Nepal is located between China and India, two emerging world economic powerhouses, most populous countries of the world and markets of a billion plus each; Nepal offers premium opportunities for investors and businessmen. While Nepal has preferential trading arrangement with India, she has very close economic ties with China. Other close neighbors of Nepal are Bangladesh and Pakistan. Nepal and Bangladesh have already started bilateral trade through land route. Nepal along with Bangladesh, Bhutan, India, Maldives, Pakistan, Afganistan and Sri Lanka are the eight member countries of South Asian Association for Regional Cooperation (SAARC). The SAARC nations have a Preferential Trading Arrangement and are heading to free trade area under the SAARC framework. Nepal is also the member of WTO, BIMSTEC.
In order to create conducive environment for investment, Nepal has adopted liberal economic policies and has offered various incentives, and privileges, such as tax holidays to investors, including the foreign investors. Special Economic Zones (SEZs) have been established in various parts of the country, where investors may have advantages provided by relaxed regulations and expedited services from the government mechanisms. Ample legal and institutional framework has been created to ensure that investment is safe and dividend is repatriated without hurdles. The labor cost of Nepal is comparatively very low.
Nepal has a huge potential of hydro power that comes to about 83,000 MW out of which 43,000 MW is economically viable. Until now, Nepal has not been able to exploit much of its potentiality and the people in Nepal still face severe power shortages. In order to harness and develop hydropower, private sectors were involved to carry out small and medium sized hydro power projects. Similarly the government is encouraging private foreign investment in this sector. A number of projects for feasibility studies and development has also been recognized.
Tourism also avails high scope for foreign investment opportunities. There are also high scope for foreign investment in agriculture and forestry, medicinal and aromatic herbs; flower and vegetable seeds; floriculture and sericulture; processing of spices, coffee; fruits and dairy products; vegetable and mushroom farming and tea sectors.
Mineral that includes Stone and Limestone; Talc; Silica; Dolomite; Iron-ore; Oil and Natural Gas needs to be further explored. Areas like computer software development; Leather and Textile; Pharmaceutical; Electronic and the Service Industries also carry high possibilities of foreign investment. With the expectation to supplement domestic private investment through foreign capital flows, transfer of technology, enhancement in management skills and productivity and to get into the global market, Nepal finally opened its door for foreign investment by adopting the most liberal economic policies.
The Government of Nepal has also created a competitive and investment friendly environment by making the administrative procedures simple and easy and also providing attractive incentives and facilities to the foreign investors making Nepal one of the safest and suitable business destinations in the world.
The law of Nepal also assures the security of investments against nationalization. Besides this, Nepal being a member of Multilateral Investment Guarantee Agency (MIGA) assures the foreign investors against non-commercial risks like currency transfer, breach of contract, war and civil disturbances.
The followings are the principal legal and policy documents in the regime of investment and enterprise:
- Commerce Policy,2065( 2008)
- Environment Protection Act, 1997
- Industrial Enterprise Act, 1992
For further details, please visit:
- Trade and Export centre of Nepal