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.
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