FDI dip in first 3 months

Post Report

KATHMANDU, Nov 5 – Along with the shrinking global flow of Foreign Direct Investments (FDI) dragged by the squeezing world economy, the Nepalese economy witnessed a dip in the foreign investment inflow during the first quarter of the current fiscal year.

During the period, the Department of Industry approved 25 new foreign investment proposals as opposed to 30 such proposals approved during the like period last year. The total project cost, total fixed investment and total foreign investment of the proposed projects are Rs 1.77 billion, Rs 501 million, and Rs 717 million respectively. All projects are projected to generate extra employment opportunities for an additional 1,102 labour force.

Of 30 total foreign investment projects approved by the department last year, the total project costs and total fixed investments were Rs 2.69 billion and Rs 2.33 billion respectively. Similarly, the total foreign investment of the projects was Rs 584 million and altogether these projects had created jobs for extra 1,525 people.

Ever since Nepal opted liberal economic policy and opened its doors for the foreign investment with necessary policy level reforms in the 90s with an aim to address the capital scarcity along with relevant technology, altogether 39 countries have invested in 699 projects.

Up to now, the total project cost, fixed investment and foreign investment of the projects of entire 699 project are Rs 76.96 billion, Rs 64.85 billion and Rs 20.14 billion respectively. These investments have contributed to generate extra 85,520 employment opportunities.

Among the countries investing in Nepal in the post-reform period, India continued to maintain first position followed by Japan and the USA. Altogether 244 Indian projects have come to Nepal with Rs 27.95 billion as total project cost, Rs 21.66 billion as fixed investment and Rs 7.20 billion as foreign investment. These projects have, so far, absorbed 34,208 people.

Similarly, Japan, the second largest foreign investor, has invested in 74 projects followed by USA with 72 projects.

Though, there has been some slide in the inflow of FDI, it is still not late to take some stringent measures to curb such decline. One of the crucial sectors in which Nepal is falling behind is the timely policy reform, hindering the goal of making Nepal as one of the attractive destinations of foreign investors. Since India still maintains number one position in the country-wise list to invest in Nepal, the ongoing massive reforms in the policy of foreign investment in India can seriously hit Nepal’s efforts to attract foreign investment, particularly from India.

The Indian budget for the current year, which was admired as "investment friendly", among others, has greatly simplified investment procedures. The budget also has introduced a liberal labour regime allowing the entrepreneurs to hire and fire contract labourers.

The latest Indian step can obstruct aspirant Indian investors coming to Nepal since the Indian government has massively simplified its investment procedures and it also adopted a liberal labour policy. In order to make current pace of FDI attraction, it has become inevitable for Nepal to take similar steps, particularly in the area of labour policy.

Another determining factor of decline in FDI is the existing confusion on the renewal of the Nepal-India Trade Treaty 1996, which provides duty and quota free access for the goods produced in Nepal to the Indian market. Since the domestic market is extremely small with low consumption expenditure of the consumers, most of the foreign investors come to Nepal to penetrate huge Indian market of more than 1 billion consumers. "The existing confusion regarding the renewal of the treaty has slowed domestic as well as foreign investments," says Dr Shankar Sharma, member of the National Planing Commission.

Another area that Nepal should pay a serious attention is to activate the almost protracted defunct one-window policy of Nepal. The basic sprit of the policy to provide all necessary facilities needed for foreign investors have not been practically materialized. Under such circumstances, it is a need of hour for Nepal to induce extra efforts to curb the shrinking FDI.

FNCCI chief meets Korean envoy

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KATHMANDU, Nov 5 – President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Ravi Bhakta Shrestha met Ryoo See-Ya, Ambassador of Republic of Korea to Nepal at the FNCCI secretariat here today.

On the occasion talks were held on the Nepal-Korea bilateral trade, investment, tourism promotion and expanding economic relations, states an FNCCI press release.

