‘PIA template draft to be finalised soon’The Investment Board Nepal (IBN) is all set to finalise the draft of the project investment agreement (PIA), a contractual document in which the board will sign with foreign investors once their investment proposal is endorsed by the government.
The Investment Board Nepal (IBN) is all set to finalise the draft of the project investment agreement (PIA), a contractual document in which the board will sign with foreign investors once their investment proposal is endorsed by the government.
The IBN is preparing the template of the document as per the rule which makes it mandatory for the board to sign such pacts with foreign investors.
Currently, the IBN is holding consultation with multiple stakeholders to finalise the document. The draft of the template will be presented in the next board meeting of the IBN. Once approved, it will be used to seal deals with foreign investors.
“Our board meeting will most likely be held this week, which will approve the template of the PIA,” said a highly placed source at the IBN. “Once the board approves it, the IBN will use the document to enter into deal with Hongshi Shivam Cement Private Limited.”
Hongshi Shivam is a Nepal-China joint venture company, which is attracting Rs36 billion in foreign investment to build a cement factory in Nawalparasi. The company is planning to produce 6,000 tonnes of cement per day.
The IBN is planning to sign such agreements to attract foreign direct investment (FDI) by providing numerous facilities to foreign investors. The PIA is a “marketing document” to show Nepal is a FDI-friendly destination, according to the IBN source.
As per the PIA, projects that will be built through foreign investment will receive similar treatment as domestic projects. They will also receive certain financial benefits if they are able to generate significant number of jobs for Nepalis. The PIA will also entitle them to certain benefits if they contract out portions of projects to Nepali contractors.
The PIA will also help developers of projects being built through foreign investment to get approvals from various government authorities and secure work visa for foreign employees hired by the companies.
“Getting approval from multiple government authorities can be a cumbersome task for foreign investors,” said the source. “The PIA will ease this process.” The PIA, according to the IBN, will also help foreign investors to acquire land to build projects.
“Acquisition of both private and public land has become a major challenge for foreign investors, and in many cases difficulties in land acquisition have delayed projects,” said the source. “Upon signing the PIA, the IBN will help investors to acquire land for project development by holding negotiations with private land owners.” The PIA will also provide security to foreign investment against state intervention like nationalisation of projects.