Econ-ity » April 27, 2014

Daily Archives: April 27, 2014

What do experts have to say on the proposed Foreign Investment Policy (FIP), 2014 (Draft)

Foreign Investment Policy (FIP), 2014 has been proposed and brought to the public’s attention recently by Ministry of Industry, Government of Nepal. As a think tank which aims to create a greater discourse on sound economic policies, Samriddhi, The Prosperity Foundation hosted its latest edition of Econ-ity (Samriddhi  Foundation’s regular discussion forum) on the proposed Foreign Investment Policy (FIP), 2014. The discussion was attended by lawmakers, entrepreneurs, present and former members of the bureaucracy, legal experts, policy experts and journalists.

Some of the key speakers were Mr. Rameshwore Khanal (Former Finance Secretary), Mr. Purushottam Ojha (Former Secretary, Ministry of Commerce) and Mr. Madhukar SJB Rana (Former Finance Minister). This edition of Econ-ity was moderated by Dr. Biswambher Pyakuryal (Professor of Economics, TU). Mr. Krishna Gyanwali (Secretary, Ministry of Industry) was present at the occasion to discuss and collect the opinions of the participants on the draft policy.

From left,  former finance secretary Rameshore Khanal, economist Bishwambher Pyakuryal, Industry Secretary Krishna Gyawali and former commerce secretary Purushottam Ojha

From left, former finance secretary Rameshore Khanal, economist Bishwambher Pyakuryal, Industry Secretary Krishna Gyawali and former commerce secretary Purushottam Ojha

There were a number of concerns that came up during the discussion. Some of them were as follows:

1)      The issue of minimum thresholds was discussed at length as a negative factor that discourages smaller scale investment (especially those kind that are predominantly coming into IT and Tourism industry of Nepal)

2)      The institutional structure proposed by the policy was commented as being complex and adding on to the bureaucratic hurdles in getting FI.

3)      The negative list was commented upon as having sectors which could benefit from open competition and foreign investment including retail and real estate business.

4)      The minimum requirements placed on a sector specific basis were questioned as the rationale behind such a policy could not be clearly understood.

5)      Small and cottage industries also argued that they could benefit through small scale foreign investment and technology transfer that comes through foreign investment.

6)      Serious concern was raised over the ‘Nationalization Clause’ present by the current draft.

Overall the participants expressed concern over the current draft’s concentration on big industries and investments. It was generally agreed that a Foreign Investment policy should be open and since SMEs form the basis of Nepali economy, they should also be focused upon while devising a Foreign Investment Policy.

Speakers and panelists recommended a thorough revision of the current draft based upon clear strategic vision and objectives and taking a gradual approach based on research of existing FDI patterns rather than hurrying the policy in this way.

Sarita Sapkota

About Sarita Sapkota

Ms. Sapkota is the Coordinator of Communication and Development at Samriddhi Foundation and was previously engaged with the Foundation as a Research Associate for more than three years. She is a graduate of political science and also contributes articles for Samriddhi's column at The Himalayan Times' Perspectives supplement.

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