FDI commitment drops 72pc in first quarter of this fiscal

KATHMANDU:

Foreign Direct Investment (FDI) commitment in the first quarter of this fiscal 2014-15 dropped more than 72 per cent compared to the corresponding period of the previous fiscal 2013-14. The country has received FDI commitment of Rs 2.49 billion in the review period, which stood at Rs 8.97 billion last fiscal year, according to the Department of Industries (DoI).

Explaining the reason for the decline, Dhruba Lal Rajbanshi, director general of DoI, said, “FDI commitment last year was higher as investors’ commitment in the energy sector amounted to Rs 5.35 billion in the first quarter alone, while the country did not receive any commitment in the sector in the review period.”

Rajbanshi also cited snail-paced reforms in the legal front hindering investor confidence as another prime reason for the slide in FDI commitment. The government has yet to introduce crucial Bills like Foreign Investment and Technology Transfer Bill, and Industrial Enterprises Bill, among others.

The World Bank’s recent Doing Business Report-2015 has ranked Nepal in second position among South Asian nations in terms of investment climate. But the FDI commitment situation of the first quarter of the current fiscal has disappointed both the government as well as domestic investors.

Out of the total commitment of Rs 2.49 billion, the country has received the largest commitment of Rs 909.43 million in the service sector, followed by manufacturing sector at Rs 606.25 million. The country has received investment commitment of Rs 453.05 million in tourism, Rs 384.38 in agriculture and forestry, and Rs 140 million in the mineral sector. Altogether 104 projects under different heads have received the commitment.

The number of projects and employment proposed in the review period, however, is more than that of the previous fiscal. The 104 projects that have received FDI commitment are expected to generate employment opportunities for 3,885 individuals, while 85 projects proposed in the first quarter of last fiscal had projected to create jobs for 3,624 people.

Northern neighbour China topped the list, making more than 43 per cent of the total FDI commitment in the first quarter this fiscal. Investors from China have committed Rs 1.09 billion in agro and forest, manufacturing, mineral, service and tourism sectors. In contrast, India was the largest contributor last year, with total FDI commitment of Rs 5.51 billion in the first quarter of 2013-14. Indian investors, this year, have made a commitment of Rs 750.45 million in manufacturing, mineral and service sectors.

The country had received total FDI commitment of Rs 20.08 billion for 304 projects last fiscal.

Source: THT