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Despite government assurances of an improved business environment in the country, Nepal has failed to attract significant foreign direct investment in the last fiscal year.  Foreign direct investment (FDI) pledges in the country dropped by 22.20 percent in FY 2022/23. FDI commitments totaled Rs 38.457bn in FY 2022/23 compared to Rs 49.431bn in FY 2021/22.

A total of 327 industries having FDI pledges have been registered at the Department of Industry (DoI) during the last fiscal year. The majority of industries approved by the department are small-scale industries. The DoI approved 297 small-scale industries, 25 medium-level, and five large-scale industries. The department has also approved 64 technology transfer agreements.

The service sector and tourism sector are the two most preferred areas of foreign investors in Nepal in the last fiscal. According to DoI, 82 percent of the registered industries are in the service sector and tourism sector categories. Only nine percent of industries have been registered for the manufacturing sector while it was five percent for the IT sector.

Government officials point out the global economic downturn, the lowering of the minimum threshold for FDI, and the tightening of visa rules for foreign investors by the Nepal government for the decline in FDI pledges. In November last year, the government lowered the minimum threshold for FDI to Rs 20 million from Rs 50 million to attract even the small foreign investors in the country. Since the FDI threshold has been lowered, there is an increment in the number of industries' registration but the investment amount has remained lower than that of the last fiscal year.

There has been growth in the number of companies registered in the IT sector. A total of 16 IT companies were registered in FY 2022/23 compared to seven in FY 2021/22.

FDI commitments also declined this fiscal due to a slowdown in investment commitments from China. The investors from the northern neighbor have been committing the largest amount of FDI in the last several years to Nepal. With China facing economic problems due to renewed Covid-19 crisis, and supply chain disruptions, investment pledges from the northern neighbor have also been affected. 

Nepal falls among the countries that receive the lowest FDI in the world. Despite many talks on attracting FDI in the country, the country has failed to attract foreign investors as expected. At less than one percent of GDP, Nepal’s current levels of FDI are the lowest among similar economies.

Economists and industrialists say it has become imperative to improve the existing policy and structural system to bring more foreign investment into Nepal. According to them, while the immediate reason for the decline in FDI might be the global recession and domestic political situation, there are structural and procedural obstacles in Nepal that discourage investors. 

Despite introducing a one-door system in the Investment Board Nepal and Industry Department, FDI has not come in as expected. “It has failed to facilitate FDI so far because it has failed to become a complete one-stop service center,” the economist said.

In the second week of March, Prime Minister Pushpa Kamal Dahal had said that the government is seriously working on further simplifying the procedures, fully operationalizing the one-stop service, and developing necessary rules for the automatic approval of foreign direct investments (FDIs) applications. 

Of late, the government has eased procedures related to FDI. The Department of Industry (DoI), the government agency responsible for providing services to foreign investors, has developed a mechanism to approve foreign direct investments (FDIs) through the online channel. The mechanism that allows the department to approve FDI worth Rs 100 million automatically has come into implementation from Jestha 1. 

The private sector says the country has not received the net FDI as per the investment pledges. "The actual FDI inflow is much less than what has been committed by the foreign investors," said Pashupati Murarka, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). 

According to Murarka, there was a huge drop in the demand for goods and services in the last fiscal year.  “At a time when domestic investors are reluctant to invest, we cannot expect foreigners to invest in the country,” said Murarka. 

Net FDI inflow plunges by 73.2 percent

Nepal received less than Rs 5bn in net foreign direct investment (FDI) in the first 11 months of FY 2022/23. According to the latest macroeconomic data of the Nepal Rastra Bank (NRB), net FDI inflow as of mid-June stood at Rs 4.64bn, a decline of 73.2 percent. The country received net FDI worth Rs 17.35bn during the first 11 months of FY 2021/22.

Box 1

Month wise FDI commitment

Box 2

Net FDI in Nepal (First 11 months)

Paddy is Nepal’s main food crop. Agricultural experts say farmers will get better yields if paddy seedlings are transplanted by mid-July. However, plantation has been completed on only around half of the paddy fields because of factors like a long spell of drought, shortage of fertilizers, and the impact of lumpy skin disease on oxen. 

Plantation had been completed on 65 percent of paddy fields by this time last year.

