<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 src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b1e9c7e80680e045958jpeg.jpg" alt="" width="1400" height="930"/><figcaption>GRAZIE: Annamaria Forgione (far left) with her staff when Fire and Ice first opened in 1995 in Thamel, and this week serving the popular Pizza Margherita at her restaurant that will soon mark its 25th anniversary.</figcaption></figure>Ever since her father emigrated from Italy to Venezuela, and later living in London, Annamaria Forgione (pictured below) had always yearned to belong to some place she could really call home. Now, at 68, the founder of Fire and Ice Pizzeria in <a href="https://archive.nepalitimes.com/article/Nepali-Times-Buzz/thamel-tales-review,3661" target="_blank" rel="noopener">Thamel</a> has decided that she belongs more to Nepal than Naples.This week, as the Nepal Investment Summit gets underway, it may be a good time to remember one of the first investors in Nepal’s hospitality sector after the Foreign Investment Act was passed in 1992. Fire and Ice will soon mark 25 years in Kathmandu, and is a model business that has stuck with Nepal through thick and thin.“As an immigrant child, I missed the sense of home, but it gives me great happiness to know that I belong to Nepal,” says Forgione, raising her voice to be heard above the background noise of her busy Kathmandu pizzeria one recent evening.Forgione was working at the Italian Embassy in London when she fell ill and became wheelchair-bound for more than a year. Her British husband, a teacher, started looking for a job so she could have a change of scenery to recover, and fortuitously landed a job at Lincoln School in Kathmandu.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022110811118/636a2b219c7e80680e045959jpeg.jpg" alt="" width="800" height="1161"><figcaption> </figcaption></figure>“It was an act of god that I came to Kathmandu,” says Foregione, smiling. “Otherwise, who knows, Fire and Ice may have opened up in Ulan Bataar.”It was her obsession with cleanliness that made Forgione plan “a clean, simple place with no pretences”, where people in Kathmandu could eat without falling sick. She even put a microscope in the kitchen to show waiters the germs lurking about if they did not wash their hands.Read also: <a href="https://www.nepalitimes.com/here-now/northeast-indian-cuisine-is-a-hot-new-sensation-in-nepal/" target="_blank" rel="noopener">Northeast Indian cuisine is a hot new sensation in Nepal</a>, Sewa BhattaraiThe timing was perfect. The new business-friendly Foreign Investment Act made it easy to register Fire and Ice, and with the boom in trekking tourism, and growth in Kathmandu’s expat community in the mid-90s, the restaurant immediately took off as a place not just to eat, but to meet and greet.One regular was Crown Prince Dipendra, who came for his favourite salami pizza with his friend Devyani Rana a fortnight before the <a href="https://nepalitimes.atavist.com/three-kings-in-four-days-nepal-massacre" target="_blank" rel="noopener">massacre</a> at the nearby royal palace in June 2001. There have been many celebrity visitors since, including Sting, Richard Gere and Bollywood stars.Nepal has now moved on from monarchy to republic, from war to peace, and survived many political upheavals, but Fire and Ice is exactly where it was on Tridevi Marg next to the three temples dedicated to the goddesses, Dakshinkali, Manakamana and Jawalamai. Kathmandu-based expats return to Fire and Ice when they visit Nepal just to relive the time they were here.“Some young men come and hug me and say, ‘Annamaria, remember me?’ They were children when they used to come here 20 years ago, and now they are all bearded and grown-up,” Forgione remembers. “They feel the restaurant is a link to their childhood, it is a constant. We need these anchors to give our lives continuity.”Forgione’s main challenge in the past 25 years has been to ensure quality, so she personally supervises the kitchen, training and sourcing ingredients. The other challenges over the years have been dealing with shutdowns and extortion.Despite conflicts, <a href="http://archive.nepalitimes.com/blogs/thebrief/2015/04/25/massive-earthquake-rattles-nepal/" target="_blank" rel="noopener">earthquakes</a> and the <a href="https://archive.nepalitimes.com/regular-columns/As-It-Happens/blockade-that-benefitted-no-one,660" target="_blank" rel="noopener">Blockade</a>, Annamaria Forgione says she has never been fed up with Nepal, and will never leave. She helps Jay Nepal Action Volunteers work with  earthquake survivors, and is full of admiration of the inner strength of Nepalis.“Nepal gives me such happiness, it has been my life,” she adds, “when I go to the Big Pizzeria in the sky, I want to look down and see that this place is still going strong.”

Kunda Dixit

Napoli Nepali

<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>