Tuesday, December 17, 2013

FDI commitment nearly doubles in first 4 months of current fiscal year

KATHMANDU, Dec 16: Foreign Direct Investment (FDI) commitment has nearly doubled in the first four month of the current fiscal year compared to the same period last year.

According to the Department of Industry (DoI), some 98 interested foreign investors have registered themselves at the department during the period and their total commitment comes to the tune of Rs 10.88 billion.

This is likely to create employment for 4,470 Nepali citizens.
During the same period last fiscal year, the total FDI commitment, made by 11 foreign investors, stood at just Rs 5.50 billion.

Energy has become the most attractive sector for the FDI with investors pledging investment worth Rs 5.35 billion in the first four months of the current fiscal year, up from only Rs 2.10 billion in the same period last year.

It may be noted here that a single Indian investor has pledged around Rs 5 billion to develop a hydropower project of 44 MW capacity in Kaski district.
Likewise, foreign investors have pledged Rs 2.29 billion in the service sector, up from Rs 1.95 billion last year.

Agriculture and Forest sectors, too, have received a FDI pledge in the first four months of the current fiscal year - altogether Rs 581 million. The pledge was only Rs 207 million during the corresponding period last year.

Likewise, foreign investors registered with the DoI during this period for investment in mining and similar industries and tourism sector have committed Rs 281 million and Rs 568 million, respectively.

The FDI pledged on these sectors during the corresponding period last year was only Rs 96 million and Rs 556 million, respectively.
However, the FDI commitments for the manufacturing sector have declined to Rs 539 million from Rs 598 million during the first four months of the last fiscal year.

Director at Foreign Direct Investment Section of the DoI, Bipin Rajbhandari, said that overall FDI commitment has increased in the first four month mainly due to the pledge for a hydel project in Kaski as there was no any such project registered during the corresponding period last year.

FDI commitment had increased by 179 percent in the last fiscal year, to Rs 19.39 billion, as compared to the previous fiscal year.
The trend shows the FDI commitment is on the rise over the past few years.

However, the real FDI injection to the economy is quite lower than the commitment, according to Nepal Rastra Bank statistics.
Critics say red tape, lack of investor friendly laws, energy crisis and lack of infrastructures are some of the major stumbling blocks for the foreign investors.

Economist Bishamber Pyakurel said that FDI commitments are increasing significantly as such commitments, which only hovered around Rs 1 to 9 billion in the eight years up tp the fiscal year 2011/12, surged to Rs 19 billion in the previous fiscal year.

“However, the contributions of FDI commitments are not visible in terms of financial stability, growth rate, downsizing trade deficit and employment generation,” added Pyakurel.

He urged the government to set priorities and seek FDIs accordingly in the sectors where Nepal has strengths and adopt demand-based approach while inviting investors, rather than devising a supply-based approach.

Published on 2013-12-17 02:09:59

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