Whatever happened to Nepal Investment Year?
KATHMANDU, AUG 15 -
On Jan 1 last year, the UCPN (Maoist)-led government declared 2012-13 as Nepal Investment Year (NIY) with much fanfare to highlight its ambitious aim to thrust Nepal’s economy into double-digit growth and set the stage to double investments.
The then prime minister Baburam Bhattarai announced his intention to bring US$ 1 billion in foreign capital during NIY, which was seen as a move to fortify an economy that fluctuated with the vagaries of remittance flows. Subsequently, the Investment Board Nepal (IBN) was set up under the Investment Board Nepal Act 2012 with a mandate to fast-track mega projects under a single window.
A year and a half later, NIY is nowhere on the scene, and the IBN is taking its time getting into gear as it has slid in the priority list of the present non-political government that succeeded the Bhattarai administration.
Moreover, with the fluidity and inconsistency in the government, lack of parliament and the latest confusion over holding elections on Nov 19, NIY and the IBN look like they are lifeless. Government officials, stakeholders and the private sector have now lost hope that the promises under NIY will be implemented.
“The dissolution of the Constituent Assembly was the first setback for Nepal Investment Year ,” said an official at the Prime Minister’s Office (PMO). The political differences following the CA’s dissolution deepened doubts over the implementation of the programme, he added.
“The announcement of NIY for 2012-13 and the formation of the Investment Board was a vivid message from the government that Nepal lacked an investment climate,” said a vice-president at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
He stated that had the government ensured an investment-friendly climate with attractive incentives for investors and guaranteed peace, security and policy stability, it would not have been necessary to announce NIY nor form the Investment Board.
On the day NIY was announced, four sub-committees were also formed under it — Programme Sub-Committee, Investment Promotion Sub-Committee, Investment Sector Identification Sub-Committee and the Act, Rules and Policies Revision Sub-Committee — to ensure successful implementation of the programme. Surprisingly, none of the committees that were given four to five months to accomplish their assigned tasks have been able to complete them.
Even though foreign and local investors have been urging the Nepal government to update a number of investment related bills including the Special Economic Zone (SEZ) Act, Intellectual Property Act, Industrial Enterprises Policy, Industrial Enterprises Act and Foreign Investment and Technology Transfer Act and Labour Policy to make them more investor-friendly, there has been very little progress on this front.
The status of the plan to identify 50 projects to present to prospective investors, mainly in the hydropower, infrastructure, mining, services and tourism sectors, is equally dismal. “We are currently working on identifying the 50 projects which will be shown to prospecting foreign investors,” said Radhesh Pant, CEO of the IBN.
Though the IBN was asked to prepare profiles of 50 marketable projects a year ago, Pant said there was no hurry as investors were not interested in coming to Nepal with their FDI commitments at a time when the country’s industrial environment is not conducive due to the political vacuum.
On May 27, 2013, the government had assigned the IBN to facilitate 14 projects including Kathmandu-Tarai Fast Track, Mid-Hill Highway, Kathmandu Metro Rail Service and North-South Corridor Roads and hydropower projects like West Seti, Upper Karnali, Arun III and Tamakoshi III.
These mega projects have been brought under the purview of the IB as per the Investment Board Act that allows it to take charge of hydropower projects above 500 MW and infrastructure projects worth more than Rs 10 billion. However, due to differences between the IBN and the line ministries that were looking after the projects, the IBN has not been able to implement any of them.
“We are currently holding negotiations with three power developers, SN Power, Sutlej and GMR, to sign PDAs for four large-scale hydropower projects,” he said. Since they are multi-billion projects, the board needs to take care of every single issue with much seriousness, he added.
Meanwhile, an industrialist Manish Agrawal said, “We have already given up hope that the year 2012-13 will mark a larger amount of FDI inflow as planned by the government.” He added that when local investors were facing hard times due to a host of problems, no foreign investor would dare to come to this country to pour money into anything.
Source: The Kathmandu Post
