Nepal Investment Guide Book
Nepal Investment Guide Book
Nepal Investment Guide Book
NEPAL
INVESTMENT GUIDE
2016
GOVERNMENT OF NEPAL
OFFICE OF THE INVESTMENT BOARD
GOVERNMENT OF NEPAL
MINISTRY OF INDUSTRY
1
Publisher
Investment Board Nepal
Office of the Investment Board
ICC Complex, New Baneshwor,
Kathmandu, Nepal
Phone: 977-1-4475277, 977-1-4475278
Fax: 977-1-4475281
Email: [email protected]
Website: www.ibn.gov.np
Government of Nepal
Copyright
Investment Board Nepal
Office of the Investment Board, ICC Complex,
New Baneshwor, Kathmandu, Nepal
PAPER
Environment friendly, woodfree paper
Acknowledgement
The Office of the Investment Board would like
to thank the Department for International Development (DFID) and Japan International Cooperation Agency (JICA) for providing financial
support for this publication. We would also like
to thank the team at Samriddhi, The Prosperity
Foundation and FACTS Nepal for assisting in
the research work. We acknowledge the inputs
of representatives of the various Government of
Nepal agencies, private sector organisations,
sectorial experts and individuals who contributed to the information in this document. Finally,
we would like to thank Pentagram Pvt Ltd for the
design and layout.
CONTENTS
COUNTRY OVERVIEW
05
SECTOR OPPORTUNITIES
28
06
HYDROPOWER
29
ECONOMIC INDICATORS
07
TRANSPORT
30
STRATEGIC ADVANTAGES
08
AGRICULTURE
31
09
TOURISM
32
10
33
11
34
35
COMPANY REGISTRATION 14
FINANCIAL INSTITUTIONS
35
TAX REGISTRATION 15
16
SECTORIAL/INDUSTRY REGISTRATION
27
DISPUTE RESOLUTION
27
ACRONYMS
BPO
BS
CRO
DG
DOI
EIA
EPR
FDI
FITTA
FY
GDP
GNI
GSP
IBN
ID
IEE
INR
IPB
IRD
NPR
NTB
PAN
PDA
PIA
PPP
SEZ
SEZDC
USD
VAT
WTO
COUNTRY OVERVIEW
5
Religion
Secular state; Hinduism 81.3%, Buddhism 9.0%, Islam
4.4%, Kirat 3.1%, Christianity 1.4%1
Region
South Asia
Capital
Kathmandu, located in central Nepal
Population
28.17 million
Area
147,181 square km
Currency
Nepali rupee (NPR)
1 USD = 106 NPR (as of 1 Jan 2016)
1 INR = 1.6 NPR (fixed rate)
Altitude
59 to 8,848 metres (Mt Everest)
ISD Code
+ 977
Standard Time
GMT + 5:45 hours
Climate
Terai region : Tropical/sub-tropical
Hilly region : Moderate
Mountain region : Sub-alpine/alpine
Governing System
Republic: Multi-party parliamentary democracy with
elected prime minister responsible to the parliament
as executive head and constitution endorsed in 2015
River systems
Mahakali (Sharda in India) basin, western border of Nepal
Karnali (Ghagra in India) basin, Mid-Western Nepal
Gandaki (Gandak in India) basin, Central and Western Nepal
Koshi, Central and Eastern Nepal
Language
Nepali, written in Devanagari script
English is widely used in business
Kathmandu
(1.00m1)
Temperature: oc
Precipitation: mm
Pokhara
(0.32m1)
Temperature: oc
Biratnagar
(0.21m1)
Temperature: oc
Precipitation: mm
Precipitation: mm
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
YEAR
Avg. high
19.1
21.4
25.3
28.2
28.7
29.1
28.4
28.7
28.1
26.8
23.6
20.2
25.6
Avg. low
2.4
4.5
8.2
11.7
15.7
19.1
20.2
20.0
18.5
13.4
7.8
3.7
12.1
Avg.
14.4
18.7
34.2
61.0
123.6
236.3
363.4
330.8
199.8
51.2
8.3
13.2
1455
Avg. high
19.7
22.2
26.7
29.8
30.1
30.6
30.0
30.2
29.3
27.5
24.1
20.7
26.7
Avg. low
7.1
9.2
12.8
15.7
18.4
20.9
22.0
22.0
20.8
16.7
11.9
8.0
3.7
Avg.
