Investment Summit is a popular way to reach out tremendous Foreign Direct Investment (FDI) resources of the world. In the summit, international and national potential investors are gathered. The government presents its promising priority projects based on themes to interact and to generate curiosity, interest, and promise of the investors for the proposed projects.

It depends on how much the government is smart to win the investor’s confidence through investment-friendly fiscal and monetary schemes and security. In 2017, the government of Nepal initiated the investment summit after a gap of 20 years. The Investment Summit 2019 has an objective to make Nepal a promising investment destination with the expectation of 30 billion USD funneled in five key sectors: agriculture, energy, infrastructure, tourism, construction, and aviation.

There are queries on the preparation of Nepal Investment Summit 2019 and on the success of the summit itself. However, the government insists FDI is a cure to problems like the declining share of agriculture and industry to the GDP, poor infrastructure, sluggish export trade, and unexploited natural resources.

Approximately 50 projects are to be showcased including that of private sectors. Like as the Investment Summit 2017, the government expects the participation of more than 50 companies. For this, the government has amended laws on a fast track without much deliberation in the parliament, tried to repair physical infrastructures, and has initiated security assurance by imposing a ban on the activities of the ‘Biplav’-led Maoist outfit. There are queries on the preparation of Nepal Investment Summit 2019 and on the success of the summit itself.

Macro-Economic Indicators

The government of Nepal has a catchy slogan of ‘Happy Nepali, Prosperity Nepal’ in its budget in the current fiscal year. However, macro indicators including non-spending capital budget and rocketing imports led to a wide negative balance of payment, high unemployment rate and decreasing foreign currency reserve.

The growing general acceptance of corruption at the government level pushed the country into the 3rd rank on the corruption perspective index. Therefore, the perspective of FDI inflow is not positive. It is further complicated by the falling HDI and tax barriers reflected in the doing business index.

However, the government insists FDI is a cure to problems like the declining share of agriculture and industry to the GDP, poor infrastructure, sluggish export trade, and unexploited natural resources. The government says FDI, by solving these problems, shall ensure higher employment and economic growth. As such, this summit appears ambitious.

Laws Amendment Preparation

The government recently amended four acts out of which the Foreign Direct Investment and Technological Transfer Act 2019, is the most important one. The act is very important to create an investment-friendly environment and in boosting investor’s confidence. It was not enacted through parliamentary discussion. Thus, there is a higher possibility of flaws, errors, and mistakes in it. Its effectiveness, relevancy, and efficiency can surface as a big issue and could prove costly to the investors.

National Consensus

Whatever be its motive, the government ignored the need for national consensus in holding the summit by not the opposition on board. Nobody knows about the next government and its policy. Therefore, there is a big possibility of risk and cost of inconsistency and repatriation provisions to the investors in the long run. Therefore, the investor’s confidence in risk and marginal cost per unit production and service is challenged. Similarly, the conversion rate from the commitment to FDI to the reality may be lower than our expectation.

Investment Climate

At the given state of things, the government needs to amend more than 20 laws and regulations as part of creating an investment-friendly environment to woo investors. In fact, two laws and regulations related to FDI and technological transfer are in place. Creating investment climate is difficult in lack of other laws.

Maybe our preparation was insufficient or maybe the investors had no sufficient reasons to invest in Nepal or maybe the post follow up seriously lacked.

Insecurity Issue

The government ban on the ‘Biplav’-led Maoist faction has once again created a sense of insecurity among the industrial communities. There is a fear that the Biplav faction may once more invite insurgency similar to the decade-long Maoist war between the government and the security forces. This is driven by the bombing activities of the Biplav group targeting Ncell.

A lesson from the 2017 Summit

In this context, the last summit in 2017 may be an open book to learn lessons for this summit.

In 2017, the Investment Summit’s priority sectors were agriculture, energy, ICT, tourism, education, health, mine and minerals, and transportation. About 26 companies, out of 48 companies committed to investing 13.74 billion USD in 10 sectors. China (8450 mil USD) was first followed by Bangladesh (2400 mil USD), United Kingdom (1000 mil USD), Japan (1000 mil USD), Sri Lanka (500 mil USD) and India (360 mil USD).  There were six sectors: (1) Infrastructure (13), Energy (13), Manufacturing (6), Agriculture (5), Health (5) and Banking and Financial (2). Around 250 foreign investors had participated in the summit.

The summit appeared as a successful national event since the investors had committed 13.74 billion USD, which, however, did not materialize. The achievement remained as a mere media hype.

Maybe our preparation was insufficient or maybe the investors had no sufficient reasons to invest in Nepal or maybe the post follow up seriously lacked.

Options on the eve of the summit

Let us hope this summit, despite whatever the government’s preparation and initiation, will be successful with a higher rate of FDI commitment transpiring into reality. For this to happen, the government should immediately to work in fixing the regulatory measures and in creating an investment-friendly environment so that the investors can execute their plan into reality in the Nepalese soil.

The government should seriously work on one window policy, zero corruption, enforcement of law and order, and in guaranteeing the repatriation, among others.

But before that what matters most is how the government presents itself and performs in the summit. Managing logistics, hospitality and information dissemination during the summit are also of crucial concern.