In a first, 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 allows the department to approve FDI worth Rs 100 million automatically. The government has already published a notice in this regard in the Nepal Gazette and the system will be implemented on Jestha 1. “Through the newly-developed mechanism, the government can approve FDI worth Rs 100m,” said Ram Chandra Tiwari, Director General of DoI.

In the federal budget for the current fiscal year, the government has announced that foreign investment of up to Rs 100m will be approved through an automatic system.

Accordingly, DoI has prepared the necessary software infrastructure. In addition, the amendment process of the Foreign Investment and Technology Transfer Regulation, 2077 BS has also been initiated to give it legal recognition. According to Tiwari, DoI has made necessary changes to the regulations and has sent it to the Ministry of Industry, Commerce, and Supplies for approval. The ministry will complete the process and send it to the cabinet for authorization. “We will implement the mechanism after the cabinet approves the regulations,” said Tiwari. “We also aim to increase the FDI threshold through the system in the near future.” At present, approvals of foreign investment proposals require going through paperwork which many investors see as tedious. As a result, there was a lot of trouble in getting foreign investment approved. However, after the implementation of the mechanism, investors can get approval for investments up to Rs 100m online without having to visit the DoI office. In addition, the department will also send the necessary documents to the Office of the Company Registrar (OCR) and include the documents in the registration process. However, investors will have to go to OCR to register the companies themselves. The introduction of the mechanism is expected to ease the approval process for foreign investments. According to Tiwari, the services will be more effective with the implementation of the new system. However, the investments to be approved by other ministries and agencies will not be done through this system. The technology has been developed in such a way that only investments in the areas specified in the regulations can participate in the automated process. Foreign investors can invest 100 percent or through a joint investment agreement with Nepali partners. The information on investment approval will be automatically sent to the bodies concerned such as the Nepal Rastra Bank and OCR etc. through the system. This system has already been implemented in Nepal's neighboring countries including India and Bangladesh. In Nepal, most FDIs are less than Rs 100m. So far, DoI has approved 5,545 FDI projects amounting to Rs 421bn.