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The government has resumed the process of appointing a new chairperson for the Securities Board of Nepal (Sebon) - the capital market regulator.

The recommendation committee formed by the Ministry of Finance has invited the three candidates, who were previously shortlisted for the position but failed to appear for the interview, for an interview and presentation session.

Issuing a public notice on Thursday, the committee notified the three candidates - Krishna Bahadur Karki, CEO of Nepal Stock Exchange, Chiranjeevi Chapagain, former chairperson of the Beema Samiti (now Nepal Insurance Authority) and Dr Navaraj Adhikari, executive director of SEBON - to attend the interviews and presentations at 8 am on October 4.

Out of five candidates shortlisted for the position, only Santosh Narayan Shrestha and Sebon's Executive Director Mukti Shreshta had attended the interview and presentation session conducted during the tenure of the then finance minister Barsha Man Pun of the CPN (Maoist Center). There were rumors that the other three skipped the interview after knowing that one of Santosh and Mukti would be appointed to the position. 

Since the recommendation committee was required to recommend three names, the appointment process became complicated when legal questions arose about whether only two could be recommended for appointment. The recommendation committee had even sought the opinion of the Office of the Attorney General on whether to proceed with the recruitment process.

Although the then Attorney General Dinmani Pokhrel had advised that there were no legal obstacles to making the appointment, the selection process was ultimately canceled due to disagreements within the selection committee. 

After the process was canceled, Santosh Narayan Shrestha, one of the interviewed candidates, moved the court against the decision and managed to get an interim order against the decision to terminate the selection process.

The Supreme Court has scheduled a final hearing into the case for January.

Sebon has been without a leader since the first week of January when Ramesh Kumar Hamal completed his term. The parliamentary Finance Committee last month directed the government to end the leadership vacuum by immediately appointing a qualified and suitable person to lead the stock market regulator.

Realizing that the leadership vacuum in Sebon was affecting the country's stock market, Minister for Finance Bishnu Prasad Paudel had recently sought fresh advice from the Office of the Attorney General. It has been learnt that the office has suggested to Paudel that the process can move forward.

People privy to the issue said the appointment process, however, will not be free from controversy. They say former finance minister Pun's statement that his government fell because he refused to bow to interest groups in the Sebon chairperson appointment will make the appointment process complex.

Foreign employment professionals have demanded that the government take initiatives to lift the ban on sending Nepali workers to the UK on seasonal visas.

In an event held on Wednesday, they said that the government should make efforts to lift the UK-imposed ban on taking seasonal visa workers from Nepal to the agricultural sector after 2022. 

Chris Roebuck, a consultant at GoFund International Limited, the organizer of the program, said Nepali workers are losing opportunities. "There is a lot of demand in agriculture for migrant workers on seasonal visas in the UK," he said, "but Nepal is deprived of that opportunity." According to him, the UK is bringing in 45,000 migrant workers annually. But as the UK has stopped taking Nepali workers, Nepal has lost this opportunity.

The UK stopped taking workers from Nepal from 2023, citing reasons such as workers being cheated by manpower companies while sending them through seasonal visas from Nepal, and the illegal stay after visa expiry. A total of 3,600 Nepali workers went to the UK on seasonal visas in 2022. 

But now, Roebuck said, the Nepal government should initiate efforts to lift the ban on seasonal workers from Nepal. "Until 2029, the UK will take workers on this visa," he said: If the current situation continues, Nepali workers will miss out on this opportunity. The government of Nepal should take the initiative in this matter.

Other participants at the program, including representatives of the business community, also expressed concern that Nepali workers will continue to be deprived of opportunities if the government of Nepal does not work with the UK government to send seasonal workers.

The Nepal Stock Exchange (NEPSE) plunged by 32. 81 points to close at 2,486.76 points on Thursday.

Similarly, the sensitive index dropped by 5. 34 points to close at 447. 45 points.

A total of 13,691,596-unit shares of 322 companies were traded for Rs 4. 84 billion.

Meanwhile, Wean Nepal Laghubitta Bittiya Sanstha Limited (WNLB) was the top gainer today with its price surging by 9. 85 percent.

