Manufacturing down, energy sector looks up

KATHMANDU, JUN 25 - Even as Foreign Direct Investment ( FDI ) commitment to the manufacturing sector has declined significantly, the energy sector has witnessed a rise in such commitment in the first 10 months of the current fiscal year.

Nepal has attracted Rs 18.59 billion in FDI commitment, slightly up from Rs 18.42 billion during the same period last fiscal, thanks largely to massive commitments to the energy sector .  

According to the Department of Industries (DoI), FDI commitment in the manufacturing sector in the period stood at Rs 1.46 billion which is around 60 percent less compared to the same period last fiscal. The sector attracted Rs 3.64 billion in FDI commitments in the review period last year.

The number of projects in the manufacturing sector too has witnessed a sharp comedown, slipping coming down to 29 from 66 the last fiscal.

On the other hand, thanks to some big pledges from India and China FDI commitment to the energy sector has recorded a sound growth. Commitments amounting to Rs 11.18 billion have been made in the first 10 months of the current fiscal year, up from Rs 2.65 billion in the same period of fiscal 2012-13.  

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Pradeep Jung Pandey pointed out lack of political instability and conducive environment for investment such as labour disputes and load-shedding as major reasons behind the decline in FDI commitments to the manufacturing sector.

With the situation hardly showing signs of progress, Pandey is concerned whether the pledged commitment translates into actual investment. “The lack of conducive business enviroment means a majority of investment pledges have failed to translate into actual investment,” he added.

Besides the manufacturing, the tourism sector has also witnessed a downfall. The DoI data shows 64 companies have committed just Rs 948,000 this year, down from Rs 3.49 billion by 65 companies last fiscal.

In the first 11 months of fiscal year 2012-13, 77 companies had made FDI pledge worth Rs 7.32 billion in the service sector but has now come down to Rs 3.9 billion from 76 companies. The agro and forestry followed the energy sector , reporting more investment commitments over the period.

The commitment in the agro and forestry sector reached Rs 828 million, up from Rs 219.39 last year.

(Source: The Kathmandu Post)