According to the Ministry of Agriculture and Livestock Development, paddy transplantation has been affected this year due to the late onset of monsoon in Madhes, Kosi, and Bagmati provinces, and lumpy skin disease in Karnali and Sudurpaschim provinces. About 90 percent of the fields in Madhes province, which is considered the country’s granary, are still barren. 

Paddy transplantation has been completed on 95 percent of paddy fields in Sudurpashchim Province.

Jhapa, the largest paddy producer in the country, has achieved 65 percent progress in paddy transplantation by mid-July. However, paddy transplantation has been completed on 95 percent of paddy fields in Kailali—the second-largest producer. Bajhang, a hilly district of Sudurpashchim Province, has made 100 percent progress in paddy transplantation.

Rabindra Kumar Kushbaha of Belgachhi in Gaushala-8 of Mahottari said paddy fields are barren even in mid-July due to a lack of sufficient rainfall. “Some farmers transplanted paddy by making alternative arrangements, but seedlings are drying up,” he said.

Most of the paddy fields of Dinesh Mahato of Gaushala-11 are barren. Mahato, who cultivated paddy in two and a half bighas last year, hasn't been able to transplant seedlings this year. “Seedlings are drying up in the seedbed,” he added.

According to the Agriculture Knowledge Center, Mahottari, paddy transplantation has been completed on only 15 percent of paddy fields in the district so far. “The situation is not worrying yet, as paddy transplantation here continues till the end of July. We might get adequate rainfall by that time,” Ram Chandra Yadav, chief of the center, said.

About 90 percent of paddy fields in Madhesh Province are still barren, according to the Ministry of Land Reforms, Agriculture, and Cooperatives. Paddy seedlings have been transplanted on only 33,773 hectares out of 354,383 hectares in eight districts of the province.

Banke of Lumbini Province has made only 50 percent progress in paddy transplanting. “Transplantation progress was only 15 percent at the beginning of June. Most of the farmers have already prepared seedlings in the seedbed. Transplantation will gain pace if there is adequate rain,” Shakil Ahmed, chief of Agriculture Knowledge Center, Banke, said.

Transplantation has been completed only on the paddy fields in Rapti Sonari, Baijanath, Duduwa, and Khajura and areas that receive water from the Sikta Irrigation Project. “Paddy had been transplanted in all areas of Banke, except Narainpur, by this time last year. Narainpur has made the least progress in paddy transplantation this year,” Ahmed added.

Baglung in Gandaki Province has reported 65 percent progress in paddy transplantation. According to the Agriculture Knowledge Center, Baglung, transplantation has been done on 3,824 hectares out of the total of 5,883 hectares.

56 percent progress in Koshi 

Koshi Province has achieved 56 percent progress in paddy transplantation till mid-July. According to the Agriculture Development Directorate, Biratnagar, this is seven percent more compared to the same period last year. “Paddy transplantation has been completed on 50 percent of paddy fields in high hilly areas, 47 percent in mid-hills area, and 60 percent in Tarai areas,” Prakash Kumar Danig, chief of the directorate, said.

Dangi said paddy transplantation is progressing smoothly in Koshi Province. “We had achieved 49 percent progress in the same period last year. Paddy can be transplanted in Tarai districts until late August,” he added.

Paddy is cultivated on 340,829 hectares out of 826,646 hectares of arable land in Koshi. Of them, paddy has already been transplanted on 191,000 hectares.

73 percent progress in Karnali 

Plantation is going on at a slow pace in Karnali which would have completed transplantation on 90 percent of fields by mid-July. According to Tilak Pandey, an information officer at the Directorate of Agricultural Development, Surkhet, transplantation has been completed on 73.79 percent of paddy fields so far.

Out of 15,240 hectares of paddy fields in Surkhet, transplantation has been completed on 10,023 hectares, or 65 percent. Progress in paddy transplantation stands at 53 percent in Dailekh, 85 percent in Jajarkot, 83 percent in West Rukum, 90 percent in Salyan, 100 percent in Dolpa, 84 percent in Humla, 97 percent in Jumla, and 84 percent in Kalikot.

66.71 percent progress in Gandaki 

Paddy transplantation has been completed on 66.71 percent of paddy fields in Gandaki by mid-July, compared to 79.45 percent in the same period of the last fiscal year.

According to the Directorate of Agriculture Development, Pokahra, most of the districts in the province depend on monsoon rains for paddy. Only 37 percent of arable land in Gandaki has irrigation facilities.

