Kathmandu: Chaudhary Group (CG) has signed four Memorandum of understanding (MoU) on different projects in the Nepal Investment Summit 2019. CG has signed the MoU for establishment of solar plant, introduction of 5G networks and energy projects in Nepal.
CG has signed agreement with Saraf group on logistics, 600 MW solar plant with Sky Power, introduction of 5G Network project with TeleCell. Similarly, CG Infrastructure Pvt. Ltd, a sister company of CG, has signed an agreement with government of Province 2 for solar portable-type energy.
KATHMANDU: The Non-Resident Nepali Association (NRNA) will be investing Rs 10 billion for infrastructure development in Nepal.
NRNA inked an agreement with the government during the Nepal Investment Summit that concluded on Saturday.
According to NRNA President Bhawan Bhatta, a fund will be collected from NRNs and investment in different sectors will be made through the fund. As per the agreement reached with the government, NRN will invest in mutual funds, venture capital and investment company among others.
KATHMANDU: The closing day of Nepal Investment Summit 2019 saw signing of 15 different agreements on Saturday. An agreement letter has been signed for the construction of the 216 MW Upper Trishuli hydropower Project at an investment of USD 650 million.
Likewise, Chaudhary Group and Sky Power signed an investment agreement for 600 MW solar project. CG Mobile reached an agreement for operating 5G mobile in Nepal. Similarly, an agreement letter was signed between Chaudhary Group and Province 2 for solar energy projects in the province.
Satluj Jal Vidyut Nigam that had been failing to gather investment for the 900 MW Arun III hydro project has signed investment agreement with Everest Bank, State Bank of India and Nabil Bank.
Likewise, Hydro Solution and Chinese company Yunan Hydro signed an agreement for the construction of 164 MW Kaligandaki III hydropower project and International Finance Corporation (IFC) and Nepal Investment Board (IBN) signed agreement for Special Economic Zone (SEZ) in Samara on a Public Private Partnership model.
Moreover, an agreement was reached for the construction of Himalaya Boutique Resort in Banepa and Non-Resident Nepali Association (NRNA) signed agreement with Department of Industry for investment of Rs 10 billion for infrastructure development in Nepal.
Likewise, United Finance and Muthoot Group reached agreement for investment of Rs 390 million.
Likewise, Kandel Group operated by NRNs in Britain reached an agreement for construction of 18 MW solar project, 19 MW hydro power project and 10 MW wind power project in collaboration with Api Power Company.
KATHMANDU: Foreign delegates participating in the Nepal Investment Summit 2019 have said that Nepal is an appropriate land for investment. They said that Nepal has opened the door for foreign investment to accelerate the pace of development.
Speaking at the Summit, South African Ambassador to Nepal, Sadick Jaffer, said that his country is a believer of open economy system, adding that they do not have any trouble to invest in Nepal.
Similarly, United Arab Emirates (UAE)’s Deputy Secretary of Foreign Trade at Ministry of Finance, Abdullah al Saleh, observed that agreements on investment security and on exemption of double taxation to attract foreign investment were important.
Likewise, Malaysia’s Investment Authority CEO Shiva Surya Murti Sundar Raja shared that they had setup investment board offices in major investing countries at the first phase to extend the trade relations aiming to invite direct investment and it might be fruitful to a Nepal as well.
KATHMANDU: While the nation is observing a two-day Nepal Investment Summit 2019, a survey report finds that foreign investors find visa-related delays and quota system in hiring foreign workers as hurdles discouraging.
Visa procurement for the first time for foreign employees is acute and subsequent visa application procedures are also long and difficult, according to a report by the Institute for Strategic and Socio-economic Research (ISSR)
The report is based on a rapid survey. Titled as ‘A quick diagnostic survey on visa-related issued faced by foreign investors in Nepal’, the survey was supported by ILO and DFID.
Total 22 business firms under foreign investment had participated in the survey. Prior to the survey, ISSR had held a consultation with foreign investors in Nepal, business community leaders, and representatives from government agencies.
All of the firms surveyed responded that they had experienced difficulties in terms of visa processing for their employees. However, it should be noted that firms under Indian investment do not face this problem since Indian nationals do not require a visa to enter Nepal.
According to the report, visa applications are mostly handled by employees’ lawyers (40%), firm’s lawyers (35%) and employees themselves (25%).
However, irrespective of who applies for the visa, the minimum time for obtaining a visa is six weeks whereas the maximum time as stated in the report is 32 weeks. Similarly, visa renewal takes from six to twenty weeks, according to the report.
The firms have identified visa-related delays and quota system in hiring foreign workers as some of the major hurdles in their business expansion.
Almost all the participating firms in the survey complained that the visa application procedure involved many paper works requiring an applicant to put as many as 32 to 38 signatures.
Other hurdles associated with visa procedure include variation in the interpretation of the acts, rules, and regulations across staffs and departments, unclear policies and lack of a timeline in processing an application.
Such complications in procedure and regulation have adversely affected in hiring skilled employees by 100 percent thereby affecting the quality and quantity of productions of the firms, according to the report.
According to the firms, the government could ease their visa related hurdles through shorter visa processing days and by initiating an online visa process system. Similarly, academic qualification should not be a bar in hiring workers, as mentioned in the report.
Likewise, the report suggests that the quota system in hiring foreign workers should be relaxed in order to FDI.
Investment, work permit and visa provisions in some south Asian and ASEAN countries:
Bangladesh
Work permit is mandatory for every foreign national seeking employment in Bangladesh. For private sector industrial enterprise, outside of Export Processing Zone (EPZ), Bangladesh Investment Development Authority (BIDA) issues the work permit whereas for the employment of foreign national in the EPZ, Bangladesh Export Processing Zones Authority (BEPZA) issues the work permit.
Cambodia
The employer should submit a work permit application to the Ministry of Interior (MoI) for review and approval. An application may also be submitted to any police station of a province or municipality and when submitted, the police through the governor forwards application to the MoI for review and approval. Two types of work permit (temporary and permanent) are available in Cambodia. To get a temporary work permit which is valid for up to one year, an application along with passport with valid visa, photographs, health certificate issued by a physician of the immigrant country, written work contract, insurance policy, and payment slip should be submitted. The temporary work permit is made available to skilled workers, staff and management specialists, technical staff; and service providers. The temporary work permit is issued by the MoI.
Vietnam
Foreign employees working in Vietnam shall comply with the labor law of Vietnam, as well as international conventions and treaties, to which Vietnam is a signatory. Foreign workers in Vietnam shall be protected by Vietnamese law.
Investors can employ foreign citizens only in the positions of managers, executive directors, specialists and technical workers, in which Vietnamese workers cannot meet the demands of production and trade. Foreign investors, before employing foreign citizens to work in Vietnam, are required to provide an explanation of their demand to employ foreign workers and obtain a written approval from the competent state authority.
A foreign employee shall have to present his/her work permit when undertaking immigration procedures and when required by a competent state authority.
Lao PDR
According to the Labor law of Lao PDR, employer has to create a staffing plan within a labor unit giving a priority to Lao labor. However, if the demand for labor cannot be supplied by Lao nationals, the employer has the right to request the use of foreign labor. The ratio of acceptance of foreign labor within a labor unit must be fifteen percent of the total number of Lao laborers within a labor unit for technical experts undertaking physical labor; and twenty-five percent of the total number of Lao laborers within a labor unit for technical experts undertaking mental labor.
For large projects and priority projects of the government spanning five years or under, the use of foreign labor is accorded by the contract between the project owner and the government.
Myanmar
Foreign employees of enterprises covered by the Foreign Investment Law must apply to the Ministry of Labor, Immigration, and Population (MOLIP) with a recommendation of the Myanmar Investment Commission (MIC) for work permits and apply to the MIC for local residence permits in Myanmar. Permits for foreign workers working in SEZs are governed under the SEZ Law.
Sri Lanka
Investors and expatriates need to apply for entry visa; which expires after one month of arrival to Immigration Department. Investor and shareholder have to apply for the residence visa which has the validity of one year and is subject to extension. Extension of residence visa for sec. 16 project is of one year while that of sec. 17 project is of two year. The expatriate’s temporary visa is available for 3 months.
KATHMANDU: On the first day of Nepal Investment Summit 2019, Prime Minister KP Sharma Oli and other government officials urged foreign investors to invest in Nepal arguing that an investment-friendly environment is in place.
Inaugurating the summit, PM Oli said that Nepal is a virgin land where immense opportunities are awaiting for investment. Likewise, Finance Minister Yubaraj Khatiwada and other government officials urged for investment saying that necessary laws have been already promulgated.
Beside from the opening ceremony, officials briefed potential investors regarding 77 projects of different sectors showcased at the Summit.
Addressing the Summit, Minister for Energy, Water Resources and Irrigation, Barshaman Pun said the government has put energy in top priority as the sector is the major basis of country’s economic transformation. Addressing a session on ‘ Energy for Economic Prosperity’, Minister Pun said that the government has set a target to produce 15,000 megawatt power within next 10 years and export 5,000 MW.
Potential investors attending the Summit have showed interest for investments in energy, agriculture, physical infrastructure and tourism.
Vice president of the Asian Development Bank Shixin Chen said investments had already been made in energy, drinking water, town infrastructure and education of Nepal, and strategies had been made for more investments. He referred to the Bank’s investment in Melamchi Drinking Water Project, Gautam Buddha International Airport.
U Thaung Tun, Minister for Investment and Foreign Economic Relations of Myanmar, suggested that Nepal should focus on agriculture to boost its economy while referring to progresses it has achieved in poverty alleviation, trade increment and attracting foreign investment.
The Summit is participated by 600 investors from 40 countries. The summit titled ‘A Promising Investment Destination’ has showcased a total of 77 projects in various sectors, worth $31.93 billion.
KATHMANDU: Prime Minister KP Sharma Oli has said that Nepal is a virgin land for investment.
Inaugurating the summit at Soaltee Crowne Plaza in the capital on Friday, Prime Minister Oli said, Nepal is a virgin land where immense opportunities are awaiting your investment to uplift the living standard of 30 million honest and hardworking people.
Addressing the summit, Oli said the environment is stable and remains fully committed to protecting your investment with assured profit.
“There is a conducive environment now following the promulgation of the constitution and the successful conduction of the three tiers of the elections – federal, provincial and local,” Oli said, urging the guests to explore and share the abundant opportunities Nepal can offer.
Stating that Nepal is a second home and a place of your constant interest, and a hub of your business, Oli urged the guests to jointly explore and share the investment opportunities that Nepal can offer.
Tourism, hydropower, infrastructures including roads and agriculture are the sectors potential for investment, said Oli.
Nepal government is hopeful that the summit will bring an investment of over Rs 30 trillion in the country through 77 different projects.
Over 600 international guests from over 40 countries are taking part in the two-day summit.
Read the full text of Prime Minister Oli’s address to the summit below:
The past couple of days have witnessed heated media discussions on the two-day ‘Investment Summit Nepal-2019’ starting from today.
This is the second such summit preceded by the one held in 2017. The first summit had brought about 250 foreign investors securing letters of intent worth Rs. 13.74 billion.
The imminent summit is larger in scale in the sense that it is being participated by 600 investors from 40 countries. The summit titled ‘A Promising Investment Destination’, shall showcase a total of 77 projects in various sectors, worth $31.93 billion.
Criticisms facing the summit
Media is replete with a negative appreciation of the summit. Even before its commencement, the summit has invited a heap of negative comments. Many argue that it shall be a mere perfunctory summit for a number of reasons.
Others argue that the country is ill-prepared to invite Foreign Direct Investment (FDI) due to lack of friendly laws and regulations addressing prospective foreign investors. As such, it is too early to hold an ambitious investment summit.
The crux of all such arguments is that the country utterly lacks enabling investment environment. Security tops the list. Some point out that the violent activities by the ‘Biplav’-led Maoist outfit is ominous to an ideal investment climate in the country as it may gradually escalate to the level of violent Maoist insurgency (1990-2006).
Others argue that the country is ill-prepared to invite Foreign Direct Investment (FDI) due to lack of friendly laws and regulations addressing prospective foreign investors. As such, it is too early to hold an ambitious investment summit.
The inception
However, it should not be forgotten that efforts have been made to attract FDI in the country even before the 1980s, according to a Nepal Rastra Bank (NRB) report.
There were a few instances of foreign investment and technology transfer in the country before 1980. An investment promotion was meeting was organized in 1984.
Likewise, Nepal Investment Forum was held in 1992, according to NRB.
Investment Summit in the first week of March in 2017 had witnessed the commitment of USD 13.74 billion in ten sectors by 26 companies from eight countries.
Silver lining
As aforementioned, this summit is bigger in volume. Besides negative appraisals, the summit has some positive aspects as well. We are yet to see how the government shall resolve the issue of ‘Biplav’ outfit. Barring this, the investment climate seems to be improving in terms of policy and regulatory measures.
The government has made a number of improvement on laws and regulation in a bid to attract foreign investment. Some of them include that technology transfer is not a barrier for all types of industries in Nepal, laws have guaranteed repatriation in foreign currency, private sectors are allowed to develop and operate Special Economic Zones.
Similarly, companies can adopt “no work, no pay” system, and strikes and protests at companies are not allowed.
Regulations require a mandatory accident and health insurances for all employees and that companies are allowed to hire foreign nationals in managerial positions.
Nepal offers a golden opportunity for investors to exploit rich water resources by exporting electricity to India and Bangladesh under the existing regulation. One can dig gold in Nepal by investing in tourism, herb processing or the other number of projects being showcased at the summit.
Likewise, among other number of policy changes, investors are entitled to business and residential visas.
Nepal’s robust economic health can be another attraction for FDI. The country’s GDP growth rate has remained almost 5 percent in the past decade. It has witnessed a per capita growth rate of 8 percent in over a decade.
Similarly, the country has a foreign reserve to finance imports for up to 10 months. Besides, the country has 57 percent of the working age population.
Conclusion
Nepal is still a virgin land in terms of infrastructure development. The country requires a massive infrastructure development works to graduate to the level of a developed country.
Thus, it can be a fertile ground for countries statured with infrastructure development to not only try their technology and tools on the various infrastructure development of Nepal ranging from transportation to energy but also to reap benefits through investment.
Nepal offers a golden opportunity for investors to exploit rich water resources by exporting electricity to India and Bangladesh under the existing regulation. One can dig gold in Nepal by investing in tourism, herb processing or the other number of projects being showcased at the summit.
Yet, to truly realize the goal of this summit, the government needs to work in doing away with the hassles of red-tapism and corruption besides enacting more investment-friendly acts and rules.
KATHMANDU: Prime Minister KP Oli has reiterated the government’s priority on good governance and development.
PM Oli said there is no option to speedy and multi-dimensional development to realize the goal of ‘Prosperous Nepal and Happy Nepalis’.
Inaugurating the 8th International Trade Fair 2019 organized by the Federation of Chambers of Commerce and Industry (FNCCI) in Kathmandu today, the Prime Minister dubbed Nepal as a country with abundant possibilities for development.
He expressed the commitment to give more priority to domestic investment. He, however, emphasized on giving equal priority to foreign investment and technology since domestic resources were not enough for the country’s development.
Prime Minister Oli also assured the private sector that the government was willing to work in tandem with them.
Around 85 domestic stalls, and 90 stalls from China, 40 from Bangladesh, 10 from India, and two from Pakistan are kept in the exhibition that will run until April 1.
These days in Nepal, discussion on the topic of FDI (Foreign Direct Investment) has got momentum from federal capital city Kathmandu to small village and towns, from east to west and north to south, intellectuals to entrepreneurs and industrialists to farmers.
The key issues are lesson learnt, under realization of FDI in comparison of commitment in the previous days, role and importance of investment to achieve the goal of prosperity and happiness, bureaucratic hurdles and lapses in policies to maintain the balance of payment and to reduce the dependence on remittances as well as to downsize the huge size of trade deficit.
The opinions are focussed on the preparation of the Investment Summit as well as the materialization of commitments in projects along with the actual transfer of dollars in the bank accounts in Nepal. In previous years, very less amount was realized out of commitments in summits and talks.
In Nepal, out of the global inflow of the FDI, the share of Nepal is only 0.01 percent. The ratio of annual FDI flow with GDP of Nepal is near to 0.5 percent and the ratio of outstanding FDI-GDP is around 8 percent. Out of the committed amount in the summit two years back, few amounts less than 15 percent only has been realized in dollars.
Globally, people have realized that in the 21st century, the role of FDI is so vital and inevitable to keep the economy vibrant. FDI is an ultimate way to fulfil the funding gap, basically required in industry and infrastructure sector. So, different countries are undertaking their best efforts to attract FDI and are continuing the process of policy as well as procedure reforms.
In this background, the global amount of inflow of FDI has amounted to US$ 1.43 trillion in 2017 with fell by 23 percent in comparison to 2016. However, basic global macro-economic indicators such as GDP and trade have been improved and expanded. This is one the issue of study to find the reason and rationales. Anyway, regarding the declining of FDI in 2017, it is notable that the fell of flows is concerned with developed and transition economies. The flow in developing economies has remained stable. As a result, the share of developing economies accounted for 47 percent of the total FDI. This figure was 36 percent in 2016. Out of the total FDI flow, the share of Asia is around 25 percent and South Asia is at 3 percent.
But, the story of Nepal is different. In Nepal, out of the global inflow of the FDI, the share of Nepal is only 0.01 percent. The ratio of annual FDI flow with GDP of Nepal is near to 0.5 percent and the ratio of outstanding FDI-GDP is around 8 percent. Out of the committed amount in the summit two years back, few amounts less than 15 percent only has been realized in dollars.
In given context to assess the scenario on FDI, it is very important to review major determinants of the realization of FDI. The determinants can be categorized in economic and non-economic factors; political, social, security and financial. Some independent variables like growth rate of per capita GDP, inflation rate, level and quality of information technology, use of digital technology regarding getting approval as well as other transaction with the governments, labour cost per worker in manufacturing industry, degree of openness, risk and corporate top tax rate also influence the flow of FDI.
But much of their functionality could be achieved by better designed, cost-based incentive mechanisms. The SEZs also are continued to proliferate and diversify the industry as well as to broaden the scope of FDI. In addition, investment screening procedures are becoming more common.
Keeping these things in mind over the past 10 years, at least 101 economies across the developed and developing world have adopted formal industrial development strategies to enhance the level of FDI. In the last five years, the actions of the formulation of new strategies related to FDI have been accelerated.
Countries are trying to address the complex issues regarding the industries, their nature and specifics relating to FDI beyond conventional industrial development and structural transformation such as Global Value chain (GVC) integration and upgrading, development of the knowledge economy, build-up of sectors linked to sustainable development goals and competitive positioning for the New or Fourth Industrial Revolution (NIR).
Some countries are on the way of building new industrial revolution based strategies. Many countries are focusing on vertical policies and some are focusing horizontal competitiveness-enhancing policies designed to catch up to the productivity frontier. Besides these, investment policy tools like providing incentives, performance requirements, Special economic zones (SEZs), investment promotion and facilitation as well as screening mechanisms also play a vital role to enhance the quality FDI. Therefore, many countries have given attention to the use of such tools too. Among these, incentive tools are comparatively more familiar. Performance requirement, mostly conditions attached to incentives, are also widely used.
But much of their functionality could be achieved by better designed, cost-based incentive mechanisms. The SEZs also are continued to proliferate and diversify the industry as well as to broaden the scope of FDI. In addition, investment screening procedures are becoming more common.
Thus in many countries, most measures adopted over the past decade are removed or relaxed foreign ownership restrictions, but entry rules or rather procedures have been tightened in some cases through new screening mechanism. In this way, the favorable global investment environment, characterized by open, transparent and non-discriminatory investment policies is being so much effective to attract foreign direct investment.
In the context of Nepal, these reforms keep same importance as per the character of the economy less or more. If Nepal wants to attract a significant volume of FDI as well as domestic direct investment (DDI); since by the nature of the economy and availability of natural resources and need of upgradation as well as the expansion of physical infrastructure and industrial development, the scope and prospectus of FDI and DDI look fine.
Orally, the government is also committed to providing the spaces by policy and implementation points of view. But, the desires of the potential and existing investors are different. They want to have the commitments translated into practice and behavior. Lacking timely decision making and poor coordination as well as the rent-seeking intention of the administrative as well as political bureaucrats is still creating the bottlenecks.
Another vital thing is conflicts and misunderstanding on the way of implementation of federalism that has also created some barriers in the inflow of FDI and action of DDI. Some local governments have imposed the undue tax and non-tax revenues; intentionally or unintentionally. In a few cases, the federal government is also hesitating to fulfill the commitment, basically on the issue of VAT return and providing additional rates on PPA in case of hydro-power projects.
These behavior and hurdles have sprayed confusions in the psychological era of investors. Under this cloudy environment, the government must be serious to erase these confusions and dotted hazards, in a parallel way with further policy and procedure reform as well as the application of new tools and motivating schemes.
Otherwise, investors do not wait for a long time in the hope of having a positive environment. I remember, my grandmother, in my childhood, always would have reminding me and was used to encourage to continue study and go outside, not to stay in the native village and to search opportunities and a good career. Many times she said to me, a tiger never stays in one place without genuine reason.
The same theory is applicable in case of investors too. Without genuine reasons they do not wait for a long time in one country and projects; they always keep themselves with back up new opportunities. So to attract the FDI in due time of committed by the potential investors, the government should work strategically and wisely.