Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010Apart from the critical macro-level investment climate constraints mentioned earlier, there are threeinstitutional barriers to effective promotion of investment and trade in Nepal that will need to be addressedin the short term. These are:1. The absence of an institution with a mandate to promote Nepal for investment;2. The lack of a national strategic plan for investment promotion; and3. The very limited capacity in the Government to conduct investment promotion.A Dedicated Institution for Investment PromotionCurrently, Nepal has neither a national IPI nor any department within the Government engaged in the activepromotion of Nepal as a destination for investment. There is no institution undertaking investment promotionto complement some of the destination promotion or product promotion efforts undertaken respectively bythe Nepal Tourism Board and the Trade and Export Promotion Centre.The Department of Industries (DoI) is the current focal point for foreign investment and sole agencyresponsible for administration of the Foreign Investment and Technology Transfer Act. ‘Promoting foreigninvestment in all categories of industries’ is mentioned as a function of DoI, but, in reality, its activities are ofan administrative nature. No pro-active image building or investor targeting is undertaken by the DoI. Apexprivate sector associations and Chambers of Commerce, including CNI and FNCCI, engage in some investmentpromotion activities with respect to their members seeking investment and trade opportunities, but this workhas been hampered by the difficulties in Nepal’s investment climate and their limited capacity. As it stands,there is little evidence of new foreign investments in the country and anecdotal information actually suggestsdisinvestment taking place among foreign companies.Successful investment promotion programmes and institutions in other countries around the world oftendemonstrate capabilities and professional services in the following areas:1. Image-building: creating the image of a country as an attractive site for international investment;2. Investment Generation: targeting specific sectors and companies with a view to creating new investmentleads and proposals;3. Investor Facilitation and Servicing: assisting an investor in preparing an investment decision, starting upits new operations, and maintaining it in good standing;4. Investor Aftercare: managing relationships with existing investors;5. Policy Advocacy: improving the quality of the investment climate and identifying the views of theprivate sector on that matter.Currently, a formal approach to most of the elements listed above is missing in Nepal, though some limitedefforts exist in the area of investor facilitation and policy advocacy. In the area of advocacy, CNI and FNCCIare in regular contact with the government on policy issues. On the investment facilitation and servicing side,the Foreign Investment Section and the Industrial Facilitation Section of the DoI do fulfill some functions on anad hoc basis, including providing assistance to investors in the processing of investment approval, registrationand application for work permits, visas and the reimbursement of import/export duties. But this is essentiallya facilitation and recommendatory role as the final approval authority for all of these lies with other ministries.There are also a few private sector firms that offer some elements of investor services.The lack of a formal approach to investment promotion and absence of a single institution dedicated to thisimportant activity is visible in Nepal’s latest score on the bi-annual global investment promotion benchmarkingsurvey conducted by the World Bank Group, the Global Investment Promotion Benchmarking (GIPB) Survey2009.154NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT