<img width="1692" height="1171" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b399c7e80680e045964jpeg.jpg" alt=""/>Capacity and WillpowerThere are immense opportunities waiting for investment to uplift the living standard of 30 million honest and hardworking people. The Government is stable and remains fully committed to protecting investments with assured profit.Nepal must prosper and it can prosper. The vision for development has found place in over 75 viable projects in different sectors that will be presented to participants during the course of the Summit.Read also:<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/editorial/invest-in-investment/" target="_blank" rel="noopener">Invest in investment</a>, Editorial<a href="https://www.nepalitimes.com/here-now/maze/" target="_blank" rel="noopener">Maze</a><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b3c9c7e80680e045965jpeg.jpg" alt="" width="211" height="182">The promulgation of the democratic and progressive constitution in 2015 and successful holding of elections of all three tiers of the federal setup has effectively ended the protracted political transition, and has fostered a sense of high optimism in Nepali people. An optimism that the long-cherished dream of socio-economic transformation can now become a reality. An optimism that country’s development is possible in this generation, and that [the slogan] ‘Prosperous Nepal, Happy Nepali’ is not a far-fetched fantasy but an attainable vision.The democratically elected government has both capacity and willpower to steer the development process. The constitution is flexible to accommodate the genuine aspirations of the entire Nepali people. [The Government] has been able to bring a force that until recently remained outside into constitutional fold. In Nepal, there is no place for violence. Any attempt to disrupt law and order will be firmly and resolutely dealt with as per law.Read also: <a href="https://www.nepalitimes.com/here-now/nepal-has-to-curb-corruption-before-wooing-investors/" target="_blank" rel="noopener">Nepal has to curb corruption before wooing investors</a>, Ramesh Kumar<a href="https://www.nepalitimes.com/here-now/overseas-nepalis-are-not-impressed/" target="_blank" rel="noopener">Overseas Nepalis are not impressed</a>, Sewa Bhattaraihttps://www.youtube.com/watch?v=6rHbBYRhWKINepal has had a history of success in political change and failure in institutionalising it. Now the things have changed. We have institutionalised the achievements and brought stability.Political stability, which is the key prerequisite to economic growth, is absolutely fulfilled now.Together with political stability policy consistency is ensured. Legal, institutional and procedural reforms that were long overdue has gained speed. The past one-year has been the base year for policy and legal reform. Many new laws have been drafted translating the provisions of the new constitution into legal and institutional framework. The new framework hasalso created conducive environment for foreign direct investment, among others.Economic TransformationPolitical transformation alone cannot be enough and sustainable without economic transformation.If we could successfully steer country’s historic political transformation, there is no reason why we cannot do the same in the economic realm. The central task before us is to undertake rapid economic transformation, and the immediate goal is to graduate from Least Developed Country status and the medium term goal is to become a middle-income country and achieve the Sustainable Development Goals by 2030. Read also:<a href="https://www.nepalitimes.com/latest/nepal-inc/">Nepal Inc.</a>, Suman Joshi<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">How Nepal can invest in improving the investment climate</a>, Anil Chitrakar <figure><img width="1199" height="828" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b3d9c7e80680e045966jpeg.jpg" alt=""><figcaption>PM KP Oli inaugurates the Investment Summit at Hotel Soaltee, Kathmandu, on Friday. Photo: World Bank Nepal / Twitter</figcaption></figure>To realize this, we need to attain double-digit growth over the next years. A tentative estimation by the National Planning Commission is that the country would require an investment of over 98 trillion Nepali rupees (about USD 88billion) over the next five years. Domestic resources alone will not be sufficient to meet this requirement, and there is a need for huge investment.The economic policy and its orientation is explicitly spelled out in the Constitution which is premised on the realisation that growth and prosperity is possible only through partnership between and development of public, private and cooperative sectors.Good Governance and Rule of LawInvestment requires transparent and responsive governance and rule of law. With elected representatives in all levels of our federal set up, governance attributes are improving. There is already healthy competition among the provinces and local governments on incentivising investment and getting more of it.[The Government] has absolutely zero tolerance on corruption. Good governance is essential for economic development and prosperity. We are committed to promote free and fair competition among private sector stakeholders. We have taken firm stand against cartels and syndicates.     Read also: <a href="https://www.nepalitimes.com/here-now/a-roller-coaster-ride/">A roller coaster ride</a>, Shyamal Shrestha<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/opinion/early-investors-didnt-sell-nepal-short/" target="_blank" rel="noopener">Early investors didn't sell Nepal Short</a>, Lisa Choegyal In the past few months substantial progress has been made in improving the investment climate in the country. A sound regulatory framework has been established with the enactment of two key legislations: the Foreign Investment and Technology Transfer Act; and the Public-Private Partnership and Investment Act. The latter provides one-stop service for any foreign investment of over NPR 6 billion or a hydropower project of over 200 MW capacity.The Foreign Investment and Technology Transfer Actensures national treatment for any foreign investment. An automatic route system has been introduced to keep the foreign direct investment related processes simple and predictable, and repatriation is guaranteed on the earning or equity.Nepal has recently implemented a universal, contribution-based social security scheme that will have a transformative impact on the country’s socio-economic landscape. The scheme, which covers medicare facilities, safe motherhood, and accidental and old-age security of workers, does not only buttress the foundation of a welfare society but also ensure better and healthier industrial relations, which will contribute to conducive environment for investors.Read also: <a href="https://www.nepalitimes.com/opinion/climate-risk-to-hydropower-investment/">Climate risk to hydropower investment</a>, Ajaya DixitThe reform drive has gone well beyond this regulatory framework, and is marked by the strengthening of institutions, building capacity, streamlining and simplifying processes and procedures.Statutory provisions pertaining to land acquisition, company registration, environmental assessment and infrastructure development have been relaxed and simplified. Online registration and payment systems will soon be upgraded to full automation.Nepal will actively pursue bilateral investment protection agreement with friendly countries that will further ensure protection for foreign