Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010capabilities in all five of the IPI functions listed earlier. An additional task could be the promotion of tourismfor new investment in support of efforts to attract new tourists.One option would be to establish the IPI as an independent body from the very beginning. For practicalreasons, it might be more realistic to place it initially alongside the new SEZ Authority, perhaps as an InvestmentPromotion Department, to focus on marketing the zones. Once a wider national investment promotionstrategy is developed, it could be moved to become a fully independent IPI within the government structure.Although in theory a separate body from the SEZ Authority, the IPI would work very closely with the zones.As of late 2009, the Government was considering setting up a Board of Investment to address the institutionalgaps in Nepal. However, no details are available as of yet as to the mandate, organization, and governancestructure of such institution.A National Strategic Plan for Investment PromotionConsistent with the lack of institutional arrangements, Nepal also has no overall private sector developmentstrategy or plan for investment promotion at country level or at the level of SEZs. Without a coherent strategicplan, there is a danger that participating stakeholders and institutions will pull in different directions, thusdissipating the impact of their activities, and perhaps even contradicting and diluting each others’ efforts.Upon the BoI’s establishment, and assuming it will be mandated with an investment promotion task, the newBoI should oversee the formulation of a focused and realistic investment promotion plan for Nepal. Having aclear strategy for promoting and retaining investments is important for effective investment promotion andresource allocation. A large part of building an investment promotion strategy for Nepal means assigningweights to the five core investment promotion activities listed earlier, i.e. image building, investmentgeneration, facilitation and servicing, aftercare, and policy advocacy.Initially, the newly created BoI should focus on ‘investor facilitation and servicing’, – both prospectiveinvestors and those already in the country–‘investor aftercare’, and ‘policy advocacy’ and on learning fromthese activities. Given the political instability, industrial insecurity, and rigid labour market conditions, it isrecommended that less resource be allocated to marketing and investment generation efforts initially anduntil these conditions change favourably or perhaps only when tied direct to the planned SEZs.At the level of planned SEZs, there is a need to develop a clear promotion strategy as well, prioritizing keysectors and industries, and targeting foreign investors in key source markets for FDI that should be madeaware of the benefits offered by the Nepal SEZ programme. Building SEZs will not necessarily guaranteeforeign investment. In particular, for attracting new export-oriented industries to Nepal, a unique sellingproposition in relation to the zones and a concrete marketing action plan should be developed as an integralpart of the investment promotion strategy mentioned earlier. Obviously, duplication of efforts betweenthe zones authority and the IPI (to be established) in relation to investment promotion activities and SEZpromotion should be avoided; rather, a joint strategy and joint approach for attracting overseas investorsshould be pursued.As mentioned, successful investment generation requires a clear strategic sector focus and effective promotionof investment opportunities. Most professional IPIs have moved towards a sector-based investment generationstrategy to direct the limited resources available where they are most useful and the chances of winninginvestments are the highest. A more general marketing and ‘shotgun approach’ tends to be less effective andmore resource-intensive. As of late 2009, there appeared to be broad consensus about the target sectorsfor investment in Nepal, including most of those included in the export potential assessment presented inChapter 2.156NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT