Why should the government open outbound FDI?

The question should begin from why not the government should allow outward FDI. I do not see any strong logic to restrict Nepali businessmen from investing in foreign countries. The government should allow Nepali business community to expand their foothold in the global market. 

 

You mean, the government should introduce unconditional outward FDI policies?

No. The government can set some standards. The government can provide such permit to those who have good track record in the homeland. For instance, the government can allow businessmen and firms who have already done fabulous business in the country and have already become successful. The government should not stop their possibility of expanding business in the global arena. Similarly, companies that have world-class technology and can compete in the global market should be allowed. The export of goods from Nepal to other countries may not be convenient given the country’s geographical location. In such situation, firms and companies may want to set up their production unit outside the country to reduce transportation cost and increase products’ competitiveness. The government should facilitate such companies.

 

Existing fear on the part of government seems that the investors will not bring the capital back to Nepal if they are allowed to invest abroad. Is it like that?

It is hypothetical assumption. The government has not been able to control illicit money transfer system like Hundi. And, businessmen can easily send money outside of the country using Hundi, if they want. Basically, genuine businessmen want formal provision for outward FDI. Legalising  outward FDI is necessary to control illicit practices such as Hundi. Yes, the government should set up reliable agency to record all the details of companies that want to invest aboard. 

 

Do you think the government is shying away from introducing outward FDI policy to cover its inefficiency?

I do not blame the government directly. But one thing I can firmly say is that the government has less trust on its own citizen. It is not irrational demand that businessman should get opportunity to invest abroad in this globalized world. Why does someone knock the door of the regulator? The answer is: he/she wants to follow the due procedures. But, our government perceives those people cynically. On the other hand, it cannot control illegal capital flight. Better to legalize it and keep capital outflow on formal system. The country that does not trust its own businessmen cannot make tremendous progress. I think, environment of trust should be built up between business community and the government. 

 

Business community is also linked with some financial fraud. How can the government trust on them?

The government should introduce some provision to allow firms/companies to invest abroad. One of the reliable indicators to assess a company is its track record in the home country. The government can trust a company if it is doing good business in the home country. For example, the government can allow companies for outward FDI based on the contribution made by a particular firm to the government revenue. Revenue contribution might be one of the good indicators to assess whether the concerned firm can ensure good performance in foreign land. This provision can also help control tax evasion and encourage companies to deliver good performance in the country. 

 

So you think outward FDI will help strengthen national economy?

Yes. Outward FDI is not only linked with business but it is linked with entrepreneurship too. If the government wants entrepreneurship to grow in the country, it has to open outward FDI as soon as possible. Entrepreneurial mind wants growth and expansion. But is Nepali market alone is sufficient for an ambitious entrepreneur? The answer may be ‘not at all.’ So, the government should let them explore business opportunities across the world, which ultimately will pay back to the country. 

 

There is still some policy dilemma regarding outbound FDI. How do you see the situation?

Confederation of Nepalese Industries (CNI) has already made it clear that the existing Foreign Investment and Technology Transfer Act – 1992, should be revised and the provision of outward FDI should be included in the Act. Some experts and business communities opposed the idea and dragged it into controversy. We do not see any basis for their arguments The government may introduce policy but it should be clear and transparent.