April 28: As the government could not amend the laws to facilitate foreign direct investment through the regular parliamentary process before the Investment Summit, which commenced on Sunday, it opted to amend the laws through an ordinance.

However, even the ordinance could not be issued by the eve of the summit on Saturday.

According to an official at the President's Office, the investment ordinance passed by the Council of Ministers on April 22 has finally reached the President's Office.

President Ram Chandra Paudel's legal adviser Baburam Kunwar said that the ordinance sent by the government reached the President's Office only on Friday night.

"We have almost completed studying the ordinance. We hardly have any objection to it. The ordinance is likely to be issued by the President on Sunday," Kunwar told New Business Age.

The government had been working since a long time to amend the laws to facilitate foreign investment but failed to amend the laws ahead of the summit.

The government’s commitment to make the investment summit fruitful has been questioned due to the delay in sending the ordinance to the President’s Office.

The government has decided to amend about a dozen laws through the ordinance.

The laws to be amended include Land Act 2021, Forests Act 2070, Industrial Enterprises Act 2076, Special Economic Zone Act 2073, Foreign Investment and Technology Transfer Act 2075 among others.

Reforming these laws allows investors to acquire land beyond the limit to set up industries. Likewise, the government can approve the use of forest areas to extract minerals. The amended laws allows transferring technology from Nepal to foreign countries.

Kamlesh Kumar Agarwal, president of Nepal Chamber of Commerce, said that although the investors have keen interest in legal reform, the ordinance has not been issued on time. “This did not give a positive message to the investors,” he said, adding, “Before investing, investors give a special attention to the laws of the respective countries. They plan their investment accordingly. It is not appropriate to delay amending the laws," he said.

Private sector stakeholders are skeptical about the two-day Investment Summit underway in Kathmandu since Sunday as the ordinance was not issued even by Saturday.

Nepali Congress, the main opposition party in the Parliament, expressed its displeasure saying that the government did not amend some important laws directly related to the country and the people through the parliamentary process.

"The government's act of issuing an ordinance to amend laws targeting the investment summit which was scheduled months ago is against the spirit of the constitution, parliamentary system and democracy. The government decided to issue the ordinance by misinterpreting the provision of the constitution that allows the government to issue an ordinance in extraordinary situation when the federal parliament is not in session," reads a statement issued by Nepali Congress chief whip Ramesh Lekhak on Saturday.

The government, which has repeatedly announced to undertake the country’s sovereign ratings before investment summit, has failed to do so. As the investment summit kicked off on Sunday, the government has failed to take the investors into confidence by conducting the country’s credit rating.

The sovereign credit rating depicts the picture of the country's financial situation and credit repayment capacity. It is a kind of credit assessment that gives the real information about the country's investment risk situation. Foreign investors have taken it as a prerequisite for investment. Due to lack of crediting rating, Nepal has not been able to take commercial loans for large infrastructure projects from international development partners.

In order to increase foreign investment, the government had announced a sovereign credit rating in the budget of the fiscal year 2075/76. The government issued a public notice in this regard and invited the companies for credit rating of Nepal. Fitch, Moody's and Standard & Poor's, the world's three major rating companies, submitted proposals for the rating. From among them, the government selected Fitch Ratings for the country’s credit rating. For that, a separate agreement regarding technical assistance was also signed with the then British International Cooperation Agency (DFID) currently known as UK Aid. The government has appointed Standard Chartered Bank as the rating consultant.

The government decided not to move ahead with the credit rating due to the Covid-19 pandemic fearing that it would send a negative message to the international community as the indicators of the economy were negative due to the impacts of the pandemic.

The government recently announced to go ahead with the credit rating. Former Finance Minister Dr Prakash Sharan Mahat and incumbent Finance Minister Barsha Man Pun had been repeatedly saying that the government would undertake the credit rating before the investment summit.

Fitch Ratings had expressed its commitment to complete the credit rating within three months but it has not yet started the rating.

Admitting that the country rating could not be done before the investment summit, Joint Secretary of the Ministry of Finance, Narayan Prasad Risal, told New Business Age, "We tried but the work could not be completed. It is not yet possible to say how long it will take for the country rating.”