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Consequences for Foreign Investments In Nepal
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Consequences for Foreign Investments In Nepal

Foreign Investments – Just a couple of years ago, the state of Nepal became more oriented toward attracting any kind of business. The country is ready to welcome foreign professionals, because now even Nepalese laws are much more friendly to international business. This is due (in a good way) to the parliamentary crisis, which has shaped Nepal’s economy in terms of mobility and elasticity. The country has become an easier place to grow, so foreign investment will be put to the best use and most profitable use.

The article is strictly structured and answers questions about the current political, economic and social environment in the state of Nepal as well as the impact of external circumstances on the development of certain aspects of the economy. The article also elaborates on the key determinants of Nepal’s current economic environment, especially focusing on the most profitable sectors of the economy to invest in. These include the rapidly growing telecommunications industry.

Political Changes in Nepal

The level of Foreign Investments (FDI) in the country just a couple of years ago was very low, and this state of affairs was until the parliamentary crisis. Basically, the state policy was based on centralized control over all spheres of society, including economic and financial systems. Nepal’s development was based on five-year plans. Recently, however, the Nepalese government has become much more loyal to entrepreneurial activity, which has had a positive effect on the country’s economy as well.

The situation in the country has finally begun to clearly change for the better. The legislation of the country has become more loyal to entrepreneurship and private business. The Nepalese government is ready to accept foreign aid in cash and capital with open arms. Thanks to such mobile innovations, it was already possible to sign a $0.5 billion agreement with the MSS by 2017. Already in 2019, the minimum threshold for FDI has exceeded $415,000. And this is provided that only in 2006 these figures were equal to -$7 million.

The government’s policy goal is to cooperate with foreign enterprises, including international corporations. According to World Bank reports, the country currently ranks third in the South Asia region in terms of FDI. Local business has also been favored by the government, but its words and deeds have often been at odds.

Foreign Investments Investing in Nepal

Nepal looks quite developed economically and politically compared to other Asian countries. Foreign Investments is due to a number of factors, which are discussed in detail below. Using examples, we will explain in each section why investing in Nepal is always a profitable venture.

Geographic Position by Foreign Investments

Situated between the two “dragons” of the East, India and China, Nepal seeks to unlock its own potential, but does not try to overshadow the two leading economies of Asia. Instead, the following path of development is envisioned. By opening its borders to attract foreign business, the country can become a crucial hub for economic cooperation between two major neighboring states, with benefits for Nepal itself.

In fact, there are already significant developments in this venture. For example, India values Nepal as a supplier of quality products, the price of which is justified and not too high. Moreover, by cooperating with Nepal, the Indian state saves money and time in transporting all goods. The multi-billion-dollar Beijing Belt and Road asset passes through Nepal, which means that this small South Asian country plays an important role in supporting China’s economy.

Human Resources

More than 50% of the 30 million people living in Nepal are classified as unemployed. And all this is due to the lack of suitable vacancies. Profits dozens of times greater for the country can be achieved by increasing the labor force by at least 30%. This is possible only with the development of entrepreneurial activity on the territory of the state.

Despite this sad picture of jobs, the level of education in the country is brilliant. Every year, Nepali universities produce hundreds of new graduates in fields ranging from IT to construction to medicine. Because of the lack of vacancies, graduates have to take jobs abroad. Typically, the brain drain is to neighboring countries such as China, Australia and the Gulf states.

In any case, Nepal is a developing country that is getting its economy up and running. It won’t be long before new professional fields that require a free workforce will emerge in all sectors of the economy. This means that unemployment as a socio-economic problem will be eliminated.

Natural Resources

Nepal’s diversity of natural resources is particularly beneficial for the development of industrial sectors such as hydropower and agriculture. Thanks to the numerous rivers flowing throughout the country, Nepal’s residents are supplied with more than 40,000 megawatts of electricity. And due to its favorable geographical location and climatic factors, Nepal is a leader among South Asian countries in the development of agriculture.

The development In Telecommunications In Nepal

The spread of technology around the globe has given a huge boost to the emergence and development of telecommunications technology in Nepal as well. This sector of the economy is surprisingly new and successful, a fact that experienced international experts could not fail to notice. The global demand for telecommunications is proportional to the demand for them in Nepal itself, so this sector of the economy deserves close attention. Consider briefly the example of Abdo Romeo Abdo, who is a successful master of his craft.

He was born in distant Lebanon and succeeded in opening several businesses when he was young. Now he is one of the co-founders of Ncell, the main cell phone provider in Nepal and a supplier of cell phones. And that means it’s quite possible to succeed in the telecom sector. The demand for technology is increasing day by day, both globally and in Nepal, so investing in this sector will always be profitable and worthwhile.

Potential Barriers to Development Of Economy

A few years ago there was a turning point in the history of Nepal, when the country embarked on a “hybrid” development of the country’s political system. It seems that the government is not at all opposed to the conditions that have now formed in the country, and they are not bad at all. After all, along with some features left over from the authoritarian regime of government, some democratic aspects have emerged, giving citizens certain rights and freedoms. The peaceful citizens were afraid that these transformations would not turn into revolutions and popular uprisings, but now many are worried about whether some significant changes will finally take place.

According to the latest data, the government has taken some steps in the opposite direction with regard to the development of the state’s economy. The main decisions are still up to the state itself, but entrepreneurs may also be allowed to “steer”, because the country’s leadership is still interested in further concluding mutually beneficial agreements, especially with foreign investors. The centralized management of the economy has so far caused no objective concerns, which means that it will not harm existing trade relations and development trends in any way.

Much of the economic development of the country has stalled because of the lack of consensus in the government, because some of the officials, perhaps out of fear of something new and unknown, were in no hurry to accept the innovations. The government analyzed the situation prevailing around it and made appropriate conclusions that helped fundamentally change the structure of the country’s economic development in our time, including the essence of the five-year plans.

Conclusion

To summarize, we can call Nepal a potentially lucrative investment destination from all points of view. That is to say, no matter which sector of the economy we look into, whether it is the mature and established agriculture and information technology sector or the telecommunications sector that is just beginning its development, we will find great potential for realization through foreign investment and capital investment. The country’s hybrid regime does not hinder this in any way.

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