KATHMANDU: Finance Minister Janardan Sharma has said that it is necessary to increase culture of saving to increase domestic investment in the country. In the fourth infrastructure conference jointly organized by the Ministry of Physical Infrastructure and Transport and the Confederation of Nepali Industry, Minister Sharma said that the trend of spending 90 percent of income has not increased the tend of savings.
“Until there is a culture of saving, investment in the infrastructure sector cannot increase,” said Minister Sharma, “We are going to connect the capital market and insurance to infrastructure construction to use internal resources for infrastructure construction.” He also emphasized that foreign investment must be brought in infrastructure construction.
Bindu Lohani, the former Vice President of the Asian Development Bank, said that the investment in the infrastructure sector as a proportion of the Gross Domestic Product (GDP) in Nepal is the lowest in the Asia Pacific region.
“In a study conducted in collaboration with the Confederation of Nepal Industry, we found that there is a need to invest 31 billion US dollars in Nepal to reduce the infrastructure gap,” said Lohani, “Since domestic resources are not sufficient to meet the said requirement, foreign investment must be brought in using various sources.”
Deputy Governor of Nepal Rastra Bank Bam Bahadur Mishra said that since the bank cannot invest long-term loans from deposits of unstable nature, it has to raise funds from other sources of divestment.
“We have made a policy to keep the interest rate of long-term investment stable,” Mishra said. It has been arranged that 100 percent of core capital bonds can be issued.
Standard Chartered Bank’s head of public sector organizations in the South Asia and Asian region, Jason Bing, said that no country can increase foreign investment without a crediting rating. “The government and the central bank should be able to create a transparent system,” Bing said. If a clear policy is made, it will be easy to make a plan from which source to bring foreign investment.
Rajib Kumar Gupta, Deputy General Manager of Indian Infrastructure Finance Company, said that infrastructure construction companies should be given long-term loans at cheap interest rates. “We have been raising funds from various sources for companies that invest in infrastructure construction in India to ensure resources,” he said.
Ashish Garg, chairman of infrastructure committee of Nepal Industry Confederation, said that Nepal’s banks and financial institutions are unable to provide long-term loans at fixed interest rates. There is a problem with project financing. We have not been able to bring in foreign investment in hydropower’, Garg said, ‘Government has said that the project will be developed in PPP Molad. However, there is no cooperation in risk.
Program experts have suggested that foreign investment should be brought in using various options such as green bond, project financing, direct lending, share investment, etc.