Nepal received FDI of Rs 2.55 billion, a drop of 80 percent

KATHMANDU: Nepal received foreign direct investment (FDI) of mere Rs 2.55 billion in the first six months of the current fiscal year, a straight drop from Rs 12.66 billion during the same period last year.

The records with Nepal Rastra Bank (NRB) show that the FDI received during the review period was 80 percent less during the corresponding period of last year. In the same period last year, the FDI amount had increased by 44 percent.

Although the government, since October 14, has adopted a flexible policy to attract more FDI, it has failed to attract the foreign investors. The government has lowered the minimum threshold limit for the FDI to Rs 20 million from Rs 50 million.

According to Ram Chandra Tiwari, director general of the Department of Industry (DoI), a fall in FDI inflow was mainly due to the economic slowdown in a number of countries. He said the worsened macroeconomic indicators of the country in the past one year could also have adversely affected the foreign investors.

Last year, Nepal suffered depleting foreign currency reserves along with high financial sector instability. It was only since last November that Nepal started feeling a cushion with an improved balance of payments.

The DoI records show that the FDI commitment during mid-July and mid-January this year also declined to Rs 17.30 billion, a straight fall from more than Rs 30 billion during the same period last year.

For the past three months, the government has tightened up on issuing business visas for the foreign investors. Citing its concern to check the inflow of fake investors, the government has taken such measures, which might be one of the additional components attributed to the decline in FDI, according to the DoI officials.

An NRB report published in October shows that Nepal’s realization of FDI is only one-third of the total amount committed by the investors. As of 2020/21, the pledged amount in FDI was Rs 357 billion, while the actual realization was only Rs 130 billion.