KATHMANDU, SEP 11, 2012
The government will not entertain foreign direct investment less than Rs 5 million henceforth. The Department of Industry (DoI) on Friday made the upward revision of the ceiling which was previously maintained at Rs 2 million.
The government move is aimed at ‘encouraging quality investment’.
“We have seen many FDI projects with meager investment,” Dhruba Raj Rajbanshi, director general at DoI. “Such investment does not make a significant positive impact on industrial promotion and employment generation.”
A DoI source said security concerns were also taken into consideration while taking the decision. “Given the possibility of foreigners carrying out unwanted activities in the name of bringing in foreign investment, we increased the ceiling,” he said.
The department had been preparing to increase the minimum FDI threshold for the last few months after finding a huge number small-scale industries registered. The department said the new ceiling was fixed after consultations with the Ministry of Industry and the private sector.
The department’s data show a downfall in FDI commitments despite an increase in the number of industrial units. Foreign investors had committed Rs 10.04 billion in 2010-11, which plunged to Rs 6.14 billion in 2011-12. But the number of the industries increased to 227 in 2011-12 — up from 209 in the previous year. The registration of big FDI ventures, particularly, plunged.
“This record clearly shows the need for increasing the minimum FDI threshold,” said Rajbanshi, expressing optimism that the move will help bring large-scale investment.
Industry Ministry officials said the new provision has also been included in the proposed Foreign Investment and Technology Transfer Act. “Once the act is in place, it will help strictly implement the sealing,” said Chabindra Parajuli, under secretary at the ministry.
The private sector lauded the government move. Industrialist Rabi Bhakta Shrestha said the move would encourage serious investors to come to Nepal during the Nepal Investment Year.
FDI commitments
Small Medium Large
FY Number/Investment Number/Investment Number/Investment
2007-08 114/935.89 12/511.48 13/6520.73
2008-09 125/928.98 14/878.07 11/3548.49
2009-10 148/1140.68 12/548.82 11/4710.54
2010-11 177/1596.38 17/951.61 15/7501.72
2011-12 203/1713.01 14/659.81 10/3768
Source: Department of Industry; figures in Rs million/ TKP
The government will not entertain foreign direct investment less than Rs 5 million henceforth. The Department of Industry (DoI) on Friday made the upward revision of the ceiling which was previously maintained at Rs 2 million.
The government move is aimed at ‘encouraging quality investment’.
“We have seen many FDI projects with meager investment,” Dhruba Raj Rajbanshi, director general at DoI. “Such investment does not make a significant positive impact on industrial promotion and employment generation.”
A DoI source said security concerns were also taken into consideration while taking the decision. “Given the possibility of foreigners carrying out unwanted activities in the name of bringing in foreign investment, we increased the ceiling,” he said.
The department had been preparing to increase the minimum FDI threshold for the last few months after finding a huge number small-scale industries registered. The department said the new ceiling was fixed after consultations with the Ministry of Industry and the private sector.
The department’s data show a downfall in FDI commitments despite an increase in the number of industrial units. Foreign investors had committed Rs 10.04 billion in 2010-11, which plunged to Rs 6.14 billion in 2011-12. But the number of the industries increased to 227 in 2011-12 — up from 209 in the previous year. The registration of big FDI ventures, particularly, plunged.
“This record clearly shows the need for increasing the minimum FDI threshold,” said Rajbanshi, expressing optimism that the move will help bring large-scale investment.
Industry Ministry officials said the new provision has also been included in the proposed Foreign Investment and Technology Transfer Act. “Once the act is in place, it will help strictly implement the sealing,” said Chabindra Parajuli, under secretary at the ministry.
The private sector lauded the government move. Industrialist Rabi Bhakta Shrestha said the move would encourage serious investors to come to Nepal during the Nepal Investment Year.
FDI commitments
Small Medium Large
FY Number/Investment Number/Investment Number/Investment
2007-08 114/935.89 12/511.48 13/6520.73
2008-09 125/928.98 14/878.07 11/3548.49
2009-10 148/1140.68 12/548.82 11/4710.54
2010-11 177/1596.38 17/951.61 15/7501.72
2011-12 203/1713.01 14/659.81 10/3768
Source: Department of Industry; figures in Rs million/ TKP
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