23.0
35.0
60.0
128.0
359.0
669.0
940.0
866.0
641.0
140.0
18.0
22.0
3901
Avg. high
22.7
26.1
30.9
33.9
33.3
32.9
32.1
32.5
32.1
31.6
29.3
25.4
30.2
Avg. low
9.0
11.1
15.6
20.4
23.3
25.2
25.6
25.8
24.7
21.1
15.3
10.5
19.0
11.7
13.2
13.2
53.1
186.0
302.4
530.8
378.3
298.8
91.8
5.9
6.6
1892
Avg.
Ranking based on Census 2011. The number is the estimated population in 2015.
ECONOMIC INDICATORS
PARTICULARS
2011
2012
2013
2014
Population (million)
27.18
27.50
27.83
28.17
18,913.5
18,851.5
19,271.1
19,769.6
3.4
4.8
4.1
5.4
610
690
730
730
2,050
2,170
2,270
2,410
38.3
36.5
35.0
33.7
15.4
15.5
15.7
15.6
46.3
48.0
49.2
50.7
4,216.9
4,793.4
5,588.9
5,769.7
9.3
9.5
9.0
8.4
10.8
6.6
6.6
8.7
Mountain region
Hilly region
Terai region
N
CHINA
INDIA
STRATEGIC ADVANTAGES
Strategic location and geographic advantages
Strategically located between two large and rapidly
growing economies China and India with easy access to markets of more than 2.6 billion people
Duty free and open border access to India
Duty free access to China for around 8,000 products
Enjoys various duty and tax free arrangements in the
region as a Member of South Asian Free Trade Area
(SAFTA) and the Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation (BIMSTEC) Free Trade Agreement
The topography and abundant water resources give
rise to vast untapped hydropower potential
Contains the Himalayas, which is the highest mountain range on Earth, and 8 of the worlds 10 highest
peaks, combined with unique cultural heritage, creating potential for tourism
Incredibly rich biodiversity, creating potential in agriculture and medicinal and aromatic plant research
2
3
10
INVESTMENT SIZE
(FIXED CAPITAL)
APPLICATION AT
APPROVAL BY
>
= NPR 10 BN
(APPROX
US$ 100 M)
INVESTMENT
BOARD NEPAL
(IBN)
INVESTMENT
BOARD NEPAL
(IBN)
< NPR 10 BN
>
= NPR 2 BN
(APPROX
US$ 20 M)
DEPARTMENT
OF INDUSTRY
(DOI)
INDUSTRIAL
PROMOTION
(IPB)
> NPR 2 BN
DEPARTMENT
OF INDUSTRY
(DOI)
DIRECTOR
GENERAL OF
DOI
Application at IBN
Approval by IBN
Approval by IPB
11
The Department of Industry, under the Ministry of Industry, is the government agency responsible for the
administration and implementation FITTA and promotion of industry in Nepal, particularly small and medium scale industries. It provides foreign investment
approval to projects below NPR 2 billion (approx.
USD 20 million) and the Industrial Promotion Board
chaired by the Minister of Industry provides foreign
investment approval to projects with investment of
between NPR 2 billion to NPR 10 billion (approx. USD
20 to 100 million). The Department of Industry also
encourages FDI and helps investors to establish operations in the country. It is responsible for registering
trademarks, patents and designs to protect industrial
property rights.
Fees: There are no fees for FDI approval by the Department of Industry. However, a maximum of NPR
20,000 should be deposited at the Nepal Rastra Bank
at the time of issuing an approval letter. This amount
is refunded when the project becomes operational.
12
In the case of projects that are not put up for competitive bidding, direct negotiation with IBN is possible. As
per the Investment Board Act, the direct negotiation
method is allowed for projects under IBNs mandate if:
the proposal is absolutely necessary, and no suitable
proposals are tabled after at least two invitations for
proposals
competition is not possible
a new concept or technology is involved
the cost estimate exceeds NPR 20 billion
adoption of other procedures as per the Act is not
found to be appropriate for any reason
In such cases, the potential investor can directly approach IBN. However, investors following the direct negotiation route need to furnish all details and carry out
studies in the same manner as for obtaining approval
under the open bidding scheme.
Fees: The fees for investors through IBN are set out in
the following table.
Other projects
NRP 10,000
NPR 100,000
30% of 0.2% of the
total project cost
70% of 0.2% of the
total project cost
13
COMPANY REGISTRATION
To start a business in Nepal, investors need to
incorporate a company. The agency responsible
for the incorporation of a company is the Company
Registrar Office (CRO) under the Ministry of Industry.
