Ordinance opens door for Nepali IT companies to invest abroad

The government has paved the legal way for Nepali Information Technology (IT) companies to invest abroad by amending existing laws through an ordinance. An ordinance to amend some Nepal acts—one of the three ordinances that the government has recommended to the President to issue—enables Nepali IT companies to invest abroad, open their branch offices abroad and bring their earnings back to Nepal.

According to an official at the Ministry of Communications and Information Technology (MoCIT), interested companies must submit applications to the MoCIT to avail the facilities. “After studying the application and assessing the company’s capability, the central bank will provide foreign exchange facility to the company on the recommendation of the ministry,” the official said.

While the government is drawing flak for bypassing parliament to amend laws, industry people say the provisions introduced through the ordinance are crucial for the growth of Nepali IT industry.  They say the government’s fresh moves align with the policies and programs that the government brought for the IT sector through its policies and programs for the fiscal year 2024/25. While recognizing IT as a crucial sector for economic transformation, the budget speech stated that the government aims to achieve IT exports worth Rs 3 trillion and create 500,000 direct jobs over the next decade. 

Nepal exported $515m worth of software and IT services in 2002—a growth of 64.2 percent compared to the previous year, according to a study conducted by the IIDS. As many as 14,728 independent software developers, over 106 companies and more than 50,000 freelancers are involved in the IT service export industry, the report states.

Prime Minister KP Sharma Oli has said that the legal reforms brought through the ordinance will allow Nepali IT companies to invest abroad, open branch offices and legally repatriate their earnings home. “There were some legal hurdles in the IT sector, which the government has addressed through this ordinance,” Oli said in a social media post on Saturday. “We facilitate bringing IT earnings back to the country. We believe this will develop IT as a foreign currency-earning industry.”