investment. Negotiations will be conducted with interested countries to avoid double taxation so as to provide further incentives.The next reform cycle will involve policies and comprehensive legislation in the field of intellectual property rights commensurate with Nepal’s rights and obligation under various multilateral instruments.Economic policyNepal is one of the most flexible countries when it comes to economic policy and welcoming foreign investment. All sectors, barring a narrow box of sensitive areas, are open for foreign investment. And, 100 percent investment is allowed in almost all areas. There is attractive incentive package in terms of corporate taxation, import duties and export facilitation. Tax rates are predictable and tax holidays are guaranteed by law for those industries that meet established criteria.Nepal has a huge demographic dividend with about 57 percent of population representing the working-age group. The labour cost is competitive and low, and there is a good pool of English-speaking population specially amongst the youngsters. Policies and programmes have been developed to enable Nepali youth to be multi-skilled. Qualified and skilled manpower is available at reasonable cost locally, to make will make your investment less costly.Sound macroeconomic indicators have been maintained, hence investing in Nepal is risk free.An independent judiciary, capable of adjudicating industrial and investment related disputes on a fast-track basis, has been the mainstay of our legal system.InfrastructureBuilding infrastructure is the Government’s priority and the commitment is well reflected in the progress made in the sector of vital infrastructure. Almost round-the-clock electricity supply has been guaranteed for industries and the country will soon witness a power surplus. Road connections within the country and cross-border connectivity have improved substantially. The strategic Kathmandu-Terai Fast Track that was just a dream a few years back is now becoming a reality.   Nepal’s Special Economic Zones have both infrastructure and other amenitiesto set up industries. One such SEZ is already in operation while several others are being developed in different parts of the country. The Special Economic Zone Authority Act has been revised recently to improve conditions for investment and operation of industries. With Nepal having established a federal system of governance, the aim is to undertake a balanced development approach so that all the provinces get fair opportunities for the development of their industrial base with foreign investment. Guided by this spirit, the Government has decided to establish at least one industrial estate in each province. Likewise, with a view to promoting small and medium-size enterprises, one industrial village each will be established at the local level.Location and ConnectivityInvestors know better than others, about the importance of location.Nepal’s strategic location between the world's two largest markets with increasing purchasing power, China and India, serves as a compelling incentive for investment. Nepal enjoys access to both markets on preferential terms.With India, Nepal has duty free arrangements for most of its products, both primary and industrial goods, while China has granted a significant number of tariff lines duty free access to its market. Beyond the neighbourhood, export from Nepal is entitled to various kinds of duty-free and preferential schemes put in operation for the group of least developed countries. The size of the domestic market is also expanding along with the growth of middle class and the people’s purchasing power. The connectivity disadvantage Nepal has had is gradually dissipating because of the efforts at connectivity diversification as well as support from our friendly neighbours. Road, rail, waterways, airways and transmission-ways are covered within the framework of multi-dimensional connectivity network with both neighbours.Port access has improved, with Nepal having started utilising the Vizag Port of India for its trade and transit two years ago. Availability of a modern alternative port has helped reduce hassles at the crowded Kolkata/Haldia port. The Digital Tracking and Transshipment Systems introduced recently has eased the transportation process. A new transit route through use of inland waterways is under progress, which will connect landlocked Nepal to the sea. Transit procedures are being simplified through the use of modern technology and this will surely reduce the cost of business. Nepal ahs signed a Transport Transit Agreement with China and a Protocol to the Agreement will be signed soon. This will enable Nepal also to use Chinese territory and port facilities for its international trade and transit.Hydropower, Tourism and AgricultureWhen it comes to investment, hydropower could be a prime choice (for investors). There are other potential areas: agriculture, manufacturing, tourism, infrastructure, information technologies, mines and minerals, to name a few.The Government’s target is to generate 3000MW power in three years, 5000MW in five years and 15,000MW in ten years. While domestic consumption will gradually increase with the rapidindustrialization drive, the prospect of regional electricity market is also coming to fruition with a positive initiative recently taken by India.Work is also being done on the infrastructure foundation of cross border transmission lines. A robust master plan for such transmission line requirement is already at hand, which will guide our future course of action. The recently concluded MoU on the BIMSTEC Grid Interconnection has opened up the possibility for cross-border power trade in BIMSTEC region. Meanwhile, Nepal and Bangladesh have also signed the MoU on Power Trade.These developments make Nepal’s hydropower more and more investment-worthy. Converting water into wealth is, therefore, a not-to-be missed opportunity.Tourism is another important sector for investment. Nepal has matchless natural beauty and incredible cultural treasures.  Natural and cultural diversity make Nepal a tourist paradise round the year. 2020 is being celebrated as the Visit Nepal Year, and the intention is to attract more than 2 million tourists a year.  Nepal seeks investment for upgrading tourism infrastructure, including hotels and resorts.Agriculture has huge potentials for development. As Nepal moves from subsistence level to a commercial agriculture through modernisation, huge investment will be required. Nepal wants to enhance productivity of agriculture while reducing people’s dependence on it.  Given Nepal’s topography and climatic setting, Nepal can develop organic farming system with products of high export potential.National ConsensusThe government is not only stable with two-third majority in the Parliament, it is also has clear vision and objective for the development of the country. In devising economic policy, the Government is not moving alone. The private sector has been taken on board as an indispensable partner in the journey to economic transformation.The development agenda and foreign investment enjoy national consensus in Nepal. All political forces in the Parliament stand together to invite and encourage foreign investment.Nepal is ready for business and investment. We welcome your investment. Feel secure and seize the moment.  Your investmentwill be protected and your profit will be guaranteed. We do not want any further delay in our journey towards prosperity. Speedy and comprehensive development is the only option and the call of the hour.END

