The government has prepared a draft of the Foreign Direct Investment (FDI) Policy 2013 which, according to the authorities, will also allow Nepalis to invest abroad - something that was banned by the existing law to check the outflow of foreign reserves. 

 

The draft also fixed the threshold on FDI at US $ 200,000. It has also proposed to allow foreign investment in hydropower only in projects of 30MW or higher capacity. The FDI threshold has, nevertheless, courted controversy. “Fixation of a threshold of US $ 200,000 for FDI is not pragmatic,” said founding partner at Viruwa Venture, Vidhan Rana, adding that the implementation of the new FDI policy will hurt small businesses in the country. The government should identify sectors of high and low investment prospects and there can be different ceilings for different sectors, according to Rana. “Some sectors such as IT and agriculture do not need huge investments,” he said, “The government should lower the minimum ceiling in such sectors.” 

 

Rana also underscored the need to thoroughly discuss the pros and cons of the proposed FDI policy before its implementation, advising the government to take the private sector into confidence for the effective implementation of the policy.