Any sane businessman will say: "Go away." However, these are the parameters under which foreign investors work in Nepal. Let's face it. If you had money you would go elsewhere. There isn't much attracting investors to Nepal.
The CEO of a multinational investor admitted that the biggest time consuming part of his job here is to extend his visa every four months. You have to pay Rs 5,000- 500,000 to expedite the process, or you will be left out in the cold for months. And this is someone who has invested US $100 million in Nepal.
The case of Cairn Energy is another case in point. If Cairn finds oil and gas in the Tarai, the whole country will benefit but if unsuccessful it will lose the millions it has spent so far. The Scottish company is taking a calculated risk, but we have made it inordinately riskier with our political fluidity, corruption and tedious bureaucracy.
According to the United Nation's body on trade, investment and development issues, UNCTAD's latest World Investment Report, Nepal is in the bottom of the heap with Afghanistan, North Korea and Bhutan when it comes to attracting foreign direct investment. As per Department of Industry statistics, FDI commitment declined by 48.35 per cent in 2010-11. FDI increased by 30 per cent during the same period in Bangladesh.
The list of investor woes is long: power cuts, shutdowns, militant labour, extortion, local opposition, tedious paperwork, corruption, low productivity and skill of the workforce.
"It is embarrassing," the Nepali in-charge at the Kathmandu office of a multinational company confessed to us this week. "As a Nepali, it is embarrassing to explain to our head office what those in power demand to get work done here. These are foreign companies, they don't pay without a receipt."
Most investors we talked to said the last four months of the present government have been the worst they have ever seen in terms of corruption and extortion. It is no surprise that the maximum FDI we have is from India. Other than geographical and cultural proximity, the reason may be that they do not have to worry about extending visas.
This is an open market and if Nepal wants investors, foreign or local, it will have to clean up its act. We have a terrible reputation, and the new Nepal Investment Board needs to do a lot of catching up in the investment year 2012-13.
The legal and practical problems faced by investors have to be resolved so that they have hassle-free experiences. We aren't offering the best deals, so there has to be incentive to invest. The bureaucracy is slow, and the political will is absent.
But Nepal does have some unique selling points. We are strategically placed with access to two of the biggest markets in China, and India. Energy, among other sectors, offers a lucrative business opportunity. Goods produced here are granted preference by the European Union.
But these advantages are far outweighed by the chronic political instability and the lawlessness of the land.
Cairn still in wait-and-see mode, MARK WILLIAMSON in EDINBURGH
Oil company says it won't drill in Nepal until the investment climate improves