After its southern neighbour, Nepal is planning to sign Bilateral Investment Protection and Promotion Agreement (BIPPA) with northern neighbour soon.
Finance Minister Barsha Man Pun — talking to media persons in the western district of Banke in Nepalgunj today — said that the government is preparing to sign BIPPA with five countries including neighbouring China very soon to attract more foreign investments for the economic development of the country.
Nepal on October 21 signed BIPPA with India, making it a seventh nation to enter into investment protection and promotion agreement with Nepal, during Prime Minister Dr Baburam Bhattarai's India visit.
However, Prime Minister's own party — UCPN-Maoist — leaders are against the agreement that is aimed at attracting more Indian investments in the country in the days to come giving them equal treatment like the domestic investors.According to the agreement, "if an investor of a country suffers losses owing to war or other armed conflict, a state of national emergency or insurrection or riots in the territory of the other country will be given equal treatment, as regards restitution, indemnification, compensation or other settlement, no less favourable than that it accords to its own investors. Resulting payments shall be freely transferable."
However, the agreement will come into force on the date of exchange of diplomatic notes confirming that the legal requirements of the both countries have been fulfilled for the entry into force of the agreement.
Nepal has already signed BIPPA with France, Germany, Britain, Mauritius, Qatar and Finland, though these countries do not have significant investments in Nepal. Similarly, India has also signed such agreements with 86 countries, of which agreements with 72 countries have already been implemented.
The BIPPA will not only boost the confidence of the foreign investors that their investment is safe in Nepal as it will get equal treatment not less than that their own domestic investors, but also help reduce cost of doing business by both the countries.
Indian firms are the biggest investors in Nepal accounting for about 47.5 per cent of total approved foreign direct investments (FDIs). There are about 150 operating Indian ventures in Nepal engaged in manufacturing, services — banking, insurance, dry port, education and telecom — power sector and tourism industries.
India is the largest trading partner and largest investor of Nepal. China is the second largest trade partner in terms of imports, while in terms of exports China comes at the eight position.
India and China — both rising global economic powerhouses — are also the largest markets giving Nepal strategic benefit in case Nepal can attract investments from both the countries and exploit their markets.