zealand
Norway
Pakistan
Panama
Philippines
Poland
Portugal
Russia
S. Africa
S. Korea
Singapore
Slovenia
Spain
Sri Lanka
Sweden
Switzerland
Syria
Taiwan
Tchad
Thailand
Turkey
UAE
UK
Ukraine
USA
Uzbekistan
Vietnam

No. of
Industries
5
2
3
34
9
12
15
1
11
7
1
18
5
149
23
1
13
4
8
31
1
9
1
11
9
5
103
2
174
1
2

Total
Project Cost
2980.00
17.93
64.82
1309.42
296.63
8116.59
2169.45
83.28
1181.12
138.22
2.50
254.80
47.30
8343.56
2916.32
4.19
154.02
89.15
30.40
734.48
2.50
414.75
2.50
1032.37
48.20
1635.74
4684.35
91.70
13892.46
10.00
24.60

Total Fixed
Cost
2909.87
16.35
58.80
1076.07
239.71
6766.80
1883.77
65.17
1009.68
128.55
2.00
189.19
37.84
7840.81
2788.34
3.94
103.04
65.10
23.26
665.05
2.10
360.43
1.86
884.79
38.32
733.74
4150.54
83.25
12560.48
7.50
22.80

Foreign
Investment
2845.00
15.33
32.55
588.89
30.07
1135.83
149.73
24.98
97.28
55.39
2.50
125.78
47.30
4320.89
1505.39
4.19
107.23
47.41
27.60
331.25
2.50
174.62
2.50
116.29
60.70
886.31
1539.71
16.40
4955.90
10.00
24.60

Total No of
Employment
892
35
147
3046
2069
726
2403
121
1633
194
23
793
137
6232
1965
0
365
99
223
628
17
596
18
1159
225
721
8578
52
12287
52
55

2108

152181.75

129116.39

68049.97

155432

Total

Annex 7: Foreign Investment and Technology Transfer by Type and Scale (up to
2067/68)

Category
Manufacturing

No. of
Industries

Equity
Invest.

Type
Eqt. Invest.
& Tech. Tran

714

631

41

Scale
Technology
Transf.

Small

Medium

Large

42

505

130

77

37

Agro Based

60

59

50

Energy Based

47

46

34

Construction

42

40

23

13

Mineral Based

36

35

28

Service

648

637

571

54

25

Tourism

561

549

493

30

38

Total

2108

1997

53

58

1675

248

185

Annex 8: Number of Industries Approved for Foreign Investment by


Sector (Up to F.Y.2067/68)
(Rs. mln)
Total
Project
Cost

Total Fixed
Cost

Foreign
Investment

Employment

3696.06

2900.17

1975.78

7452

715

58291.54

44271.56

27321.65

78844

Food, Beverage &


Tobacco

106

10887.32

9188.94

3499.65

11375

Textile & Rea. Garment

256

13209.06

8739.66

6304.69

40544

Wood & Wood Product

19

425.06

292.14

457.42

2006

Paper & P. Product

42

2070.78

1702.50

541.56

1513

Chem. & Pl. Product

122

9190.72

6965.88

4762.30

9737

Non-Met Mi. Product

33

11661.02

8789.68

6451.42

4195

Basic Metal Product

26

1930.86

1158.71

729.72

2134

Fabric Metal, M/C &

88

8011.22

6790.03

4339.78

5833

Other Manufacturing
Units

23

905.50

644.02

235.12

1507

Electricity, Water, Gas

50

38718.70

38220.83

13579.55

7953

Construction

79

6124.92

4044.52

4815.41

5943

Sector
Agriculture & Forestry
Manufacturing

No. of
Indus.
91

38

Hotel & Resort

565

21318.54

19993.66

8688.95

25227

Transport & Communication

82

4575.34

3205.48

2060.50

6688

Housing & Apartment

25

1136.13

443.94

339.38

2234

Service Industries

501

18320.53

16036.22

9268.75

21091

Total

2108

152181.75

129116.39

68049.97

155432

Project Cost for Foreign Investment Industries


60000
50000
40000
30000
20000
10000

To
ur
ism

ce
Se
rv
i

in
er
al
M

ur
in
g
an
uf
ac
t

Ba
se
d

En
er
gy

ct
io
n
Co
ns
tru

Ag
ric

ul
tu

re

39

Annex 9: Number of Industries Approved for Foreign Investment by


Scale Wise (Up to F.Y.2067/68)
(Rs. mln)
No. of
Industries

Total Project Cost

Total Fixed
Cost

Foreign
Investment

Employment

Large

185

115318.14

104128.39

47401.19

42841

Medium

248

18083.29

12686.87

8321.21

31455

Small

1675

18780.33

12301.12

12327.58

81136

2108

152181.75

129116.39

68049.97

155432

Category

Total

Annex 10: Number of Industries Approved for Foreign Investment by


Category (Up to F.Y.2067/68)
No. of
Industries

Total Project
Cost

Total Fixed
Cost

Foreign
Investment

(Rs. mln)
Total No. of
Employment

Agriculture

60

1674.42

1095.61

893.29

3497

Construction

42

3605.34

2683.10

2762.81

3016

Energy Based

47

40759.24

40381.02

14518.77

7947

Manufacturing

712

54611.18

40355.50

25595.87

78409

Mineral

36

5162.62

4223.60

2904.24

5574

Service

650

25955.40

21220.18

12974.65

32127

Tourism

561

20413.55

19157.38

8400.34

24862

2108

152181.75

129116.39

68049.97

155432

Category

Total

40