Trade and Investment Opportunities in Nepal

 

Nepal is considered as a liberal country for trade promotion and an attractive destination for investment from the point of view of areas of investment, conditionalties, incentives and facilities. In other words, trade and investment opportunities in Nepal are safe and lucrative primarily owing to investment friendly environment, flexible rules and regulations compatible with the spirit of globalisation and liberalisation, cheap labour, harmonious understanding among government, employers and trade unions, and free access of joint venture products to vast Indian market.

Nepal is strategically located between two growing giant economies of the world, India and China. In view of the huge potentials of these burgeoning markets, the prospect of doing business in Nepal is tremendous. In addition, Nepal has offered to be a transit nation between them. Nepal is a member of the WTO, Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and a founding member of the South Asian Association for Regional Cooperation (SAARC) under the umbrella of which South Asian Free Trade Agreement (SAFTA) is in the implementation phase. This will provide additional opportunities for the investors in Nepal.

Agriculture and agro-processing, tourism and hydropower generation and infrastructure development are the major priority areas for development in Nepal. Additional opportunities may also be found in IT-related services, biodiversity, human resources development, education and health sectors and pharmaceuticals. Abundant reserves of limestone and a number of other minerals in various parts of the country offer prospects for the cement and other mineral-based industries as well. Construction business is booming and there is a great opportunity in all construction related industries in Nepal.

Among others, Nepal has made a conditional commitment to open up sectors like legal service, engineering, architecture, Research and Development, advertising, market research, courier, telecom, musical products, higher education, financial service, hotels and restaurants. Foreign investment in these above specified areas is safe, secure and most profitable in Nepal.

Being the second largest source of hydropower in the world, Nepal has the potentiality of generating 83,000 MW of hydropower. A land of over 6,000 rivers and streams with a combined length of more than 45,000 km. Nepal has many hydropower projects currently at hand, many of them are economically lucrative. It is high time to invest in Nepal in hydropower sector that ensures sustained and reliable availability of energy to the domestic market as well as for export to neighbouring India.

The trade and treaty with India offers significant and preferential access to the largest market in the South Asia region. Nepal also has duty-free access to the European Union under its Everything-But- Arms initiatives. Implementation of SAFTA has added more space for trade and investment. Our competitive markets for manufacturing and untapped resources and diversified agricultural production base provide myriad of mutually beneficial areas for investment.

In short, following are the most feasible project areas for foreign investment in Nepal:

  • Agriculture and agro-based industry
  • Tourism industry
  • Energy industry
  • Manufacturing industry
  • Construction industry
  • Service industry
  • Mineral Resources and mineral-based industry
  • Textile and apparel industry

After Nepal embarked on the path of economic liberlisation in early nineties, the Government of Nepal has adopted various policy measures and established institutional support mechanism to attract greater flow of foreign investment in the country. They include mainly:

  • Foreign Investment and Technology Transfer Act 1992
  • Industrial Policy and Industrial Enterprises Act 1992
  • Foreign Investment and One Window service
  • Water Resources Development Policy
  • Labour Act 1992
  • Trade Unions Act and Regulations 1992
  • Privatization Act 1994
  • Company Act, 1997
  • Income Tax Act 2002
  • Nepal Ratra Bank (Central Bank) Act 2002
  • Labour and Employment Policy 2005
  • Nepal-India Trade Treaty 2002
  • Non-Resident Nepalese Act 2006

For detail information on trade and investment opportunities in Nepal, please visit the web pages of following organisations: