Lately, the country has been
receiving fewer foreign direct investments (FDI) due to perennial problems like
poor industrial relations, political instability, lack of quality physical and
social infrastructure, more fragmentation and enforcement of contracts, coupled
with the lack of intellectual property protection and security threats, despite
huge potential.
"Nepal received six times
less FDI at only four paisa for every Rs 100 foreign direct investment that
entered South Asia in 2005-2010, from some 23 paisa in 1998-2000," said
former economic advisor of the Finance Ministry Keshav Acharya.
The FDI that the country received
was, however, the lowest in the South Asian countries like India — the largest
foreign direct investment receiver — followed by Pakistan, Bangladesh, Sri
Lanka, Maldives and Bhutan, he said, adding that the trend of foreign direct
investment revealed that more than 90 per cent of the foreign direct investment
that has entered the country was equity investment, whereas less than three per
cent entered under technology transfer, and equity and technology transfer
combined.
Similarly, the small scale
industry is the most favourite among foreign investors, as it has attracted
some 72 per cent of the total FDI in 2006, and it increased to 78.87 per cent
in 2010, whereas attraction towards large industry seems to the least.
"Large scale industries
failed to attract foreign direct investment as it attracted some 11.5 per cent
of the total FDI in 2006, which further declined to 8.96 per cent in
2010," Acharya added.
Sector wise, the manufacturing
sector is the most favourite with foreign investors, followed by others sector
that include energy, construction and mines. "Though foreign direct
investment in manufacturing, services and agriculture is declining, investment
in others sector has been increasing," he said.
On the occasion, vice chair of
National Planning Commission (NPC) Deependra Bahadur Kshetry said that the government
has been requesting development partners and investors to invest in
agriculture, as it will not only propel economic growth but also check the
outflow of unemployed youth.
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