When the government will roll out a red carpet for international investors in Kathmandu for the Investment Summit, industry observers say the event will be a test of the administrative capabilities of KP Sharma Oli to translate the hype into actual investment.
Earlier this month, the government introduced three vital laws to attract foreign investors, including much talk about Foreign Investment and Technology Transfers that promised FDI approval within a week and one-door service at the Ministry of Industry.
During the last investment summit in 2017, the government signed a letter of intent with foreign investors to invest $ 13.50 billion. But only a small portion of that amount is included in the actual investment. Members of the Nepalese business community cited the lack of follow-up and urgency of the post-summit government and ongoing bureaucracy for a lackluster situation after the first summit ended in high notes.
[Read: The government did not do his homework before the investment summit – Ram Sharan Mahat]
Experts say it will help if the government will move beyond the initial interest and take a proactive role to seduce investors to actually make a commitment, something that did not happen last time.
“The government must hold complex discussions with parties who show interest in certain projects, explain how they will move forward to maintain interest and translate it into actual investment,” said Advocate Semanta Dahal, who has advised the government about various infrastructure project.
The 2017 summit comes as Nepal has passed the constitution after a prolonged deadlock and is preparing for a historic local election that lasts two decades. The key message is to tell the world that Nepal is open for business.
This year’s summit, with a new law passed to attract foreign investment, aims to double the same message in front of a much larger audience. According to the Nepal Investment Agency, there will be delegates from around 50 countries compared to the participation of only 21 countries at the 2017 Summit. Speaking to the Post earlier this month, Maha Prasad Adhikari, CEO of Nepal Investment Agency said, “Our footing is political stability, policy predictions, and reformation. State agencies will facilitate investors efficiently and effectively without red tape and red tape. ”
But some industry insiders said that preparation for the summit did not show that the government was doing enough homework to implement the lessons learned from the last summit.
“There isn’t much difference in preparation for the summit from the last time except in the front, which is broad,” said Siddhant Pandey of Business Oxygen, Nepal’s first private equity company. In recent months, ministers and government officials have fled to London, New Delhi, Beijing and several other places in an effort to raise the profile of the Investment Summit and bring more participants.
But unless the ease of doing business improves in Nepal, the hype surrounding FDI will subside after the end of two days of luxury, some business owners say. Nepal slipped five places from 105 in 2017 to 110 in 2018 in the ease of conducting a global business ranking prepared by the World Bank. During the same time, India has jumped from 130 to 77 in the ranking. Obtaining approval from various government agencies and long waiting times to start the investment process, in addition to the high cost of doing business, has been routinely referred to as an obstacle to investment in Nepal.
In 2017, then industrial minister Nabindra Raj Joshi looked very optimistic when he told the Post, that the Investment Summit was “the beginning of glorious days for Nepal”. But two years since the statement, Nepal is still far from fostering a favorable investment climate and paving the way for foreign investors to easily enter and exit the country, something that the government thinks Joshi will do.
“Investment in and out is not efficient in Nepal,” said Willem Grimminck of One to Watch, an investment management company that invests in small and medium-sized businesses. But Grimminck said he hoped that things would change with the government’s recent decision to issue a law to attract foreign investment.
“The investment summit will be a good test to see whether the government is successful and how investors are responding to the reforms that have been carried out by the government,” he added.
While the government is trying to seduce international investors, local entrepreneurs say there must be ongoing efforts to foster a climate that is beneficial for everyone, and they must also be given equal treatment for business convenience.
“We cannot have an uneven playing field,” said Shekhar Golchha, senior vice president of the Nepal Federation of Chambers of Commerce and Industry. “Overcoming all the concerns that reduce the spirit of investment in this country should be a continuous exercise after the summit too.”