Draft policy proposes minimum foreign investment thresholds

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    FDIKATHMANDU: The government is mulling over creating minimum thresholds on foreign investment in five priority sectors to ensure sizeable funds that can make positive contribution to the country’s development process enter the country. 

    The Ministry of Industry (MoI) has identified hydropower, physical infrastructure, agro and herbs processing, tourism, and minerals and manufacturing industries as five priority areas for foreign investment.

    “Minimum foreign investment thresholds in these sectors may vary. But foreign investment of less than $200,000 will not be accepted in any sector,” says the draft of the Foreign Investment Policy 2014 prepared by MoI, which will soon replace the Foreign Investment and One-window Policy 1992. 

    The draft policy has proposed preventing foreign investors from funding hydropower projects that generate less than 30 megawatts of electricity. 

    But no floor has been set for investment in construction of the transmission lines. 

    “Foreign investors will be allowed to fund transmission line projects based on a benchmark created by the government,” says the draft policy.

    However, for investment in transport and other infrastructure, a minimum threshold of Nepali rupees equivalent to $10 million has been fixed.

    MoI has also proposed a minimum threshold of Nepali currency equivalent to $2 million for investment in agro, herbs processing, export-based and mining industries, and industries that help in substitution of imports. This threshold, however, will not apply to industries where technology and management skill transfer take place.

    In the case of tourism industry, the draft policy has proposed barring foreign investors from investing in hotels in Kathmandu Valley that are classified as less than four stars. But this provision will not apply to other areas of tourism, says the draft policy. 

    Similarly, no minimum threshold, except for the basic minimum of $200,000, has been fixed for investment in IT sector, higher education institutions, particularly those working in the areas of health and technical and vocational education, and organisations that churn out technical human resources, adds the draft policy, which proposes allowing foreign investors to acquire stakes in various companies based on commitment expressed by Nepal to the World Trade Organisation.

    The draft policy has also proposed mobilising the Department of Industry (DoI) to settle any dispute that arises in industries with foreign investment. 

    The government would refer to the United Nations Commission on International Trade Law if the DoI fails to settle the dispute, says the draft policy. 

    “In case the security of promoters or employees of industries that have attracted foreign investment is at risk, the Industrial Armed Force would be mobilised immediately. And to provide round-the-clock security, police beats would also be set up at industries that have employed over 500 Nepalis.”

    The draft policy has also proposed setting up a one-stop service centre to help foreign investors acquire land, get foreign exchange facility, conduct environment impact assessment, import various goods and equipment, and secure visas for themselves and foreign employees.

    Source : The Himalayan Times