Atul Keshap is the Senior Vice President for South Asia at the US Chamber of Commerce. The seasoned diplomat, who previously served as the US Ambassador to Sri Lanka and the Maldives, also holds leadership positions as the President of the US-India Business Council and the US-Bangladesh Business Council. With a distinguished 28-year career in US diplomacy, Ambassador Keshap has served in various capacities across countries like India, Morocco, and Guinea. During his recent visit to Kathmandu for the Nepal Investment Summit 2024, Keshap talked to Mukul Humagain of the New Business Age to discuss the interest of US companies in investing in Nepal, the country's regulatory landscape and potential areas for investment. Excerpts:
Before coming to Nepal for the Nepal Investment Summit, you had a meeting with our Finance Minister in Washington DC. What impression have you drawn from that meeting when it comes to investment facilitation?
It was a pleasure to host Finance Minister Barshaman Pun at the US Chamber of Commerce. As the world's largest business advocacy organisation, we have dedicated significant efforts to bolstering trade and investment connections between the United States and nations worldwide. Nepal's decision to send its foreign minister last October and its finance minister this year demonstrates Nepal's commitment to attracting greater investment and fostering closer engagement with the United States.
We are delighted with the outcome. Our discussion was highly productive; key US companies participated eagerly to listen to the minister's insights and exchange thoughts on their objectives for the summit. However, the primary objective remains fostering increased trade and investment flow in both directions. If Nepal experiences economic growth and improved living standards through foreign direct investment (FDI), it is a win-win scenario. Minister Pun seemed particularly focused on this aspect.
How important is it for Nepal to maintain a stable regulatory environment to reassure global investors of the country's commitment to fostering a conducive business environment?
When a company is considering a significant investment, predictability is crucial. It needs assurance that it has thoroughly assessed all tax, regulatory, labour, industry and infrastructure requirements, ensuring a profitable framework for investment. Ultimately, investors seek stability; they want to allocate capital where it is secure and where the investment promises productivity.
Companies seek comfort and a favourable rate of return when deciding where to invest, as nations worldwide vie to attract global capital. Having worked in various countries like Vietnam, Mexico, and the US, I have witnessed this hunger firsthand. Foreign Direct Investment (FDI) is coveted everywhere because it translates to employment opportunities, increased investment, tax revenues for governments and overall prosperity. Nepal stands to benefit greatly by establishing a stable regulatory framework, which enhances its attractiveness to investors.
The US ranks among Nepal's top 10 foreign investors, comprising approximately 2.9% of the total FDI stock. Recent media reports indicated that Coca-Cola and Disney expressed interest in investing in Nepal. What additional measures should the government prioritise to further attract US investment?
Allow me to share a few insights. First, US companies are renowned for upholding the highest standards of ethics, managerial proficiency and technological innovation. Their contributions to society's prosperity through job creation, tax contributions and responsible market engagement have been substantial. While you highlighted several prominent US firms, it is worth noting that there are additional companies also considering opportunities in Nepal.
Indeed, securing a sovereign credit rating is crucial. However, it's equally imperative to take proactive measures to remain off the FATF grey list.
Three key sectors of notable interest in Nepal are tourism, energy (especially hydroelectric power) and IT services all of which are experiencing noteworthy advancements. Simplifying regulatory procedures and fostering an environment conducive to investment decisions in these sectors would undoubtedly bolster Nepal's prosperity. The nation holds substantial potential, and there exists a keen interest in tapping into it. The pivotal determinant lies in the message conveyed by the government and the investment framework presented to these companies. Given their global stature, these companies have the capacity to make significant positive impacts in Nepal.
According to the US State Department's 2023 Investment Climate Statement on Nepal, the country offers opportunities for investors willing to accept the inherent risks and unpredictability of doing business there, and those who possess the resilience to invest with a long-term mindset. Do you share this assessment?
Every investment venture carries inherent risks, regardless of location. Nations vie to mitigate these risks, making it imperative for Nepal to scrutinise elements of its regulatory framework to minimise such risks. This underscores the significance of dialogues with the Finance Minister and the government. Additionally, having an American Chamber of Commerce (AmCham) is invaluable; this marks the 130th AmCham globally. These entities, comprising remarkable individuals and companies, can collaborate with the government to identify measures that mitigate risks, thereby enhancing Nepal's appeal as an investment destination.
