Achievements Of Nepal Investment Summit
Nepal hosted the much-touted investment summit from March 29 to 30 in Kathmandu. The summit was participated in by 1,200 participants, including over 700 delegates representing over 300 companies from forty countries. This is the third investment summit since the introduction of multi-party democracy in the country in the 1990s and the second summit since the new constitution was promulgated in 2015. The first summit was held in 1992, and the second in 2017.
During the second investment summit, investment commitments were made of USD 13.5 billion but Nepal could not capitalise on the commitments as it could garner about 25 per cent of the commitments.
This time, Nepal showcased 77 projects- 50 government and 27 private-sector projects- valued at USD 31.9 billion for foreign companies to invest in. At the summit, the investors evinced interest in investing in 17 projects: seven transport infrastructure, four energy, three agriculture infrastructure, two health and education and one logistic terminal projects. Further, memorandums of understanding for 15 projects outside the showcased project were signed, which is a positive development in the investment sector. Although 17 projects were selected by the investors at the summit, the Nepal Investment Board has given them till April 20 to apply for the projects of their choice. So it is expected that more agreements will be inked with the investors in the days to come.
It is a no-brainer that investors will not invest in Nepal, or in any other country for that matter, if there is no investment-friendly environment, no security of their investments and no guarantee of returns on investment. To ensure that more and more investors invest in the country, new laws have been enacted, cumbersome laws have been amended and procedural reforms have also been made. The Foreign Investment and Technology Transfer Law and the Public Private Partnership Investment Act are designed for the safe repatriation of profits and facilitation of investments respectively. Likewise, establishment of a hedging fund is another milestone in ensuring that foreign investments are secure.
The investment summit has acted as a bridge between the government and investors. It has also succeeded in apprising the foreign delegates and investors of the conduciveinvestment environment being created with the installation of a stable government and political stability taking root. Now the age of political debates and wrangling is over. The present government has emphasised economic prosperity with the catchphrase ‘Prosperous Nepali, Happy Nepali’. To materialise this motto, it is imperative to accelerate infrastructure development in Nepal
It would be germane to note that Nepal is trying to graduate to the status of developing country by 2022. After attaining this status, the country will have to meet the millennium development goals by 2030. The country has also set a goal of becoming a middle-income developed country by the same deadline and of becoming a high-income developed country by 2043. These are ambitious goals, for which 2-digit economic growth is required. For this, investments in various sectors like new technology, employment creation, export growth and import substitution are required. As per the projection of the government, a whopping amount of Rs. 9,799 billion will be required for investments for the forthcoming five years. As the country cannot mobilise such huge funds from internal sources only, it will have to look to foreign countries. Viewed thus, the just concluded investment summit can be said to have been convened at the right time. What is more, establishment of the Nepal Infrastructure Bank is a positive aspect in the direction of making investments in infrastructure development. Similarly, the NRN fund of Rs. 10 billion will also be set up for investments in infrastructure development projects.
The investment summit has proved to be a grand success. There is not even an iota of doubt about it. But the government should not sit back in a complacent manner. Rather, the government should take the initiative in convincing more investors to take up the remaining sixty showcased projects and turn the investment commitments into a reality.
Moreover, there should be a strong mechanism to implement the projects taken up by the investors. Delay in implementing projects, which is the order of day in Nepal, is not desirable. It is said that procrastination is the thief of time. So the government should ensure that the projects taken up by the investors proceed like clockwork and that the quality of the works does not turn out to be inferior. For this, constant monitoring is required.
Nepal has a bad track record when it comes to implementing projects. That a project may linger on not only for years but for decades is not a good omen. Post-quake reconstruction, for example, has been going on at a slow pace with the result that less than one-third of the works have been completed so far. When all the post-quake reconstruction works will be completed is in the womb of time.
Learning from the fate of the projects now in progress, the government should take appropriate measures to ensure that the projects selected by the investors do not meet with snags of any sort. As long as the investors have confidence in their investments, they will choose Nepal as an investment destination. Boosting up foreign investors’ confidence is a big deal, which can be sustained by creating a conducive environment for safe investments, guaranteeing profits together with facilities for hassle-free repatriation, providing for flexible entry and exit facilities and so on. The investment summit has catalysed the investment environment in the country to the desired extent. It would be prudent on the part of the government to use to its account the opportunities thrown open by the investment summit.
(Former banker, Maharjan has been regularly writing on contemporary issues for this daily since 2000)