Experts today suggested the government to seek foreign direct investment (FDI) in sectors that the country needs for its development.
"The country must prepare a foreign direct investment policy according to the needs of the country, and based on what benefits it needs to take from which country," they suggested, adding that the country should accept FDI in those sectors that will generate employment. "Since the country needs to generate massive employment — to check youth leaving for foreign employment — Nepal should accept FDI in hydropower, agriculture and tourism."
Addressing the Public Private Dialogue on 'Foreign Investment and Technology Transfer Policy Draft 2013,' here today, finance minister Shankar Koirala, who is also minister for Commerce and Industry, agreed with the experts and the private sector.
"The country is getting foreign direct investment in sectors that are not prioritised by the government," he said, adding that the country must learn lessons from its past experiences. "However, we need to reform the legal and policy level hurdles to attract foreign direct investment."
The Foreign Investment and Technology Transfer Policy draft 2013 has also opened up investments abroad by domestic business people, though it had been banned by the budget a couple of years back to check the outflow of foreign reserves. "However, we have to thoroughly discuss on its advantages and disadvantages before implementing it," the minister said, urging for a study on foreign direct investment policies of neighbouring countries and adopting the best practices from global experiences. "Otherwise, policy alone cannot help boost investment, if there is no protection of investment."
Trade secretary Krishna Gyawali, on the occasion, said that the country has been able to frame credible policies but has failed to implement them. "Unified Industrial Information Centre could help increase coordination among government agencies," he said.
The foreign direct investment policy draft has noted geographical condition, political instability, poor security management, lack of skilled manpower, unnecessary demands by locals and lack of implementation of one-window policy as major reasons for the country not being able to attract foreign direct investment.
The draft policy has suggested active economic diplomacy and transparency of FDI to attract more foreign direct investment in the country.
Similarly, it has also prioritised hydropower, infrastructure development, agriculture and herbs processing, tourism, mines and minerals related industries for foreign direct investment. Fast track, railway, tunnel way, cable car, metro, flyover and international airports have been identified under infrastructure heading for foreign direct investment.
The draft has also fixed a minimum ceiling of $200,000 for foreign direct investment, whereas a minimum of 30MW of hydropower can also attract FDI.
Speaking on the draft policy, vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Bhawani Rana said that attracting foreign direct investment is a challenge at a time when industrialists are closing down their businesses due to bandhs and strikes.
Likewise, president of Confederation of Nepalese Industries (CNI) Narendra Basnyat complained that labour and economy has been defined separately, which has become a problem.Some private sector players suggested the government to take the private sector into confidence for the fruitful implementation of the policy.