FDI pledges up Rs34.9b in first 8 months: SurveyInternational companies have pledged foreign direct investment (FDI) worth Rs34.91 billion in the industrial sector in the first eight months of the fiscal year, which is more than double the amount promised during the whole of 2016-17.
International companies have pledged foreign direct investment (FDI) worth Rs34.91 billion in the industrial sector in the first eight months of the fiscal year, which is more than double the amount promised during the whole of 2016-17.
According to the Economic Survey 2017-18, which the Ministry of Finance unveiled on Sunday, foreign companies pledged to invest Rs15.11 billion in the last fiscal year. The dramatic rise in FDI commitments has been attributed to political stability following the conclusion of the federal, provincial and local elections, luring foreign companies to invest in the country’s manufacturing sector.
The total pledged FDI in the industrial sector had reached Rs247.85 billion as of mid-March 2017-18. Of the total committed amount, China and India account for the largest chunk of 71.6 percent. Chinese companies pledged Rs90.74 billion to set up 1,262 companies. Of the total FDI, the share of the northern neighbour amounts to 36.61 percent.
Likewise, India accounts for more than 35 percent of the total FDI commitments. Indian companies are investing Rs86.80 billion in 713 business firms.
The Department of Industry has registered 4,273 foreign investment companies from 92 countries. South Korea, the British Virgin Islands, Britain, Mauritius, Singapore and the United Arab Emirates were among the major investors in Nepal’s manufacturing sector.
The FDI commitments are for 3,595 small industries, 395 medium industries and 283 large scale industries.
Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said an improvement in the political condition and investment environment could have led to an increase FDI pledges. “Due to this reason, there is a high possibility of the realisation of the pledged amount too,” Golchha said. According to him, foreign investors of late have been attracted to putting money in large projects such as hydropower and cement factories.
Golchha said that the increase in FDI could also help keep the country’s foreign currency reserves intact at a time when the growth rate of remittance inflow has been dropping. “However, there is a need for devising policy to attract more FDI in infrastructure projects in particular,” he added.
Province 3 was the largest recipient of FDI, accounting for more than half of the foreign investment in the industrial sector. FDI pledges in Province 3 totalled Rs137.39 billion. Province 7 received the least amount of FDI commitments worth Rs972 million.
Nepal has signed the Bilateral Investment Promotion and Protection Agreement (Bippa) with six countries including France, Germany, Britain, Mauritius, Finland and India. These countries account for around 40 percent of the FDI pledges in 1,103 firms.