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Machhapuchre Bank

The investment summit

The two-day investment summit organised in Kathmandu was concluded on 30 March with instant commitment of 1700 billion rupees worth investment in 17 various projects. Although, the organizers are highly encouraged from such a commitment, economic observers and business people are still doubtful on the investment part.
In the 2017 summit, commitment worth 1400 billion rupees was made but the government was unable to bring a single rupee as foreign direct investment. Therefore, this time also, it is not sure how much investment will Nepal get from this summit.
The government, so far, had displayed 77 projects in the showcase. Out of them, MoU was signed only on 15 projects — some of them were already finalized projects.
The government had expected 300 billion rupees worth commitment from the participants.
The government has claimed that it has developed an investment friendly environment by introducing laws guaranteeing necessary security for foreign direct investment, the foreign investors are still hesitated for investment.
Surely, before investment the investors minutely conduct study on all aspects of their investment and profit ratio. Obviously, foreigners come here for investment to make profit, not to lose their investment. If they become hundred percent sure that their investment is not going to be failed, then only, they come for investment.
In this regard, initial commitment for investment of 1700 billion rupees is just the gesture. Foreign investors attended the summit and they acquired primary level information from the summit. They will conduct further study on investment environment, the government’s commitment for FDI, the state of peaceful labour force, raw materials, market for the products. Besides, political stability is the prime issue to attract FDI. Hence, along with encouraging number of participation of the investors, one should not become confidant. The main thing is that the government should be able to address many hurdles to attract foreign investment.
Besides, the government, instead of claiming the summit as a big achievement, has to follow those interested investors very closely by instigating frequent reminder to them.
There was a large number of participation from China, however, the participants didn’t make any commitment during the summit. According to a Chinese journalist stationed in Kathmandu, Shengping Zhou, the Chinese participants were hesitated to express immediate commitment due to the past experiences they had felt in Nepal.
According to the very Chinese journalist, the participants had remarked: Do not sign agreement with Nepali side without careful consideration!
This is the lesson learned by Chinese side at the cost of blood who is becoming more sober in Nepal’s market.
Many Chinese government agencies and companies complained that they were under pressure to implement MOUs signed with Nepal side that was always not ready. It takes two to make a quarrel.
That’s mainly why there is no MOU and agreements with China this time in the investment summit that saw the largest number of Chinese participants!
Identifying areas of investment:
Surely, Nepal cannot achieve the goal of economic prosperity without foreign direct investment. In the meantime, the government responsibility is to protect national investors as well. The past experiences show that many local investors have been displeased since arrival of some multinational companies. After the country adopted open market economy, the Newar community, which was playing dominating role in the economic sector, has already been disappeared from the scene. Instead, migrated Indian community is in the leading role in our economy. Disappearance of the national investors by the foreign investors is a serious issue. How had the East India Company colonized India and China through the means of trade, all of us are aware. Therefore, along with FDI, the government should adopt the policy of protecting national investors.
A country cannot gain economic achievements without development of the infrastructure sector. However, this sector is considered as the expensive one. Therefore, we need foreign investment in this sector. In the Nepali context, construction of reservoir model hydropower projects, construction of highways and railways are the prime infrastructural sector. Along with construction of run-of-the-river projects, Nepal should give special consideration on construction of reservoir model multiple projects, railways and roads. Construction of Budhigandaki and West Seti project are very important for the supply of electricity and also for irrigation during the dry season. Railway is important for Nepal because it can be operated from electricity, which will substitute consumption of petro-product.
Questions have been created by some experts that if Nepal will jump on such big and ambitious projects, the country will have to face debt-trap. Going through the recent history of China, after adopting liberal economy during the 80s, she had focused on construction of infrastructural projects by taking loan without condition from the World Bank, ADB and other foreign direct investors. In result, within four decades, China has become the largest country on foreign direct investment. China’s present development is the result of infrastructural development in the past.
China is a huge country compared to Nepal. Considering the population and development of infrastructural sector, the Chinese leaderships had to pass through a very difficult period. However, since development of the infrastructural sector, China has emerged as the second largest economy in the globe.
Our southern neighbor is also focusing on infrastructural development. But when we talk about infrastructural development through foreign investment, always, controversy has been created.
Our experts are talking about export of electricity in the region. China doesn’t need Nepal’s electricity. India is thus the only buyer of it. If we want to export our electricity to India, we are unable to fix the price but we have to sell at that price that fixed by India. If we will be able to generate electricity at low price and supply electricity at cheap price to the local industries, simultaneously, the production cost can be reduced and our products can be competitive in the global market. In this regard, Nepal should identify low cost hydropower project and supplying them to the local industries, including operating railway service, cable cars and establishing fertilizer and silver factories which consume excessive energy instead of thinking on exporting electricity.

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