Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010The World Bank Group’s GIPB Survey 2009 measures the performance of IPIs in 185 countries. Thedata presented in table 5.4 shows Nepal’s performance, the South Asia regional average, as well as theperformance of the best IPI in the world, using three investment promotion-related elements as benchmarks:the effectiveness of the IPI website in promoting investment opportunities; the effectiveness of the IPI inhandling inquiries by a potential new foreign investor in manufacturing; the effectiveness of the IPI in handlinginquiries by a potential new foreign investor in the software sector. The scores are presented in the form ofa percentage index in order to facilitate relative comparison between countries. For every benchmark, atleast one IPI gained a score of 100 per cent, the highest possible score. Nepal’s overall score of 26 per centrepresents a weak performance.Table 5.4Effectiveness of Investment Promotion Intermediaries: Nepal compared to South Asiaaverage and best in the worldDepartment of Industries - Foreign Regional AverageComponent & WeightingsBest in WorldInvestment Division(SA)Website (50%) 37% 54% 93%Manufacturing Inquiry (25%) 23% 26% 86%Software Inquiry (25%) 7% 8% 83%Overall 26% 36% 89%Source: World Bank, Global Investment Promotion Benchmarking, 2009.Some key characteristics of successful IPIs include: Well-defined mandate and clear objectives Strong support within government Sufficient and sustainable budget Qualified management and staff Strong links and credibility with the private sector Partnership with other public bodiesIn view of the poor performance of the current investment promotion arrangements in Nepal, the Governmentshould consider establishing a dedicated and comprehensive investment promotion body that is independentof any single ministry and reports directly to the Prime Minister’s Office. Also, to attract and retain the privatesector skills it will need (e.g. investor targeting, marketing, public relations, customer support, etc. ), theorganization should be freed of pay constraints and job security rules imposed in the civil service. To drawon the skills of the private sector and to encourage coordination across ministries, the entity should havea governing board comprising high-level representatives of relevant ministries and the private sector. Thegoverning board should not be involved in day-to-day operations, but should require and approve budgetsand working plans and provide strategic and operational advice. Because the investment climate in Nepalis a ‘hard sell’ at the moment, the performance of the investment promotion agency should be evaluatedinitially on its inputs rather than on the amount of investment coming to the country. In other words, itsperformance should be judged as adequate if it fulfills the commitments to action that it makes in its annualplan. Later, as political stability and labour relations improve, evaluation ought to shift to measurements ofactual investment inflows.The new national IPI need not be large initially, but it would need to be resourced adequately to do aprofessional job of marketing the new SEZs and to start building up a national promotional capability. Beyondmarketing the zones in collaboration with the SEZ Authority, its initial mandate should be in the areas ofinvestor servicing and dialogue with investors to support the reform agenda. Eventually, it could developNEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT155