Prime Minister Pushpa Kamal Dahal on Tuesday urged development partners, mainly China, to support Nepal’s aspirations to graduate from the Least Developed Country status by 2026.

“As you all know that Nepal aspires to become a middle-income country by 2030 and graduate from the Least Developed Country status by the end of 2026, we need significant investments for the development of critical infrastructure to meet these targets,” said Dahal.

He was speaking at Nepal-China Investment and Business Forum 2023 in Kathmandu on Tuesday, jointly organised by the Confederation of Nepalese Industries (CNI) and the China Council for the Promotion of International Trade, the largest trade and investment promotion organisation in China.

“We count on the Chinese investments in filling our financial and technological gaps,” said the prime minister.

“We are ready to facilitate the Chinese companies interested in investing in Nepal,” Dahal added. “Profitable areas of investment include hydropower, manufacturing, infrastructure development, tourism, agriculture and mining and minerals.”

China is the largest source of foreign direct investment (FDI) for Nepal and its second-largest trading partner, after India.

Dahal said Nepal has made significant reforms in its investment climate. “We are seriously working on simplifying other procedures and fully operationalising the one-stop service for investors. Necessary rules are being developed for the automatic approval of the FDI.”

Zhang Shaogang, the vice-chairman of the China Council for the Promotion of International Trade, said the Chinese enterprises are the main players in the Nepali projects.

“In the past five years until 2022, China has signed project contracts worth $10.74 billion in Nepal,” said Zhang. “There are many attractive products in Nepal, but their visibility is yet to be enhanced among the Chinese consumers.”

He added. “We should further enhance the areas of investment cooperation as Nepal has a huge demand for infrastructure development and investments in a wide range of areas such as power stations, communication, road construction, clean energy and information technology.”

On the same occasion, the Chinese Ambassador to Nepal, Chen Song, said that the Chinese investments in Nepal have reached Rs216 billion, creating more than 100,000 jobs—directly and indirectly.

“China will continue to help Nepal in the development of infrastructure and human resources,” said Chen. “We encourage Chinese enterprises to invest and do business in Nepal.”

China was the second-largest source of foreign tourists for Nepal before the Covid-19 pandemic.

“I believe China will become the largest source of tourists for Nepal, in the coming days,” Chen added.

However, Nepal’s growing trade deficit with China and the “apparent gaps in China’s committed and actual FDI are some of the issues that a forum like this should try to address with a practical solution,” said Dahal, the prime minister.

Nepal imported goods worth about Rs264.78 billion from China in the fiscal year 2021-2022. Nepal’s exports to China, however, were at a meagre Rs808 million during the same period.