First Business News Portal in English from Nepal
KATHMANDU: The United States (US) government has said that Nepal’s slow progress in securing Parliamentary ratification for the Millennium Challenge Corporation (MCC) Compact and implementing it has not sent a good signal to potential investors in the country.
Releasing a report entitled,2021 Investment Climate Statements: Nepal, the US said that delay in ratifying the Compact from the Parliament, one of the preconditions set to officially start the implementation of the Compact, might affect potential investments in the country.
In 2017, the MCC signed a $500 million MCC Compact with Nepal that will focus on the electricity transmission and road maintenance sectors. Nepal has agreed to contribute an additional $130 million for these Compact programs. However, the Compact has not entered the implementation phase as it awaits ratification from the Parliament.
Owing to reservations about the Compact among few political leaders terming it part of the US Indo-Pacific Strategy, the Compact hasn’t been ratified even after four years after both the US and Nepal government signed the agreement.
Similarly, the US government, in the report has also stated that corruption, laws limiting the operations of foreign banks, challenges in the repatriation of profits, limited currency exchange facilities, and the government’s monopoly over certain sectors of the economy, such as electricity transmission and petroleum distribution, undermine foreign investment in Nepal.
Likewise, political uncertainty is another continuing challenge for foreign investors in Nepal, as per the report. “Nepal’s ruling party has spent much of its energy over the last years on internal political squabbles instead of governance,” reads the report.
However, the report states that Nepal offers opportunities for investors willing to accept inherent risks and the unpredictability of doing business in the country and possess the resilience to invest with a long-term mindset.
Picture Courtesy: US Embassy in Nepal
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