FDI commitment rises to 5-year high at Rs 10b

Nepal received the highest foreign direct investment (FDI) commitment of Rs 9.81 billion in the last fiscal year, as a housing boom and newly explored hydro potentials lured overseas investors.

“Last year saw a sound peace dividend in foreign direct investment. We were long due to receive such an encouraging response,” said Tilak Ram Sharma, director general of the Department of Industry (DOI).

Government statistics show that the department approved 212 foreign investment projects during the year with the energy sector leading the list. The total project cost stood at Rs 20.40 billion and total fixed cost at Rs 16.89 billion.

In the previous year, the country had received FDI commitment of Rs 2.88 billion. FDI commitment was Rs 2.76 billion five years ago in Fiscal Year 2003/04. “A good thing, unlike in the past, is that the capital has already started to funnel in for major projects,” Sharma told the Post.

The department's record shows other qualitative difference as well in FDI commitments received during the year.

After a gap of a few years, the agricultural sector received 11 foreign investment projects in 2007/08. The tourism sector lured the maximum number of FDI projects, 67 during the year, whereas the regular topper in attracting FDI, the manufacturing sector, saw 51 FDI projects registered during the year.

The country received Rs 1.59 billion in investment in the housing sector alone.

The sector drew Indian investment of Rs 1.25 billion from six projects. Likewise, it received FDI of Rs 200 million from UK investors, Rs 100 million from the Chinese and Rs 35.40 million from the Spanish parties.

“Investments have come from diverse countries and it has been surprising to us as well,” said an official at the Foreign Investment Division of DoI.

Likewise, the country received FDI commitment worth Rs 1.60 billion in the cement industry. “The Birla Corporation Limited of India is investing Rs 20 million. Arati Cement has also registered a project of Rs 1.58 billion,” said the official.

Hydropower, another promising sector, lured FDI of Rs 2.22 billion, shows the DoI data. Of the major investment in the sector, a South Korean hydropower company committed to invest Rs 1.98 billion to develop a hydel project in Benighat.

West Seti, another much-talked about project, has also been registered receiving the Chinese investment.

Nepal received FDI commitment from investors across 39 countries. As usual, Indian investors topped the list of maximum FDI generator during the year. “We have received investment commitment of Rs 4.55 billion from investors in our Southern neighbor,” said the DoI official.

Likewise, FDI commitment of Rs 2.92 billion was received from South Korean investors. China, with an FDI commitment of Rs 448 million, was the third largest investment generator for Nepal during the year. The United Arab Emirates with an FDI commitment of Rs 403 million generated the fourth largest foreign investment.

Once implemented, the FDI projects registered last year are estimated to create employment for 10,677 people.
Source: eKantipur