Industries Registered with FDI Increase in Volume but Decline in Terms of Commitment Amount

July 20: Foreign investment commitments: Number of industry registrations increased, commitment amount decreased

The commitment made by foreign investors to invest in Nepal has decreased in the last fiscal year compared to the previous FY.

Despite a considerable number of foreign investors registering industry and getting approval of investment commitment from the Department of Industry in the last fiscal year, the amount of investment has decreased compared to the previous fiscal year.

Although the commitment amount has decreased, the number of registered industries is relatively high. According to the annual progress report published by the Department of Industry, the investment commitment amount has decreased by Rs 15.75 billion. The number of industries registered during this period has increased. Last year, 327 foreign investment industries were registered. In the previous year FY 2021/22), the number of industries with foreign investment registered in Nepal was 295.

According to the department, foreign investors had committed to invest Rs 38.40 billion while registering those 327 industries.

When these industries come into operation, around 17,012 people will get employment opportunities in the country. Last year, foreign investors had made investment commitment of Rs 54.15 billion while registering 295 industries. The proposed employment was 16,905.

Foreign investors seem to be more enthusiastic about investing in small scale industries. This process was repeated last year as well.

Out of the total 327 industries registered last year, the number of small scale industries stood at 297. In the previous year, 217 small industries were registered among 295 industries.

An official of the department said that the number of industries registered has increased due to the minimum threshold set by the government for foreign investment. According to him, the investment amount is low.

The government has been revising this threshold time and again. As a result, the data of the department shows that foreign investors are more focused on getting the project approved within the threshold. The government last year reduced the foreign investment threshold to Rs 20 million. Four years ago, the government had set such a limit at Rs 50 million. Before that, the minimum limit for foreign investment was Rs 5 million.

Looking at the statistics of the Department of Industry, it seems that foreign investors propose and approve investment projects within this limit. Last year, 25 medium-scale industries and 5 large-scale industries were registered.

Foreign investors seem to be more interested in the tourism sector. The data of the department shows that more investment commitments were made in the same sector last year. According to the data, 34.41 percent of the industries registered with foreign investment were related to the tourism sector.

After the tourism sector, the foreign investors are attracted towards the service sector. In the third place, foreign investments were made in the manufacturing industries. Altogether 16.5 percent of such industries were registered in the ICT segment and 1 percent in energy and agriculture sectors.