19 August, Kathmandu. It has been found that only 29 percent of foreign direct investment (FDI) approvals are received. The study showed that only 29.6 percent of the FDI sanctioned by the Department of Industries in the last 25 years was received.
A study by Nepal Rastra Bank has shown that the net foreign direct investment in the financial year 2081/82 was 7.5 billion. During that period, FDI of 12 billion came, but 4.7 billion investment was returned, according to the study. Foreign investors have taken about 40 billion rupees as dividends in that financial year.
The foreign direct investment survey report of the Central Bank has shown that the total FDI size has reached 3.40 billion with net FDI of 7.5 billion in 2081/82.
According to the survey, the annual growth rate of FDI during the financial year 2081/82 was 2.1 percent. The study concluded that this increase was mainly contributed by: additional equity investment and reinvestment of profits.
In the previous year, the main part of Nepal's foreign investment balance was paid-in capital. It is mentioned in the study report that the share of reinvested profit in the total balance is more than one third.
This study claims that foreign investors are confident about their investment and are continuing to expand investment. The study pointed out that the rest of the foreign investment consists of inter-company loans. According to the study, inter-company loans are mainly used in investment projects that require large capital.
The share of the industrial sector is the largest in both the total foreign investment inflow and balance. Especially the manufacturing and electricity and energy sectors are the beneficiaries of foreign investment.
In the service sector, financial and insurance activities are in the forefront as the main recipients of foreign investment. The study shows that foreign investment is still concentrated in limited areas. The study suggested diversifying investment in other sectors to increase the resilience of investment and widen its economic impact.
In the financial year 2081/82, India remained the largest source of foreign investment in Nepal, followed by China, Ireland, Australia and Singapore. Asian economies continue to predominate in Nepal's foreign investment scenario.
In the previous year, Bagmati Province has seen a lot of foreign investment. Investment seems to be concentrated in major urban and industrial centers. This study has highlighted the need to promote investment in other sectors through improvement of infrastructure, expansion of communication network and strengthening of investment facilitation.
The study has pointed out that although the manufacturing industries with foreign investment are operating at medium capacity, they have earned good profits in the previous year. According to the study, FDI is playing an important role in hydropower and manufacturing sectors.
It is claimed in the study report that Nepal is continuously liberalizing and revising its investment policies and procedures, creating a favorable environment for attracting foreign investment by promoting ease of doing business and online/digital services.
The study claims that these reforms have increased confidence among investors. The survey pointed to lack of infrastructure, regulatory and procedural delays and land acquisition difficulties as the main obstacles to high foreign investment inflows.
