August 25: Federation of Nepalese Chambers of Commerce and Industries (FNCCI) President Bhavani Rana urged Indian entrepreneurs to increase their investment in Nepal, saying that the country was moving toward political stability after holding two phases of local elections.

Addressing the Nepal-India Business Forum on August 23, Rana informed the gathering of Indian businesspersons that the major problem of Nepal’s development, the political instability, is being sorted out by Nepal’s leaders by institutionalizing the new constitution.

“Our government has already successfully conducted two local elections and gearing up for next phase of elections. This has and will further provide the thrust on maintaining the political stability and ending the prolonged transitional period,” Rana said during the meeting held in honour of visiting Nepali Prime Minister Sher Bahadur Deuba.

Rana further said that the government of Nepal and its bureaucratic mechanism have prioritized creating conducive environment for investment and lowering the cost of doing business in Nepal.

“Government has started a second-generation policy reform initiatives and reformed several laws like Industrial Enterprises Act, Company Act, Labour Act, Social Service Act, to name a few and brought new ones like Special Economic Zone, IPR Policy, Mines and Minerals Policy, among others. The much-awaited Foreign Investment Act is also expected to be ratified by the Parliament within a month. This all shows Nepal’s willingness to support the private sector led growth,” added Rana.

Rana informed the meeting attended by delegates of the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and ASSOCHAM that the macroeconomic indicators of Nepal have been relatively well despite the country undergoing through a rough phase in the last two decades marked by internal conflict, prolonged political transition and the devastating natural disasters.

“Last year, Nepal achieved its highest economic growth of 7.5 percent, the highest in the region. In the last one decade, the per capita income of Nepal has increased significantly thereby increasing the consumption by manifold and making Nepal an attractive market,” she said.

Even though there is a trade imbalance, the balance of payment is satisfactory, said Rana during the speech.

According to Rana, there has been a rise in local investments in sectors like hospitality, manufacturing, and agro processing. There is also a surge of FDI in sectors like hydropower, infrastructure and manufacturing.

Last year, Nepal received a commitment of about 14 billion USD during the Nepal Investment Summit. Recently, the Millennium Challenge Corporation of USA has approved the investment of USD 500 million in Nepal’s power and transportation sector, informed Rana adding that this would further encourage FDI in Nepal.

“Nepal, despite its flaws and challenges, is a profitable market. Just ask some of your colleagues from the ITC, Unilever, Dabur, Punjab National Bank, State Bank of India, Asian Paints, Berger Paints, among others, who are enjoying a good rate of return in their investments. These are the companies who have been in Nepal for about more than two decades and still doing a good business in Nepal.”

Rana further informed that the volume of bilateral trade between Indian and Nepal is also increasing every year. However, the growing trade gap is a matter of great concern for Nepal.“This is the reason why we seek greater investments from Indian private and public sector, especially in productive sector,” she added.

Rana also informed the gathering that FNCCI and CII are jointly organizing Nepal-India Business Summit this year.“Taking this opportunity, we would like to invite you all to participate in the summit and support us in enhancing Nepal-India economic cooperation,” she said.