Likewise, Green Ventures Limited (GVL) was the top loser with its price dropped by 10. 00 percent.

At the end of the day, the total market capitalization stood at Rs 3. 95 trillion.

In the fiscal year 2024/25, foreign direct investment (FDI) commitments in Nepal reached an all-time high, doubling from the previous year. The Department of Industry reported FDI commitments of Rs 61.9bn, compared to Rs 30.7bn in 2022/23. Despite this, actual investment inflow has remained low, with only Rs 8.4bn invested last year.

According to the Department of Industry and Nepal Rastra Bank (NRB), the situation is gradually improving, with Rs 12.12bn in FDI commitments made in just the first two months of the current fiscal year. Nepal has received a total of Rs 524.02bn in foreign investment so far, with 6,364 projects approved. These commitments could potentially create 333,908 jobs if the proposed projects are executed. However, the trend shows that actual FDI inflows have lagged behind commitments, despite several years of optimistic projections. Although recent legal reforms aimed at making Nepal more investment-friendly have contributed to an increase in approved FDI, the inflow of funds remains a challenge.

Arjun Sen Oli, director and information officer at the Department of Industry, noted that while investment commitments are promising, only 32-35 percent of committed funds have been invested so far. “Investment commitments are encouraging as they indicate that more funds are on the way,” he said.

In May, the government held its third investment conference, aiming to position Nepal as a prime investment destination. Both large and small investments are expected to materialize, though NRB data indicates that only a fraction of the committed investments has been realized.

Stakeholders believe that a stable government and consistent policies are crucial for further improvement. The Department of Industry has introduced a streamlined system for processing foreign investment proposals, making it easier for investors to apply from any country without needing to be physically present. This has helped create a more conducive environment for foreign investments. “This new system simplifies the proposal process and has enabled the government to foster a more investment-friendly market,” said Oli.

Additionally, the government has lowered the minimum threshold for foreign investments from Rs 50m to Rs 20m and removed limits on foreign investment in the IT sector. This has led to a surge in IT sector investments.

Inward foreign investment improves

Foreign investment into Nepal increased by 36.1 percent in the last fiscal year, according to data from the NRB. Although the government has introduced reforms to reduce investment fees and remove limits on IT sector investments, overall FDI inflows remain modest. In 2022/23, Rs 6.17bn was received, rising to Rs 8.40bn in 2023/24. However, this is still significantly lower than the Rs 18.56bn received in 2021/22, and other years have seen similarly fluctuating figures.

Economist Dilliraj Khanal believes that while recent commitments are encouraging, it will take time for these investments to materialize. “The commitments made last year are only now being implemented,” he said, adding that the government’s recent reforms have had a positive impact on IT investments, though overall FDI inflows remain underwhelming. He stressed that there is a significant gap between committed and actual foreign investment.

Khanal also noted that political stability and consistent policies are essential to attract more foreign investment. “The recent growth in investment is not surprising, given the lack of political stability and effective implementation of amended laws. The government's win-win approach is still not functioning effectively, making it harder to attract FDI.”

To build investor confidence, there is a need for more agile and transparent procedural arrangements, as well as an improved investment environment. Industry, Commerce, and Supply Minister Damodar Bhandari acknowledged that the investment environment has not developed as expected since the last investment conference. He cited political instability and the absence of a stable government as major obstacles. Bhandari recommended revising key policies, including the Mining Act, Commercial Policy, and the 2013 Industrial Policy.

Repatriation of foreign investment returns

A survey by the NRB revealed that in the fiscal year 2021/22, while Rs 18.56bn was committed, only 34.3 percent of this amount actually entered Nepal. Meanwhile, Rs 15.67bn was repatriated as dividends. In 2020/21, dividend repatriation exceeded FDI inflows, indicating a tendency for foreign investors to withdraw profits rather than reinvest.

Over the past 27 years, a total of Rs 411.5bn in FDI has been approved for Nepal. However, only 36.2 percent, or Rs 148.99bn, has actually entered the country. This highlights significant weaknesses in Nepal’s foreign investment sector, exacerbated by political instability and inconsistent policies. Economists argue that these challenges have limited Nepal’s ability to attract and retain meaningful foreign investment.