Investment potential in Nepal

Nepal has a lot of untapped investment potential especially in the areas of infrastructure development, renewable energy, green hydrogen, hydropower, tourism, agri-business, and information and communication technology. Manufacturing is another area where Nepal could attract projects.

KPMG in India has a track record of supporting government agencies on investment promotion programs, business reforms and investment summits. We will be happy to advise the Government of Nepal on the Nepal Investment Summit. For the success of the investment summit, along with inter-ministerial collaboration, laying the platform with a stronger policy environment, effective promotion and targeting investors across key sectors, it will be essential to showcase investable projects that are ready to execute.

The workshop on ‘Unlocking Nepal’s Investment Potential’ organized by KPMG in India, along with the Investment Board Nepal (IBN) in Kathmandu was a precursor to the proposed summit in April. The focus was on promoting private investments, particularly Foreign Direct Investment (FDI), to unlock the country's full potential. The speakers elaborated on potential strategies which could be adopted to reduce compliance burden for investor fraternity and simplify the business processes for obtaining requisite clearances and approvals by investors. Drawing from its extensive experience, KPMG shared success stories from other similar economies and drew parallels to offer indicative actionable recommendations for Nepal. Nepal is on the cusp of transformation, and the workshop concluded with a commitment to enhance the country’s investment climate through legal, procedural, and regulatory reforms.

To foster economic expansion and enhance investment potential in Nepal, a comprehensive strategy should focus on strengthening the policy environment, infrastructure development, regulatory reforms, ensuring ease of doing business, and targeted sector-specific investment promotion. Strengthening key sectors like tourism, technology, renewable energy, green hydrogen, and manufacturing can also play a pivotal role in attracting investors and fostering sustainable economic growth. Additionally, building a business-friendly environment, easing process friction, and encouraging innovation will further contribute to creating an attractive investment climate in Nepal.

There are several areas where India could increase investment in Nepal, particularly in areas of synergies and leveraging learnings from each other in ease of doing business (EODB), managing large programs, and infrastructural development through public-private partnerships (PPPs). By fostering collaboration in key sectors such as renewable energy, green hydrogen, manufacturing, digital public infrastructure, technology centers, agriculture, and tourism infrastructure, services, both nations could drive mutual growth and development. Several factors could contribute to the gap between promised investments and actual outcomes. Identifying and addressing these issues, improving transparency, and ensuring a stable investment climate could help bridge this gap.

The author is CEO of KPMG, India