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Nepal - a business destination in South Asia


 By Dr Srimal Fernando Asia Correspondent


Nepal is a country on the move with a rapid growth rate of 4.7 percent since 2009. According to “Ease of doing business 2012” the annual flagship publication of the World Bank, the country is ranked  107th out of 183 economies. The country moved three positions up from 110th in 2011. Poverty is still prevalent despite considerable amount of welfare policies by government’s of past and present despite the country’s  close graduation from least developing country (LDC) status to a middle income country with a per capita income of US$ 1200 (2010 est.).

Nepal has a population of 26.6 million in (2011 est.) of which 37 percent are engaged in agriculture, 22 percent in industry and the balance is represented by the service sector. An excellent business framework is backed by the Department of Industries (DoI). The Industrial Promotion Board (IPB) of the Government of Nepal (GON) adds to the attractiveness of the country’s investment climate. The Government encourages foreign direct investments (FDI) and is actively pursued by the policy on economic liberalization with emphasis on private sector investments.  Since 2008, export growth continues to be a major driver of Countries rapid economic growth and the number of foreign companies investing in the country has been increasing steadily.

The economy of the state is heavily dependent on agriculture, industrial exports and tourism sectors.  In the fiscal year 2009-10 exports to the European countries accounted for 46.13 percent of the country’s total garment exports. The skilled, semiskilled & unskilled labour force in the country is considered to be the country’s main asset. The remittance from Nepalese working overseas is the major source of foreign exchange. Presently money from migrant workers is estimated at USD 2.8 billion in 2009.

Water is a natural resource that is available in great abundance and the mountainous landscape and climatic characteristics have endowed the country with vast hydropower potential of around 44,000 MW. At the end of year 2006 power generation from hydro-electricity stood at around 556.4 Mega Watts (MW). As a result the demand for thermal energy has seen a large year-to-year increase. The country's energy requirements are met from thermal power, generated from oil, natural gas and other sources. The Government of Nepal encourages development of this enormous hydro power potential with financial and technical assistance from donor countries and multi lateral agencies.


Nepal is historically an agricultural state and is a leading producer of agricultural products. Being an agricultural country, the majority of its workers are engaged in farming and animal husbandry. Agriculture in Nepal is the largest sector accounting for 36.6 percent of the Gross Domestic Product (GDP). The agricultural sector continues to employ a significant proportion of the labor force. Pulses, jute, sugar-cane, tobacco and grain are the vital economic indicators of Nepal’s agrarian society. Grain production in 2005/2006 was estimated at 7.65 million metric tones.



Significant progress has been achieved in the industrial sector of the country over the past two decades. The country's Industrial enterprise act of 1992 added to the attractiveness of the districts investment climate yielding many opportunities for investment in large, small and medium industries as well as in cottage industries. There are 3032 units of large, medium and small scale industries registered with the Department of Industries (DOI) as of 2006.   The Nepali cottage industry had undergone a major overhaul during the past five decades. According to the Department of Cottage and Small Industries (DOCSI) as of 2007 number of units makes up 13,000. The burgeoning high end industries based at three operational special economic zones (SEZs) of Nepal in Panchkhal (Kabhrepalanchok District),  Bhairahawa, Birganj and Ratmate Jiling (NuwakotDistrict)  yield many opportunities for investment. The burgeoning high end industries based at the Special Economic Zone in Birgunj located 270 kilometers from Katmandu yields many opportunities for investment.


Nepal is blessed with large deposits of limestone. The other deposits include magnetite, lead, zinc, talc, copper and natural gas. Among millions of tones of limestones excavated, Chovar and Udaya-pur limestone deposits are the largest. The Country has an estimated natural gas reserve of 42 million cu. m in Kathmandu valley alone. The Government of Nepal (GON) has identified another sedimentary deposit containing 270 million cubic meters of natural gas recently.

Tourists visiting this beautiful country will find that things they can see and do are limitless. The noteworthy towns such as Katmandu, Lumbini, Pokhara, Patan, Manipur, Nepal-guni and Bhaktpu have their own distinctive character.  Of the world’s fourteen high peaks the country has eight that include Mount Everest known as Sagar-matha in Nepali. At 29,021 feet it is the world’s highest point. It has more than 240 peaks over 20,000 feet above sea level. According to Ministry of Culture, Tourism & Civil Aviation of a total of 544,985 entered the country via Tribhuvan International Airport (TIA) in 2011. Similarly, tourist arrival through road till November 2011 was 174,612.  Currently India is the number one market for the tourism industry in Nepal. The Nepal Tourism Board (NTB) is promoting Nepal as a favorite tourist destination at major travel & trade fairs under the theme of ‘Nepal Tourism Year – 2011’. Traveling to Nepal can be done in different ways but the experience that a visitor gains is unforgettable.

Nepal’s transport infrastructure is relatively advanced and is the backbone of the country. The county has one international airport and a wide range of domestic airports.  The Tribhuvan International Airport is a major stop over point for many international and domestic airlines.  

Considering the cultural affinities bridging South Asia and having a large domestic market with growing tourism, industrial and agricultural sector, flexible labour laws with stable inflow of remittances with comfortable balance of payment situation, the country is set to be 'next investment destination'.



October 2017 Edition





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