FDI inflows down by 2.85 per cent in 2012

Despite much-hyped Investment Year announcement, Nepal has attracted below $1 billion in Foreign Direct Investment (FDI) in 2012, according to the United Nations Conference on Trade and Development (UNTCAD) report.

The FDI inflow in 2012 stood at 2.85 per cent lower than in 2011, it said, adding that Nepal – with $92 million FDI – stood second last in attracting FDI in 2012, just ahead of Bhutan that received $16 million but behind Afghanistan that received $94 million.

In 2011, Nepal had received $95 million, according to the World Investment Report – 2013.

Nepal is among the 18 least developed countries (LDCs) that attracted less than $100 million in FDI in 2012, it said, adding that the total FDI into LDCs has, however, increased by 20 per cent to $26 billion. “Nepal is among the countries that posted decline in FDI inflows,” according to the report.

Cambodia (with FDI up by 73 per cent) led the LDCs, followed by the Democratic Republic of Congo (up by 96 per cent), Liberia (up by 167 per cent), Mauritania (up by 105 per cent), Mozambique (up by 96 per cent) and Uganda (up by 93 per cent), the report added. “Nepal is also among the six landlocked countries that received FDI between $10 million and $99 million.”

Pun claims party cadres paying money for national assembly

Though finance minister Barshaman Pun claimed that his party is able to finance its seventh national assembly, entrepreneurs blamed the ruling party’s forceful donation drive for disturbing investment climate in the country.
"The UCPN-Maoist is capable to hold its national assembly scheduled to be held in Hetauda from tomorrow from the financial help of its own well wishers, cadres, representatives and observers of the national assembly," Pun said, adding that some 3,500 representatives and observers will have to pay Rs 5,000 per head to take part in the assembly. "Our party's 35,000 registered members will also help financially according to their capacity, apart from well wishers."

If Pun is to believe, the party will collect Rs 17.50 million from its 3,500 representatives and observers, if they all pay. But the party is still creating donation terror and threatening entrepreneurs. But UCPN-Maoist has projected some Rs 80 million for a week long assembly. "We have asked for help with the entrepreneurs but not forcefully," Pun added.

UCPN-Maoist is holding its national assembly in Hetauda Industrial Estate — requesting the entrepreneurs in the industrial area — on February 2-7 also to save money," he said, adding that the chairman, vice chairmen and all the party cadres are staying in the industrial area to save money. "The party has arranged hotels only for the guests."

But the entrepreneurs tell a different story. "The ruling UCPN-Maoist party cadres have been forcing us to give donation, if not they are asked to give accomodations for a week during the assembly," said an entrepreneur without willing to be named.

The business community has already asked the government to immediately stop the forceful donation drive and security threat on entrepreneurs. "The UCPN-Maoist cadres have been issuing threats, if we denied them," the entrepreneur said, adding that the private sector is facing hard times due to chronic power shortage and repeated labour problems but still we are treated as the milking cow.

The government has neither been able to bring any relief package to operate industries in full capacity nor been able create investment friendly environment, he blamed.

According to the central bank's report, industries were able to utilise only 58 per cent of their capacity in the last fiscal year 2011-12 because of declining capacity of the industries, high labour cost and rising prices of raw materials.

The government has declared the year 2012-13 as Nepal Investment Year but failed to create investment friendly environment, according to another entrepreneur, who opined that without building confidence within the domestic private sector, it is not possible to attract foreign direct investment (FDI).

A fortnight ago too, CPN-Maoist — the splinter group of UCPN-Maoist — had also forced entrepreneurs to give donations for its seventh national assembly.
Due to being a ruling party, UCPN-Maoist cadres have also received donation from the government offices.
Until the political party's become transparent in its financial transaction, such forceful donation drive and threat will continue. 

FNCCI asks government to address forceful donation, extortion

The umbrella organisation of the private sector has asked the government to address the forceful donation drive and extortion, and provide security to their businesses and property.

"The government should fix a minimum donation amount by bringing an Act, if necessary," said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya, here today.

