Foreign Investment Opportunities in Nepal
Nepal has been adopting a liberal foreign investment policy since early 1990s. Foreign investment is allowed in almost all sectors except cottage and very few small industries. However, transfer of technology is allowed in any types of enterprises. Foreign investors are permitted to own up to 100% equity share. Foreign Investment and Technology Transfer Act and Industrial Enterprises Act are the basic laws that guide foreign investment. These laws, in addition to concessions mentioned in sector specific laws, include provisions for incentives and facilities. Sector specific policies and Acts provide details about the sector-specific permission, procedures, approvals and preferential policies for investment. Department of Industry receives application for foreign investment projects below 10 billion NRs. Online application facility is also available through the department’s website- www.doind.gov.np. For the projects above 10 billion NRs, Investment Board, Nepal, which is chaired by the Prime Minister, takes care of foreign investment proposals as single window.
Investors may enjoy Nepal as their ideal destination. Visa regime is liberal. The applicable tax rate in Nepal is one of the lowest in the region. The Industrial Enterprises Act offers lucrative incentives with attractive tax exemptions. Nepal offers abundant and untapped natural resources, optimum climate round the year in many parts of the country, abundant skilled and semi-skilled labor force, hospitable people, easy access to decision makers, rich cultural and bio diversity and wonderful natural beauty. It has also been placed at second status in South Asia in World Bank’s ease of doing business report in last 3 years.
Major potential areas of investment
Hydropower- Nepal is rich in water resources with multiple sources of water including big rivers originating from snow-capped Himalayas. The theoretical capacity for producing power from hydropower projects is above 80,000 MW, however installed capacity is just around 800 MW and there is acute shortage of power in the country. The opportunities exist in this sector to meet the domestic as well as regional demand, that includes China.
Transport- Nepal is in process of economic transformation to realize its goal of graduating from Least Developed Country (LDC) status to developing country status by 2022 and becoming a middle income country by 2030. Infrastructure building projects particularly Roads, Bridges, Railways, metro transports, airports, and public transportation system, among others are required in massive scale.
Agriculture- This sector is the largest contributor to GDP, which accounts 33% in 2016. The country’s virgin land, diverse topography and optimum climate in many parts offer many opportunities. Agriculture and medicinal herbs processing, production of essential oils, organic farming, packaging and branding, seeds and nurseries, fertilizer plants are major potential areas in this sector.
Tourism- Nepal is endowed with wonderful beauty by nature. Range of high mountains including 8 out of 14 highest mountains of the world, big snowmelt rivers and its topography offer adventure tourism for trekking, mountaineering, white water rafting, bungee jumping, ski diving, paragliding, canyoning, mountain biking, Everest Marathon, and so on. The rich biodiversity and uncovered beauty of natural parks provide unique experiences. Nepal has very rich cultural heritage with ancient monuments. Lumbini, birthplace of Lord Buddha offers much prospects for pilgrimage and cultural tourism. Tourism products including high class hotels and resorts, amusement parks and cable cars are some of the potential areas. Lonely planet has rated Nepal as the best value destination to travel in 2017.
Being located between China and India and having optimum climate with unique features, Nepal is one of the best places for MICE tourism. Easy access to government machinery, liberal visa regime with availability of on arrival visa and generous hospitality of the people offer good prospects for holding international meetings and conferences.
Information and Communication Technology (ICT)- The ICT sector is one of the fastest emerging sectors in the country with huge potential for growth in coming years. Opportunities exist in Business Process Outsourcing, ICT Parks, and other software developments. Availability of skilled professionals at reasonable salaries, optimum climate and location of suitable world time zone offer good prospects for ICT sector in Nepal.
Mines and Minerals- Nepal lies in the centre of the 2500 km Himalayan belt, which has favorable geography for various minerals. As many as 63 minerals including limestones, marble, coal, gold, and precious and semi precious stones have been identified in Nepal, but not yet fully explored except limestone for cement industry. Therefore, opportunities exist in exploration of petroleum and natural gas, iron ore, copper, dolomite and magnetite.
Health, Wellness and Education- This is another promising sector. Opportunities exist in building world class education institutions and education cities in the field of medicine, engineering, management and others due to most hospitable and pristine climate, low cost of living, availability of English speaking human resources at low salary and locational advantages. Government allows private investment up to 100 percent in higher education. Developing world class health infrastructures hold much prospects, which may offer medical tourism as well. Similarly, production of high quality pharmaceuticals, herbal medicine, processing of aromatic plants and traditional healing are other potential areas.
Financial Institutions- Nepal has witnessed rapid growth in the number of banks, financial institutions, and insurance companies including with joint ventures. Much opportunities exist in this sector with high class services.
Nepal Investment Guide, 2016. (download available also in Chinese).
Acts and Policies (download available-attached)
For detail informations, please click
Department of Industry (www.doind.gov.np)
Investment Board, Nepal (www.ibn.gov.np)
Other relevant links
Federation of Nepalese Chambers of Commerce and Industries (www.fncci.org)
Nepal- China Chamber of Commerce and Industry (www.nepal-china.org.np)
—Foreign Investment and Technology Transfer Act (FITTA)
—Industrial Enterprises Act (Nepali)
—Investment Board Act
—Income Tax Act
—Patent, Design and Trademark Act
—Private Firm Registration Act
—Private Finance in Build and Operation of Infrastructures Ac
—Banks and Financial Institutions Act
—Foreign Exchange Regulations Act
—Land Acquisition Act
—Excise Duty Act
—Value Added Tax Act
—Competition Promotion and Market Protection Act
—Civil Aviation Act
—Special Economic Zone Act (Nepali)
—Foreign Investment Policy
—Hydropower Development policy
—Nepal Trade Integration Strategy, 2016