25 Percent Foreign Investments Approved Through Automatic Route

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25 Percent Foreign Investments Approved Through Automatic Route

KATHMANDU: In just one and a half months since the implementation of the automatic route for industry registration, its usage has surged significantly. Applicants using the automatic route receive their foreign investment approval letters via email immediately after submitting their applications, with company registration occurring simultaneously. The government currently allows the registration of foreign investment companies with up to Rs 500 million through this automatic route, with no minimum investment limit for IT-based industries.

The Department of Industry has developed an electronic system for approving foreign investments automatically. Investors can log into this system, fill in the required details, and if all the information is correct, they receive investment approval automatically. Since the implementation of the automatic route in May, 90 projects have been approved, with a total proposed investment of Rs 11.18 billion.

In addition to the automatic route, investments are also accepted through the traditional system. In the old system, investment is approved through meetings and decisions. Combining both processes, Nepal received foreign investment commitments of Rs 44.41 billion across 359 projects in the first 11 months of the current fiscal year.

According to the Department of Industry, 25 percent of the total foreign investment approvals in these 11 months were through the automatic system. Investment commitments worth Rs 8.28 billion have been received for 68 projects via the automatic route, indicating its ease for investors.

Shankar Singh Dhami, director of the Foreign Investment and Technology Transfer branch of the department, stated that the automatic route has gained popularity because it simplifies the investment approval process. Most of the investment proposals through the automatic route are in the tourism sector (49%), followed by the service sector (31%), information and technology (16%), and productive and agricultural industries.

Comparing the current year 2080/81 to the previous year 2079/80, foreign investment commitments in Nepal have increased by 28.39 percent. In the 11 months of 2080/81, Nepal received foreign investment commitments of Rs 44.41 billion across 359 projects, compared to Rs 34.58 billion across 274 projects in the same period last year.

"The increase in foreign investment commitments is due to amendments in laws to facilitate foreign investment, the implementation of the automatic route, and positive outcomes from the investment summit," Dhami explained. In mid-April to mid-May alone, investment commitments for 90 projects amounted to Rs 11.18 billion, a significant increase from Rs 4.97 billion committed for 57 projects in the corresponding period of the previous year.

As usual, the investment projects approved by the Department of Industry, which handles investments up to a maximum of Rs 6 billion, were mostly small in scale. In the 11th month of the current year, many small industry projects were approved, with fewer large-scale investments. The department approved 341 small, 14 medium, and 4 large projects in the review period, compared to 247 small, 22 medium, and 5 large projects in the same period last year.

Most of the projects in the current year relate to the tourism sector, with 176 projects approved. Additionally, 114 service sector projects, 40 productive projects, and 11 information, communication, and technology projects were approved. The least approved projects were in the energy and mineral industries.


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