Motions pictures, personal businesses such as hair salons, beauty parlours, tailoring, driver training providers, internal courier services and domestic food processing have been opened to foreign investment in the new Industrial Policy.
The policy endorsed by the Cabinet last week has also opened catering services and rural tourism, except for certain tourism businesses, to foreign investment.
With the Foreign Investment and Technology Transfer Act 1992 opening foreign investment in consultancy services, including those related to management, accounting and engineering, for up to 51 percent, the new policy has huked the proportion to 100 percent.
If technology transfer is assured, the policy has opened the door for foreign investment even in cottage industries. Foreign investment in multi-brand retail business has been opened to firms having operations in at least two other countries and making investments of over Rs 500 million.
Industry Secretary Uttam Bhattarai said the policy seeks to attract more foreign investment in the country. Once the Foreign Investment Act is also amended in line with the changes to the policy, it will come into implementation.
Most importantly, foreign investment in media (radio, newspaper and television) has been banned in the new policy. So far, there has not been a clear policy on this front. The new policy, however, has not talked about what to do with the existing foreign investment.
The ban on foreign investment in the areas of arms and ammunition, real estate, maintaining guide, porter, kitchen manger, poultry, bee-keeping, and fishery, primary production of agriculture sector, radioactive materials, security printing and coin businesses has been continued.
The policy has assured no discrimination and no nationalisation as long as the investment remains in Nepal. “If a certain portion of foreign investment is required for the government for public welfare, the government will provide compensation,” states the new policy.
The policy has also ensured the right of repatriating investment. “Although the existing legal provisions offer this facility, the new policy is more specific,” said Bhattarai.
The new policy has named five areas as priority sectors — hydropower, transport infrastructure, agriculture (those related to food processing and medicinal herbs processing) tourism and mines.
“The first priority given to infrastructure sector is a good move,” said Pradeep Jung Pandey, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). “As the infrastructure sector needs a lot of investment and technology, we need foreign investment, but in other areas the Nepali private sector is also capable to invest.”
The government has also assured the foreign investors that it would facilitate land acquisition to set up enterprises. For hydropower and infrastructure projects under the build operate and transfer model, the project will have the right to use until the ownership is transferred to the government. “If an investor wants, s/he can pass the ownership to the government.”