DoI says it will confiscate deposits of foreign firms if they do not operate in stipulated time
KATHMANDU, Aug 5: The Department of Industry (DoI) has warned the approved foreign firms to bring in the pledged investment within stipulated time or they will face action.
Issuing a public notice, one of the government authorities authorized to permit the foreign direct investment (FDI) has asked the registered foreign firms to initiate the process of operating their businesses within 35 days. “This is to inform the approved foreign investors to operate their businesses in 35 days and withdraw their deposited amounts. If they fail to notify the department about the operation of their businesses, the deposited amounts will be confiscated,” reads the notice by the DoI.
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At a time when the country is facing actual realization of the FDI far less than the pledged amounts, the DoI has come up with the caution notice. The records with the DoI and Nepal Rastra Bank show that the country received only 15 percent of the committed amount in the first 10 months of the last fiscal year. Between mid-July and mid-May of FY 2023/24, the DoI recorded investment commitments totaling Rs 54.86 billion. However, NRB's data shows that only Rs 8.16 billion of FDI was actually received.
A total of 402 foreign firms pledged to invest foreign direct investment (FDI) worth Rs 61.78 billion in the entire period of FY 2023/24. The amount pledged in the review period was the second largest till date. Based on the past trend, the actual realization is likely to stand at a very low level.
The DoI report entitled “Foreign Investment in Nepal-2024," states that Nepal has received foreign investment commitments totaling Rs 425.72 billion in the past 13 years. However, only Rs 148.87 billion has been realized, which is just one-third of the committed amount.
The Nepal Development Update 2022, a report of the World Bank showed that Nepal’s FDI inflow is just 0.5 percent of GDP, which is the lowest in the South Asian region. It could be increased through the easing of regulatory approval procedures. According to the DoI officials Nepal has also considered a high level of flexibility on welcoming the FDI to fill up the gap of capital injection and technology transfers.
However, in many cases, foreign investors are found to register their firms just to extend their business visa in the country. Citing the rising cases of investment pledges not being fulfilled after the applicant had obtained the visa, the department last year even tightened the business visa issuance system by recommending the business visas for foreign investors for only three months.
The DoI in its public notice further stated that the foreign investors can file complaints at the department if they face any problems related to discount facility, concession, visas, foreign currencies, land use, industrial security and red tape, among others.