I can share some insights. Nepal's pursuit of its first sovereign credit rating holds significant importance. Achieving this rating would pave the way for attracting international financial investments. Indeed, securing a sovereign credit rating is crucial. However, it's equally imperative to take proactive measures to remain off the FATF grey list. For international investors considering allocating part of their portfolio to Nepal, staying clear of the FATF grey list holds immense significance. It serves as a testament to Nepal's credibility and reliability, signalling to the global financial community and investors worldwide that Nepal is under positive observation, fostering trust and confidence in its investment environment.
Another crucial aspect is increasing competition in the energy sector through reforms in the electricity law. This initiative not only promises significant revenue generation for the Nepali population but also facilitates funding for development projects. Such reforms are highly attractive to investors, as they signal a commitment to creating a conducive investment climate. Additionally, the formulation of a comprehensive national investment policy and the streamlining of regulations for foreign investment are paramount. These efforts, coupled with the predictability factor mentioned earlier, further enhance Nepal's appeal as an investment destination, instilling confidence among potential investors.
If all goes according to plan and the appropriate regulatory framework falls into place, coupled with sufficient business interest, naturally, we will strive to facilitate opportunities for American businesses.
The government recently issued an ordinance to amend nine investment-related laws ahead of the Investment Summit. Do you believe that amending these nine laws will suffice to address investment concerns?
First, it is crucial to recognize that these decisions are sovereign in nature, and ultimately, it is up to the Nepali people and the government to determine their course of action. However, it is important to acknowledge that Nepal operates within a competitive global framework. Every country, both regionally and globally, vies for a share of the same investment pool. Therefore, the ability to establish a regulatory and policy framework that outshines those of neighbouring countries and competitors worldwide is pivotal. By doing so, Nepal can attract more investment. Ultimately, the effectiveness of these decisions will be demonstrated through future results and empirical evidence.
You mentioned the potential for major US companies to consider additional investments in Nepal. It is essential to note that should these investments materialise, they would adhere to the highest standards of ethics, managerial expertise, technological advancement and environmental stewardship. However, the conducive conditions must be in place, and ultimately, this decision rests with the Nepali people. Consider this: Do you wish to compete on a global scale with countries like Vietnam, Mexico and India, which are courting foreign investment to bolster their GDP? Take Singapore as an example. It meticulously studies and enhances its regulations within the ASEAN region to become the most attractive investment destination. Consequently, Singapore attracts more foreign direct investment than the entire ASEAN bloc combined. This poses a fundamental question for Nepal to ponder and answer.
You have been instrumental in establishing the US-India Business Council and the US-Bangladesh Business Council. Do you see a possibility and need to establish a US-Nepal Business Council?
I believe it is crucial to observe how the government shapes the investment agenda and engages with the business community. If the right policy frameworks emerge, particularly concerning sectors like IT services, electricity and tourism, there may indeed be heightened interest from US corporate entities. Hence, my presence here serves multiple purposes - not only to offer support to our newest American Chamber of Commerce, attend and address the Nepal Investment Summit, and engage with government officials, but also to assess the potential opportunities, especially if the regulatory environment aligns favourably. Let's remain optimistic and see how things progress.
If all goes according to plan and the appropriate regulatory framework falls into place, coupled with sufficient business interest, naturally, we will strive to facilitate opportunities for American businesses. However, our commitment extends beyond mere profit motives. Any partnership must be mutually beneficial - a true win-win scenario. It should contribute positively to the welfare of the Nepali people, boosting GDP, and enhancing per capita income and overall well-being. If these conditions are met, there is every reason to pursue such collaborations.
You have served in South Asia and know how the governments in the region function. Does Nepal figure among the global investors?
To be candid, my primary objective here is to gain a deeper understanding of the situation. I aim to bring back insights to the United States and share them with the members of the US Chamber of Commerce, our extensive network of thousands of companies. I've been hearing some encouraging reports. Your stock market is thriving, foreign currency reserves are robust, post-earthquake reconstruction efforts have been successful, the IT sector is flourishing and there is increased investment in tourism. Sitting in this modern hotel is a testament to the positive developments underway. These success stories deserve broader recognition. If coupled with strong government policies, investors will undoubtedly take notice.
