Stakeholders want the ongoing political deadlock to be resolved as soon as possible for the investment climate to improve, besides the implementation of policies, better coordination between ministries, single-window system to fast track projects, and an amendment in the labour laws to improve labour-industrial relations.
According to PricewaterhouseCoopers (PwC) India — that has come to Nepal to support the Investment Board towards a successful Nepal Investment Year over the next six months — in engagement with the International Finance Corporation and Investment Board has also observed that the exit route for firms and legal provisions for sick industries need to be smoother and benefits — fiscal and non-fiscal — for infrastructure providers and special industrial regions need to be legislated. It has also urged for a Public Private Partnership (PPP) policy, clearer and better structured bidding and agreements, pre-approvals from governing agencies to enhance prospects and readiness of investment in mega projects, and long-term vision to encapsulate inherent strengths and regional importance of the country which are key to bringing in investments to Nepal.
"Lack of implementation of long-term vision, excessive bureaucracy, shortage of skilled manpower, lack of capacity, and insufficient physical infrastructure have also blocked foreign investment inflow," it added.
Though aviation is one of the prospective sectors that can attract foreign investment, shortage of skilled manpower, lack of capacity of systems, data and information for decision making, and insufficient physical infrastructure have hurt the sector.
Likewise, another prospective sector — Business Process Outsourcing (BPO) — has also been dogged by acute power shortage — 16 hours of power cuts daily —and has had to invest in power backup making the industry less lucrative for investors. It has also been hit by limited and expensive data bandwidth.
The government has been trying to attract foreign investors for a double digit growth but the infrastructure and lack of power have made investors shy away. "However, the Investment Board has fast tracked some of the mega projects that will support other industries," according to chief executive of Investment Board Radhesh Pant.
The key sector industries have been hit by inadequate seed capital investment, poor transportation and road network, lack of adequate power sources and load shedding issues, paucity of skilled labour, constraints related to entrepreneurial and technical skills, deteriorating labour and industrial relations, high transaction cost due to poor infrastructure, limited knowledge among domestic firms on ways to increase product competitiveness and reliance on tax concessions.