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“Investing in Nepal is risk free”

<figure><img width="1400" height="933" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b269c7e80680e04595cjpeg.jpg" alt=""/><figcaption>On Thursday, a worker puts up the registration desk as part of preparations for the Investment Summit at Hotel Soaltee, Kathmandu. Photos: Bikram Rai</figcaption></figure>After adopting a liberal free-market policy, passing the first <a href="https://archive.nepalitimes.com/regular-columns/Comment/making-nepal-fdi-friendly,853" target="_blank" rel="noopener">Foreign Direct Investment</a> (FDI) Act in 1992, despite the end of the conflict, and after many ups and downs, FDI never really picked up. Why?By 1994, some 1,180 new factories were registered and in the four years between 1992-1996,  foreign investment commitments increased 10-fold. But the Maoist war started, foreign investors were directly targeted, many closed shop and left, and those who stayed did not expand. <img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b299c7e80680e04595djpeg.jpg" alt="" width="211" height="182">Read also:<a href="https://www.nepalitimes.com/here-now/maze/" target="_blank" rel="noopener">Maze</a><a href="https://www.nepalitimes.com/editorial/invest-in-investment/" target="_blank" rel="noopener">Invest in investment</a>, Editorial Today, more than a decade after the decade-long war, Nepal has political stability but the economy remains stagnant. Nepal received less than $167 million worth of FDI in the first seven months of the new government assuming office – one-third of the amount received during the same period last year. There was a mere $400 million worth of FDI in the last five years.  In the World Bank’s Ease of Doing Business List of 2018, Nepal dropped five spots to 110th position among 190 countries. The Bank cites administrative hassles, a complicated tax system and structural problems as major impediments to investment.“If we do not change ad hoc regulations at all levels and reduce red tape, it will be foolish to expect more <a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">foreign investment</a>,” says FNCCI vice-chair Umesh Lal Shrestha. Former vice-chair of the National Planning Commission Dipendra Bahadur Chettri adds that while the laws and regulations have changed for the better, the proof of the pudding is in the implementation. The bureaucracy is still investment unfriendly.Read also: <a href="https://www.nepalitimes.com/latest/nepal-inc/" target="_blank" rel="noopener">Nepal, Inc.</a>, Suman Joshi<a href="https://www.nepalitimes.com/?p=23951&amp;preview=true" target="_blank" rel="noopener">A roller coaster ride</a>, Shyamal K Shrestha <figure><img width="1780" height="1244" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b2a9c7e80680e04595ejpeg.jpg" alt=""><figcaption> </figcaption></figure>Added to it is a pervasive rent-seeking culture among policy makers and civil servants at every level. It is common knowledge that government secretaries do not issue licenses unless they get a kickback. The Melamchi Water Supply Project is <a href="https://www.nepalitimes.com/from-the-nepali-press/melamchi-delayed-by-government-extortion/" target="_blank" rel="noopener">stuck in its final stages</a> because the contractors refused to pay off the secretary. Officials of the <a href="https://www.nepalitimes.com/here-now/how-they-kept-nepal-in-the-dark-ages/" target="_blank" rel="noopener">Nepal Electricity Authority</a> (NEA) in collusion with private cement companies, shut off power to state-owned Udaypur Cement.“How do you expect businesses to come to Nepal when the first thing officials ask for in an investment meeting is their share?” asks Shrestha.Bureaucrats compete fiercely for lucrative positions in the Industry Registration and Licensing Section, the Foreign Investment and Technology Transfer Division, and Office of Company Registrar because that is where they can shake down investors.Read also:<a href="https://www.nepalitimes.com/latest/two-experts-on-nepals-investment-climate/" target="_blank" rel="noopener">Nepal’s investment climate</a><a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">How Nepal can invest in improving the investment climate</a>, Anil ChitrakarNepal is also seeking to graduate from its Least Developed Country status to Developing Country status by 2030, but that is unlikely, without achieving the UN’s Sustainable Development Goals, which in turn will require an annual foreign investment flow worth $15 billion because experts say national resources alone will not suffice. <img width="1400" height="339" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b2d9c7e80680e04595fjpeg.jpg" alt="">A sluggish bureaucracy and corruption, however, have sent the wrong message to the outside world. <a href="https://archive.nepalitimes.com/article/nation/Melamchi-water-not-enough-for-everyone,3899" target="_blank" rel="noopener">Large projects like Melamchi</a> are perennially stuck; the 216MW hydropower project on the Trisuli is yet to begin, eight years after the Korean South East Power Company began work, having already invested Rs6 billion. In contrast, a 102MW hydropower project started four years ago by the same Korean consortium in Pakistan is nearing completion.General Manager Giriraj Adhikari says: “We are ready to go ahead with the project but officials are taking their time to decide on hedge fund issues. When will that be? No one knows.”Read also: <a href="https://www.nepalitimes.com/?p=23930&amp;preview=true" target="_blank" rel="noopener">Overseas Nepalis not impressed</a>, Sewa BhattaraiThe worst precedents were set by the Norwegian company SN Power pulling out of the 650MW Tamakosi III project in 2013 because of the lack of political will on the part of the government, and Australia’s SMEC gave up on the $1.5 billion West Seti Project after trying for 15 years. China’s Three Gorges also withdrew from West Seti due to lack of agreement on a power purchase.The Finnish company <a href="https://www.nepalitimes.com/banner/what-will-nepal-do-with-its-e-waste/" target="_blank" rel="noopener">Nepwaste had a proposal to solve Kathmandu’s waste problem</a> and generate electricity with an incinerator project, but is reluctant to advance, first because senior politicians wanted a cut and then because Kathmandu Municipality asked the Finns to deposit the total annual salary of all its workers in its bank account to begin.Eighteen other large projects involving Chinese and Nepali contractors are in trouble after a Chinese government-owned insurance company reported uncertainty about return on investment in Nepal. Nepal has no policy yet on sovereign guarantee.  Other foreign investors are frustrated by the government’s failure to provide basic infrastructure like roads, power and water. Without a transmission line, Chinese-backed Hongsi Cement is using a 25MW diesel generator.Read also: <a href="https://www.nepalitimes.com/opinion/early-investors-didnt-sell-nepal-short/" target="_blank" rel="noopener">Early investors didn’t sell Nepal short</a>, Lisa Choegyal<a href="https://www.nepalitimes.com/?p=23904&amp;preview=true" target="_blank" rel="noopener">Napoli Nepali</a>, Kunda Dixit <img width="750" height="738" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b2f9c7e80680e045960jpeg.jpg" alt="">It is not just the government that is working at cross-purposes to create obstacles for foreign investors, Nepal’s protection-minded private sector is equally to blame. Nepal’s cement cartel tried its best to stop Hongsi from setting up its plant, and was only successful after allying with Shivam. Another Chinese cement company Hwasin is setting up a plant, but only after partnering with industrialist Suraj Vaidya.When news surfaced that India’s Amul wanted to invest in Nepal, Nepal’s dairy industry was up in arms and lobbied their case in Parliament. Dairy and agro-industries are therefore in the FITTA negative list.When India’s biscuit company Britannia announced plans to expand in Nepal, Pashupati Biscuit openly lobbied against it. The tourism industry has been adversely affected by domestic companies who want to keep the foreigners out. Experts say foreign investment is not just about money, but bringing in state-of-the-art technical knowhow, skills and quality control. This is most evident in the cement industry where domestic manufacturers have been selling customers sub-standard cement by keeping foreign companies out. Some investors have even faced violent threats. In 2001, Nepal Telecom gave a license to Spice Nepal to operate a private telecom service. India’s Modi group that owned majority share of the company backed out when its representative was threatened with kidnapping. The Koreans involved in Himalayas Spring Water’s Ontop brand in Rasuwa pulled out after its executive was beaten up by the same Maoists who are in government now.Many middlemen and former government officials are also sitting on lucrative hydropower projects and mineral mines hoping to cash big on licenses.Read also: <a href="https://www.nepalitimes.com/opinion/climate-risk-to-hydropower-investment/" target="_blank" rel="noopener">Climate risk to hydropower investment</a>, Ajaya DixitDespite the risks, foreign investors still find <a href="https://www.nepalitimes.com/opinion/climate-risk-to-hydropower-investment/" target="_blank" rel="noopener">Nepal’s hydropower</a> a viable business venture, and more than 60% of the projects on offer at this week’s Investment Summit are in energy. After India and Bangladesh opened their market for electricity imports, Nepal has the opportunity to promote this sector to export surplus electricity after projects meet domestic demand expected to reach 10,000MW by 2030.Hitherto, the main roadblock for investment was political instability. Now that Nepal has a stable and strong government, the climate for growth is much more favourable. But as long as the state is afflicted with a rent-seeking mentality, experts say the best laws will not be enough to attract investors.  <h2>“Nepal is open for business”</h2> <img width="640" height="584" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b319c7e80680e045961jpeg.jpg" alt="">Nepal will use the Investment Summit this week to present projects on 63 categories including hydroelectricity, agriculture, tourism, and infrastructure. Investment Board Nepal CEO Mahaprasad Adhikari (pictured above) speaks to Nepali Times about prospects and challenges. Excerpts:Nepali Times: Some MPs have themselves said investment-related bills were brought for ratification without sufficient debate. What is your take?Mahaprasad Adhikari: Old bills were amended and new bills were registered in Parliament. We were hoping they would create a feasible environment for policy improvement during the Investment Summit. Bills regarding Public-Private Partnership and Foreign Investment and Technology Transfer Act have already been passed, and both were vigorously debated. In fact, the Foreign Investment and Technology Transfer Act was firsts discussed there years ago. If there are any changes, they can always be amended in future.How are the new laws more investment-friendly?There were no laws about public-private partnership (PPP) before. The act creates a legal foundation and provides fundamental tools to advance PPPs. Investors can now have more clarity about the process. Provisions related to transportation and infrastructure help strengthen the public-private partnership through the 'Viability Gap Fund' that enables the government to promote the private sector. The Investment and Technology Transfer Act will help expedite the investment process, increase security, and station a one-point service centre for efficiency. But critics say the new acts instead of strengthening the Investment Board increases the government agencies who need to give approval.The Investment Board has been functioning as a one-window service centre, and served as a bridge between investors and government agencies. The idea is that investors no longer need to visit different government offices once they contact the board. In the longer term, we hope to ensure that all government agencies communicate their decisions online. We are looking to expedite the process, and want investors to expend energy on development rather run around for documentation.We heard the same things at the 2017 Summit, but not much changed. How will this one be any different?This year's summit follows a different model, we are pushing policy improvements, and then present well-researched, attractive proposals to investors. Some of the investments commited in the last summit have arrived while the remaining is in the pipeline. Work and research has already commenced for a fourth of the investments worth Rs375 billion. What are your expectations this time?It is an invaluable opportunity to make international investors aware about Nepal's efforts to create investment-friendly environment. We have studied many projects thoroughly to showcase them at the summit, and that is an outcome by itself. We will also propose private sector projects to international investors. The message is that Nepal is ready and open for business.