The Company Act 2006 provides for two types of
companies: private limited and public limited.
14
Note: An additional NPR 3,000 is charge for every NPR 10 million increase in
capital beyond these limits.
TAX REGISTRATION
15
SECTORIAL/INDUSTRY REGISTRATION
Sector
Registration/
licensing body
Details
Hotels, lodges
and restaurants
Tourism Industry
Division of the Ministry
of Tourism and Civil
Aviation
Banks and
financial
institutions
The Nepal Rastra Bank, the central bank of the country, along with the
CRO regulates the incorporation of a bank or financial institution.
The Bank and Financial Institution Act (BAFIA), 2006 lays out rules
related to the incorporation, operation and winding up of financial
institutions.
Banks and financial institutions are classified into 4 classes commercial
banks, development banks, finance companies, and micro finance
institutions, based on the amount of paid-up capital.
As per the BAFIA, at least 30% of shares of banks and financial
institutions need to be set aside for the general public. In the case of a
foreign bank incorporating a subsidiary in Nepal, such provisions may
be relaxed.
Food
Department of Food
Technology and
Quality Control
16
Department of Mines
and Geology
Education
Ministry of Education,
Civil Aviation Authority
of Nepal (CAAN),
Ministry of Health
Hydropower
Department of
Electricity Development
As per the Electricity Act, 1992, if the capacity of the project is more
than 1,000 kW, operators must obtain a survey licence and, after the
survey, a licence to generate, transmit or distribute electricity from the
Department of Electricity Development.
There is a simplified procedure for the development of micro hydro
projects up to 1,000 kW capacity.
The project proponent has to obtain a survey licence before starting
survey work including a detailed design and feasibility study.
After completion of the survey, a separate licence has to be obtained
from the Department of Electricity Development to start construction
and operate the project.
The maximum term of a survey licence is 5 years.
Health services
Department of
Industry, Department
of Commerces
Ministry of Health
17
Tourist visa
Under this category, visitors can come to Nepal and stay
for 60 days with renewals allowed for up to 150 days in total in a calendar year. A tourist visa can be obtained from
Nepali missions in the tourists country of origin or upon
arrival at the port of entry by paying the prescribed fee.
Non-tourist visa
Foreigners having obtained permission from the Government of Nepal to work on either remuneration or volunteer
basis in any firm/company/association/industry or enterprise within Nepal require this visa. This type of visa is
issued for a period not exceeding one year at a time and
its term may be extended as needed. A non-tourist visa
requires approval from the Ministry of Home Affairs if the
duration of the visa applied for exceeds three months.
Foreigners who have obtained a recommendation from
the Department of Industry to conduct a feasibility
study for any industry or enterprise for a period not exceeding six months can also obtain a non-tourist visa.
18
Business visa
A business visa can be granted on the recommendation of the concerned agency to the following foreigners (and his/her family):
- A foreigner and/or his/her authorised representative
who has obtained a licence to invest in any business
or industrial enterprise within Nepal
- A foreigner who has obtained a licence to make an
investment to export trade from Nepal
- A foreigner visiting Nepal from a country that exports
goods manufactured in Nepal who purchases goods
or who places a purchase order for export
Business visas are issued for periods not exceeding
five years at a time; however, the validity of this type
of visa may be extended as needed.
Residential visa
Any foreign investor who has made an investment
equivalent to more than USD 100,000 at any one time
and in convertible foreign currency can be granted a
residential visa on the recommendation of the Department of Industry/Investment Board Nepal. The validity
period of this visa is one year at a time.
If the investor, making a lump sum investment equivalent to more than USD 100,000 in convertible currency,
happens to be a company, only one shareholder authorised by that company and his/her dependents may
be granted residential visas.
LABOUR LAWS
Investors setting up enterprises in Nepal that will employ staff (either on a permanent, fixed term or consultancy basis) will need to follow Nepals labour laws.
This section gives a brief overview of the labour laws
contained in the Labour Act 1992.
Working day
The normal allowable working hours per day are 8
hours, 6 days a week, or 48 hours a week. The employer can decide the starting and finishing time as well
as the day of the weekly holiday (which is traditionally
Saturday).
Working age
A person must be over the age of 16 to be hired for
employment. A child under the age of 14 cannot be employed under any circumstance. A child between the
age of 14 and 16 can be employed for up to 6 hours
a day.
Contracts
Nepali labour laws allow three types of employment
contracts: regular employment contract (permanent),
fixed duration employment contract (often termed as
contract employment), and task-based employment
contract (piece rate contract).
