FDI inflows down 2.85pc in 2012

DESPITE the announcement of Nepal Investment Year 2012-13 and formation of Investment Board Nepal, foreign direct investment (FDI) inflows in 2012 were 2.85 percent lower than the figure of 2011. Nepal attracted FDI worth $92 million in 2012, against $95 million in 2011, according to the latest World Investment Report - 2013 prepared by the United Nations Conference on Trade and Development (UNTCTAD). What is more worrying is Nepal stood second last in attracting FDI in 2012— just ahead of Bhutan, but behind war-torn Afghanistan. Afghanistan received $94 million, while Bhutan got $16 million in FDI in the year, according to the report. Other South Asian states are far ahead when it comes to attracting FDI. Investment Board Nepal CEO Radhesh Pant, however, said despite decreased FDI inflows, commitments for investment have been high in 2012. “We will probably see more FDI inflows in the coming years,” he said. According to Department of Industries, FDI commitments in the first half of the fiscal year was at Rs 9.53 billion, up from Rs 7.14 billion in the entire FY2011-12. Nepal is among the 18 least developed countries (LDCs) that attracted less than $100 million in FDI in 2012. Although the total FDI into LDCs increased by 20 percent to $26 billion, Nepal is among the countries that posted decline in FDI inflows, according to the report. FDI growth in LDCs was led by strong gains in Cambodia (inflows were up 73 percent), the Democratic Republic of Congo (up 96 percent), Liberia (up 167 percent), Mauritania (up 105 percent), Mozambique (up 96 percent) and Uganda (up 93 percent), the report said. It said Nepal is also among the six landlocked countries that received FDI between $10 million and $99 million. Only Burundi received less than $10 million in FDI. Pant said political and policy instability has been the major problem in attracting FDI since 1990, not only in 2012. “The investment year was planned with a hope that the country would get a new constitution and would head towards stability,” he said. “But unfortunately, the hopes were shattered after the dissolution of the constituent assembly.”