June 5: Cabinet of Ministers has endorsed a bill that allows foreign investment in the domestic securities market on June 2. Now onwards, foreign investors can invest in the sole secondary market of the country. In a bid to attract huge foreign investment in Nepal, the cabinet approved the bill with a mechanism of approving foreign investment in the capital market. Earlier, foreign investment was allowed in industries and service sector only.

“However, foreign investors are not allowed to purchase securities directly as a Nepali citizen,” said Pradip Koirala, Joint Secretary of Ministry of Industries. The foreign investors can invest in Nepali secondary market by establishing a capital investment fund. “A separate fund must be formed and registered in Industry Department in order to invest capital. They can enter the market after obtaining approval from Nepal Rastra Bank (NRB) for the investment,” said Koirala.

The purposed bill just opened a door for foreign investment in the sole secondary market. It will be managed and controlled through a definite regulations and provisions. Similarly, the draft also proposed of allowing investment in dollar that is collected by Nepali companies by issuing securities in foreign capital market. The draft bill which was formulated to amend the Act was lingering in the Ministry of Industries for a long time. The draft bill will be implemented once it gets approval from the parliament.