Employing foreigners
Under the accession to the WTO agreement Nepal has
made a commitment to allow 15% of technical and
managerial posts to be filled by expatriate staff by entities with foreign investment. For visa requirements of
foreign workers, refer to the section in this guide on
visas.
19
Retrenchment
As per the prevailing Labour Act, if an enterprise needs
to curtail its operations or close down partially or wholly, the management, after obtaining approval from the
government through the Department of Labour, may
retrench some or all of its workers (Labour Act, Section
12). In such situations, workers hired last need to be retrenched first. The retrenchment can be done by giving
a months notice or a months pay in lieu of notice. As
per the law, an employer has to pay a lump-sum equivalent to 30 days salary multiplied by the total number
of years in service as compensation for retrenchment.
An enterprise may temporarily suspend production
while keeping workers in reserve. However, the workers in reserve need to be paid half of their salary and
benefits. A worker who has completed 55 years of age
may be retired compulsorily. An employer has the right
to extend the service period of such a worker for up to
five years.
Welfare benefits
According to the law, workers under permanent contract have to be provided with welfare and social security benefits. The employer has to deduct 10% of an
employees salary, match that amount and deposit the
combined sum in the employees provident fund. If a
worker resigns or retires after working three or more
years on a permanent contract, the employer has to
pay gratuies at the rate of half a months salary for seven years of continuous service, two-thirds of a months
salary for 715 years of service, and one months salary
for 15 or more years of service (Section 29, Labour Act).
Labour offices
There are labour offices at 10 different locations across
the country. As there is no separate entity prescribed
by law to manage the operation of factories, these offices also act as factory inspectors.
20
TAXATION
Investors setting up enterprises in Nepal must comply
with Nepals tax laws. This section explains the taxation system in Nepal, including the accounting system,
corporate tax rates, rebates and concessions, VAT and
excise duty.
Accounting system
Nepal imposes both direct and indirect taxes. Under
the Income Tax Act 2002, income tax is levied on the
income of both individuals and corporate bodies. Corporate tax, individual income tax, payroll tax, and capital gains tax all fall under this Act. Income tax is administered by the Inland Revenue Department.
Nepal follows internationally-accepted accounting
norms and systems. The Nepal Financial Reporting Standards (NFRS) are issued by the Institute of
Chartered Accountants of Nepal (ICAN), which is a
self-regulating body. Company accounts need to be
maintained on an accrual basis. The fiscal year for tax
assessment and tax payment begins from the month of
Shrawan and ends in the month of Asadh in the Nepali
calendar (mid-July in the Gregorian calendar).
Nepal follows a pay as you earn system of tax collection and payment, which includes the provision of
advance tax, which is comprised of instalment tax and
tax deducted at source (TDS). In the case of indirect
taxes like excise duty and VAT, taxes have to be deposited within 25 days after the expiry of the calendar
month of the transaction. In the case of income tax,
estimated tax should be paid in three instalments as
per Section 95 of the Income Tax Act 2002.
The taxpayer has to prepare the final book of accounts and tax returns, have this book audited by auditors of the concerned governing body, file the returns
and make the final payments within three months of
the expiry of the fiscal year. The taxpayer can obtain
an extension on filing the returns up to a maximum of
another three months. Presumptive tax payers are not
required to file income tax returns as they pay a fixed
amount of tax each year.
Tax rate
25%
20%
30%
25%-30%
30%
20%
Enterprises operating roads, bridges, railways hydropower stations, transmission lines, 20%
etc. on BOOT basis, etc.
21
Excise duty
Nepal levies excise duty on the production/import of a limited number of commodities listed as negative externalities
and luxury goods (such as alcohol, cigarettes, vehicles,
plastic goods, etc.). Excise may be on an ad valorem or
specific basis (based on volume, weight or quantity).
There is a list of goods and services on which VAT is not applicable such as grains, lentils, vegetables, raw agricultural products, fruits; medicines and raw materials
for medicines, pesticides, health equipment and appliances, agricultural appliances, handicrafts, health and educational services (there are alternate provisions for
health services and educational services), electricity supply, artistic services, passenger and goods transport, etc. as per schedule 1 of the VAT Act.
4
22
Import
Only registered firms and companies can be involved
in importing goods. The firms and companies have to
be registered with the concerned department (Department of Industry or Department of Cottage and Small
industries for industry and Department of Customs for
trading firms). They should also be registered with the
Inland Revenue Department for PAN and VAT.
