FY 2018-19 Review: Nepal’s FDI Inflows Decline by 63 Percent

While Nepal is preparing for the fast-approaching Nepal Investment Summit from March 29-30, 2019, it has been observed that the country’s investment climate continues to remain low since the past few months.

According to Nepal Department of Industry (DoI) statistics, foreign investments in Nepal decreased significantly by 63 percent in the first eight months (review period) of FY 2018-19 compared to the same period, last year.

The country recorded NPR 34.9 billion in investments between mid-July and mid-February of FY 2017-18, while this year the investments dropped to NPR 11.25 billion.

However, FDI commitment in terms of numbers of projects increased drastically during the current review period compared to last year.

The Himalayan nation received investments for 194 projects in the first eight months of 2017-18, whereas it registered investments for 224 projects during the same period, this year.

Reasons for Decline in Foreign Investment for Nepal

• Energy Sector 2018: As per the DoI, Nepal did not receive any investments in the energy sector this year, whereas it had received an investment of NPR 22 billion during the same period last year.
• Agriculture and forestry sector: Nepal received foreign investments worth NPR 1.8 billion between mid-July and mid-February last year, while it recorded only NPR 88 million during the same period this year.
• The country also experienced a drop in investments for its information & technology and mineral sectors this year.

Private sector leaders explained that both domestic and foreign investors were reluctant to invest in Nepal because of the rising production costs.

“Though the government has been creating a favorable policy environment for business and investment, it is crucial that production cost is brought down through necessary measures to bring in investment,” said Shekhar Golchha, Senior Vice President, Federation of Nepalese Chambers of Commerce and Industry.

Let’s see how Nepal will mobilize the Investment Summit to improve the FDI inflow in the country for the remainder of the current fiscal.