October 16: The government has started implementing the minimum limit of Rs 20 million for foreign direct investment (FDI). The government had made such arrangement in the budget for the current fiscal year. The government has reduced the minimum limit required for foreign investment with the objective of increasing investment in the country.

A recent meeting of the Council of Ministers decided to fix the minimum requirement of FDI per foreigner at Rs 20 million in accordance with sub-section 3 of section 3 of the Foreign Investment and Technology Transfer Act 2075.

Prior to this, the minimum limit for foreign investment was Rs 50 million.

Earlier, the government had raised the minimum limit for foreign investment from Rs 5 million to Rs 50 million in the budget three years ago in accordance with sub-section 3 of section 3 of the Foreign Investment and Technology Transfer Act 2075 BS. Now the minimum limit has been set at Rs 20 million, as per the budget announcement.

The Ministry of Finance had presented the proposal to fix the new limit in accordance with the budget announcement to the Council of Ministers.

Government Spokesperson Gyanendra Bahadur Karki informed that the minimum limit of FDI has been fixed as per the announcement made in the budget.  However, the government has not fixed the ceiling for the maximum FDI in the country.

According to foreign investment experts, although the reduction of the minimum limit is positive, it is not possible to attract large investments immediately. It is expected to boost small and medium scale industries.

Although the government has been reducing the minimum limit required for FDI time and again, it has failed to attract foreign investment.

According to Anjan Neupane, an expert on foreign investment, there is a possibility of additional investment in the IT, tourism, and service sector following the government’s decision to lower the minimum limit. He says the threshold is still too high.

According to him, it is not yet easy to attract investment in Nepal. Foreign investors have to face the obstacles on every step that starts after pouring their investment.

“The Department of Industry has a one-door system. NRB has two employees. That’s all. The old problems are still there,” said Neupane.

According to Neupane, no procedural reforms have been made in the bodies that deal with foreign investors such as the Department of Industry, the Office of the Registrar of Companies, and the Immigration Department.

Investors are well aware that the obstacles in investment approval, company registration, visa permission, business establishment, and operation have not been solved yet. According to Neupane, more than two dozen agencies, including half a dozen ministries, are still needed to take the project to the construction stage. The one-door system is just for the sake of name.

As of mid-September this year, Nepal received investment commitment of Rs 419 billion from 55 countries.