The government will bring the Foreign Investment and Technology Transfer Act (FITTA) immediately after the Foreign Investment and Technology Transfer Policy, through ordinance, to reverse the current trend of import-led economy, according to minister for industry, commerce and supplies Shankar Koirala.
"Though the incumbent government has been formed with a sole aim to conduct a free, fair and peaceful election of the Constituent Assembly, it cannot turn its back on the pressing needs of the country like economic development," he said during a Public-Private-Dialogue on the draft of the Foreign Investment and Technology Transfer Act, jointly organised by the Confederation of Nepalese Industries and Ministry of Industry, with support from USAID-NEAT, here, today.
Foreign investment is key and a strong instrument for development, said Koirala, adding that the country has, however, received foreign investment of only around $84 million to $85 million till date, not due to lack of an Act but because of lack of implementation.
Though the country had opened foreign investment in the country about three decades back, it was effectively implemented after the 1990 democratic movement that brought a liberal economic policy, he added.
"The proposed Act — that will help attract more foreign investment in the country — will be implemented effectively as it is being finalised with consultations from stakeholders," Koirala added.
However, the effectiveness of the policy will depend on the Act, and that of the Act on implementation, said Koirala, who is also the finance minister.
Emerging countries have been competing to attract foreign investment with attractive packages, said president emeritus of CNI Binod Chaudhary, on the occasion.
Nepal should offer more competitive packages to attract foreign investment, he said, adding that the current Act failed to attract foreign investment. "It failed to encourage foreign investment."
The draft Act — that will replace the current Act of 2049 BS — is expected to encourage foreign investment as it has offered various incentives and packages apart from prioritising sectors that Nepalis cannot invest in — like hydropower generation and transmission; infrastructure development including expressway, railway, tunnel way, metro railway, flyover and international airports; agriculture-based and herbal processing industry; tourism and mines, and manufacturing industry.
Aligned with the Industrial Policy that the government had brought some three years back, the proposed Act aims at regulating foreign investment rather than controlling it as foreign investment is necessary for mega projects.
It has fixed a minimum threshold of $200,000 for foreign investment apart from separate sectoral thresholds for prioritised sectors, and maximum percentage of foreign investment on service sectors, liberal visa regime and one-stop service, and time-bound decision for foreign investments to encourage investors.
The draft Act has also opened limited investment window for Nepali entrepreneurs, who want to invest abroad. But they have to submit their periodic reports, on the basis of which, the government might allow them to invest more, if the country is benefitting.During the dialogue, the entrepreneurs also suggested to encourage joint ventures in the country.