Nepal has to curb corruption before wooing investors

https://youtu.be/NR6mf_rrRb0Learning from the success of overseas Chinese and Indians investing in their homeland, the Nepal government hurriedly passed two foreign investment related bills recently. But non-resident Nepalis are not impressed.The Public Private Partnership and Investment (PPPIA) Bill was passed by Parliament on 18 March, and the Foreign Investment and Technology Transfer (FITTA) Bill on 22 March, but investors say it does not go far enough in allying their concerns.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b239c7e80680e04595ajpeg.jpg" alt="" width="211" height="182"/>Read also:<a href="https://www.nepalitimes.com/here-now/maze/" target="_blank" rel="noopener">Maze</a><a href="https://www.nepalitimes.com/editorial/invest-in-investment/" target="_blank" rel="noopener">Invest in investment</a>, Editorial<a href="https://www.nepalitimes.com/?p=23939&amp;preview=true" target="_blank" rel="noopener">Curb corruption before wooing investors</a>, Ramesh KumarNot only do the bills have contradictory provisions with an extended negative list, a minimum limit for investments, and requirements of multiple approvals, experts say they do not address the central concern of transparency, policy continuity and rule of law.FITTA has extended the negative list (sectors in which foreign investment is prohibited) to include agriculture, horticulture, and dairy, sectors which many overseas Nepalis are eager to modernise and create jobs back home.Read also: <a href="https://www.nepalitimes.com/latest/nepal-inc/" target="_blank" rel="noopener">Nepal, Inc.</a>, Suman Joshi<a href="https://www.nepalitimes.com/?p=23951&amp;preview=true" target="_blank" rel="noopener">A roller coaster ride</a>, Shyamal K Shrestha “When you prohibit so many areas for foreign investment, you are giving the wrong message to investors, especially to non-resident Nepalis. Not only does it render some sectors completely off limits, it also scares investors that their current investments may become off limits in future,” says <a href="https://www.nepalitimes.com/opinion/bottom-up-approach/" target="_blank" rel="noopener">Siddhant Pandey of Business Oxygen</a>. “Investment should be welcomed in all areas so as to help economic growth, technology transfer and to bring Nepal’s human resources up to speed.”The Non-resident Nepali (NRN) Association is concerned about shortcomings in the Acts, and has said so through a document published by its policy research wing Nepal Policy Institute (NPI) which rues the fact that the Acts treat overseas Nepalis, foreign citizens of Nepali origin, and other foreign investors alike.Read also: <a href="https://www.nepalitimes.com/latest/two-experts-on-nepals-investment-climate/" target="_blank" rel="noopener">Nepal’s investment climate</a><a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">How Nepal can invest in improving the investment climate</a>, Anil Chitrakar Says Khagendra Dhakal of NPI: “The government says it needs the negative list to protect small-scale industries, but people of Nepali origins have special emotional ties to Nepal even if they may not have enough capital for large scale investments. NRNs and foreign citizens of Nepali origins should be given the same rights as Nepali citizens.”The NPI report recommends scrapping the negative list and lifting restrictions on foreigners from investing in businesses worth less than $150,000 for overseas Nepalis.“If a business worth $100,000 is employing at least 20 Nepalis and training them in new technology, it should be open to investment for NRNs and foreigners of Nepali origin too,” says Dhakal.However, FITTA authorises the Industry and Investment Promotion Board to approve companies investing Rs5-10 billion, while PPPIA directs companies above Rs6 billion to the Investment Board Nepal (IBN).Read also: <a href="https://www.nepalitimes.com/opinion/early-investors-didnt-sell-nepal-short/" target="_blank" rel="noopener">Early investors didn’t sell Nepal short</a>, Lisa Choegyal<a href="https://www.nepalitimes.com/?p=23904&amp;preview=true" target="_blank" rel="noopener">Napoli Nepali</a>, Kunda Dixit<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b249c7e80680e04595bjpeg.jpg" alt="" width="1000" height="428"><figcaption> </figcaption></figure>Amidst concern that PPPIA concentrates power in the IBN, which does not have much to show for itself, the real question at the Summit this week is whether these hastily-passed bills will remove misgivings of foreigners and NRNs about investing in Nepal.Economist and former Nepali ambassador to the United States Shankar Sharma believes that the law itself is not the problem when it comes to attracting foreign investment, but its execution.“We have good laws but their implementation is weak, which is the real problem,” says Sharma. “There is supposed to be a one-door policy, but in reality investors are made to jump through hoops to register companies or repatriate profits. The process is cumbersome, full of hassles. We need detailed guidelines about how these laws will be simpler and easier to implement.”Former president of NRN association Jiba Lamichhane agrees, stating that though the laws are all right there are other problems. “Overall our laws are quite liberal, but they fail to create a conducive investment climate with extortion, hassles over repatriating profits. If we want to attract investment, we must learn from best practices around the world. African countries attract huge investments from China while we have not been able to do so despite being next door,” he says.Investing in Nepal is more expensive than in other Asian countries due to the lack of skilled manpower and infrastructure, and experts say that without improvements the two bills are not going to make much of a difference.On the positive side, FITTA and PPPIA have eliminated many of the hassles related to registering FDI companies. Investors who needed to get approval from at least five agencies, now need to go to only two.The World Bank’s Nepal Country Manager Faris Hadad-Zervos told Nepali Times: “Nepal is entering a new chapter in its development, and it is not just about one law or policy but a change in the narrative where Nepal has survived several crises and is moving to rebuilding. The actual impact of the bills will depend on regulations to operationalise these laws.”

Overseas Nepalis are not impressed

<figure><img width="1000" height="1500" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b369c7e80680e045962jpeg.jpg" alt=""/><figcaption>Photo: BIKRAM RAI</figcaption></figure>Nepal introduced the Foreign Investment and Technology Transfer Act (FITTA) in 1992, but it lags behind South Asian economies and Least Developed Countries (LDCs) in <a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">attracting Foreign Direct Investment</a> (FDI), and even the investment that comes in is declining.Net FDI inflows in Nepal, which stood at $196 million (0.8% of GDP) in 2017 declined by 14% to $169 million (0.6% of GDP) in 2018. FDI inflows crossed the $1.0 billion threshold in Bangladesh, Pakistan and Sri Lanka. India alone attracted $40 billion FDI in 2017. Bhutan, India and Sri Lanka are ranked above Nepal in Doing Business related indicators.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b399c7e80680e045963jpeg.jpg" alt="" width="211" height="182">Read also:<a href="https://www.nepalitimes.com/here-now/maze/" target="_blank" rel="noopener">Maze</a><a href="https://www.nepalitimes.com/editorial/invest-in-investment/" target="_blank" rel="noopener">Invest in investment</a>, Editorial <a href="https://www.nepalitimes.com/?p=23939&amp;preview=true" target="_blank" rel="noopener">Curb corruption before wooing investors</a>, Ramesh KumarAs Nepal convenes another Investment Summit in Kathmandu this week, investors will be watching if there is any progress in translating the vision of economic prosperity into concrete reform measures. Reviving the investment climate is vital to taking Nepal's economy on a high growth trajectory for mass job creation, raising per capita income and reducing social inequality.Despite the government declaring Nepal Investment Year 2012/13 and organising an Investment Summit 2017, these campaigns could neither raise FDI levels nor convince investors that it was FDI-friendly. Since 2018, economic growth has rebounded to 6.0%, on average, due to restoration of political stability, improved electricity supply, favorable monsoon and higher tourism arrivals.Read also: <a href="https://www.nepalitimes.com/latest/nepal-inc/" target="_blank" rel="noopener">Nepal, Inc.</a>, Suman Joshi<a href="https://www.nepalitimes.com/latest/two-experts-on-nepals-investment-climate/" target="_blank" rel="noopener">Nepal’s investment climate</a><a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/" target="_blank" rel="noopener">How Nepal can invest in improving the investment climate</a>, Anil Chitrakar However, poor governance, weak and inadequate infrastructure, and bureaucratic hassles remain deterrents. Nepal ranked 109/140 on the Global Competitiveness Index 2018, 117/163 on the Logistics Performance Index 2018 and 110/190 in Doing Business 2019. FDI created only 243,540 jobs (1.4% of the labor force) up to mid-July 2018: 46% of FDI is in energy, 18% of FDI is in manufacturing, 18% of FDI is in services and 15% of FDI is in tourism. Small and cottage industries and many agricultural sub-sectors are in the negative list to protect domestic producers even though state support has not raised productivity nor export performance.Nepal has also become a net food importer, and imported $247 million worth of rice in 2017, higher than the total $215 million in agricultural exports that year. Similarly, the export performance of agro-based products identified under Nepal Trade Integration Strategy 2016 (large cardamom, ginger, and honey) remain dismal due to supply-side constraints affecting overall productivity.As more than 70% of Nepalis are employed in agriculture, selectively opening some sub-sectors to FDI could raise productivity in both subsistence and cash crops. This would check ballooning imports of food items that contribute to Nepal’s high trade deficit. This will also enable higher value-added production domestically, and enhance supply chains, thus creating strong backward linkages in terms of skilled employment.Read also: <a href="https://www.nepalitimes.com/?p=23930&amp;preview=true" target="_blank" rel="noopener">Overseas Nepalis not impressed</a>, Sewa BhattaraiNepal can take a cue from India’s Consolidated FDI Policy 2017, which allows an automatic entry route into various agricultural sub-sectors up to 100% but bars FDI totally in other farm sub-sectors. Vietnam, with net FDI inflows of $14.1 billion in 2017, does not maintain a negative list of industries but maintains foreign equity caps, mostly in the service sector.A single large infrastructure project such as the export-oriented Arun III Hydroelectric Project will add $1.4 billion to Nepal’s FDI stock. The recently-introduced hedging regulations are likely to mitigate some of foreign exchange risks around FDI and encourage further investment in the energy and infrastructure sectors.New luxury hotels set up by international hotel chains outside the Kathmandu-Chitwan-Pokhara triangle will diversify the tourism sector, which has the potential to create many better jobs and help less developed places in Nepal. The success of the new and amended labour, foreign investment, and industry laws will depend on whether they address risks to investment, allow business flexibility and create a level playing field for both domestic and foreign investors.Read also: <a href="https://www.nepalitimes.com/opinion/early-investors-didnt-sell-nepal-short/" target="_blank" rel="noopener">Early investors didn’t sell Nepal short</a>, Lisa Choegyal<a href="https://www.nepalitimes.com/?p=23904&amp;preview=true" target="_blank" rel="noopener">Napoli Nepali</a>, Kunda DixitOpposition to reforming these laws from various sections of the political class, private sector, and trade unions reveals a deep-seated fear of competition, which is crucial for efficiency and productivity. Investment-related legislations should be regularly reviewed and amended accordingly.Investors are currently required to obtain approvals from a plethora of government agencies. Investment Board Nepal and Department of Industry should be the only one-stop shops for facilitating investment. Security concerns have again risen against the recent spate of violence, including damage to the property of FDI projects.Continuation of the stalled public-private dialogue between the government and the domestic private sector under the platform of Nepal Business Forum could go a long way in tackling investment climate bottlenecks at both the national and sub-national levels. This body can also form a task force to identify reforms related to ease of doing business. Shyamal Shrestha is a member of the Bibeksheel Sajha Party @ShyamalShrestha

