FDI PLEDGES DROP 84% IN 10 MONTHS

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    As a result of unfavorable investment climate in Nepal in Fiscal Year 2015/16 due to earthquake, blockade and unrests, Foreign Direct Investment (FDI) commitments in the first ten months of the current fiscal year have decreased by 84 percent to Rs 10.44 billion, compared to the same period last year.

    In the first 10 months of 2014/15, Nepal had received FDI commitments worth Rs 65.25 billion.

    According to the figures provided by the Department of Industry (DoI), the authorized government body to approve foreign investments up to Rs 10 billion, FDI commitments have dropped in almost all sectors but the manufacturing sector.

    “FDI commitment figures show that foreign investors are in no mood to invest in Nepal this year,” Maheshwar Neupane, director general of DoI, said, adding, “The massive decline in FDI commitments is the result of unfavorable investment climate that the country witnessed this year due to the earthquakes, blockade and prolonged unrest in the Tarai.”

    DoI data show that agro and forestry sectors witnessed a drop in FDI commitments by 70 percent to Rs 177.8 million.

    Similarly, the construction and energy-based sectors saw fall in FDI commitments by 90 percent and 96 percent to Rs 10 million and Rs 1.81 billion respectively. Similarly, the service and tourism sectors also witnessed sharp declines in FDI commitments. While the FDI commitments in the service sector have fallen by 13 percent to Rs 4.38 billion, the commitments in the tourism sector have declined by 70 percent to Rs 1.08 billion.

    Interestingly, FDI commitments in the manufacturing sector have increased by 88 percent in the first ten months of 2015/16 to Rs 2.96 billion, compared to the same period last year.

    The private sector opines that Nepal on the one hand has not been able to brand itself around the world effectively and on the other the country’s investment climate is deteriorating every year.

    “There are investment opportunities in every country and investors prefer to invest in countries where lucrative returns are more likely,” Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry told Republica, adding, “Foreign investors don’t find Nepal attractive.”

    Likewise, Murarka also said that actual investment is much lower every year as compared to FDI commitments.

    DoI data, however, show that there is not much difference in the total number of projects under foreign investment in the first ten months of 2015/16, compared to the corresponding period last year. Nepal recorded 267 projects with foreign investment in the first ten months of last year, against 245 such projects registered during the same period this fiscal year.

    Source : Republica