July 25: Despite having some investment-friendly laws and regulations, Nepal still lacks investment-friendly environment, says a report prepared by the US Department of State. This finding comes at a time when the Government of Nepal (GoN) has been urging the international community to invest in Nepal as the country has been created conducive environment for foreign investment.
The report titled '2020 Investment Climate Statements: Nepal' says that the country provides huge opportunities in energy, ICT, tourism and agriculture but it still has various obstacles related to inviting foreign investment.
The report states political instability, massive corruption, bureaucratic hassles and poor implementation of law as obstacles in bringing FDI (foreign Direct Investment). The government is willing to bring in FDI but has not been able to work accordingly, the report further says adding that foreign investors face various hurdles in taking back their profit and currency exchange.
The report has pointed out that the government has a monopoly over power transmission lines and petroleum distribution sector. According to the report, the trade unions close to political parties stage protest programs in industries and the previous government was occupied in resolving its intra-party rift rather than on maintaining good governance which has discouraged FDI in the country.
Immigration laws and visa policies for foreign workers are complex, while operation procedures are not efficient and corruption has further exacerbated the problem of foreign workers seeking to work in the country. The report has expressed dissatisfaction over the government for not being able to implement the US-funded Millennium Challenge Corporation (MCC) project. The report states that the country is discouraging FDI by its inability to implement game changer project like MCC.
In 2017, Nepal signed the MCC project but has not endorsed it through the parliament for its implementation and this does not convey a good message among foreign investors, the report says.
The reports also finds the then government's attempt to prohibit media and non-government organization as inappropriate and considers bringing in secessionist CK Raut and outlawed Netra Bikram Chand into peace process through dialogue as a positive thing. This step will drive to bring in the foreign investment, the report added.
According to the report the country can earn a good amount through the development of hydropower secctor. With an estimated capacity of 40,000 MW, it can make hydropower as a major source of income through the export of energy. The report has also predicted, tourism which provides great opportunities for investment, will be affected by COVID-19 pandemic till 2022.