The protests and violence unleashed across the country during the Gen Z movement have left a lasting impact not only on public spaces but also on investor confidence. Foreign direct investment (FDI) commitments — previously showing signs of revival — have sharply declined over the past month, reflecting rising uncertainty among investors.
According to data from the Department of Industry (DoI), the first two months of the current fiscal year had offered encouraging signs. Between mid-July and mid-August, Nepal received FDI pledges worth Rs 24.10 billion for 127 projects. The following month brought an additional Rs 8.98 billion for 109 projects — more than double the FDI figures recorded in the first quarter of FY 2024/25. The momentum suggested that investor confidence was finally returning after a prolonged slowdown.
However, the upward trend collapsed abruptly. Between mid-September and mid-October, FDI commitments plunged to just Rs 2.04 billion for 75 projects — barely a quarter of the previous month’s figure. Of this amount, Rs 1.55 billion for 21 projects came through the paperwork approval process, while the remaining Rs 494.73 million for 54 projects was registered under the automatic route.
The violent episodes on September 8 and 9 severely damaged business operations, impacting both domestic and foreign-funded enterprises. The fire at Hilton Kathmandu, one of the country’s flagship FDI-based hotels, alone caused nearly Rs 8 billion in damages. Hyatt Regency Kathmandu also suffered heavy losses, forcing the hotel to shut down temporarily.
“These incidents have sent a chilling message to the global investor community,” said Rajendra Malla, former president of the Nepal Chamber of Commerce. “The destruction of private and public property has discouraged both domestic and foreign investors. Unless the government guarantees the safety and security of investments, restoring FDI to previous levels will be very difficult.”
The economic consequences are already evident. While the government had projected economic growth of 5.5 percent for this fiscal year, the World Bank has slashed its forecast to 2.1 percent, pointing to the Gen Z protests and subsequent instability as major causes of the slowdown.
Altogether, Nepal received FDI pledges worth Rs 35.13 billion for 311 projects in the first quarter of this fiscal year, comprising 300 small, four medium, and seven large-scale projects. During the same period, foreign investors also repatriated Rs 2.90 billion in dividends — a massive jump from just Rs 67.08 million last year.
For now, the figures signal a worrying decline in investor confidence. Experts warn that unless Nepal takes urgent steps to restore stability, protect investments, and rebuild trust, the nation risks further erosion of the fragile economic recovery that had only just begun.
