Creating Conducive Business ClimateCreating Conducive Business ClimateProgram and Policy in NepalProgram and Policy in Nepal

Shankar Prasad KoiralaSecretary at Ministry of IndustryGovernment of NepalMarch 2, 2017

1

Policy Reform Nepal aspires to become a developing country by 2022 and a middle

income country by 2030 Contribution of Industrial sector to national GDP is around 5%,

which is nominal, target is 10% in 1st phase Completed a long political transition, now the focus is on Economic

Transformation Economic agenda is now the priority of Government and of all

political parties in Nepal Government has taken various initiatives to make necessary policy,

structural and procedural reform To achieve the objective of economic prosperity trough

industrialization, GON is seriously working on reforms and review of the relevant policies

Industrial Enterprises Act, 2016 Recently approved by the Parliament Provisions:

◦ Simplified and clarified the procedures for entry, operation and exit of the industries

◦ Provision of One Stop Service Centre (Custom, Tax, Immigration and NRB)

◦ Envisioned to provide various concessions and incentives to the industries◦ Provision of One-Stop Coordination Committee◦ Strike is not allowed in the industry◦ Additional tax exemption and special incentives in industrial zone◦ Land on lease and exemption of land ownership limit for industry◦ Draft of Regulation of this Act is almost complete

To implement the industrial Enterprise Act To provide rebate and special consensus for the designated industry To attract the foreign investment in Nepal

Policy Reform …

Special Economic Zone (SEZ) Act, 2016• Approved by the Parliament• Provisions:

▫ Provides one window service for industries▫ Income tax, local tax exemption▫ Strikes and protests prohibited ▫ For the promotion base industry, the industry registration and

industry administration is done by SEZ for those industry, which establish in SEZ

Draft of Regulation of this Act is almost complete

Policy Reform …

Mines and Minerals Regulation, 2016 Approved by the Cabinet Open area of Mine Works in Nepal

Foreign Investment Policy, 2015◦approved and the draft of new Foreign Investment Bill is almost ready to be tabled in the Cabinet

rehabilitation and resettlement policy Nepal

GON is seriously working on Policy Reform in Industry Sector and Ministry beliefs that we have been able to bring changes and make Nepal as a investment friendly country.

Policy Reform …

Infrastructure

Establishment of SEZ◦ 14 SEZ has been identified, feasibility studies of 8 SEZ completed;

Bhairahawa SEZ is in operation◦ Infrastructure development for Garment Processing Zone has been

initiated in the premises of Simara SEZ Area◦ The industry registration will be made in SEZ for the industries within

the respective SEZ.

Industrial Districts in each state/province◦ Land acquisition for at least one Industrial district in each State is almost

completed

Pipeline Policies and Acts

Company Act, 216 Tabled at Parliament, Process of endorsement Provision for easy exit of the companies

FITTA, Foreign Investment and Technology Transfer Act, in progress◦ Attraction of FDI, various provision◦ Assurance of investment and repatriation◦ Area specified open to FDI◦ Administrative Procedural simplification◦ Provision to invest in existing industry and investment through technology

transfer◦ Special exemption and incentives for FDI◦ Grant non-tousist and business visa for investors and representatives◦ Exemption on land ownership limit and provision of land on lease

Integrated Intellectual Property Rights Policy ◦ Drafted and tabled in the Cabinet

Mines and Minerals Policy◦ Draft submitted to the Cabinet◦ Open new area of investment

Structural Reforms

One Stop Service Centre CommitteeTo facilitate and provide various services and incentives to the industries

through one window

Dedicated branch office of Commercial Bank inside the premises of Company Registrar Office has already been established

Online system for FDI approval, Visa Recommendation and Industry registration has already been enacted. The online system of Intellectual Property will be operationalized soon.

Procedural Reforms Registration

◦ Online registration and document submission of companies has already been established by Office of Company Registrar (OCR)

Approval and Date connectivity◦ An automation system for FDI approval and industry

registration, ◦ It will be launched the online date exchange system

between OCR and DoI will be established very soon. ◦ After this data sharing, industrialist does not have to

submit the same documents in two government entities.