A roller coaster ride

<figure><img width="1500" height="1044" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b109c7e80680e045951jpeg.jpg" alt=""/><figcaption>Illustration: BHANU BHATTARAI</figcaption></figure>Let us just say, for the sake of argument, that Nepal has now untangled its politics, formed a Constitution, the war is over and there is political stability. (We know that this is not strictly true, especially since there is a disgruntled faction of the ruling party that is on a <a href="https://www.nepalitimes.com/here-now/its-a-crime-not-to-call-it-terrorism/">violent extortion spree</a> across the land.)Read also: <a href="https://www.nepalitimes.com/here-now/maze/" target="_blank" rel="noopener">Maze</a>But suppose we had sorted out the politics, and we were actually taking a big leap forward towards a ‘prosperous and happy’ nation. Would that finally <a href="https://www.nepalitimes.com/latest/nepal-inc/">convince foreign investors</a> that Nepal is an attractive place to do business because of its sizeable domestic market and prime location between the world’s biggest markets?<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b139c7e80680e045952jpeg.jpg" alt="" width="211" height="182">Not really. Foreign investors would look at lists like the World Bank’s Ease of Doing Business, Forbes Magazine's Best Countries for Business, or the Global Finance magazine's list of Top Countries for Foreign Direct Investment, and see that Nepal scores nowhere near the top 50, or even the top 100 countries.Read also: <a href="https://www.nepalitimes.com/latest/nepal-inc/">Nepal, Inc.</a>, Suman JoshiJust Google "Nepal" and "<a href="https://www.nepalitimes.com/editorial/bulldozing-democracy-2/">Corruption</a>" and see how low Nepal ranks in the Transparency Index. There is the recent case of the Malaysian telecom investor <a href="https://www.nepalitimes.com/here-now/supreme-court-weighs-in-on-ncell-tax-dispute/">Axiata being forced to pay</a> Rs61 billion in capital gains tax even though it is the buyer, not the seller, that should be liable. In this space we recently recounted the horror story of how senior bureaucrats repeatedly <a href="https://www.nepalitimes.com/from-the-nepali-press/melamchi-delayed-by-government-extortion/">extorted an Italian contractor for kickbacks</a> and forced its personnel to abandon the nearly complete $500 million water supply project when they did not fork out Rs50 million. A Spanish contractor upgrading Kathmandu airport quit after being harassed over payoffs. Other investors have reported being asked for a cut to repatriate profits, and renewing business visas has become an ordeal. <a href="https://www.nepalitimes.com/here-now/nepali-scientist-returns-to-pinpoint-hazards-of-dirty-air/">Kathmandu’s air pollution and poor quality</a> of education are other deterrents for investors.Given such sleazy behaviour, it is surprising there are still foreign companies interested in <a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/">investing in Nepal</a>. Despite the country’s strategic location, great potential for energy, agriculture and infrastructure projects, the level of foreign direct investment <a href="https://www.nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal/">(FDI) has been dropping rapidly</a>.Read also: <a href="https://www.nepalitimes.com/latest/two-experts-on-nepals-investment-climate/">Nepal’s investment climate</a><a href="https://www.nepalitimes.com/opinion/how-nepal-can-invest-in-improving-the-investment-climate/">How Nepal can invest in improving the investment climate</a>, Anil Chitrakar It rose steeply after the Foreign Investment Act of 1992 and the first Investment Summit a year later. But inflows dried up during the war years as the Maoists targeted domestic industries and foreign investors for extortion, threats and bombings. After the end of the conflict, investment rose sharply again as private hydropower projects got underway. However, there has been only $400 million in <a href="https://archive.nepalitimes.com/regular-columns/Comment/making-nepal-fdi-friendly,853">foreign investment</a> in the past five years, with only $169 million in 2018 since the Nepal Communist Party took office -- a further drop of 15% compared to the previous year.In the meantime, other developing countries in the region, even those governed by communist parties like Vietnam and Laos, have moved up the value chain in garments and manufacturing and are now attracting investments in energy and electronics. India and China have attracted their diaspora to invest in the home country, but Nepal’s laws have failed to meet the demand of overseas Nepalis for special provisions to non-residents.Why is Nepal stuck? It boils down to poor governance, lack of accountability, and no rule of law. Those conditions are linked to political will, a national vision and efficient implementation of policies – all in short supply.This is why, despite being optimistic about Nepal’s long-term future, we are pessimistic in the short-term as the government holds another Investment Summit for the sake of a summit without even beginning to address the root causes. In the run-up to the Summit, the government hurriedly passed FITTA which actually makes it more cumbersome to get approvals, and has added dairy and agro-industries in the negative list to protect domestic businesses. The Public-Private Partnership and Investment Act, although streamlining IBN’s role, does not address the confusion over jurisdiction of federal and provincial governments. The new rules for hedging on dollar-rupee fluctuations are unlikely to reassure foreign investors because they come with so many if’s and but’s.<a href="https://www.nepalitimes.com/here-now/nepal-can-create-a-business-friendly-environment/">Foreign investors</a> are attracted to put money in a country if there are incentives, facilities, transparency, and a guarantee of no bureaucratic harassment. With so much competition in Asia, and especially in the immediate neighbourhood, it is unlikely that many of the 600 potential investors from 38 countries who are in Kathmandu this week will be convinced.It is hard to entice foreign investors to the country when even Nepali businesses are so hesitant to start up a business. We do not need any more speeches; Nepal first needs to improve governance and transparency before another futile attempt to woo investors. <h2>10 years ago this week</h2> Nepal is holding another Investment Summit this week, exactly ten years after Maoist Prime Minister Pushpa Kamal Dahal embarked on a trip to Nordic countries to restore investor confidence after the war. Excerpt from a <a href="http://archive.nepalitimes.com/news.php?id=15725" target="_blank" rel="noopener">page 1 report</a> in the <a href="http://archive.nepalitimes.com/issue/441">issue #444</a> of 27 March – 2 April 2009:Prime Minister Pushpa Kamal Dahal has said his primary mission during his Nordic tour next week will be to encourage foreign investment. However, his hosts will also want to hear just how seriously he is committed to protecting democracy during Nepal’s transition to peace, and they will link his track record to future development assistance. Dahal will probably be able to convince the Norwegians and Finns he is serious about democracy, but he will have a much tougher time with potential investors. “The investment climate doesn’t look good at all,” said one European investor, “and what is worrying is that instead of getting better it is getting worse.”In Oslo, Dahal is set to meet executives from Statkraft, the Norwegian state-owned hydropower company that partly owns SN Power that is investing in the 600MW Tama Kosi III, and will face tough questions about security, legal stability, political and bureaucratic delays.<a href="http://archive.nepalitimes.com/issue/441"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b149c7e80680e045953jpeg.jpg" alt="" width="507" height="812"></a>

