IN FOCUS
Summit witnessed the signing of
15 deals between Nepali (as JV
Partner) and foreign companies.
Similarly, out of 77 projects
presented by the government before
international companies, there
were only 17 applications for 10
projects (Kathmandu Ring Road
Bus Rapid Transit Project; Tamor
Storage Project; Dhulikhel Medicity;
West Seti Hydropower Project;
Nijgadh International Airport;
International Convention Centre,
Bhaktapur; Integrated Agriculture
Infrastructure Project Banepa &
Chitwan Integrated Agriculture
Infrastructure Project Hemja; and
Integrated Agriculture Infrastructure
Project Urlabari).
Strikingly, the Chaudhary Group,
a home-grown conglomerate proved
to be the most impactful deal-
maker by making four joint-venture
agreements in Solar Power, Logistics Park, and Mobile
Network Service. Reportedly, the Chaudhary Group has
entered into a joint venture agreement with Sharaf Group
to develop a multi-modal logistics park and 600MW solar
photovoltaic project with the US-based Sky Power. Of this
600MW deal, a 200MW solar power project is in the pipeline
in Province 2, near Janakpur. To enter the telecom sector, CG
LifeCell announced a joint venture agreement with Istanbul-
based Turkcell for 5G mobile network service.
For the already existing Arun-III Hydropower Project,
the Nepalese and Indian fi nancial institutions made the
much-needed commitment of Rs 78.59 billion. The 900
MW fl edgling project would also receive additional fi nancial
assurance of Rs 65.60 billion from the State Bank of India
and Rs 8.12 billion and Rs 4.87 billion from Nepal’s Everest
Bank and Nabil Bank respectively.
The 216 MW Upper Trishuli 1 hydroelectricity project had
received an investment of $650 million. The policy decisions
from Nepal Electricity Authority Board (NEAB) proved as
a catalyst in this regard. The World Bank’s International
Finance Corporation (IFC) and Multilateral Investment
Guarantee Agency (MIGA) will fi nance the project.
As part of a critical energy deal, a Joint Development
Agreement (JDA) was signed between China’s Yunnan
Xinhua Water Conservancy and Hydropower Investment
Co Ltd and Nepal’s Hydro Solution for the 164 MW Kali
Gandaki Gorge Project.
The Special Economic Zone (SEZ) being a new idea for
Nepal made news when a project was initiated in Bhairahawa,
bordering India though it is not yet
operational. The IBN, IFC and SEZ
Authority entered an institutional
collaboration for developing SEZ
in Simara through Public-Private
Partnership (PPP).
Notwithstanding the euphoria,
the offi cial fi gure shows that after the
formation of the new government,
Foreign Direct Investment (FDI)
has gone down which is a matter
of concern for the government.
According to data provided by the
Department of Industry, Government
of Nepal, the FDI dropped down by
63 percent in the fi rst eight months of
the fi scal year 2018-19 as compared
to the same period last year.
Nepal received an FDI
commitment of Rs 34.9 billion
between mid-July and mid-February
in 2017-18; the total FDI commitment
in the corresponding period this
fi scal plummeted to Rs 11.25 billion. In the previous Nepal
Investment Summit held in 2017, international investors
pledged to invest Rs 1,446 billion of which a quarter has not
been realized yet. According to a survey released by Nepal
Rastra Bank (NRB), Nepal’s central bank, in June 2018, FDI
infl ows in Nepal were substantially low as compared to its
neighbouring countries. It shares only a meagre 0.01 percent
of the total FDI in the world while South Asia received 3.1
percent of total FDI infl ows in 2016.
“Foreign investors from 39 countries have made
investments in 252 fi rms in Nepal. India is the main investor in
Nepal in terms of paid up capital. However, West Indies comes
ahead of India if we consider total stock of FDI by including
reserves and loans,” states the NRB report. It also outlined
that most of the FDI in Nepal comes from tax haven countries
which means that Nepalese businessmen acquired money in
those countries through illegal means and channelized that
money as FDI in Nepal. However, there are numerous reasons
behind the low infl ux of FDI in Nepal.
Nepal was marred by a long cycle of insurgency, political
violence and instability tilted towards economic liberalisation
in 1990. One of the stumbling blocks to foreign investment
during the insurgency period was the strike and closure of
factories by trade unions which were uncommunicative
towards political parties. With the inception of the peace
process in 2006 which offi cially ended the violent insurgency
of Maoists, the FDI gradually began to be generated in Nepal.
For more than a decade, the country faced a colossal
power outrage which also became one of the key factors for
The Special Economic Zone
(SEZ) being a new idea for
Nepal made news when
a project was initiated in
Bhairahawa, bordering
India though it is not yet
operational. The IBN, IFC and
SEZ Authority entered an
institutional collaboration
for developing SEZ in Simara
through Public-Private
Partnership (PPP).
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 4 • April-May 2019, Noida • 71