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Why Invest in Nepal

Macro Economic Outlook

  • Nepal has been pursuing a liberal foreign investment policy and been striving to create an investment- friendly environment to attract FDIs into the country. Our tax slabs one of the lowest and our position is fairly good in ease of doing business. Profitable areas of investment include hydropower, industrial manufacturing, services, tourism, construction, agriculture, minerals and energy.
  • Nepal encourages foreign investment both as joint venture operations with Nepalese investors or as 100 per cent foreign-owned enterprises. The few sectors that are not open to foreign investment are either reserved for national entrepreneurs in order to promote small local enterprises and protect indigenous skills and expertise or are restricted for national security reasons. Approval of the GoN is required for foreign investment in all sectors. No foreign investment is allowed in cottage industries. However, no restriction is placed on transfer of technology in cottage industries.
  • Most investment gurus believe that agriculture and mining will produce the best returns around the world in the next 20-30 years. Food prices are expected to go up because the growing middle class population in emerging markets will demand more expensive food including meat and more jewelry. Worldwide inflation will be higher than expected; so holding precious metals will be better than holding cash.
  • Nepal is close to India and China which will have the largest surge in the middle class population in the history of the world. As families become smaller and wealthier, they will start eating well. Meat consumption will rise. It will take more agricultural resources to produce more meat.
  • These families will also be more interested in traveling. Due to proximity, Nepal is a prime destination for both Chinese and Indian tourists.

Key Facts

Human Resources57% working age (15-59 years)Low cost of labor as compared to peer countries
Agreement and Treaties related to TradeBIPPA with 5 countriesDTAA with 11 countriesTrade and Transit Treaty with with IndiaTransit and Transport Agreement with China
Financial AdvantagesUpto 100% ownership allowed to foreign investors except in few areas. Upto 80% FDI is allowed in the Insurance SectorRepatriation fully allowedTax holiday for some sectors / locationCompetitive corporate Income Tax (General 25%, 30% for Bank & Finance Company, General Insurance Company, Petroleum entities; Cigarette, Beer, Liquor, Khaini, Guthka and Pan Masala Manufacturing Company)
Supportive Constitutional and Legal ProvisionsPrivate-Sector friendly Laws and Policies: encouraging Foreign Investments, Prioritizing Private-Sector, and guaranteeing Property Rights Private-Sector Friendly Laws and Policies Project Development Agreement (for PPP Projects) Project Investment Agreement (for Private Projects) Provision of Non-Nationalization and National Treatment
Strategic AdvantagesLocated between China and India, with an open border access to India 8000+ products that have a duty free access to China77 items have a duty free access to US (till 2016)Duty Free Quota Free (EBA) access to EU
Other advantagesVisa ServiceTourist Visa on Arrival for VisitorsNon-Tourist Visa and Business Visa for ForeignWorkers and InvestorsResidential Visa for Investors (Investment >= USD 1 Million)Land ownership allowed in Company nameIndustrial infrastructure such as  access to roads and transmission lines to the project sites
Source: Investment Board of Nepal

Other benefits

The Nepalese government is very supportive of all investment. It aims to create social and economic systems that can provide reliable access to good-quality, basic necessities such as education, health, and food, that can generate jobs, protect the environment, and eradicate poverty.The Government of Nepal and private sector organizations work together for to set up its goal. Through sustainable economic development, the country is working toward political stability, peace building, trade facilitation and economic capacity building.

The Government of Nepal is very keen for the industrial development in the country. For the same reason, it has been focused on creating an investment-friendly environment, increasing employment, production, and productivity, and substituting imports and minimizing the trade deficit by promoting export-oriented industries. The new Industrial Policy 2010 was created to replace the Industrial Policy of 1992 with the primary objective of attracting domestic and foreign investments by improving the industrial environment, increasing industrial production and productivity, creating more employment opportunities, substituting imports through the promotion of export-based industries, and improving Nepal’s balance of payment by minimizing the trade deficit.

The policy has already been approved and is in the implementation phase, while preparations for the approval of the Technology Transfer Policy 2010 are in process. Likewise, a Nepal Business Forum has also been constituted to promote an investment-friendly environment and to maintain mutual trust and understanding amongst government officials, private investors, and stakeholders. So, our research shows that Nepal is a better place for the investment climate and we encourage to invest in Nepal for those people and organizations waiting for such time.

With the view to attracting foreign as well as domestic Investment to boost the economy, the Government of Nepal has constituted a high level Investment Board, chaired by the Prime Minister of Nepal. The main objective of this board is to facilitate investors in investing in the potential sectors in Nepal. It provides one window facilities to the investors.

These are a number of investment ideas that can generate significant returns over the years. There will be even more opportunities in Nepal as the middle class population grow in Nepal. Rate of returns on investment in Nepal is high.

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