Importers have to fill out a customs declaration form
(Pragyapan Patra), and submit it with the relevant
documents to the Customs Office. In addition to this
document, the Customs Office will also ask for a copy
of the registration document (e.g., industry registration,
firm registration, PAN/VAT registration certificate, tax
clearance certificate) when the company is carrying out
import activities for the first time.
23
Export
Phyto-sanitary certificates
Phyto-sanitary certificates are issued from Plant Quarantine Posts under the Plant Protection Act and rules after a thorough examination and proper treatment of exportable seeds or plants, or plant products, if required.
Certificate of origin
A Certificate of Origin is required by Nepalese Customs
for all exports. Three private sector associations the
Federation of Nepalese Chambers of Commerce and
Industry (FNCCI), Confederation of Nepalese Industry
(CNI), and Nepal Chambers of Commerce (NCC) can
issue a Certificate of Origin. In the case of the FNCCI,
its member bodies and chambers of commerce and
industry in the various districts can issue these certificates. For exports on preferential terms (to India and
China on duty free basis and South Asian Free Trade
Area exports), only the FNCCI is authorised to issue
the Certificate of Origin. The issuance of a Certificate
of Origin for Indian exports involves a site visit and approval by a technical committee from the Department
of Industry.
24
PROPERTY LAWS
This section briefly explains Nepals zoning laws, laws
on land acquisition and intellectual property laws.
Zoning laws
There are no strict zoning laws in Nepal or areas designated for different kinds of activities or purposes (e.g.,
residential areas, commercial areas, industrial areas,
agricultural areas, etc.) and where other kinds of activities cannot be undertaken. However, there are certain
norms fixed by the Industrial Promotion Board regarding the location of industries, which forbid the location
of certain businesses in certain areas.
Land acquisition
Intellectual property
The registration of patents designs and trademarks is
made under the Patent, Design and Trademark Act,
1965. The Department of Industry is the responsible
body for such registration. The existing law is rather old
and is in the process of being changed. A unified intellectual property law is being contemplated.
The duration or validity of registration of patents designs and trademarks is 7 years. Trademark registration can be renewed any number of times, with a validity of 7 years each time. Designs can be renewed for
2 terms of 5 years and patents can be renewed for 2
terms of 7 years.
To obtain land or buildings owned by private individuals, the investor must negotiate with the owner to either
purchase or lease the land. The purchase deeds are
registered at the Land Management Office.
If forest land has to be obtained (e.g., in the case of
mining, hydropower projects or infrastructure projects),
the investor must follow a process prescribed by the
Ministry of Forests and Soil Conservation. This Ministry may ask for an equal amount of private land to be
procured for use as forest land and afforestation in the
same area.
In the case of government (non-forest) land, the land
can be leased by the investor according to the Land
Leasing Policy 2014. The lease term ranges from 1050
years. The lease can be renewed after the term expires.
25
Industrial Districts
The Government of Nepal has established 11 Industrial Districts (IDs) in different parts of the country
with the assistance of various donor countries. IDs
are equipped with basic infrastructure for doing business, such as developed land fenced with boundary
walls, industrial sheds, warehouses, roads, drainage/
culverts, electricity, water supply and other services.
The government-owned Industrial Districts Management Ltd, which was established as a separate corporate entity in July 1988, is entrusted with the overall management and supervision of all IDs, as well
as other tasks such as conducting feasibility studies
of IDs in potential areas, materialising new IDs, and
planning and promoting the industries therein. Currently there are 10 IDs in operation at Balaju, Patan,
Hetauda, Dharan, Nepalgunj, Pokhara, Butwal, Bhaktapur, Birendranagar and Rajbiraj. Another is planned
at Dhankuta.
26
ENVIRONMENTAL CLEARANCE
Nepal has established a system of environment clearance and pollution control certification under the Environment Protection Act, 1997 and its rules. The Environmental Protection Rules prescribe the process for
carrying out the necessary investigation and obtaining
the clearance from the Ministry of Science, Technology
and Environment, which is the authority designated to
provide the clearances.
DISPUTE RESOLUTION
The Foreign Investment and Technology Transfer Act
(FITTA) has a special provision for dispute settlement.
The Act calls for dispute settlement by mutual consultation. For industries with fixed assets/investment of up
to NPR 500 million, if the dispute cannot be settled by
mutual consultation in the presence of the Department
of Industry, it shall be settled by arbitration in accordance with the prevailing arbitration rules of the United
Nations Commission on International Trade Law (UNCITRAL). The arbitration shall be held in Kathmandu.
