KATHMANDU, Jan 17: The foreign direct investment (FDI) commitment went up by an impressive 60 percent in the first five months of the current fiscal year despite the odds faced by the country.
Statistics compiled by the Department of Industry (DoI) show FDI commitment topping Rs 29.9 billion in the five-month period to mid-December.
If the entire amount pledged by foreign investors enters Nepal, around 12,000 additional jobs will be created in sectors such as agriculture, manufacturing, tourism and services.
But since the country does not have an effective mechanism to monitor whether the commitment made by foreign investors was fulfilled, many may not know how much of the amount pledged by them actually flowed into the country.
"The investment commitment always seems encouraging, but the actual flow is quite disappointing," a DoI official told Republica on condition of anonymity because of his limitation to speak with the media.
Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry, also shared DoI official´s view.
"I don´t think all foreign investors fulfill their investment commitments," he said. "But the rise in FDI commitment definitely portrays interest shown by foreigners to come and invest in Nepal, as it costs time and money to register companies here.”
However, this interest shown by foreign investors, according to Murarka, is marred by political instability and other constraints, such as power shortage and labor problems.
The latest DoI statistics show FDI commitment in the energy sector was higher than in other sectors this year.
The FDI commitment in the energy sector stood at Rs 18.38 billion in the five-month period--up 72 percent than in the same period last fiscal year.
"This year, a total of 28 firms expressed commitment to invest in the energy sector, as against 12 in the same period last year," the statistics show.
The response received by the country´s service sector was also impressive, as FDI commitment in the sector surged by 53 percent to Rs 2 billion in the five-month period.
If this commitment translates into reality, a total of 1,976 new jobs would be added in the service sector alone.
Unlike in energy and service sectors, FDI commitment in the manufacturing sector was not encouraging, as pledges made by foreigners to invest in the sector fell by three percent in the review period.
The sector had attracted Rs 6.3 billion in FDI commitment in the first five months of last fiscal year, which dropped to Rs 6.1 billion in the five-month period this year. If the amount pledged by foreign investors enters Nepal, a total of 4,865 jobs would be created.