Government yet to prepare a minimum threshold for FDI

The government’s declare of having strengthened it is mechanism to facilitate investment strategies sounds hollow, as the permission of foreign direct investment from the Department of Sector, that is authorized to approve FDI up to Rs 6 billion, had been temporarily suspended since the govt is yet to determine the minimum threshold for foreign investment in Nepal.

The Foreign Investment and Technology Transmit Bill, that was authenticated by President Bidhya Devi Bhandari on March 27, has a provision which states that the government will set a minimum threshold for foreign investment and also publish it in the Nepal Gazette. However, failure of the government, particularly the Ministry of Sector, Commerce, and Supplies, to timely decide the minimum threshold for foreign investment has barred DoI from giving nod to foreign projects for the last three weeks.

“The new Overseas Investment and Technology Transfer Act has questioned the government to set the minimum threshold for foreign investment and this is yet to be achieved. In such a context, we are facing issues in approving overseas projects, particularly small-sized investment projects,” declared Binod Prakash Singh, director general at DoI. He declared the department had already requested MoICS to set the minimum threshold for FDI soon.

Prior to the enforcement of FITTA, there is a minimum threshold of Rs 5 million for overseas investment. DoI has recommended that MoICS should set a minimum threshold of Rs 70 million for foreign investment.

However, Singh declared DoI would approve projects really worth above Rs 1 billion through ‘departmental decision’ and also would not wait for the minimum threshold determination.

Meanwhile, Industry Secretary Yam Kumari Khatiwada stated that MoICS had already started the process of setting up the minimum threshold for FDI and promised that the threshold problem would not hit the approval process of mega foreign projects from DoI.

“After consulting shareholders, we have set a threshold for overseas investment and sought a nod from the Ministry of Financial. Following a ‘go ahead’ from MoF, we can present the minimum threshold suggestion at the Cabinet and publish it in the Nepal Gazette,” informed Khatiwada.

Similarly, Khatiwada also promised that the govt would soon bring FITTA guidelines and make sure that all provisions introduced by FITTA enter the implementation phase.

As per the new legal provision, DoI had been authorized to give approval to overseas projects of up to Rs 6 billion, whilst projects of above Rs 6 billion need approval from Investment Board Nepal.

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