While paddy transplantation has been completed on 50 percent of paddy fields in Gorkha, progress in transplantation stands at 65 percent in Lamjung, 68 percent in Tanahun, 65 percent in Parbat, 40 percent in Syangja, 65 percent in Baglung, 80 percent in Kaski, and 85 percent in Nawalpur.

Highest progress in Sudurpashchim

Sudurpashchim has achieved 92 percent progress in paddy transplantation—the highest among the seven provinces of the country.

According to Keshav Raj Pandey, information officer of the Directorate of Agricultural Development, Dhangadhi, transplantation has been completed on 95 percent of paddy fields in Kailali—the largest paddy producer in the province.

“Likewise, Kanchanpur has made 91 percent progress in transplantation. Thanks to good monsoon rains, transplantation has been completed even on farms that do not have irrigation facilities,” Pandey added.

Transplantation, however, hasn’t made much progress in eight hilly districts of the province, which depend on monsoon rains. “These districts haven’t received rain for the past three to four days,” Yagya Raj Pandey, director of the directorate, said. “Nevertheless, we are hopeful that transplantation will be completed in the province within a week.”

Paddy is cultivated on 179,000 hectares in nine districts of Sudurpashchim. While Baitadi has reported 98 percent progress in paddy transplantation, progress in other districts stands at 90 percent in Darchula and Dadeldhura, 88 percent in Doti, and 85 percent each in Achham and Bajura.

An earthquake measuring 4 on the Richter scale shook Kaski district on Wednesday.

The National Earthquake Monitoring and Research Center said that the tremor was felt at 9: 53 am local time with its epicenter at Mirsa of the district.

On July 13, an earthquake measuring 4.6 on the Richter scale occurred in Humla, with its epicenter at Kalika.  

Police have arrested a man on the charge of keeping a suspicious object in Sinamangal.

SP Sitaram Rijal of the District Police Range, Kathmandu, said that a man has been apprehended for placing a suspicious object in Sinamagal.

His details will be made public shortly, police said.

A suspicious object was found near the Khotang Halesi Jewelers in Sinamangal on Wednesday morning.

A pamphlet of a party called Nepal Utthan Krantikari was also found in the place where the suspicious object was found.

Meanwhile, a bomb disposal squad of Nepal Army defused the suspicious object.

The price of gold has increased by Rs 600 per tola in the domestic market on Wednesday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 113, 100 per tola today. It was traded at Rs 112, 500 per tola on Tuesday.

Meanwhile, tejabi gold is being traded at Rs 112, 550 per tola. It was traded at Rs 111, 950 per tola.

Similarly, the silver is being traded at Rs 1,490 per tola today.  

The government has decided to publish a notice regarding waiver and amendment in the fees for company registration and capital increment.

A Cabinet meeting held at the Prime Minister's official residence in Baluwatar this morning made the decision to this effect, informed government spokesperson and Minister for Communications and Information Technology Rekha harma.

The meeting also approved the Prime Minister Pushpa Kamal Dahal’s upcoming visit to Italy to participate in the 'United Nations Food System, 2023 Stocktaking Moment' to be organized by the UN Food and Agriculture Organization (FAO) in its headquarters in Italy.

The meeting decided that the PM Dahal-led Nepali delegation will comprise Minister for Agriculture and Livestock Development Dr Beduram Bhusal and others.

Minister Sharma said that the government has appointed Dr Rabi Malla as the executive committee member of the Martyr Gangalal National Heart Centre. 

Dr Malla has been serving the hospital as a medical person.

A suspicious object was found in Sinamangal, Kathmandu on Wednesday.

The suspicious object was found near Khotang Halesi Jewelers near Sinamangal Bridget this morning.

SP Sitaram Rijal of the District Police Range, Kathmandu said that the suspicious object was found near the shutter of Khotang Halesi Jewelers.

He said that a bomb disposal team was called to defuse the suspicious object.

Security has been beefed up in the area, police said.

CPN-UML Chairman KP Sharma Oli left for Cambodia.

A six-member team headed by Oli left for Cambodia last night to observe the election to be held there, informed UML Publicity Department Chief Rajendra Gautam.

The delegation comprises Oli's spouse Radhika Shakya, party's deputy general secretary Bishnu Rimal, Oli's personal secretary Rajesh Bajhracharya.

Chair Oli is scheduled to return home on July 24.