The government has announced a series of legal and procedural reforms aimed at making Nepal a more attractive destination for foreign investment while improving the overall business environment. The measures, introduced through the budget for the upcoming fiscal year, seek to simplify investment procedures, reduce regulatory barriers, and encourage greater participation from foreign investors and Non-Resident Nepalis (NRNs).
Presenting the budget, Finance Minister Dr. Swarnim Wagle stated that the reforms are intended to streamline the entire investment process—from approval and operation to profit repatriation—while addressing long-standing concerns of investors regarding bureaucratic hurdles.
One of the key changes involves amendments to the Foreign Investment and Technology Transfer Act. Under the revised provisions, foreign investors will no longer need prior approval from Nepal Rastra Bank to repatriate profits or investment returns. Instead, they will only be required to notify the central bank. Likewise, the government has replaced the existing prior approval requirement under the automatic investment approval mechanism with a simpler notification-based system.
The reforms also expand the scope of foreign investment by recognizing hybrid financial instruments, including convertible securities and project-linked financing. In addition, procedures related to overseas payments for services, royalties, and technology transfers have been simplified to facilitate business operations.
In a notable amendment to the Civil Code, foreign investors, multinational corporations, and international organizations operating in Nepal will now be allowed to lease residential apartments for employee accommodation and related purposes. These entities will be permitted to lease up to 25 percent of apartment units or buildings on a long-term basis.
The government has also introduced a significant reform in the capital market by allowing NRNs to participate in the secondary securities market. To support this move, necessary amendments will be made to laws governing investment approval, accounting standards, profit repatriation, and capital gains taxation. Officials believe the measure will attract additional foreign currency inflows and contribute to the development and expansion of Nepal’s capital market.
To improve the business environment further, the government plans to establish a dedicated Commercial Tribunal for the speedy resolution of business and commercial disputes. It has also pledged to introduce new legislation to strengthen intellectual property rights protection and revise the legal framework governing debt recovery.
Another major reform concerns industrial enterprises. Industries will no longer need prior approval from the Department of Industry for capacity expansion, changes in ownership structure, or capital increases. Amendments to the Industrial Enterprises Act will introduce a notification-based system, reducing administrative delays and encouraging business growth.
To enhance access to finance, particularly for small and medium-sized enterprises (SMEs), the government has announced a “first loss recovery” mechanism under a credit guarantee framework. It also plans to develop a credit scoring-based lending system for both individuals and businesses, a move expected to improve financial inclusion and facilitate easier access to credit.
The government believes these reforms will create a more investor-friendly environment, attract greater foreign capital, strengthen Nepal’s financial markets, and support long-term economic growth.
