The Koshi Province government organised the first Koshi Province Investment Summit in Biratnagar inon May, 2025, to promote the province as a destination for private investment and economic transformation through public–private partnerships. The initiative reflected a growing realisation that, after federalisation, provinces cannot remain confined to administrative functions alone; they must actively assume a developmental role and lead economic growth.

Nepal’s economy is currently under strain. A large share of economic activity depends on imports, while government revenue remains heavily reliant on customs duties. Much of this revenue is then redistributed to subnational levels through grants, reinforcing a consumption-oriented fiscal structure rather than a production-oriented economy. In such a context, subnational governments cannot afford to remain passive recipients of transfers. To make federalism meaningful, provinces must become engines of investment, production, and employment generation. Provinces must shift their focus toward investment, and there is no alternative to partnering with the private sector. Koshi Province’s effort is commendable in this regard. Bagmati Province initiated a similar approach earlier but could not sustain the momentum, and Sudurpashchim Province is also preparing to organise an investment summit.

The Koshi investment summit brought together investors, banks and financial institutions, industrialists, development partners and government agencies. During the summit, 71 projects from diverse sectors—tourism, agriculture, industry, infrastructure, energy, information technology and services—were presented to investors. Memoranda of Understanding (MoUs) were signed for 46 projects during the event, and an additional five were finalised shortly afterwards, bringing the total to 51 projects with an estimated investment commitment of about Rs157 billion. Among the signed projects, agriculture, tourism, industrial production and infrastructure constituted the major share, followed by green energy, IT, waste management and health-related initiatives. The summit also signalled a policy shift: Both federal and provincial governments committed to improving the legal environment and facilitating public-private partnership projects, recognising that public resources alone are insufficient to achieve development targets and that private capital, technology and managerial capacity must be mobilised to accelerate growth and employment.

A review meeting held last week (February 12) assessed the implementation status of the projects. The progress report indicated that some projects had entered construction, others were in the stages of revising Detailed Project Reports (DPRs) and drafting Project Development Agreements (PDAs), while a few had already begun test production. For instance, the organic fertiliser plant in Barahakshetra has started trial production, hydropower and hospital projects have advanced significantly, whereas cold storage, tourism and large infrastructure initiatives remain in feasibility and procedural phases. Several ambitious projects, including cable cars, tourism infrastructure and green hydrogen, are still at early development stages.

The review also revealed structural challenges. Policy inconsistencies, land ownership issues, banking regulations and overlapping federal-provincial jurisdictions have delayed implementation of several projects. Investors continue to face difficulties due to the absence of a fully effective one-stop service mechanism and the need to approach multiple agencies for approvals. Some projects remain stalled because of regulatory barriers and unclear legal provisions, highlighting that the success of investment promotion depends not only on provincial initiative but also on supportive national economic policy and coordinated intergovernmental action.

Despite constraints, the summit has generated confidence among investors and established the private sector as a development partner of the province. It demonstrated the practical potential of the public-private partnership model in sectors such as tourism infrastructure, agro-processing, hydropower, urban services and industrial production. The real test now lies in implementation-ensuring policy stability, legal clarity, effective federal-provincial coordination and continuity beyond electoral cycles. The investment summit, therefore, represents more than a ceremonial event; it is a concrete step toward operationalising federalism through economic governance and could help transform the province into an investment-friendly growth centre contributing to national capital formation and employment generation.

One of the strongest aspects of the program was the active leadership of Koshi’s Chief Minister, Hikmat Kumar Karki. Each investor was allowed to present their concerns and views openly. A dedicated administrative mechanism was assigned to immediately record and respond to the investors’ issues. The mechanism was formed under the coordination of the Principal Secretary with the participation of secretaries from all ministries and relevant stakeholders. Furthermore, Saroj Koirala, Executive Director of the Provincial Investment Authority, was instructed to maintain continuous dialogue with the private sector and resolve the outstanding issues within six months.

A similar effort to promote provincial-level investment had earlier been initiated in Bagmati Province. From the very beginning of my forayfray into provincial government, I believed that while provinces certainly have the responsibility to advocate, negotiate and lobby with the federal government for the implementation of their constitutional powers, they must also move forward by partnering with the private sector in development activities. With this perspective, we organised an investment summit in Chitwan in April 2019 to attract private sector participation in infrastructure, industry, agriculture, tourism and service sectors. The initiative was coordinated through the Provincial Policy and Planning Commission, and as its Vice-Chair, I led the preparatory process, stakeholder consultations and engagement with the private sector, aiming to institutionalise the developmental role of provinces and align investment promotion with the periodic development plan.

However, I did not remain in the province for long. After completing the initial phase, including preparation of the periodic plan, local-level human development indices and the establishment of a project bank, I resigned, and the initiatives lacked continuity. Although the private sector was highly encouraged by the Chitwan Investment Summit, despite being the capital province, it failed to sustain the momentum. Political instability, competition for power, expansion in the number of ministries and frequent changes of chief ministers and ministers weakened policy continuity and investor confidence.

In this context, the recent initiative of Koshi Province is encouraging. It shows that provinces can drive economic transformation by mobilising private investment and coordinating development actors. If sustained beyond electoral cycles, such efforts can help shift Nepal’s economy from dependency toward productivity.

Sustaining investment initiatives depends less on organising events and more on continuity and political ownership. The active leadership of Chief Minister Hikmat Kumar Karki appears to have built investor confidence, reminding us that credible follow-through matters more than conferences themselves. Other provinces should follow suit, not merely by organising summits, but by institutionalising investment promotion, policy stability and intergovernmental coordination so that federalism delivers tangible prosperity at the subnational levels.