Invest in investment

Nepali Congress (NC) President Gagan Thapa's candidacy in Sarlahi-4 has thrust this Madhes constituency into rare national focus. If Thapa wins and the NC emerges as the largest party, Sarlahi-4 will send Nepal's next prime minister to Parliament. But if he does not, Nepal’s grand old party will face the next years in the opposition to fight another day. There is a troubling paradox in Sarlahi-4 where the district bordering the Indian state of Bihar has been a battleground for national politicians with fierce electoral competition, all while remaining one of the region's most underserved and underdeveloped constituencies.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260305140344_069cbbc11e971a851b444866dee57f760c0cc611ed40bdf96c627e343e3c0485.png" data-media-id="editor_0" data-image-id="20260305140344_069cbbc11e971a851b444866dee57f760c0cc611ed40bdf96c627e343e3c0485" data-rendition-name="original" width="1802" height="1276" loading="lazy" alt="Sarlahi-4 voting"> <figcaption>Photo: MADHES PAHARA MEDIA</figcaption> </figure>  Ever since Mahant Thakur split from NC in 2008 to form the Tarai Madhes Loktantrik Party, the district has seen rotating political alliances and fragmented votes. Yet, despite 18 years of candidates promising change irrigation schemes remain incomplete, market access for farmers has not improved, unemployment is high.&nbsp; On election day, voters here marked their ballots with fingers stained by dye from the Holi festival the day before. The road leading to Barathawa Bazar was deserted for the most part, except for some youth riding in motorcycles. This is where the high-profile contest between Gagan Thapa and RSP nominee Amresh Singh is being staged. Among the other aspirants is 27-year-old UML candidate Amnish Yadav, the son of former MP Shiv Pujan Yadav. The Yadavs are a political family with considerable caste influence in the constituency. In 2022 Yadav’s daughter Madhumala Yadav received over 14,000 votes here, ranking third overall. Yadav was voted MP from the Maoist party, but defected to the UML this time. His other son is the chair of Sarlahi’s Ramnagar Rural Municipality. Sarhali-4 has 121,012 voters, and the Yadav is banking on the 27,000-strong Yadav vote bank. Sarlahi-4 voter Avishek Sah told us he wanted his vote to go to a young nominee and not someone who has been MP thrice already, like Amresh Singh. &nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260305140344_527c5c2f9aa6a6c7e3bbdfbfe79fdafb0a0b56a62427e9ced86b924c6c563b10.jpg" data-media-id="editor_1" data-image-id="20260305140344_527c5c2f9aa6a6c7e3bbdfbfe79fdafb0a0b56a62427e9ced86b924c6c563b10" data-rendition-name="original" width="1200" height="1600" loading="lazy" alt="Sarlahi-4 voting"> <figcaption>Photo: AYUSHA CHALISE</figcaption> </figure>  To make local loyalties even more complicated, Amnish Yadav’s uncle, Harinder Yadav is an active NC member and walked side by side with Gagan Thapa during his door-to-door campaigns.&nbsp; The NC is betting on Thapa getting over 60% of the total votes. Amresh Singh’s tally could be limited to 10,000 votes — that too because of the nationwide RSP wave, and the popularity of its prime ministerial hopeful Balendra (Balen) Shah. “Amresh Singh lost his appeal when he played victim after he was denied a ticket by the NC in 2022,” Harinder Yadav says. Voters we spoke to here agreed with this assessment that Singh did not do much for the district once he got elected in the past, and being a part of the RSP seems to be his biggest asset. “The only reason I voted for Amresh Singh is because Balen is in RSP,” local voter Mahendra Gupta from Barathawa. &nbsp;“This is his last chance to return the people’s trust.”&nbsp; Gupta is aware of the institutional presence of the NC here. The party received the most votes in 2022 local elections, adding that the candidacy of someone as high-profile as Thapa is a positive sign for Sarlahi-4.&nbsp; Other voters like Ruby Gupta are rooting for both the NC and the RSP. “I will vote for Gagan and for Balen,” she says, adding that her FPTP vote will go to Thapa while her PR ballot would be for the RSP. RSP supporters are confident that their candidate will win big because even though many voters may not have openly voiced their support they still voted for the party and candidate. The Balen Wave was not limited to RSP voters, but also to UML candidate Yadav, who said in a gathering that he will be “the voters Balen” if they elect him. He touted his party’s track record in government, and largely campaigned on administrative efficiency, infrastructural expansion, and local service delivery. Amresh Singh ran on the RSP’s anti-establishment brand, promising to fight corruption, challenge traditional party politics, improve basic services such as education, health, jobs, and infrastructure, while pushing for stronger representation and development for Madhes.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260305140344_982df01801fa7d3532ca0555ecb8a0756e3223be3d93650e08ca82a312dc2ebd.jpg" data-media-id="editor_2" data-image-id="20260305140344_982df01801fa7d3532ca0555ecb8a0756e3223be3d93650e08ca82a312dc2ebd" data-rendition-name="original" width="1600" height="1200" loading="lazy" alt="Sarlahi-4 voting"> <figcaption>Photo:AYUSHA CHALISE</figcaption> </figure>  Singh’s rivalry with his NC competitor goes beyond the ballot— he allegedly blames Thapa for being denied the NC ticket in 2022, which led him to win the election from Sarlahi-4 as an independent. &nbsp; For his part, Gagan Thapa focused on a more pragmatic development agenda that includes upgrading roads and irrigation, improving schools and hospitals, supporting farmers, and creating employment opportunities with improved governance at the centre. He also promised to build an engineering college in the constituency.&nbsp; Thapa also promoted his own anti-establishment image within the NC, repeatedly reminding voters on the campaign trail that he represents the aspirations of the youth.&nbsp; On Thursday, as voting progressed, there were violent disruptions in two centres where voting was briefly halted. But Sarlahi district police spokesperson Saroj Rai told Nepali Times that there were no major problems. Police in collaboration with the Nepal Army sent the ballot papers to the district’s counting stations, where the votes are expected to be tallied through the night and the winner announced Friday morning.

