Infrastructure holds huge investment potential

Nepal still holds huge potential for growth as a tourist destination.

"Air traffic to Nepal increased at a compounded annual rate of 10 per cent between 2005 and 2010," said advisor to the prime minister and former finance secretary Rameshwor Khanal.

Some 29 international airlines currently operate 284 flights per week to the mystic Shangri-La Nepal, he said, adding that the country offers huge potential for the growth of the tourism industry.

The country has 54 airports currently and there is still a huge potential for infrastructure development like airports, the former bureaucrat said. "The country has permitted foreign direct investment (FDI) in domestic airlines, international airlines, flying schools, and repair and maintenance work."

Similarly, the second international airport that is planned at Nijgadh in Bara district, and upgradation of Gautam Buddha Airport in Bhairahawa and the only international airport in the country, speaks volume of the need for foreign investment in infrastructure development in the country, Khanal added.

Air transport is the only and efficient mode for a mountainous country like Nepal as it will take more time to construct roads. Though the country is within reach of achieving its target for road accessibility by 2016, according to International Finance Corporation (IFC), a lending arm of the World Bank Group, there is huge potential for investment for the north-to-south road corridors.

Envisioning the need for transport corridors for trade between India and China, eight different road corridors have been identified, he said, adding that these road corridors will provide easy trade and transportation between India and China, the two rising Asian economies which have a target to increase bilateral trade to over $100 billion by 2015.

Besides infrastructure for the rising tourist arrivals, the country also has a huge demand for investment in the industrial corridor that could contribute significantly to the economy.

"The domestic demand for infrastructure, energy, and communication exceeds supply, creating a huge growth potential in the domestic market itself," said Khanal. "Due to access to trainable and low cost workforce, Nepal offers a huge potential for foreign investment."

Similarly, with the help of the development partners, the country is constructing a dry port in Birgunj and international container depots in Biratnagar and Bhairahawa, and they are sufficient to support the industrial growth of the country.