The Meaning of Organizing an Investment Conference

In terms of participating countries, it will be larger than the previous two investment conferences. The government has a challenge to make it equally successful from the point of view of achievement. The measure of achievement will be the effective presentation of the proposed project from its side, the commitment from the investor and its implementation status.

The government has been holding such conferences from time to time with the aim of attracting foreign investment in projects that are especially needed by the country but cannot be afforded by domestic investment. The upcoming investment conference is the third. The decision to hold the investment conference this year was made last October. But due to the lack of preparation in time, it seems that it was rushed in the end. Domestic and foreign investors have already been raising legal concerns. Even after the investment conference was announced, the law could not be amended through the parliamentary process. Only a few days ago, the government sent an ordinance to the President's Office to amend 10 laws related to investment, which is yet to be issued. Even if an ordinance is brought to untie the knot, investors should be given the confidence to amend the law through the parliamentary process. On the sidelines of the investment conference, the government has also approved the model format of the bilateral investment agreement (BIA) between Nepal and other countries.

This time, the government has prepared to present 148 projects worth 9 billion rupees to investors. Investors can commit to investment by looking at the presentation of the project. The implementation aspect of the investment commitments made at such conferences in the past has not been satisfactory. In the investment conference of 2017, only 2 billion projects were implemented out of 14 trillion projects committed. Similarly, in the conference of 2019, there was an investment commitment of 15 billion, but only about 90 billion projects were worked on. After the commitment, the government should also give priority to increasing the implementation rate by creating a favorable environment in the country and encouraging investors to advance the related projects.

In terms of investment, the country has not yet created a favorable environment. Although there are both national and international reasons for this situation, the main one is internal. The morale of the industrialists and businessmen of Nepal has fallen. Industries are running at less than half capacity. Production, productivity, employment, markets have all declined. There is no demand for loans even though interest rates are continuously falling. More than 6 trillion of investable funds are accumulated in banks. Not only the import-export, but also the price increase is decreasing. These indicators indicate that the economy is in recession. At such a time, the government has the challenge of assuring investors.

Domestic and foreign investors have been raising land acquisition, tree cutting and obstruction of local residents as problems during project implementation. Investors are discouraged as such disruptions extend the project duration and also increase the cost. It is also important to ensure that there are no interruptions during project execution. There is a need to make the one-door system implemented more effectively so as not to cause unnecessary hassle in the procedural work for the purpose of encouraging foreign investment.

The 'hedging' facility for risk management created by fluctuations in foreign currency exchange is also a basis for attracting investors. Although there is a policy arrangement regarding hedging, it has not been implemented. The government should pay attention to its implementation. A big project is expected as soon as foreign investment is called. But in a country like ours, the possibility of large investment coming at once is low. The government should take initiative to bring in small investments along with large ones in the investment conference. It is easy to attract large investments when small investments have good returns.

In order to attract foreign investment, domestic investors should also be encouraged. At present, when domestic investors are not enthusiastic, it is difficult to attract foreign investors because they understand and know the situation here from the private investors here. In the past, why foreign investment did not come as expected, why domestic investors are not able to get excited, if policy reforms can be made, the upcoming investment conference will be successful.

Due to the country's limited resources, we need foreign investment for infrastructure construction and industry-business expansion. The internal revenue is difficult to cover even the current expenditure. Government finances are constantly in deficit. In such a situation, the government should take initiatives to increase foreign aid and subsidies as much as possible to strengthen government finances. For that, the investment conference is an important place to attract investors from many countries at the same time by promoting their projects. The government should leave no stone unturned for the necessary preparations.