Investment In Nepal

Foreign Investment Opportunities in Nepal

Nepal has been adopting a liberal foreign investment policy since the early 1990s.  Foreign investment is allowed in almost all sectors except cottage and very few small industries. However, the transfer of technology is allowed in any type of enterprise. Foreign investors are permitted to own up to 100% equity share.  Foreign Investment and Technology Transfer Act and Industrial Enterprises Act are the basic laws that guide foreign investment. These laws, in addition to concessions mentioned in sector-specific laws, include provisions for incentives and facilities. Sector-specific policies and Acts provide details about the sector-specific permission, procedures, approvals and preferential policies for investment. Department of Industry receives applications for foreign investment projects below 10 billion NRs. Online application facility is also available through the department’s website- www.doind.gov.np.  For the projects above 10 billion NRs, Investment Board, Nepal, which is chaired by the Prime Minister, takes care of foreign investment proposals as a single window.

Investors may enjoy Nepal as their ideal destination. The Visa regime is liberal. The applicable tax rate in Nepal is one of the lowest in the region. The Industrial Enterprises Act offers lucrative incentives with attractive tax exemptions. Nepal offers abundant and untapped natural resources, optimum climate round the year in many parts of the country, abundant skilled and semi-skilled labor force, hospitable people, easy access to decision-makers, rich cultural and biodiversity and wonderful natural beauty. It has also been placed at second status in South Asia in World Bank’s ease of doing business report in the last 3  years.

Major potential areas of investment

1)     Land, Land and More Fertile Land

Although land prices in the Terai and rural areas in Nepal are starting to go up, they are still cheap. Land can provide dividends in terms of crops while waiting for the value to go up in a couple of decades.

Jeremy Grantham, a famous investor who predicted the 2007 financial meltdown, predicts that state-of-the-art organic farming is the best investment in the world now. In Nepal, we can combine both traditional and modern organic farming techniques to grow food in anticipation of the rapid food price increase.

2)     Tourism Investments

Nepal is the country in the world that is sandwiched between two fastest-growing large economies. India and China will have huge growth in middle-class populations eager to travel. Nepal can tap the growing tourism market by anticipating where Chinese and Indian tourists may want to spend.

Buying shares in tourism-related stocks such as hotels, airlines or restaurants is a passive way to tap this potential. You can also open a resort or travel agency in anticipation of the boom. If you open up your own venture, the key to success is to be appealing and different from others.

3)     Hydropower:

The potential of hydropower in Nepal is huge. While investing in large-scale hydropower plants may need a huge sum, it is possible to buy shares in related companies when they go public.

Several hydropower projects are underway in Nepal. In the next 10 years, several of them will become public. This will provide a good opportunity for an ordinary investor without millions of rupees to invest. For large-scale investors, projects await in number. Nepal concluded a much-awaited Power Trade Agreement with India in 2014 paving the way for the trade of electric power just like other marketable commodities. This now ensures predictability of the market once electricity is produced.

4)     Outsourcing:

Most foreign companies are looking to outsource programming, research or labor-intensive work to developing countries. These companies will save a substantial amount of money by doing so. Such outsourcing opportunities exist especially in web programming because of a large number of students interested in computer engineering in Nepal.

5)     Medical Tourism:

Nepal has produced some of the best doctors around the world. Surgeons from Nepali hospitals also do surgeries in Singapore, UK and USA. It is true that Nepali hospitals lack the infrastructure and equipment found in developed countries, but the quality of doctors is high.

So a good opportunity to invest is in medical tourism in Nepal. Healthcare services in the developed world is expensive. A simple bypass surgery costs around a hundred thousand dollars there, while the same surgery can be done in Nepal at a fraction of the price.

Since Nepal is a country endowed with natural beauty, visiting Nepal for pleasure as well as medical reasons should be an attraction.

For details on investment please read Nepal Investment Guide, 2021 prepared by Investment Board, Nepal.  (download Nepal Investment Guide, 2021).

For more information, please visit the links below:

Department of Industry (www.doind.gov.np)

Investment Board, Nepal (www.ibn.gov.np)

Other relevant links:

Federation of Nepalese Chambers of Commerce and Industries (www.fncci.org)

Nepal- China Chamber of Commerce and  Industry (www.nepal-china.org.np)

Some major acts relating to investment in Nepal:

—Foreign Investment and Technology Transfer Act (FITTA)
—Industrial Enterprises Act (Nepali)
—Investment Board Act
—Company Act
—Income Tax Act
—Patent, Design and Trademark Act
—Private Firm Registration Act
—Partnership Act
—Labour Act
—Electricity Act
—Private Finance in Build and Operation of Infrastructures Ac
—Contract Act
—Arbitration Act
—Banks and Financial Institutions Act
—Foreign Exchange Regulations Act
—Immigration Act
—Customs Act
—Land Acquisition Act
—Excise Duty Act
—Value Added Tax Act
—Competition Promotion and Market Protection Act
—Copyright Act
—Civil Aviation Act
—Special Economic Zone Act (Nepali)

Major Policies:

—Foreign Investment Policy
—Industrial Policy
—Hydropower Development policy
—Telecommunication Policy
—Tourism Policy
—Aviation Policy
—Trade Policy
—Nepal Trade Integration Strategy, 2016