FDI approvals surge to a record level

Post Report

KATHMANDU, July 21 - Despite shrinking global Foreign Direct Investment (FDI) flow and worsening law and order situation of the country, Nepal has cleared highest numbers of FDI proposals in the last fiscal year.

During the period, the Department of Industry approved 93 new foreign investment proposals as opposed to just 68 such approvals granted during the like period last year and the number is the highest in the post democracy era.

The total project cost, total fixed investment and total foreign investment of the proposed projects are Rs 7.08 billion, Rs 5.56 billion and Rs 2.58 billion respectively. All those approved projects would generate extra employment opportunities for an additional 6,753 people once they come into operation.

Of 68 total foreign investment projects approved by the department last year, the total projects cost and total fixed investment were Rs 2.57 billion and Rs 1.86 billion respectively. Similarly, the total foreign investment of the projects was 1.39 billion and altogether these projects had created jobs for 4,659 people.

Ever since Nepal opted liberal economic policy and started welcoming FDI, with adequate policy level reforms during 90s with an aim to minimize the scarcity of capital and relevant technology, altogether 39 countries have invested in 686 projects.

Up to the end of last fiscal year, the total project cost, fixed investment and foreign investment of the projects of entire 686 project are Rs 74.2 billion, Rs 63.5 billion and Rs 18.6 billion respectively. These investments have contributed to absorb 84,956 extra manpower.

Of the countries investing in Nepal until last fiscal year, India continued to remain as a dominant foreign investor followed by China and the United Kingdom. Altogether 37 Indian investments got final approval with Rs 2.9 billion as total project cost, Rs 2.04 billion as fixed investment and Rs 1.2 billion as foreign investment. These Indian projects are expected to create employment opportunities for 2,504 people.

Similarly, China, whose FDI in Nepal has increased impressively in recent years to secure second position by pushing down Japan to the third position, has received approval for 15 projects. The main cause of such surge is the Indo-Nepal Trade Treaty 1996 under which goods manufactured in Nepal can enjoy duty free access into the Indian market, which is the second largest consumer goods market in Asia after China itself. "Most of the Chinese investors have come to Nepal with the aim to penetrate the huge Indian market," an official of the department said.

Similarly United Kingdom and Japan shared the third position with the approval of 7 projects from each country during the last fiscal year.

Of the total foreign investment projects that received necessary government permission last year, 3 projects have started their operation. Similarly, 88 FDI projects have received necessary approval while two projects have obtained license.

Manufacturing sector continued to be the dominant attraction for the aspirant foreign investors. Altogether 49 projects proposals related with manufacturing sector were approved last year. With 29 approvals, textile and readymade garment topped the manufacturing sector followed by chemical industries with seven approvals.

Despite the shrinking inflow of tourists, in recent months, 19 FDI projects related with hotels and resorts received approval while the number of service related industries bagging the FDI permission was 15.

Nepse Index tumbles by 17 points

Post Report

KATHMANDU, July 21 - The double-digit plunge in Nepse index by over 17 points has thrown cold water over the delight that was brought by impressive soar of over 25 points among the speculative investors of Nepalese money market last week.

According to the stock information released by Nepal Stock Exchange (Nepse), on the opening day of transaction on Monday, the index stood at 352.25, which on the last day of closing on Friday tumbled to 334.64 loosing 17.61 points within this week. The index last week had surged 25.49 points to touch 348.43 points while the same in the previous week such index had slumped by 7 points.

In the sector-wise breakdown on the Nepse floor this week, the index of commercial bank, which commands lion’s share in the market dived to 23.24 points to settle at 358.84 points from 384.08 points. The index of commercial bank last week had recorded a remarkable surge of over 21 points to touch 379.38 while the index during the previous week had fallen by over 10 points.

Similarly, the index of manufacturing and processing sector, during this week, went down from 349.31 points to 339.88 points while it had soared by over 30 points in the last week. The index of finance group this week marginally declined from 325.9 points to 324.55 points against the rise of over 3 points recorded during last week. In the like manner, the index of hotel group also declined to remain at 283.30 points from 291.34 points. However, the indices of trading group and other group remained unchanged at 155.55 points and 192.90 points respectively through out the week.

Similarly, in the share participation, commercial banks continued to play dominant role with the lion’s share of 65.02 per cent of the total share transactions recorded this week. Finance group maintained its second position with the participation of 18.38 per cent followed by manufacturing and processing group that captured 15.24 per cent. The remaining groups- insurance sector and hotel sector maintained 1.35 per cent and 0.01 per cent respectively. No transactions were recorded for the groups of trading and other.

In this week, the share market recorded a total turnover of Rs 27.9 million in 746 share transaction with the trading of 44,192 units of share whereas 163,289 units of shares valued at Rs 55.5 million were transacted in 4,507 number of transactions.

During this week, Nepal Merchant Banking and Finance Company topped the list in terms of number of transactions with 318 share transactions. While in terms of volume of total transaction and shares units, Bank of Kathmandu recorded the highest with a turnover of Rs 15.91 million and 19,633 shares units.

Companies whose shares were traded for all five days include three companies; Bank of Kathmandu (Rs 850 - 815), NIC Bank (Rs 409 - 386) and Nepal Merchant Banking and Finance Company (Rs 233 - 251).

Similarly, the companies whose shares were traded for four days are Nepal Arab Bank Limited (Rs1500 - 1470), Nepal SBI Bank (Rs1500 - 1430), Siddhartha Finance Company (Rs 147 - 145) and Lumbini Finance and Leasing Company (Rs202- 205).

Likewise, the companies whose shares were transacted only for one day include Nepal Lever Limited, Nepal Insurance Company, United Finance Company, Nepal Film Development Company, Annapurna Finance Company, HISEF Finance Company, Lalitpur Finance Limited, Western Finance Limited and Pokhara Finance Limited.