FDI pledges shoot up 177.85pc in first half
KATHMANDU, JAN 21 -
With Chinese investors aggressively eyeing the hydropower sector, foreign direct investment (FDI) commitments have surged by a whopping 177.85 percent in the first six months of the current fiscal year.
Nepal attracted FDI worth Rs 26.98 billion in the period, according to the Department of Industry (DoI). In the same period last year, the figure was at Rs 9.71 billion.
Such is the interest of the northern neighbour in Nepal that its commitments in the first half exceeded its total pledges until the last fiscal year by Rs 7 billion. In the first six months this year, Chinese investors committed Rs 17.41 billion, against Rs 10.63 billion committed until the last fiscal. The surge in FDI commitments from China is mainly driven by the investment in hydropower. Of the total Rs 17.41 billion in FDI commitments from China, hydropower accounts for Rs 16.21 billion.
“FDI commitments have swelled massively in the first six months, mainly due increased attraction of investors towards hydropower projects,” said Radhesh Pant, chief executive officer of the Investment Board Nepal (IBN). “Chinese companies have shown keen interest in the hydro sector.” According to Pant, Chinese investors are keen on acquiring hydro projects with 80-90 MW capacities.
“While Chinese investors were only interested in hotels and restaurants earlier, their focus now has shifted towards hydropower projects,” said Pashupati Murarka, vice-president of the Federation of Nepalese Chamber of Commerce and Industry. He said increasing interest of Chinese in Nepal is a good sign. “Our FDI commitments were dependent on India only. The emergence of new players will benefit the country with increased competition and diversity.”
With the hydropower sector attracting much investor interest, the energy sector has topped the list in terms of FDI commitments. The sector has attracted FDI worth Rs 22.6 billion—up 979.19 percent compared to last year. Seven projects have been registered at the DoI.
Among the major FDI projects in the energy sector are a joint-venture between Himalaya Infrastructure Fund, Tudi Investment and China’s Sichuan Ji Antai Energy Development Company with a total investment outlay of Rs 13.6 billion. Similarly, Himalaya Hydro and India’s General Construction joint-venture has pledged Rs 5.24 billion.
The services sector became the second most favourite for foreign investors, with 42 projects committing Rs 2.41 billion. However, the figure is lower compared to last year’s. In the first six months of fiscal year 2012-13, investment pledges in the service sector was at Rs 4.06 billion.
Agro- and forestry-based industries attracted Rs 679 million (29 projects), manufacturing sector Rs 643 million (12 projects), tourism sector Rs 556.95 (28 projects) million and mineral industries Rs 81.41 million (5 projects).
According to Murarka, the growth in FDI commitments is a positive indication and that the government has to work on translating the commitments into actual investment. “It’s not that commitments have not translated into investment at all, but the government has to focus more on increasing it,” said Murarka.
He said the government has to ensure investment safety, create stable working environment and address labour issues to make sure these commitments turn into actual investment.
(Source: The Kathmandu Post)
