By A Staff Reporter
Kathmandu, May 22: Vice-Chairman of the National Planning Commission (NPC) Prof. Dr. Pushpa Raj Kandel said on Tuesday that the government was treating the private sector as its trusted partner in development and economic growth.
“The country would achieve the growth rate higher than 8 per cent in the next fiscal year 2019/20. We have expected more than 55 per cent investment contribution from the private sector over the period of the 15th Periodic Plan,” he said while addressing the pre-budget discussion on ‘Investment realisation through budgetary reforms’ organised by the Nepal Economic Association (NEA).
He said that the government wanted cooperation from and collaboration with the private sector and included its representatives in the institutions like the National Development Council and the Investment Board of Nepal. Likewise, a Business Advisory Council was established as a mechanism to have dialogues with the private sector.
Dr. Kandel said that Nepal needed the Foreign Direct Investment (FDI) to propel economic growth and assured that the investors would get high rate of returns from the investments they made here.
He also said that the investment from the Non-Resident Nepalis would get priority treatment.
Secretary at the National Natural Resources and Fiscal Commission Dr. Baikuntha Aryal said that the private sector supplements the government investment while the resource gaps were met by the FDI.
“Nepal has poor investment realisation of both the public and private investment. While the average of the FDI realisation is about 30 per cent of the approved amount, the government financing has been mobilised just 35 per cent,” he said.
According to the Financial Comptroller General Office, only 34.92 per cent financing and 41.99 per cent capital budget has been utilised by Monday.
Dr. Aryal said that the States could also sign investment deals with the investors with the approval from the federal government.
“Nepal continues to have poor realisation of the Foreign Direct Investment (FDI) with about 30 percent of the approved investment being realized,” said Prof. Dr. Shivraj Adhikari, Executive Member of NEA.
“FDI inflow depends on openness, integrated policies, incentives, promotion and facilities and liberalization. But the behavior of the state plays a crucial role and can be a major determinant at times superseding the policy regime,” he said. According to him, there is a mismatch between the priority of the government and foreign investors with the former giving importance to agriculture, energy, tourism and infrastructure, and the latter to energy, tourism, service and manufacturing. But the FDI realization rate is high in agriculture compared to energy, service and manufacturing. Agriculture, tourism, minerals and manufacturing are the sectors that recorded the higher FDI realization rate with 57.7 percent 41.4 percent, 31.8 percent and 28 percent.
Foreign investors from 39 countries have made investment in 252 firms in Nepal of which 29 are large industries. Prof. Adhikari said that Nepal received the least intra-regional investment. About 90 percent FDI goes to India and the larger chunk of remaining goes to Bangladesh and Pakistan. Former Finance Minister Shankar Prasad Koirala suggested the government to focus on facilitating the private sector, which is expected to make two-thirds of national investment, with reforms in laws, process and activities. He said that by organizing an investment summit, the communist government had sent a positive message to the foreign investors globally and the creation of new investment friendly legal instruments like the Public Private Partnership and Investment Act, SEZ Act and Foreign Investment and Technology Transfer Act had helped in attracting more foreign investment.
Ramesh Poudel, Visiting Fellow of Australian National University, said that Nepal’s competitive advantage must be improved in order to attract FDI. “Until and unless we produce cheaper products as compared to our regional peers, we can’t improve the FDI and export trade,” he said. He suggested to sell what the country had rather than putting efforts in creating new things that it doesn’t have.