Monday 14th of November 2011
Govt may allow Nepalis to invest abroad
KATHMANDU, NOV 14 -2011
Nepali investors willing to invest abroad may get their wishes fulfilled through the upcoming Foreign Investment and Technology Transfer Policy (FITTP). The Ministry of industry is gearing up to introduce the new policy by the beginning of the next fiscal year.
Currently, the law bans Nepali nationals from investing abroad and the business community has long been demanding the government for relaxation in the existing provision. With the Act prohibiting investing abroad, it should also be revised in line with the policy before Nepalis get the formal right to take capital out of the country for investment purpose.
The first draft of the FITTP says any Nepali investor can expand business or open branch, outlets or contact office of their firms abroad with the permission of the Nepal Rastra Bank (NRB). “A working plan in this regard will be prepared later by NRB itself,” says the draft policy.
Ministry officials said those who have already invested abroad will also be brought under the purview of the policy. The existing Foreign Investment Policy (FIP) 1992 is mum over the establishment of any profit-oriented business enterprises abroad by Nepalis abroad. “This is the first time that we are trying to open the way for Nepali investors to expand their investment to foreign lands through the policy,” said a ministry official.
Although some headway had been made in this regard two years ago, the beginning of the liquidity crunch in the banking system diverted the government’s attention towards solving the crisis within the country.
Major Nepali business houses have expanded their business abroad and are unofficially transferring funds to other countries. Many businessmen have expanded their businesses in neighbouring India—an open secret.
According to a recent report prepared by the United Nations Development Programme titled ‘Illicit Financial Flows from the Least Developed Countries: 1990-2008,’ a total of $9.1 billion (Rs 657.93 billion) in capital was siphoned out of the country during the period 1990-2008 from Nepal. On an average, $480.4 million (Rs 34.73 billion) unofficially went out of the country annually.
Industry Minister Anil Kumar Jha asked, “If we can a turn a deaf ear to the fact that Nepalis are taking capital out of the country under huge risk, why can’t we introduce a policy that would allow them to invest abroad legally?”
“The unofficial fund transfers carried out by Nepali investors prove that they do have the capacity to expand their business abroad, which will be a glory for the country,” he said.
Industry Secretary, Shankar Koirala said although no concrete decision has been taken, the ministry is holding massive discussions with stakeholders, including the private sector, to see whether there are any possibilities that Nepalis can be let free to open their businesses in foreign lands.
With Nepal signing Bilateral Investment Promotion and Protection Agreement ( BIPPA) with several countries, including India, which seeks national treatment of foreign investment projects, the Nepali private sector is barred from enjoying the facilities given by the BIPPA due to the existing provision.
The current ban on overseas investment was imposed fearing that the country would lose necessary capital. But the business community says that is a wrong perception. “It is not that the country will lose capital if Nepalis are allowed to invest abroad,” said Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry. “Rather the country can benefit from the profits made abroad.”
Former Finance Minister Ram Sharan Mahat termed the government’s move a ‘positive effort’. “Nepalis should be allowed to show their entrepreneurship skills in the international arena,” he said. “If they promise to bring a certain amount of profits back home, they should be given the opportunity to invest up to a certain amount abroad.”
Source: Kantipur
Nepali investors willing to invest abroad may get their wishes fulfilled through the upcoming Foreign Investment and Technology Transfer Policy (FITTP). The Ministry of industry is gearing up to introduce the new policy by the beginning of the next fiscal year.
Currently, the law bans Nepali nationals from investing abroad and the business community has long been demanding the government for relaxation in the existing provision. With the Act prohibiting investing abroad, it should also be revised in line with the policy before Nepalis get the formal right to take capital out of the country for investment purpose.
The first draft of the FITTP says any Nepali investor can expand business or open branch, outlets or contact office of their firms abroad with the permission of the Nepal Rastra Bank (NRB). “A working plan in this regard will be prepared later by NRB itself,” says the draft policy.
Ministry officials said those who have already invested abroad will also be brought under the purview of the policy. The existing Foreign Investment Policy (FIP) 1992 is mum over the establishment of any profit-oriented business enterprises abroad by Nepalis abroad. “This is the first time that we are trying to open the way for Nepali investors to expand their investment to foreign lands through the policy,” said a ministry official.
Although some headway had been made in this regard two years ago, the beginning of the liquidity crunch in the banking system diverted the government’s attention towards solving the crisis within the country.
Major Nepali business houses have expanded their business abroad and are unofficially transferring funds to other countries. Many businessmen have expanded their businesses in neighbouring India—an open secret.
According to a recent report prepared by the United Nations Development Programme titled ‘Illicit Financial Flows from the Least Developed Countries: 1990-2008,’ a total of $9.1 billion (Rs 657.93 billion) in capital was siphoned out of the country during the period 1990-2008 from Nepal. On an average, $480.4 million (Rs 34.73 billion) unofficially went out of the country annually.
Industry Minister Anil Kumar Jha asked, “If we can a turn a deaf ear to the fact that Nepalis are taking capital out of the country under huge risk, why can’t we introduce a policy that would allow them to invest abroad legally?”
“The unofficial fund transfers carried out by Nepali investors prove that they do have the capacity to expand their business abroad, which will be a glory for the country,” he said.
Industry Secretary, Shankar Koirala said although no concrete decision has been taken, the ministry is holding massive discussions with stakeholders, including the private sector, to see whether there are any possibilities that Nepalis can be let free to open their businesses in foreign lands.
With Nepal signing Bilateral Investment Promotion and Protection Agreement ( BIPPA) with several countries, including India, which seeks national treatment of foreign investment projects, the Nepali private sector is barred from enjoying the facilities given by the BIPPA due to the existing provision.
The current ban on overseas investment was imposed fearing that the country would lose necessary capital. But the business community says that is a wrong perception. “It is not that the country will lose capital if Nepalis are allowed to invest abroad,” said Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry. “Rather the country can benefit from the profits made abroad.”
Former Finance Minister Ram Sharan Mahat termed the government’s move a ‘positive effort’. “Nepalis should be allowed to show their entrepreneurship skills in the international arena,” he said. “If they promise to bring a certain amount of profits back home, they should be given the opportunity to invest up to a certain amount abroad.”
Source: Kantipur
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