Sarlahi-4 nervously watches ballot count

As this report is uploaded, the latest results in Nepal’s election show that the Rastriya Swatantra Party (RSP) is headed for an even bigger sweep than most had predicted.
The RSP was leading by large margins in 49 of 165 constituencies, &nbsp;with the UML, NC and NCP trailing far behind. Prominent political figures from the old parties like K P Oli, Minwndra Prasad Rijal, Ishwar Pokhrel, Bishnu Prasad Poudel, Bimalendra Nidhi all seem headed for defeat.
It does look like the RSP’s bell election symbol is ringing right across Nepal — from cities to the remotest districts in the mountains and plains. The party’s blue colour is sweeping the land.
The Nepali people seem to have sent a clear message that they were throughly dissatisfied with the chronic failure of the three main parties to work in the national interest to create jobs and deliver development. It was also an expression of lingering outrage over the the 8 September massacre outside Parliament. &nbsp;
It now looks almost certain that Balendra Shah will get to be Nepal’s next, and youngest, prime minister. Hopefully he will be leading a cabinet of competent and honest technocrats. It remains to seen how the power equation between Shah and the RSP’s leader, Rabi Lamichhane will play out.
Lamichhane is out of jail on bail for fraud cases which he has called political vendetta by the previous regime. Both he and Shah are charismatic and ambitious. Their working relationship will determine Nepal's political stability and whether it can avoid the political cronyism of the past.
This election was not just about casting votes. It was about standing up to principles and a value system, and respecting the hopes and aspirations of Nepal’s youth. It to push for transparent government and against impunity — including for the gunning down of young Nepalis in cold blood.
<div class="embed-block"><iframe src="https://election-geo-dashboard.pages.dev/" width="100%" height="600" frameborder="0"> </iframe>Live election results as winners of candidates are announced.</div>
CAN DO MAN
Shah got mixed reviews as mayor. He was impulsive and ad hoc, but most people inKathmandu and beyond liked his can-do attitude and unconventional style which stood in sharp contract to the legacy leaders. Over his three year mayorship he showed more maturity and planning capacity.&nbsp;
But he always ran headlong into opposition from the federal government over his urban planning and other initiatives to make Kathmandu more liveable. Coming from a civil and structural engineering background, he was involved in building low-cost housing after the 2015 earthquake.
But his public persona is more tied to his irreverent rap lyrics that stood up for the marginalised underprivileged in society, while exposing the high-handedness and apathy of the state. But this also exposed contradictions because he also used his own municipal guards to beat and chase away street vendors and squatters.
But there is no doubt that a combination of the sharp messaging in his rap videos amplified by the algorithms of social media ignited Nepal’s youth to rise up. It was more about optics and emotion than policy and strategy.
He studied Kathmandu district for five years, visiting experts in every field before announcing his independent candidacy for mayor in 2022. Many like me in his own constitunecy did not know who he was and where he came from.
He is a year younger than my architect son, and I saw in him a reflection of my own son’s commitment to serving the nation. I voted for him to be mayor despite his sometimes erratic behaviour, which could be attributed to his youth.
The best sign of his strategic planning, which unsettled septuagenarian and octogenarian politicians, is the he did not grab the first easy option of becoming prime minister in September when GenZ activists offered him the post.&nbsp;
Joining RSP was a masterstroke, as was his challenge to Oli in Jhapa to project national branding. He needed a party platform and Lamichhane needed a popular prime ministerial persona since he himself could not hold the post.
Shah has shown the capacity to take risks when he believes the value justifies the action for the country. Now, he will have to show more strategic thinking on a national scale, as well as understand the delicate geopolitics of Nepal.&nbsp;
He must rise above the kind of crude social media posts that earned him followers on X, but did nothing to erase his erratic and impulsive image.&nbsp;
Some assume that behind his trademark RayBan shades is a closet dictator, and his past remarks about Hitler are still up on social media. He has in the past shown impatience with criticism, unleashing supporters on social media to troll detractors.&nbsp;
Even so, the public seems willing to place their hope on an educated young man with integrity and a proven record for planning at the helm. By tomorrow it will be clear whether the hope Nepalis have held has been fulfilled, and the coming years will show if the RSP will lead Nepalis to a better future.
The voters seem to have shown the door even to the NC despite the fact that under Gagan Thapa, the party had turned a new leaf. A strong government under Prime Minister Balendra Shah heading a carefully selected cabinet and a strong opposition of the NC, UML and other parties for check and balance may be just what we need for a stable Nepal.&nbsp;
Nepalis have collectively always shown maturity in elections. This time they have given a resounding endorsement for integrity and for good governance.

Bells ring all over Nepal

After Thursday’s election, Nepalis are in a wait-and-watch mode. The Election Commission says counting ballot papers will be expedited this time, and the results for the First-Past-The-Post (FPTP) will start being declared within days. In 2022, it took three weeks for the final results to be tallied.&nbsp;
But winning an election is only half the challenge for the parties, forming a government under parliamentary politics is like a complicated mathematical equation.&nbsp;
In 2022, the Nepali Congress (NC) emerged as the biggest party, winning 89 seats. But the UML with 78 seats and the Maoists with 32 formed a minority government. In fact, Sher Bahadur Deuba did not become PM then despite leading the biggest party in Parliament.
This time, there is an unmistakeable Rastriya Swatantra Party (RSP) wave led by its prime ministerial candidate, Balendra Shah. Besides his own popularity, Shah represents change which most Nepalis are clamouring for after decades of corrupt and feckless coalitions that did not deliver.&nbsp;
The past months of campaigning has seen massive youth engagement on social media through memes, AI clips, and viral images. Digital content that appeals to emotion rather than policy debate between candidates shape electoral outcomes in Nepal and elsewhere. &nbsp;
Shah represents GenZ aspirations, and was their candidate for prime minister. It was only when he declined that Sushila Karki was nominated. None of the political parties in the recent past -- new, old, or revolutionary — have won enough seats to go it alone.&nbsp;
The most recent majority government was formed by the short-lived Communist Party of Nepal after the UML-Maoist merger in 2022. But that rare two-thirds majority collapsed after a power struggle between K P Oli and Pushpa Kamal Dahal. The only party to have won a majority was the NC in the 1991 and 1999 elections. But it is near impossible for it to repeat this success now, even with Gagan Thapa's rebranding of the party.&nbsp;
We have compiled these possible scenarios for election outcome in order of likelihood:
RSP gets a majority
RSP hits the magic 138 to form a government entirely on its own. Balendra Shah wins Jhapa-5, and becomes the new prime minister at 35, the youngest ever to hold the office in Nepal. But danger lurks: there could be a personality clash between Shah and Lamichhane who are both equally ambitious. History could repeat itself.&nbsp;
RSP wins but does not get a majority
RSP is likely to sweep the most votes, but what if it does not secure enough seats for a majority? It would need a coalition partner and Nepali Communist Party (NCP) under Pushpa Kamal Dahal could fit the bill, but only if it has the numbers. The RSP is not likely to team up with the UML or NC.
The NCP is relatively untainted by the 8 September events, and also has former UML defectors like Madhav Kumar Nepal and Bhim Rawal who could bag their rural vote banks. After all, there are no permanent foes in politics. If the royalist RPP and Tarai-based Janata Samajwadi have enough seats, those could be options for the RSP. &nbsp;
NC is second
The NC under the new leadership of Gagan Thapa could become the second biggest force and form a government with RSP in a power-sharing deal with Shah. This would be the most stable scenario since the RSP and NC have competent and idealistic young technocrats. Thapa himself embodies a strong combination of both old and new politics to navigate the system for more efficient government. But then Thapa and the RSP's Rabi Lamichhane do not get along.
NC and NCP form a majority
If the NC becomes the largest party but not by a big margin, it could join up with the NCP and Ujyalo. Teaming up with the UML would likely face backlash with the party and outside. If Gagan Thapa becomes prime minister he will face internal pressure from both Deuba loyalists. Same old story.
Minority coalition of NC, UML and NCP
RSP becomes the first party but does not get a majority, paving the way for the three legacy parties to cobble together a minority government. While this is possible in Nepal’s parliamentary system, such a scenario is likely to lead to more instability and dissatisfaction among young Nepalis demanding change, and even trigger street unrest. &nbsp;

