Kathmandu, Sept. 28
Realisation of the Foreign Direct Investment (FDI) in Nepal
has remained poor over the years, with just 36.2 per cent net inflow in 27-year
period since 1995.
Only in the Fiscal Year 2011/12, the total FDI inflow
surpassed the total commitment and reached 128.8 per cent with the commitment
of Rs. 8.13 billion and inflow of Rs. 9.19 billion, according to the Survey
Report on Foreign Direct Investment in Nepal (2021/22) published by the Nepal
Rastra Bank on Wednesday.
Likewise, the inflow was 88.8 per cent in 2016/17 which was
the aftermath of the devastating 2015 earthquake that damaged properties worth
more than Rs. 600 billion. That year, Nepal received the FDI of Rs. 13.5
billion. But in 2017/18 it went down to just 31.4 per cent with the inflow of
Rs. 17.5 billion against the pledge of Rs. 55.7 billion.
Likewise, the largest FDI inflow was received in 2020/21
when Rs. 19.5 billion was channelised into the country. The FDI inflow remained
negative in 2000/01, 2001/02 and 2005/06.
Nepal has FDI from 57 countries by the end of the Fiscal
Year 2021/22 (mid-July 2022) amounting to Rs. 264.33 billion.
Of the total FDI that the country received, paid-up capital
makes 53.7 per cent share, reserve fund 31.7 per cent and loan 14.6 per cent. The
FDI stock was increased by about 16 per cent in 2021/22.
According to the report, highest FDI – Rs. 88.59 billion –
has come to Nepal from India, followed by China Rs. 33.45 billion, Ireland Rs.
20.90 billion, Singapore Rs. 16.07 billion and St. Kitts and Nevis Rs. 15.09 billion.
St. Kitts and Nevis is a famous tax haven.
Meanwhile, Nepal has remained as one of the countries in the
South Asian region that receives a minimal amount of FDI. In 2022, India
received US$49.4 billion FDI which is up by 10.3 per cent from 2021. Likewise,
Bangladesh received US$ 3.5 billion and Pakistan US$ 1.3 billion while Nepal
got only US$ 0.1 billion which is down by 66.8 per cent compared to 2021.
About 62.6 per cent of the FDI, that comes to Nepal, is
mobilised in industrial sector, 37.3 per cent in service. However, in terms of
industry-wide category, hydroelectricity has received 32.8 per cent of the
total industrial sector FDI while banks and financial institutions have got
25.6 per cent of the service sector FDI.
The electricity, gas, steam and air conditioning sector,
hydropower sector in particular, in Nepal has been a preferred sector for FDI
in recent years. The latest survey shows that 32.8 per cent of FDI stock and
41.8 per cent of total paid-up capital is in this sector, read the report.
Moreover, hydropower sector has also attracted other sources
of external financing such as foreign loans in addition to FDI; the
electricity, gas, steam and air conditioning sector accounts for 41.4 per cent
outstanding foreign loan at the end of 2021/22.
Other sectors that received FDI are accommodation and food
services, information and communication, human health and social work,
construction and agriculture, forestry and fishing.
Meanwhile, Bagmati Province has received the largest share
of the total FDI inflow. It has 55.4 per cent of the total FDI stock with Rs.
146 billion investment. Koshi received 17 per cent (Rs. 45.05 billion), Gandaki
16.8 per cent (Rs. 44.4 billion) and Madhes 8.8 per cent (Rs. 23.3 billion).
Karnali has received just Rs. 47 million, 0.02 per cent of the total FDI stock.
According to the report, companies established with the FDI
are running at a capacity of 71.1 per cent and their average profit rate is
14.3 per cent.
The NRB had made conclusions on the basis of the survey of 231 companies established with the FDI. The central bank said that it has been preparing and publishing the reports on the FDI to support the government and concerned agencies in better policy formation.
Published in The Rising Nepal daily on 29 September 2023.
No comments:
Post a Comment