The commitment for foreign direct investment (FDI) declined by 43.39 percent in the first six months of the current fiscal year compared to the same period last year.
According to the Department of Industry (DoI), Nepal received commitment for FDI worth Rs 17.30 billion during mid-July to mid-January, while the figure was Rs 30.56 billion in the corresponding period of the last fiscal year.
The worsened external sector indicators, mainly the depletion of the foreign currency reserves, of the country in the past one year had taken a toll on the country’s FDI position during the review period, according to the DoI officials. Likewise, soaring inflation and economic slowdown that appeared in a number of countries, also affected the possible inflow of the FDI in the country.
In the review period this year, foreign investors pledged the aforementioned amount for 131 projects. Of them, two were for large firms, while 19 were for medium level and remaining 110 were for small firms.
During one month between mid-December and mid-January, Nepal approved 20 projects under the FDI. The pledged amount for the projects was Rs 4.85 billion.
Since the past few months, the government has adopted flexible policies, targeting to attract more FDI. On October 14, the government lowered the minimum threshold required for FDI. The minimum limit has now been reduced by 60 percent to Rs 20 million, from Rs 50 million earlier.
As of now, the government has recorded an investment of Rs 436 billion for more than 5,600 FDI-based projects. A total of 299,961 people have secured jobs in these projects.
Meanwhile, the DoI registered investment commitments worth Rs 139 billion from both domestic and foreign investors during mid-July and mid-January. The amount was 27 percent less compared to the amount in the same period last year. Out of 145 firms registered, only 39 were large firms.
A notable fall in banks’ loan issuance, exorbitant interest rates and heavy downfall in the aggregate demand have been blamed for the decline in the investment commitments.
