After a hiatus of five years, the government is set to host the Nepal Investment Summit in the last week of April. It has already put in place a comprehensive structure, comprising a steering committee led by the finance minister, an implementation committee headed by the chief secretary, and a technical committee overseen by the secretary of the Ministry of Industry, Commerce and Supplies to streamline the event. Additionally, the Summit's Secretariat will be coordinated by the CEO of the Office of the Investment Board Nepal CEO. Addressing the Vibrant Gujarat Global Summit last month, Minister for Finance Dr Prakash Sharan requested Indian investors to participate in the summit scheduled for April 28 and 29 in Kathmandu.
The government's announcement to host the third edition of the Nepal Investment Summit is indeed positive. It, however, is essential to reflect on the unfulfilled investment commitments from previous summits. The government's repeated pledges to "draw in foreign investment" and "transform the country into an appealing Foreign Direct Investment (FDI) hub" have lost their impact, given the prolonged indecision that has hindered Nepal's FDI policies.
As a nation currently ranked among the world's least attractive destinations for FDI, the task ahead for the government before the summit is clearly defined. The summit is occurring amid a notable exodus of young people from Nepal, coinciding with economic recession and governance challenges. Prioritising the reform of the FDI regime, attracting investments, and generating new employment opportunities are crucial if the nation is to counteract the widespread migration.
While the government is expediting preparations for the Summit, recent media reports suggest that two Indian corporate behemoths - Adani Group and Tata Group - have shown interest in pursuing substantial projects in Nepal. The Adani Group is exploring an airport project, while the Tata Group is contemplating reviving three struggling public enterprises. The interest demonstrated by these Indian conglomerates indicates the appeal of Nepal to foreign investors. Nevertheless, it also underscores the imperative for reforms in the country's FDI regime.
A comprehensive revamping of the FDI regime is a must if the government wants to establish Nepal as an attractive investment destination. Investor confidence hinges on the assurance of investment security. While there have been noticeable legal and institutional reforms in recent years, a lot of work is still to be done in this regard. Streamlining the FDI approval process is equally crucial. The government must prioritise the introduction of viability gap funding (VGF), amend hedging regulations, and complete Nepal's country rating before the summit. These actions are essential to convey the message that the government is prepared to engage in business.
Furthermore, controversies such as the Axiata Group's exit from Ncell and arrest of a leading Nepali businessman require careful handling to instill confidence in foreign investors. It is in Nepal's best interest to approach such issues with extreme caution.
The task force, established to propose legal reforms in anticipation of the third investment summit, has put forth recommendations for amendments to a dozen laws and regulations. The implementation of the Aryal-led task force's suggestions will instill confidence in both domestic and international investors. To elevate the investment summit beyond a mere event, the government must demonstrate urgency and commitment, assuring investors that Nepal is steadfast in addressing their requirements and concerns.
