Political and policy stability, human capital, government's support for private sector, free and efficient bureaucracy, and liberal international trade regime will help a country attract foreign direct investment, according to a senior Japanese economist.
"These four domestic elements and one international element will help a country to attract foreign direct investment," said Prof Emeritus of Seikei University Ryokichi Hirono during an interaction on Investment organised by the Japanese Embassy and Investment Board here in the Valley today.
Incentives for industries will also encourage investments, he said, adding that a good labour relation is yet another aspect to attract investment.
"When Singapore brought an Act barring strike, the island economy started booming," he said citing the example of how Singapore achieved its goal of being a better economy in half a decade. "Nepal should take a lesson from Singapore."
Government should start taking initiatives to attract investment, said Hirono, who has a long experience of working with multilateral agencies like World Bank and UNDP.
The globalisation of trade and investment have helped push growth but it has darker sides too, he opined, adding that widening gap between rich and poor, environmental degradation and corruption are key challenges today, every nation is facing that could be addressed by sustainable development. "But sustainable development should have four pillars; economic, social, environmental and cultural sustainability," he reasoned. "Japan is planning for Sustainable Development Goals (SDGs) — which should be backed by economic growth — after the Millennium Development Goals (MDGs) will come to an end in 2015."
There is a huge optimism in Nepal, he said, adding that the optimism only could not guarantee economic growth. "Political stability with a new vision will help facilitate investments," the senior economist said, adding that political stability can guarantee Japan's Overseas Development Assistance (ODA) that has been revoked since 2001.
The Japanese government is considering resuming ODA loan," informed Investment Board chief executive Radhesh Pant, who returned from Japan — after marketing Nepal to attract investment — last month. "Japan's Ministry of Agriculture is willing to support commercial farming and agro-based industries," he said, adding that Japanese investors are also interested in clean energy with new technology, tourism, minerals and mines-based industries, export-oriented industries especially to India, vocational and technical schools.
The government has formed Investment Board to formulate policies to create investment-friendly environment, select priority sectors for investment, monitor, implement and execute approved investments and provide aftercare, provide appropriate incentives, and coordinate among different government agencies. "The board is planning to promote 50 viable projects from five to seven sectors," Pant said.