Nepal Business Forum has been established for effective Public Private Dialogue (PPD) mechanism

Given high priority to foreign direct investment mobilizing natural resources

Adopted Economic diplomacy to attract FDI Small and Medium Size Enterprise Promotional Activities Online integration of DoI, OCR, Tax Office and NRB with Online

payment with Digital Signature Follow up plan of this Summit : Policy Committee lead by NPC, Project

Committee lead by MoF, Industrial Promotion Committee lead by IBN and Overall Coordination Committee lead by MoI

Other Major initiatives

Country-Wise FDI in NepalCountry-Wise FDI in NepalNumber of Industries from FDINumber of Industries from FDI

Country No.CHINA 1,110INDIA 658USA 341SOUTH KOREA 311JAPAN 229UK 158GERMANY 102FRANCE 81THE NETHERLANDS 68AUSTRALIA 64BANGLADESH 60SWITZERLAND 55CANADA 40SINGAPORE 38RUSSIA 37DENMARK 34ITALY 32MALAYSIA 31PAKISTAN 26TURKEY 23AUSTRIA 20BELGIUM 20SPAIN 20NEW ZEALAND 19

Country No.PHILIPPINES 18CHINA (TAIWAN) 17ISRAEL 17NORWAY 16BRITISH VIRGIN ISLANDS 14UNITED ARAB EMIRATES 14IRAN 12SWEDEN 12THAILAND 11FINLAND 10UKRAINE 10MAURITIUS 9SYRIA 9POLAND 8SOUTH AFRICA 8BRAZIL 7IRELAND 7SRI LANKA 7BERMUDA 6MEXICO 5AZERBAIJAN 4BHUTAN 4KAZAKHSTAN 4KYRGYZSTAN 4UZBEKISTAN 4

Total No. of industries from FDI : 3,870

Top 50 only

FDI Country-wise dateFDI Country-wise dateSN COUNTRY NAME

TOTAL AMOUNT OF FOREIGN INVESTMENT

(Rs. in million) 1 INDIA 81,167.462 CHINA 59,350.323 SOUTH KOREA 10,994.334 BRITISH VIRGIN ISLANDS 7,967.28

5 USA 7,527.23

6 UK 5,255.077 MAURITIUS 3,314.708 SINGAPORE 2,896.399 SWITZERLAND 2,891.23

10 CANADA 2,698.9411 JAPAN 2,342.1712 UNITED ARAB EMIRATES 2,320.41

13 SPAIN 1,975.23

14 TURKEY 1,795.34

15 THE NETHERLANDS 1,477.90

16 GERMANY 1,310.22

17 NORWAY 1,165.33

18 SEYCHELLES 684

19 BANGLADESH 669.93

20 COOK ISLANDS 666.66

21 AUSTRALIA 624.67

22 BRAZIL 545.83

23 FRANCE 544.58

24 MALAYSIA 496.28

Investment in Rs. Million till Jan last, 2017 (1 USD = Rs. 108)

Total FDI : Rs. 206,030.00 Million

Nepal Conducive for Investment, FDI : Nepal Conducive for Investment, FDI : Why Nepal ?Why Nepal ? Conducive Policy and Program Cheap Labor, skill, semi-skill and un-skill Energy intensiveness Favorable Climate in Nepal Hospitable social environment Political commitment for investment Start-up governance reform initiative Getting easy for the foreign currency inflow and outflow

We believe that Nepal is undergoing a series of policy and institutional reforms, that will play a catalyst in attracting FDI and, are quite open for any policy and program reform to harness the FDI in Nepal.

Our Expectation Our Expectation We are confident that with your cooperation, we can achieve the

objective of the event We would highly appreciated if you could communicate your

respected private sector organizations, investors and other respected agencies, who are especially looking for opportunities to do business in Nepal for investment

We expect your proactive role in this matter and, Last but not least, we seek your valuable suggestions and

cooperation

Key Message : After series of political transition, now is the time for Nepal’s Economic Transformation. Having series of reforms, Nepal will be the best place to invest.

Thank you very much