March 27: Industrialists have objected to Section 44 of the Foreign Investment and Technology Transfer Bill. However, government authorities dismissed the concern raised by the industrialists terming it as a comment made without any insight. The bill was passed by the National Assembly on March 22 without any amendment.

The bill, which has been approved by the upper house, will become a law once the president authenticates it.

Government authorities argue that the bill would facilitate foreign investment. But the industrialists are in dilemma due to the provision relating to major product and accessories mentioned in Section 44 of the bill.

The aforementioned section states that companies with foreign investment can produce, except the main product, any accessories or service required by sub-contracting with other industries. This means that the companies need to mention any one of its product as their main product. They will be bound to produce the main product themselves.

For instance, Unilever Nepal’s main product is Lifebuoy soap. The company purchases OK soap from Nepal Soap and sells it under its brand in the market. If the Act is implemented, Unilever Nepal can have Nepal Soap produce only some parts of its ingredients. The company can have other industries produce the wrapper while the soap must be produced by Unilever.

Yam Kumari Khatiwada, secretary at the Ministry of Industry, Commerce and Supplies, claims that the new provision has been introduced to facilitate multinational companies.

“Water producing companies can bring in water jars from other companies,” she said, adding that the legal provision has been introduced to clear the existing confusion.

The clause does not define main product and accessories. Advocate Anjan Neupane who has expertise in foreign investment stated that this can have serious effect on the multinational companies operating in Nepal.