"The private sector is committed to promoting ethical business practices but the problem starts with donations itself, as it cannot be mentioned in their books," he said, adding that the Act will help entrepreneurs write the donations in the book. "Likewise, donations must not be forceful or negotiated as is happening currently. It should be based on the donor's wish and capacity, and not on physical or mental force that have been determining the donation amount."

Earlier too, entrepreneurs had asked the government to let them write donations in their books and reduce taxes.

"Increasing incidents of extortion and forceful donations have threatened entrepreneurs," said Vaidya, citing the recent attacks on bankers and industrialists. He also urged the government to bring the culprits to book immediately.

The prolonged transition has also increased incidents of forceful donations and physical attacks that have discouraged the industries, pulling its contribution to the gross domestic product down to 5.9 per cent from 10 per cent.

Political parties should work hard to end the current political transition as soon as possible as it has been hurting business confidence against the private sector's expectations that the end of the conflict would help the economy progress, Vaidya said, asking the government to make economy a basis for political consensus.

"The government should ban strikes in industries until the country gets a new constitution and it must work to end load-shedding within five years by implementing FNCCI's suggestion," he said.

The government should help increase competitiveness of the industries by reducing load-shedding hours, said FNCCI vice president Pradeep Jung Pandey. "Encouraging industries will help increase manufacturing activity," he added. 

Nepal Inc to brand country

KATHMANDU: Nepal Inc is planning to brand the country as a preferred investment destination. "Federation of Nepalese Chambers of Commerce and Industry (FNCCI) will promote investment in the country for employment generation," said FNCCI president Suraj Vaidya. "FNCCI will organise the India Week — during the second International Trade Fair — to attract Indian investment in the country and expand the market for domestic products," he said, adding that it is also planning to organise a roadshow in India and China to attract investment and popularise Nepal Investment Year 2012-13. "The road show in China will help promote tourism and alternative energy, where as in India, it will help expand Nepal's market and attract investment as India is the largest foreign investor in the country. Besides seeking foreign investment, the private sector will also conduct a study on measures to increase exports to over Rs one billion and also expand the domestic market."

Investment Board, Private Sector to market projects

Nepal Investment Board and private sector are jointly marketing projects that can promote socio-economic development and generate employment in the country.
"The board has formally called for proposals from the private sector for projects of national priority sector like hydropower, tourism, agriculture, mining and minerals, health and education, information and communication technology (ICT) and physical infrastructure like roads, airports, bridges and alternative energy," said chief executive of the Investment Board Radhesh Pant.
"The promoters could be domestic or international," he said, adding that the project proposals over Rs 1 billion and are financially viable will be marketed by the board and Federation of Nepalese Chambers of Commerce and Industry (FNCCI) jointly as Nepal Investment Year initiative. "It will also send a positive message to the investors that the government and private sector are working together to attract the investment in the country."
The board is expecting many financially viable projects — especially in hydro and tourism sector — to be submitted by February 20 at the board.
"The board will then publish a priority list and start marketing them," Pant said. "There are many good projects which have not been able to take off due to lack of funding and the board and FNCCI will jointly market them."
Even the projects that are below Rs 1 billion but help local soci-economic development could be considered, he added.
The board was established by the government after a decade of lobbying from the private sector as the single-window solution to the investment above Rs 1 billion.
Though, the government has been planning to attract some 50 projects of over Rs 1 billion during Nepal Investment Year 2012-13, the board has not been able to attract investors — both domestic and foreign — due to government's failure in bringing the budget for the current fiscal year.
The uncertain politics and policy measures coupled with regular 12-hour load-shedding due to incumbent government led by caretaker prime minister Dr Baburam Bhattarai's apathy towards people and the country have sent a negative message to the investors.

Investors to be feted
KATHMANDU: The Ministry of Industry is planning to felicitate investors, who have invested over Rs 2 billion with Prime Minister National Recognition. "The ministry has been preparing a list of the investors, who have invested over Rs 2 billion," said joint secretary at the ministry Yam Kumari Khatiwada. "The ministry is also working on directives of Industrial Security Force for the security of industrial corridor and preparing to help sick industries," she informed, adding that the draft of Special Economic Zone (SEZ) establishment guideline has also been sent to cabinet for approval, apart from new regulation to revive sick industries.