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Investment Opportunity in Nepal

Investment Opportunity in Nepal . Prof. Sri Ram Poudyal , Ph.D . Chairman, Institute of Policy Research Government of Nepal Board Director, Nepal Rastra Bank. Introduction about Nepal. Current Economic Status (2013). Status of FDI in world. Nepal ranking in world.

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Investment Opportunity in Nepal

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  1. Investment Opportunity in Nepal Prof. Sri Ram Poudyal, Ph.D. Chairman, Institute of Policy Research Government of Nepal Board Director, Nepal Rastra Bank

  2. Introduction about Nepal

  3. Current Economic Status (2013)

  4. Status of FDI in world

  5. Nepal ranking in world • In terms of the FDI potential index, Nepal ranks the lowest in the region, i.e., 175 out of 182 countries ranked globally.

  6. FDI inflow in Nepal by major country (From beginning to till 29 Jan 2014)

  7. Trend of FDI in Nepal

  8. Sectoral Composition & scale of FDI S : < NRS 30 million M : NRS 30 >= 100 million L: 100 million and over

  9. Project cost covered by FDI by sector

  10. FDI from Belgium

  11. Trend of FDI from Belgium

  12. FDI from Belgium by Sector & scale

  13. FDI from Netherlands

  14. Trend of FDI from Netherlands

  15. FDI from Netherlands by Sector & scale

  16. Nepal's advantage for FDI • Resources Availability • Water resources • Hydro power potential = 83,000 MW • Economic potential = 50% • Current Generation = 650 MW • Domestic Requirement = 900 MW • Biological Resources • Herbs • Labour Resources • Millions of youth in foreign labour market every year • Market Availability • Nepal population 26.5 million • China's Population 1.63 billion (Tibaten region population 3.03 million) • India's Population 1.24 billion • Efficiency Increasing Factors • Cheap labour. Scope for increasing labour efficiency • Quit efficient communication system • Large number of management graduate, engineers, Chartered accountants

  17. Possibilities of utilizing trade - investment nexus • Nepal-India Trade Treaty last renewed in 2009 provides zero tariff access to almost all products manufactured in Nepal expect some in negative list- Alcohol, Tobacco, Perfumes • China provides zero tariff access to 7787 Nepali Products. Export possibility of food grains, sugar, vegetables, fruits • Duty free and quota free access in most OECD countries except US and Japan • Global Enabling Trade Report states Nepal as having the third best indicator on margin of preference in destination markets amongst 132 countries

  18. Table 2: Availability and quality of transport infrastructure in South Asia

  19. Investment Board Nepal • Established in 2011 • High level board chaired by Prime Minister • Promote economic development by creating an investment-friendly environment by means of mobilizing and managing public-private partnership, cooperative and domestic and foreign private investments in infrastructure and other sectors. • Function as a central agency for investment promotion and facilitation • Provide one window service for registration, licensing, visa issues.

  20. The priority areas/projects of investment byInvestment Board of Nepal 1. Hydropower projects above 500MW. 2. Roads and transportation infrastructure – key focus projects will include a Kathmandu-Terai fast track road project, mid-hill highway, and north-south corridor connecting India and China. 3. Airports – Construction of a second international airport and overhaul of the existing Tribhuvan International Airport (TIA), upgrading of regional airports - key to commerce and tourism development. 4. Agribusiness and Medicinal herb processing facilities. 5. Solid Waste Management & Treatment, Chemical Fertilizer Industries, and Petroleum Refineries.

  21. The priority areas/projects of investment byInvestment Board of Nepal (Cont.....) 6. Banks and Financial Institutions – establishment of an infrastructure financing institution, BFI with more than 51% foreign ownership, Insurance and re-Insurance companies. 7. Medical colleges, Hospitals and Nursing Homes with three hundred beds or more. 8. Special Economic Zones - They can be catalytic in attracting investors, bringing new technologies and jobs in the short to medium term, while providing a useful framework as a pilot and testing ground for broader economic reforms in the country. 9. Any “Infrastructure or Service Industry” (means any industry in construction, mining, tourism and aviation) that has a paid up capital or project cost exceeding Rs. 10 billion.

  22. Acts and regulations on entry & operation of FDI • Foreign Investment and Technology Transfer Act (FITTA) 1992 • Industrial Enterprises Act (IEA) 1992. • Department of Industries (DOI) is the sole agency for administration and implementation of Foreign Investment & Technology Transfer Act in Nepal.

  23. forms of FDI • Share Investment in Existing Industries • Establishment of New Industries • Technology Transfer (Trade Mark) Threshold for FDI: US$ 50 thousand

  24. Areas Restricted for FDI Foreign investors are permitted to own up to 100 percent equity share in industries except in the following areas. • Cottage Industries (Except industries using electricity more than 5 kW) • Personal Service businesses (Business such as hair cutting, beauty parlour, tailoring, driving training, etc.) • Arms and Ammunition Industries • Gunpowder and Explosives • Industries related to Radio-Active Materials • Real Estate Business (excluding construction industries) • Film Industries (National Languages and other recognized languages of Nation) • Security Printing • Bank notes and Coins

  25. Areas Restricted for FDI (Cont.....) • Retail Business (excluding international chain retail business with its business in at least two countries) • Bidi (excluding more than 90% exportable) • Internal Courier Service • Atomic Energy • Poultry • Fisheries • Bee Keeping • Consultancy Services such as Management, Accounting, Engineering, Legal Services (Maximum 51% foreign investment is allowed) • Beauty Parlour • Processing of Food Grains on Rent • Local Catering Services • Rural Tourism

  26. Start Fixed Capital > NRs. 10 bln. Application at DOI No Yes Fixed Capital > NRs. 2 bln. Approved by Industrial Promotion Board Application at IB Company Registration Yes No Industry Registration/Tax Registration Approved by Director General of DOI Issuance of FDI Approval Letter Commissioning of Industry Streamlined FDI Approval Process Department of Industry, October 2013

  27. Visa Arrangements • Non-tourist Visa for Carrying out the Feasibility Study • Non-tourist visa for Expatriates (Expatriate personnel working in the industries will be granted a non-tourist visa for duration of one year at a time on recommendation of DOI and Department of Labour.) • Business Visa (Foreign investors or his/her authorized representative and their dependents will be granted a business visa for up to a period of five years at a time on recommendation of DOI. Documents required at DOI) 5 years visa • Investment > 200,000 through banking channel • Income Tax Average NRs 200,000 years/per year • Employment > 50 persons • Export > NRs 2 billion

  28. Visa Arrangements (Cont...) • Residential Visa: Foreign investor making an investment equivalent to more than 100,000 US$, at one time will be granted a residential visa on recommendation of DOI.

  29. Thank you.

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