Relevance of Investment Summit
It is necessary to increase domestic investment in Nepal’s industries before organizing investment summits to attract FDI.
Nearly two-thirds of Nepal’s international trade takes place with India. The situation is such that we have to rely on India for the major goods consumed in the country – from petroleum products to food grains. While Indian investment in Nepal’s manufacturing and service industries is much more than that of any other country, among the tourists visiting the country through the aerial route, the number of Indian tourists is high. If the number of tourists entering the country through land routes is included, Indian tourists dominate Nepal’s tourism sector. Similarly, India has traditionally been the major market for the goods produced in Nepal. Thus, Nepal’s entire economy is linked to India in such a way that there is no alternative to it.
It is definitely necessary to further widen the economic and trade relations between Nepal and India. While doing so, it is not otherwise to expect that an economy as big and prosperous as India should increase its investment in Nepal further. Also, it is natural to think that investment from India, the major market for the Nepali goods and services, including electricity, will create the basis for sustainable economic development in Nepal. Internalizing this truth, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), a major umbrella organization of the Nepali private sector, has announced to organize a ‘Nepal-India Investment Summit’ in the next two months.
In order to make the initiatives taken towards economic diplomacy and international relations result-oriented, the FNCCI in association with the Confederation of Indian Industries (CII) has announced to hold the investment summit in the coming September in Nepal’s capital Kathmandu. Similarly, it has been announced that a Nepal-India Investment and Trade Promotion Unit will be established at FNCCI and a Cross-border Trade and Tourism Expo will be organized in India’s West Bengal state in August in association with the West Bengal Government.
At the first glance, the Nepal-India Investment Summit is not only relevant but also necessary. It will surely develop and expand the economic ties between the two countries to some extent. However, we should not forget that Nepal has to make some preparations before organizing such summits aimed at attracting investment.
Though foreign investors expressed their intent for investing more than Rs 1,400 billion during the Nepal Investment Summit organized by the government in the last fiscal year, statistics show that Nepal received the lowest amount of FDI for the past five years in that year.
Thus, as it has become clear that investment summits alone are not that helpful in attracting FDI, the Nepali private sector urgently needs to do something about it. In order to create an investment-friendly environment in the country, the government has of late taken may initiatives including making policy-level arrangements. However, the aim of the government initiatives is not only to attract FDI but also increase domestic investment. FDI won’t come into the country at a time when the domestic investors don’t invest in the country themselves.
Rather than the government, the Nepali private sector is the best side to convey to the international community the message that Nepal has investment-friendly environment. The Chinese company Hongshi has decided to be a partner in Nepal’s Shivam cement company, realizing that there does exist investment opportunities in Nepal’s cement sector.
What we need to understand is the fact that it is the domestic investment which eventually attracts foreign investment. So, it is necessary to increase domestic investment in Nepal’s industries before organizing investment summits to attract FDI.