Nepal will soon hold the third investment summit in the hope of getting more foreign direct investment (FDI) to boost its economy. The government is showcasing a slate of 150 projects, with a focus on hydropower, transportation, tourism, expressways, and agriculture.
Lessons from the Past
The inaugural summit in 2017 garnered significant interest, securing pledges of nearly US$13.51 billion, primarily from China. However, the actual FDI inflow fell short of these initial commitments. The 2019 summit saw a similar pattern, with a gap between promised and realized investments.
Building a More Favorable Investment Climate
This year’s event aims to bridge this gap by not only attracting foreign investors but also domestic investors and non-resident Nepalis (NRNs). The government has enacted a series of reforms to improve the investment environment. These include:
- Amending eleven laws to address project implementation challenges.
- Introducing viability gap funding (VGF), hedging mechanisms, and country rating regulations.
- Opening FDI for travel agencies and ride-sharing services.
- Easing export restrictions for Special Economic Zones (SEZs).
- Simplifying the process for FDI approval and dividend repatriation.
Focus on Public-Private Partnerships (PPPs)
The summit will also promote public-private partnerships (PPPs) as the benchmark for project development. Successful PPP collaborations like the Gautam Buddha International Airport and the Arun III Hydroelectric Project showcase the potential of this approach.
Challenges Remain
Despite these efforts, Nepal faces challenges in attracting and retaining foreign investors. Recent departures of major investors like Axiata and Habib Bank have cast doubt on the country’s commitment to FDI. Additionally, bureaucratic hurdles and land acquisition issues continue to impede project progress.
A Look to the Future
Nepal’s economic prosperity hinges on attracting sustainable FDI. The upcoming summit presents an opportunity to showcase the country’s potential and demonstrate a strong commitment to investor needs. By streamlining regulations, fostering a predictable business environment, and prioritizing sector-specific investment promotion, Nepal can translate its aspirations into tangible results.
Also Read: https://whatthenepal.com/2024/04/24/emir-of-qatars-historic-visit-to-nepal-key-highlights-and-significance/
