FDI commitments hit record Rs 19.39b

KATHMANDU, AUG 21 -

Foreign direct investment (FDI) commitments reached an all-time high of Rs 19.39 billion in the last fiscal year.

Despite protracted political transition, a total of 300 projects from foreign investors were registered at the Department of Industry (DoI) in 2012-13, according to DoI’s annual statistics.

The whopping 145 percent growth in FDI commitments is mainly due to the surge in investment pledges from China and British Virgin Islands, which contributed more than Rs 10 billion together.

According to DoI, Rs 3.07-billion investment commitment came from Hong Kong, and Rs 2.62 billion from mainland China. In 2011-12, FDI from China was worth Rs 986.03 million, while there was no investment from Hong Kong.

This is the first time the investment commitments from China have surpassed those from India. Until last fiscal year, it was India which used to top the FDI commitment chart. In 2012-13, Indian investment marginally increased to Rs 2.50

billion from Rs 2.29 billion in the previous year.

The DoI statistics throw some interesting facts. Investments from countries that have never been serious investors to Nepal in the past emerged as major contributors in the last fiscal year. There has been a remarkable surge in investment commitments from countries like British Virgin Islands, the UAE and Spain. In 2012-13, commitments from these three countries stood at Rs 4.49 billion, Rs 1.17 billion and Rs 1.78 billion, respectively, according to DoI. The services sector is where foreign investors want to put their money in, while tourism is fast emerging as another most preferred sector, the official data showed.

With trade union problem consistently hitting the manufacturing sector, commitment to the services sector reached an all-time high of Rs 7.30 billion last fiscal year. While the manufacturing sector attracted Rs 4.52 billion, the tourism sector attracted Rs 3.89 billion — up from Rs 837.45 million in 2011-12.

Government officials say FDI commitments in the last fiscal exceeded their expectation. DoI Director General Dhruba Rajbanshi said the onus now is on the government to capitalise on the interest of foreign investors in the long term.

However, there was word of caution form former Finance Secretary Rameshore Khanal, who said no matter how much FDI commitments the country attracts, it cannot benefit until the commitments are implemented. “It is now the government’s responsibility to provide conducive environment to help the foreign investors realise their investment plans,” added Khanal.

FDI Commitments

Year    Amount

2006-07    Rs 3.18 billion

2007-08    Rs 9.81 billion

2008-09    Rs 6.25 billion

2009-10    Rs 9.10 billion

2010-11    Rs 10.05 billion

2011-12    Rs 7.14 billion

2012-13    Rs 19.39 billion

(Source: Department of Industry/ The Kathmandu Post)