KATHMANDU, Aug 18: Nepal Rastra Bank (NRB) has simplified the process for investors to bring money into the country for the purpose of setting up company under foreign direct investment.
The central regulatory bank said foreign investors aspiring to make 100 percent investment can bring one percent of the total paid-up capital through banking channel in advance for registration fee and to meet pre-operating cost.
Issuing a circular to commercial banks and development banks last Friday, NRB also paved the way for such companies or investors to count the spent amount brought through the banking channel into foreign direct investment.
“The move is aimed at simplifying the process for foreign investors to set up their business or company in Nepal. In the absence of this policy, foreign investors were facing difficulty in sending money for registration process or arranging pre-operation cost,” Bhisma Raj Dhungana, executive director of NRB, told Republica.
“After being registered as a foreign venture, such companies or businesses will now get certificate from the respective bank for the amount that it brought into the country for registration or to meet pre-operation cost. However, foreign ventures will be allowed to count the amount as foreign direct investment only after the expenditure audit of such money,” he added.
Foreign investors so far had been spending the money through their local agents which would be counted as an expenditure rather than foreign direct investment.
According to statistics of Department of Industries, Nepal received foreign direct investment commitment of Rs 67.42 billion for 368 projects in Fiscal Year 2014/15. These projects have proposed to create 13,158 jobs. Such commitment was Rs 20.11 billion for 305 projects in 2013/14.
However, even a small portion of the pledged investment is unlikely to translate into reality immediately due to various reasons like political instability, labor problems, lack of investment climate in the country, and complex bureaucratic procedures for registration of new ventures.