The laws of Nepal shall be applicable in the arbitration
process. For industries with fixed assets/investment of
more than NPR 500 million, disputes may be settled
as per the joint venture agreement or share purchase
agreement.
27
SECTOR OPPORTUNITIES
28
HYDROPOWER
Nepal is rich in water resources with multiple sources
of water, including glaciers, snowmelt from the Himalayas, rainfall and groundwater. Nepals theoretical capacity for producing power from hydropower projects
is around 80,000 MW, out of which 43,000 MW is estimated to be economically feasible. However, installed
capacity is only 750 MW of electricity, despite the fact
that peak domestic demand (supressed) is well over
1,000 MW. Demand for electricity is increasing at 79%
per year.
With about 68% of all hydropower generation capacity and the entire transmission and distribution network
under its control, the Nepal Electricity Authority (NEA)
is the most significant player in the energy sector. Independent power producers (private players) own approximately 32% of hydropower generation capacity.
The government endorsed the Work Plan on National
Energy Crisis Alleviation and Energy Development Decade in February 2016, which provides a roadmap for
policy reforms and initiatives to spur private sector investment.
Opportunities
Nepal faces acute power shortages and opportunities
exist in the hydropower sector to meet this gap in demand.
Nepal is targeting graduating from least developed
country (LDC) status to developing country status by
2022 and aims to become a middle income country
by 2030. To meet its growth aspirations, Nepal will
need to add 6,000+ MW (which requires investment of
approximately USD 10 billion). Consequently, a lot of
industries and infrastructure projects are in the pipeline opening up huge opportunities.
In addition to energy development, investment opportunities lie in the upgradation and expansion of distribution
systems (for which investment of approximately USD 2
billion is required) and transmission systems (for which
investment of approximately USD 4.45 billion is required).
The Power Trade Agreement (PTA) signed with India has
opened up a large market for exporting electricity to India.
The SAARC Framework agreement on Energy Cooperation signed during the 18th SAARC Summit in 2014 will
pave the way for the eventual formation of a regional energy market.
29
TRANSPORT
The transportation sector in Nepal contributes 8.8% of
GDP and grew at a rate of 6.8% in 2013/14. The average
growth rate of the sector in the last five years was 6.9%.
During the three year plan period (FY 2013/142015/16),
a total of 25,133 km of strategic roads were built. Nearly all districts (73 out of 75) now have road access and
an additional 1,609 bridges are in operation. Nepal also
has 56 domestic airports and 1 international airport in
Kathmandu.
The National Planning Commission has identified 21
National Pride Projects that will contribute to the
development of the economy, of which 10 are in the
transportation infrastructure sector. The Government
of Nepal is planning to construct international airports
in Bhairahawa in the Terai (the plains adjoining India)
and Pokhara (in the west). It is also increasing the capacity of Tribhuvan International Airport and blacktopping 22 domestic airport runways. An international airport is also planned for Nijgadh, which is about 76 km
from Kathmandu.
30
Opportunities
Only 19% of roads in Nepal are all weather roads
and 2 out of the 75 districts are still not connected
by roads. Hence, there are many opportunities to expand the road network, for which the government is
seeking to form public-private partnerships.
Nepals main highways require expansion to accommodate the increase in traffic, which is another area
for public-private partnerships.
In order to cater to the needs of the growing population, the development of mass public transportation systems bus-rapid transport (BRT), railways,
monorails, airports has been prioritised. To finance
these projects, the government is looking at publicprivate partnerships.
Eight north-south corridors (roads) linking China and
India through Nepal, a cross-border railway line connecting Kathmandu with China, five cross-border
railway lines, ultimately connecting Kathmandu with
India, a railway line along the East-West Highway,
and cable cars in the hilly regions are planned.
AGRICULTURE
Nepals geography, topography, water resources and
ample supply of labour give Nepal a comparative advantage in agricultural production. Nepals economy
is largely dependent on agriculture, which accounted
for 32% of GDP in 2014/15 and absorbs about twothirds of the labour market. Only 25% of the total land
area is cultivable land; another 33% is comprised of
forest land and the rest is mountains. The lowlands of
the Terai region produce an agricultural surplus, which
caters to the needs of the food-deficient hill areas. The
Agriculture Development Strategy 2014 recommends
spending NPR 502 billion in 10 years.
