Foreign investment of Rs 39.19 billion approved in 475 industries in 6 months of current fiscal year, employment offered to 20,122 people
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Foreign Direct Investment (FDI) commitments have increased by 52 percent in the first six months of the current fiscal year. Compared to the first six months of the previous fiscal year, FDI commitments have increased in the current fiscal year.
According to the Department of Industry, investment commitments of Rs 39.19 billion 61 million have been received in the first six months of the current fiscal year. Investment commitments of Rs 25.77 billion 64 million were received in the same period of the previous fiscal year.
The department has data that foreign investment has been approved in 475 industries in the first six months of the current fiscal year. Investment has been approved in 161 industries through the 'unauthorized route' and 314 industries through the automatic route. A total of 20,122 people have been offered employment, the department said. Investment of Rs 25.77 billion was approved in 314 industries during the same period of the previous fiscal year. It has been proposed to provide employment to 10,244 people.
Large industries account for a large share of the total commitment. Investment worth Rs 23.14 billion has been received in large industries through seven industries. Small industries have received commitments of Rs 13.72 billion through 460 projects, while medium industries have received commitments of Rs 2.39 billion through eight projects.
The highest investment commitment was received in the month of Shrawan of the current fiscal year, while the lowest was received in Poush. According to the department, investment commitments of Rs 24.1 billion were received in Shrawan. In Bhadra, investment commitments of Rs 8.98 billion were received, followed by Asoj, Rs 2.4 billion, Kartik, Rs 1.54 billion, and Mangsir. According to the department, the lowest investment commitment was Rs 599.5 million in Poush.
Nepal Rastra Bank data shows that despite the increase in foreign investment commitments, the amount inflow is low. Stakeholders say that there is no policy framework that all foreign investment commitments come or should come in the same period. According to Nepal Rastra Bank data, foreign direct investment (equity) of Rs 7.5 billion was received in the five months of the current fiscal year.
Which is more than the last fiscal year. While Rs 6.3 billion was received in the five months of the last fiscal year. Gunakar Bhatta, former executive director of Nepal Rastra Bank, said that while the world itself is becoming a protectionist economy after the financial crisis, FDI inflows have been decreasing comparatively after the Corona pandemic.
‘After the global financial crisis of 2008, the flow of FDI around the world is not what it used to be. The decline in FDI flow after the Corona pandemic is a global trend,’ he said, ‘but Nepal does not get this exemption. In the last 30 years, FDI has been only 0.28 percent compared to the gross domestic product (GDP). That in itself is low FDI.’
Saying that although the source of foreign exchange reserves was once foreign debt, remittances are now happening, he said that FDI has not been able to enter. He said that even in the years when a lot of FDI entered, it was about 19 billion every year for about 2 years before the Corona pandemic.
He said that despite the global trend, the issue of investment security, investment-friendly environment and policy stability are the issues behind the lack of FDI entry. In Nepal’s case, it is also possible that the system will change in ten years. That is also the issue of interest of national and international investors,’ he said, ‘Stable policy and government are both issues. FDI has not come in even though it has not been shown that both the government and the policy are stable.'
He says that since the market is small, investors also look at trade relations with neighboring countries, and the lack of cordial relations with neighboring countries may also be the reason why investment has not come in. 'The market destination of investors coming to Nepal is India. Nepal is not 100 percent. That is why trade relations with India are also looked at,' he said. Investors may also be looking for more cordial trade relations between Nepal and India. Bhatta says that stability may also be sought in the behavior of the bureaucracy and political party leadership.
According to the National Bank, the highest amount of foreign investment was 4.98 billion 100 million rupees in Mangsir. The lowest amount of investment was 467.4 million rupees in Asoj. According to the National Bank, 691.5 million rupees were inflowed in Shrawan, 581.9 million rupees in Bhadra, and 751.2 million rupees in Kartik. Stakeholders also say that when the government approves foreign investment, investors are allowed to bring in investment in phases (in installments).
Government officials say that the commitment and approved amount will not be deposited all at once. Birendra Raj Pandey, President of the Confederation of Nepalese Industries, said that arrangements should be made to enable investors interested in bringing in foreign investment to quickly bring in investment and that a single point service should be made effective. He also said that the law and process for reinvesting undistributed profits should be simplified to encourage investment.