Shrestha pointed out the possibility of Korean investment in roads, hydropower, and information technology (IT). He also said that direct flight between Korea and Nepal could attract more Korean tourists to Nepal.

Ambassador Ya urged the FNCCI to support the Catalogue Show being to be organized by Nepal-Korea Chamber of Commerce and Industry in Kathmandu in November.

Siddheshwor Kumar Singh, President of International Relations Committee was also present on the occasion.

Biratnagar to be linked with broad-gauge railway line

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BIRATNAGAR, Nov 5 - After approval of the Indian government for a broad-gauge railway link, Biratnagar - an eastern customs point, will be facilitated soon with the construction of 107 kilometers long broad-gauge railway line linking Katihar of Bihar.

The information was given by an Indian lawmaker Sukadev Paswan, who represents Araria district of Bihar, India, while speaking at an interaction programme organised here today by the Nepalese entrepreneurs of Sunsari and Morang districts.

He also informed that Central Indian Railway Minister Nitish Kumar will inaugurate the project on coming Wednesday.

The broad-gauge line for which the Central Indian Government has allocated over Rs 2 billion, will be completed within 18 months. During the construction of the railway, the existing meter gauge rail link will continue to function without disturbing Nepal-Bangladesh trade, it was also informed.

Meanwhile, local Nepalese entrepreneurs have stressed that since the project is sure to be initiated, Nepalese government should construct Export Promotion Area in Biratnagar as soon as possible.

Price of imported goods either from India or any third country will get reduced due to the slash in the transportation expenses, experts say. Similarly, current rate of loss or damage of the goods will also be reduced since they will be forwarded directly from Calcutta to Biratnagar without loading and unloading in any other in-between stations.

Till date, the broad gauge line is available only from Calcutta up to Katihar. And the transportation, which is frequently disturbed by chakka jam, bandh or strike, is still being carried out through the out dated railways . Experts believe that the new broad gauge will be able to enhance the trade without the fear of strike or other disturbances.

Sanker Lal Agrawal, President of Morang Trade Association says," From the present system of unloading goods at Katihar and then again loading in order to transport to Biratnagar, was quite complex. But the direct railway broad-gauge will remove all those problems." He also expects that the competitiveness of the local industries will also be enhanced since the broad gauge will minimize production cost of industries.

Speaking on the occasion, Paswan also said that Nepal-India Trade Treaty would be renewed without hurting the age old relationships between Nepalese and Indian businessmen. He also highlighted the possibility of extending the Broad gauge line from Biratnagar to B.P. Koirala Institute of Health Sciences, Dharan.

Nepalese entrepreneurs pointed out the problems being faced by Nepalese entrepreneurs and also stressed on enhancing bilateral trade relationships.

Seminar on Int’l Standard

KATHMANDU, Nov 5 (PR) - A five-day international seminar on Enhancement of the International Standardization Activities in Asia Pacific (SEISA-AP) began here today.

The seminar today dwelt upon various aspects of international standardization of Information Technology (IT). Participants of the seminar today made deliberations on global trend of standardization and standardization process.

Being participated in by the IT experts from Nepal, Bangladesh, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Pakistan, Thailand and Japan, the seminar would discuss the issues like technical trends, post standardization, e-document technology and current status of multiple script processing.

Similarly, current status of Japanese standardization activities, experience of Thailand and current experience of IT standardization in Asia would also be discussed during the five-day seminar.

SEISA helps member countries in acquiring international standards for their products which is given by the International Standard organization (ISO). Acquiring the ISO makes the products sellable in any part of the globe, which will ultimately help the member countries grow strong financially.

The seminar is being organized jointly by Ministry of Science and Technology, Nepal, Japanese Standard Association (JSA), Japan, Centre of the International Cooperation for Computerization (CICC), Japan, Computer Association of Nepal (CAN) and Committee for Standardization of Nepali in Computers under the aegis of Ministry of Economy, Trade and Industry (METI), Japan.