As the agriculture sector is the biggest contributor to
GDP, the Government of Nepal is committed to uplifting this sector. The government is currently focusing on
the modernisation, diversification, commercialisation and
marketing of the agriculture sector. Towards this, the government plans to make available agricultural inputs, such
as irrigation, electricity, transportation and agro-credit.
Opportunities
Opportunities exist in agriculture production; processing, packaging and branding (non-timber forest
products, cardamom, ginger, aquaculture, vegetables, floriculture, tea, coffee and honey) also offer
many opportunities.
The Nepal Trade Integration Strategy 2010 focuses
on the development of cardamom, ginger, honey,
lentils, tea, noodles and medicinal herbs/essentials
oil as priority export products. The Trade Policy 2015
reemphasizes the need to develop these products.
There are good opportunities in input markets (such
as for seeds, nurseries, fertilizers, agricultural infrastructure and technology, and agriculture financing)
and, due to favorable climatic conditions, the focus
on high value organic crops is increasing.
31
TOURISM
With the worlds highest mountain range, the Himalayas, and 8 of the 10 highest peaks in world, Nepal has
long been popular among mountaineers, trekkers and
adventure seekers. It also offers beautiful lakes, steep
rivers and gorges, unique wildlife, historic monuments,
impressive fine arts, significant religious sites and exotic cultures attracting a wide array of travellers for a
variety of reasons.
Nepal is also a destination for religious tourism and pilgrimages. Lumbini, the birthplace of Lord Buddha, and
Pashupatinath and other Hindu pilgrimage sites are the
main attractions for people following Buddhism and
Hinduism.
Almost 800,000 tourists visited Nepal in 2014. The average length of stay for a tourist in Nepal is about 12.4
days, and March, October and November are the peak
months for tourists to visit. This sector employees approximately 500,000 people in Nepal. The Vision 2020
has set a target to increase annual tourist flow to 2 million, opening avenues for a lot of opportunities.
Opportunities
There are opportunities in developing tourism infrastructure (hotels, restaurants, roads, airports, etc).
There is also great potential for expanding the market for
meetings, international conferences and events (MICE).
Plans to upgrade the current international airport are
underway, which will increase the tourist traffic significantly.
The expansion of existing tourism products and introduction of new and innovative products has the
potential to attract different types of tourists and extend their average length of stay.
4%
Pilgrimage
50%
13%
Official
Convetion/conference
Other
3%
12%
32
Holiday/pleasure
7%
Not specified
INFORMATION COMMUNICATION
TECHNOLOGY
Nepals ICT sector is one of the fastest emerging sectors
in the country, with huge potential for growth in the coming years. All the services related to the ICT sector are
open to foreign direct investment, except for media. For
telecommunications, 80% foreign ownership is allowed.
The Government of Nepal has identified IT and business
process outsourcing (BPO) in the Nepal Trade Integration Strategy 2010 as one of the five priority potential export service sectors. The Trade Policy 2015 also reemphasizes the importance of developing this sector. IT
has the potential to generate high growth and significant
profits and is expected to be one of the most significant
growth sectors in Nepal. The major telecommunications
service providers in Nepal are Nepal Telecom Corporation (government owned) and Ncell (mainly foreign
owned). This is a cross cutting sector which will enhance
the performance of all other sectors
Opportunities
Foreign BPO companies can tap into the young English-speaking population and benefit from the cost
advantages offered by the low wages and low establishment and operating costs. The time zone in
Nepal is also favourable for companies looking to
outsource from America or Europe.
As there are only two major telecommunications
companies (NTC and Ncell) dominating the sector,
there is room for new firms to enter the market.
There are unmet needs for the use of ICTs in governmental agencies and the private sector.
There are plans to develop an IT Park (an area set
aside by the government for software developers, ITbased businesses, IT service providers and investors
in related fields).
33
34
Opportunities
In recent times, the western part of Nepal has witnessed gas and oil seepage, confirming the presence of oil and natural gas in Nepal. About 10 petroleum and natural gas exploration sites have been
identified.
Nepal has more than 20 million metric tonnes of ore
reserves in more than 80 locations.
Copper occurs in Nepal in more than 107 locations.
Recent studies have shown that Nepal may have 2.5
billion metric tonnes of cement grade limestone.
Nepal has an estimated 5 billion metric tonnes of dolomite and 180 million metric tonnes of high-grade
magnetite.
Opportunities
Opportunities exists in developing education infrastructure, including upgrading and building educational institutions and even education cities (medical, IT, engineering, management, etc), for which the
government is seeking to engage in private-public
partnerships.
