FDI pledges up 250 percent in first 10 months this FY

KATHMANDU, JUN 02

Foreign Direct Investment (FDI) commitment in the first 10 months of current fiscal year has surged significantly although there is deep apprehension about whether the commitment would translate into actual investment.

Department of Industry (DoI) statistics show the FDI pledge surged by around 250 percent over the period. The country saw commitments of Rs65.09 billion as of mid-May 2015 from 256 companies.

In the same period last year, the figure stood at Rs18.61 billion.

However, the earthquake had a significant impact on investment commitment. From the period between April 24 and May 25, 13 industries pledged Rs175 million.

In the same period last year, 38 industries had pledged Rs688 million.

The quake and subsequent aftershocks prevented investors from visiting the DoI to file investment pledges. DoI officials, however, are hopeful the investors would show up in the days to come as life returns to normal.

DoI Spokesperson Rudra Bahadur Malla said though the earthquake might have immediate impact on FDI pledge, only time can tell what the long-term trend would be. “We will have to send a message that Nepal is safe for investment and that the earthquake has not hit the areas where most of the industries are operating,” Malla said, adding the role of tourists, media and the government will be crucial.

The significant surge in investment pledges in the first 10 months can be attributed to the commitments coming to energy-based industries. Four energy based industries—KSK Energy Ventures Limited (India), Byucksan Engineering (SOUTH KOREA), Shiva Ganga Hydropower (INDIA) and Sinohydro Holdings (HONG KONG)—have pledged Rs 53.99 billion. This is almost 83 percent of the total commitments.

These four companies have pledged developing hydropower projects which would generate a combined 644MW power.

In the same period of corresponding year, investment pledge from energy-based industries stood at just Rs 1.44 billion.

After energy, the service sector attracted Rs5 billion pledges, followed by tourism (Rs 3.69 billion) and manufacturing (Rs 1.55 billion).

FDI Commitments

Sector                    Amount

                     2014-15         Fiscal 2013-14

Energy        Rs 53.99 billion    Rs 11.18 billion

Service         Rs 5 billion        Rs 3.9 billion

Tourism         Rs 3.69 billion    Rs 948.17 million

Manufacturing     Rs 1.55 billion    Rs 1.46 billion

Agro and Forestry     Rs 554.88 million    Rs 842 million

Construction     Rs 100 million    --    

Mineral         Rs 190 million     Rs 261.41 million

Total         Rs 65.09 billion     Rs 18.61 billion

Source: The Kathmandu Post