The magic 138

Nepal conducted its post-GenZ movement early election on Thursday in a peaceful and orderly manner, although turnout was below average in most districts. In fact, some constituencies saw voters reject the election, including in Arghakhanchi and Mustang.&nbsp; Preparation for the polls had to be done hurriedly after the September protests, with little time for political parties to work on their manifestos and campaign. But the election did push most parties to field younger, fresher and untainted candidates. This was more a <a href="https://nepalitimes.com/news/old-vs-new-vs-new">personality-driven election for the next prime minister</a> than a traditional parliamentary poll. The three main parties had pre-emptively announced their prime ministerial candidates although the chief executive is supposed to be decided by the largest party in the House.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_00809e41288d8dd46d1c8915e8e39fba09892049cfda37ba347e4b23989e94c0.jpg" data-media-id="editor_1" data-image-id="2026030514034_00809e41288d8dd46d1c8915e8e39fba09892049cfda37ba347e4b23989e94c0" data-rendition-name="original" width="2048" height="1366" loading="lazy" alt="Nepal elections"> <figcaption>Balendra Shah</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_d288f2cbe05c9c1376e315ea4f24528c5ee63766c978657aee8848eb9f87f4ea.jpg" data-media-id="editor_2" data-image-id="2026030514034_d288f2cbe05c9c1376e315ea4f24528c5ee63766c978657aee8848eb9f87f4ea" data-rendition-name="original" width="1600" height="1066" loading="lazy" alt="Nepal elections"> <figcaption>Gagan Thapa</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_3e2c1c4595b3aa3a4b0c6ca80aa6243e7c5c6e5d232c9295a380c565f85bd233.jpg" data-media-id="editor_3" data-image-id="2026030514034_3e2c1c4595b3aa3a4b0c6ca80aa6243e7c5c6e5d232c9295a380c565f85bd233" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Nepal elections"> <figcaption>K P Oli</figcaption> </figure>  Going by the noise on social media sites, there seemed to be overwhelming support for the Rastriya Swatantra Party (RSP) and its prime ministerial hopeful, former Kathmandu mayor <a href="https://nepalitimes.com/here-now/political-rap">Balendra Shah</a>. Standing against him in his home turf was K P Oli, of the UML who was forced to resign after the 9 September protests. Although the UML was fielding a tried and tested leader, the Nepali Congress (NC) has tried to carry forward the GenZ aspiration for change by putting forward its new party leader Gagan Thapa as its prime ministerial candidate. The lower-than-average turnout appears to have been driven by several factors: a public that is apathetic towards the older parties but is not yet convinced by the capability of the new. Limited time campaigning, and the over-idealistic manifestos of the parties does not seem to have fired up the electorate.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514038_50394032b053d433ed039aeb6d2c00a491d2a56b48a67e55e27fbffe7e4c7fe4.jpg" data-media-id="editor_5" data-image-id="2026030514038_50394032b053d433ed039aeb6d2c00a491d2a56b48a67e55e27fbffe7e4c7fe4" data-rendition-name="original" width="1280" height="854" loading="lazy" alt="Nepal elections"> <figcaption>Photos: ADITYA KHARE</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514038_84677be963084003c9a3d3fec0b8f95ab9b9db08c160f08c82aa03b02cb81260.jpg" data-media-id="editor_6" data-image-id="2026030514038_84677be963084003c9a3d3fec0b8f95ab9b9db08c160f08c82aa03b02cb81260" data-rendition-name="original" width="1280" height="854" loading="lazy" alt="Nepal elections"> </figure>  The low turnout is also a reflection of massive outmigration from rural districts, and the requirement that voters had to go to their own home constituencies to vote. And since the Election Commission could not organised ballot by mail or online voting, most of the estimated 4 million voters abroad also could not cast their ballots. To be sure, Nepalis abroad do represent an anti-incumbent vote bloc, and they have influenced families and friends back home through social media. The trend towards RSP and younger candidates is therefore a rejection of the old, and a protest vote against the legacy parties rather than full support for the new ones. Many migrants who were coming back to vote were also stuck in West Asia after the war broke out between Iran and Israel-US. Airlines have had to make drastic rerouting plans, and at least 21,000 flights have been cancelled. The conflict will affect petroleum imports including LPG and aviation fuel, if it continues any longer. Although our reliance on fossil fuels is declining, thanks to the increased electrification of transport and cooking, the shortage might be the first crisis for the new government of Nepal to tackle.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514038_986438337f2af271ab33d267560b8a25691a72292aae074488dc8e77f27cf9c1.jpg" data-media-id="editor_7" data-image-id="2026030514038_986438337f2af271ab33d267560b8a25691a72292aae074488dc8e77f27cf9c1" data-rendition-name="original" width="2048" height="1536" loading="lazy" alt="Nepal elections"> <figcaption>Polling in Sangjya. Photo: SHRISTI KARKI</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514038_dd2624707dae59f3b32fdebb402a3edfbfe99a4031f4f43dd4522ef7c58bfab0.jpg" data-media-id="editor_8" data-image-id="2026030514038_dd2624707dae59f3b32fdebb402a3edfbfe99a4031f4f43dd4522ef7c58bfab0" data-rendition-name="original" width="1523" height="2030" loading="lazy" alt="Nepal elections"> <figcaption>Photo: SUDIKSHA TULADHAR</figcaption> </figure>  There were 18.9 million registered voters nationwide, and the 60% turnout this time follows a declining trend, possibly making it the lowest in Nepal's polling history. In the first federal election in 2017, the turnout was an impressive 67%, which dipped to 61% in the 2022 election, although it was slightly higher in the municipal election. The EC has started counting the votes on Thursday evening and hopes to have the winners of the FPTP candidates out within 24 hours, however the tallies of the Proportional Representation ballots for the parties may take up to a week.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_8ff38b016d3cb75f27343ebe5d826f9201bfefffb6147dcbb0c415071ceb472d.jpg" data-media-id="editor_9" data-image-id="2026030514034_8ff38b016d3cb75f27343ebe5d826f9201bfefffb6147dcbb0c415071ceb472d" data-rendition-name="original" width="1616" height="1080" loading="lazy" alt="Nepal elections"> <figcaption>Ballot boxes being collected. Photos: AMIT MACHAMASI</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_6e6f6a792db2790533b7ef261e51dbdc07745ee96b80eaa8edc5abab4c7cfd21.jpg" data-media-id="editor_10" data-image-id="2026030514034_6e6f6a792db2790533b7ef261e51dbdc07745ee96b80eaa8edc5abab4c7cfd21" data-rendition-name="original" width="1616" height="1080" loading="lazy" alt="Nepal elections"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026030514034_75951a6583c17a741e3f9bd1abb796bbefed335cb6e694e5cddf519bfd0b9ed4.jpg" data-media-id="editor_11" data-image-id="2026030514034_75951a6583c17a741e3f9bd1abb796bbefed335cb6e694e5cddf519bfd0b9ed4" data-rendition-name="original" width="1616" height="1080" loading="lazy" alt="Nepal elections"> </figure>  Many have praised the interim prime minister installed six months ago by the GenZ movement, former chief justice <a href="https://nepalitimes.com/news/mission-nearly-accomplished">Sushila Karki</a> for conducting the polls on time as promised—a task that looked impossible until a few months ago, especially considering how Sri Lanka and Bangladesh suspended their electoral processes for a long time following their own youth uprisings. Balen Shah also took to his social media to commend Karki. He wrote: 'हजुरको नेतृत्वमा आज लोकतन्त्रले जितेको छ । <a href="https://www.facebook.com/hashtag/%E0%A4%86%E0%A4%AE%E0%A4%BE?__eep__=6&amp;__cft__[0]=AZYlGAeGzdXOS93cs8uOYTfW2l5YtXypnOpQOwFwdzWQQ2X_sLcqe_tqk518ULo-ftJnT5sCeT83L5zqMhzL09YgqxYLxDTzkHRSXiEtegetmKjz0ZbMz54cS2KFOKvPtqdHCZn4J6N0i4IvRDSXgHcCdLLd3kQYflb-Popks3zpA3O9Pqd4_Yh9efVCtMUPumJdN0l-y32bQLREPIMYm_mnJDYHbgoUy9iRUGMu1IOGHQ&amp;__tn__=*NK-y-R" target="_blank">#आमा</a>' (Democracy has won under your leadership. #mother). After casting her vote from Kathmandu on Thursday, Karki said: “I have fulfilled my responsibility towards the nation, let us hope the people’s wish for stability and prosperity will be fulfilled by the new elected government.”

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