Investment pledges made by foreign investors during the lockdown period of four months have plunged by 24 percent as compared to the same period in the last fiscal year.

According to the Department of Industry, Nepal received investment commitments worth Rs8.22 billion during the lockdown period (from March 24 to July 12) that envisaged generating employment for 2,068 people. In the same period last fiscal year, the commitment was Rs10.94 billion.

Jiwan Prakash Sitaula, director general at the department, said that with lockdown measures easing, proposals for foreign direct investment have started coming and many of them are in the approval phase at the department.

“Based on the number of foreign investment proposals that the department has been receiving in the past few days, we expect it will increase further,” he said. The proposals that were on hold are also expected to start coming, he said.

Amid global uncertainties for investment triggered by the Covid-19, Nepal needs to take some measures like providing effective one-stop service and introduce regulation to the Foreign Investment and Technology Transfer Act as soon as possible, said Sitaula.

Some investors have also been requesting the government to remove the threshold of foreign investment, which currently is Rs50 million, he added.

Out of 46 total foreign direct investment proposals received until mid-July this fiscal year, 37 proposals with investment commitments of Rs6.77 billion came from China alone.

In the last fiscal year, out of 78 total foreign direct investment proposals, 48 proposals with investment pledges of Rs8.38 billion came from China.

Sitaula said the increase in the number of foreign direct investment proposals from China is possibly due to Nepal’s investment policy and the Belt and Road Initiative. Chinese investment is mainly in the tourism and service sector.

The tourism sector received an investment pledge of Rs1.84 billion during the lockdown period that aims to generate employment for 363 people this fiscal year, against Rs5.2 billion pledges in the last fiscal year.

All 12 investments in the tourism sector have been proposed from China, which is mostly based in Kathmandu.

Investment pledges in the service sector amounted to Rs4.15 billion during the lockdown period against Rs4.33 billion in the same period last fiscal year.

According to the Economic Survey, foreign direct investment has increased by 165.38 percent till mid-March of the current fiscal year compared to the same period last fiscal year due to improvements in existing policy and law and simplification of the process.

The country received a foreign investment commitment of Rs29.67 billion till mid-March of current fiscal year against Rs11.18 billion during the same period last fiscal year.

Though the report expected an increase in foreign investment commitment after improving the investment environment in the country, the global outbreak of Covid-19 has impacted investment commitment in recent months, said Sitaula.

Foreign investment worth Rs100.55 billion has been approved by the Investment Board till mid-March. Of the total registered foreign investment industry, 83 percent are in the small scale industry, 11 percent medium and 6 percent large.

Sitaula said that the global pandemic would not decrease the investment commitment in the current fiscal year as expected.