The government is also looking to develop health infrastructure, including by modernising and increasing the capacity of health facalities and mobilising
privately-run hospitals by means of public-private
partnerships.
In terms of pharmaceuticals, there are persistent
shortages of quality medicines in the market presenting opportunities for manufacturers and importers of pharmaceutical goods.
FINANCIAL INSTITUTIONS
Nepal has witnessed rapid growth in the number of
banks and financial institutions (BFIs) since financial
liberalisation in the mid-1980s. This policy has encouraged foreign banks to enter the Nepalese market through joint ventures. Standard Chartered Bank,
Everest Bank, Nepal Bangladesh Bank and Nepal
SBI Bank are some of the joint venture banks operating in Nepal. The banking sector contributes around
3% to GDP.
The central bank of the country, the Nepal Rastra
Bank, regulates the banking sector, which is comprised of commercial banks, development banks,
finance companies, and micro credit development
banks/institutions.
In addition, 26 insurance companies are in operation under the Insurance Act 1992 (as at mid-April 2015), of which
3 have foreign investment and 3 are foreign joint ventures.
Nine of these companies are life insurance companies,
while the remainder are other types of insurance.
Number of BFIs
2014
Commercial banks
30
Development banks
84
Finance companies
53
37
Sub-total
204
35
36
MINISTRY OF HEALTH
Ramshah Path, Kathmandu, Nepal
Tel: +977-1-4262802, 4262543
Fax: +977-1-4262896, 4262468, 4262935
Email: [email protected]
Website: www.mohp.gov.np
MINISTRY OF AGRICULTURAL DEVELOPMENT
Tel: +977-1-4211905, 4211950, 4211697
Fax: +977-1-4211935
Email: [email protected]
Website: www.moad.gov.np
MINISTRY OF COMMERCE AND SUPPLIES
Tel: +977-1-4211631
Fax: +977-1-4211167
Email: [email protected]
Website: www.mocs.gov.np
MINISTRY OF INFORMATION AND COMMUNICATIONS
Tel: +977-1-4211556
Fax: +977-1-4211729
Email: [email protected]
Website: www.moic.gov.np
MINISTRY OF LABOUR AND EMPLOYMENT
Tel: +977-1-4211889, 4211991
Fax: +977-1-4211877
Email: [email protected]
Website:www.mole.gov.np
MINISTRY OF LAND REFORM AND MANAGEMENT
Tel: +977-1-4211666
Fax: +977-1-4211708
Email: [email protected]
Website: www.molrm.gov.np
MINISTRY OF PHYSICAL INFRASTRUCTURE AND
TRANSPORT
Tel: +977-1-4211782, 4211931
Fax: +977-1-4211720
Email: [email protected]
Website: www.mopit.gov.np
37
MINISTRY OF ENERGY
Singha Durbar, Kathmandu
Tel: +977-1-4211516
Fax: +977-1-4211510
Email: [email protected]
Website:www.moen.gov.np
MINISTRY OF INDUSTRY
Singha Durbar, Kathmandu
Tel: +977-1-421-1579
Fax: +977-1-421-1619
Email: [email protected]
Website: www.moi.gov.np
MINISTRY OF IRRIGATION
Singha Durbar, Kathmandu
Tel: +977-1-4211426
Fax: +977-1-4200026
Email: [email protected]
Website: www.moir.gov.np
MINISTRY OF DEFENCE
Singha Durbar, Kathmandu
Tel: +977-1-421-1290
Fax: +977-1-421-1294
Email: [email protected]
Website: www.mod.gov.np
38
DEPARTMENT OF LABOUR
Minbhawan, Baneshwor
Tel: +977-1-4107194
Fax: +977-1-4107288
Email: [email protected]
Website: www.dol.gov.np
DEPARTMENT OF IMMIGRATION
Kalikasthan, Dillibazar
Tel: +977-1-4429659
Fax: +977-01-4433935
Email: [email protected]
Website: www.nepalimmigration.gov.np
DEPARTMENT OF CUSTOMS
Tripureshwor, Kathmandu
Tel: +977-1-4259793
Fax: +977-1-4259808
Email: [email protected]
Website: www.customs.gov.np
MINISTRY OF INDUSTRY
Singh Durbar, Kathmandu, Nepal
Tel: +977-1-4211579
Fax: +977-1-4211619
Email: [email protected]
Website: www.moi.gov.np
Website: www.ibn.gov.np
40