FDI pledges down 30pc

KATHMANDU, AUG 21 -

Government efforts to attract foreign direct investment (FDI) do not seem to have worked very well, with FDI commitments coming down by 30 percent to Rs 7.14 billion in 2011-12 compared to previous year’s Rs 10.05 billion.

A severe decline in commitments from India and China, which had pledged the biggest investment in the previous year, dragged down the overall FDI commitment figure in 2011-12. Investment assurances from India and China fell by 67 percent and 20 percent, respectively, according to the Department of Industries.

India has historically been the biggest FDI contributor to Nepal.

Last year, Indian investors pledged investment worth Rs 2.29 billion—a decline by Rs 4.70 billion compared to the amount committed in 2010-11. And, Chinese investment commitments over the period dropped by Rs 200 million to Rs 985.4 million.

Such a decline in investment assurances from the two biggest contributors amid preparations for the Nepal Investment Year 2012-13 is an alarming issue. “The downfall in investment commitments from India and China is a serious matter as these countries have been the first- and second-largest FDI contributors,” said Dhruba Raj Rajbanshi, director general at the industry department.

The business community blamed the government’s failure to ensure better investment climate for the decreased pledges.

Meanwhile, investment pledges from the US and South Korea grew last year. American investors committed Rs 182.1 million (up 100 percent), while Koreans assured Rs 101.1 million (up Rs 30 million).

FNCCI officials said promotion campaigns conducted abroad by FNCCI and the government played helped increase FDI commitments from developed countries.

Source: The Kathmandu Post