Investment In Agriculture, Tourism And Energy

--By Shanta Raj Subedi

 

Economic development is a pre-condition for the multi dimensional aspects of prosperity. This would pave the way for boosting the economic activities thereby creating employment opportunities. Employment creation, on the one hand, provides the youths an opportunity to use their knowledge and skill in the home country while, on the other, it decreases the migration of the workforce. A huge investment is needed for employment creation. The present resource base is not enough for this purpose. 

 

The Government of Nepal, through its national plan, has declared the development strategy to achieve inclusive, broad-based, high and sustainable economic growth by enhancing the contribution of the private sector, government and co-operatives.  

 

Nepal Economic Summit has picked up important priority sectors - Energy, Tourism and Agriculture for economic development of Nepal. These three sectors are among the top priorities of the government as articulated in the current development plan, and are crucial to help Nepal graduate from LDC by 2022.  Let me briefly highlight on these sectors.  

 

The energy sector, especially hydropower, is one of the areas with immense potential for secured and profitable investment in Nepal. With huge availability of water resources, Nepal could be one of the best places to invest in hydropower. I believe that market is not a problem for us to export hydropower. Investment in the hydropower sector will not only get a domestic market but also an export market. There is enormous opportunity for investing in generation and transmission of hydro electricity. The cross-border transmission lines with India will benefit both Nepal and India. 

 

Nepal’s energy potentiality is not limited to hydropower. We have high prospects for other forms of energy like bio-mass, solar and wind energy. The Government of Nepal has announced a number of policies and incentive mechanisms for the development of this sector. Different tax incentives are already in place and we are also open to continue discussion on further incentive packages. Further, we are ready to join hands with the private sector to develop the energy sector through the Public-Private-Partnership modality.  

 

Similarly, agriculture has remained a prime sector of our economy since long. This sector alone contributes around 35 per cent to the total GDP and provides employment to more than 70 per cent population. Realizing this fact, the Government of Nepal has been increasing investment in this sector. In order to develop the agriculture sector in a holistic way, we have recently drafted the Agricultural Development Strategy. Further, we have been drafting new agriculture policy to improve the investment climate in this sector. 

 

Nepal is suitable for cultivation of organic seeds, vegetables, fruits and flowers. Our topography is such that it has scope for eco-tourism and agro-tourism also. In order to increase the production and productivity of crops and livestock products, the Government of Nepal has introduced insurance schemes and different packages of production incentives. We are committed to further increase the investment in this sector and welcome the private investors as well. 

 

Nepal is an ideal tourism destination. We do have the mixture of myriad tourism activities, like soft walking, mountaineering, sightseeing, trekking, community based tourism, village home stay tourism, eco-tourism, adventure-sports tourism and religious tourism. The huge socio-cultural diversity is another mysterious attraction of Nepal. New tourist sites are constantly being discovered and public investment has been increased to develop such sites. 

 

The Government of Nepal has been investing in basic infrastructures of the tourism sector. More private investment is needed in the tourism sector to build quality hotels, lodges and restaurants. Further, the private sector is encouraged to attract more tourists from all around the globe with sophisticated investment in this sector. The Government of Nepal is building a regional international airport near Lumbini. The private sector should be able to reap the benefits of such infrastructure and develop sufficient measures to attract religious tourists. In many aspects, the tourism sector is almost virgin for new investment. It’s not only the natural tourism that is an attractive area for investment, but also the cultural and pilgrimage tourism are equally attractive for the investors. 

 

Nepal adopted the liberalized economic policy after the restoration of democracy in 1990 through the eighth periodic plan. Since then, the private sector has been encouraged to invest in the socio-economic development of the country. In order to facilitate the private sector, Nepal government has formulated a liberal and open Foreign Direct Investment and Technology Transfer Act 1992, Industrial Enterprises Act 1992, Electricity Act 1992, BOOT Act 2006 and Nepal Investment Board Act 2011. In addition to this, we have also signed Bilateral Investment Protection and Promotion Agreement (BIPPA) with France, Germany, UK, Mauritius, Finland and India. Similarly, Avoidance of Double Taxation Treaty has been signed with ten countries and five are under considerations. These all are positive steps towards encouraging foreign investors in the country. However, we feel, there is a need for further reform in order to materialize private investment in the country.   

 

We are aware from global studies and observations that Nepal still lacks an investment friendly environment. However, the recent political development shows good gestures in this respect. The domestic market is growing. The international market is already there. There is greater enthusiasm in the domestic private sector. The government is trying to remove non-tariff barriers for investment, such as issues related to trade union, land acquisition, compensation and so on. 

 

I am confident that this summit would come up with specific recommendations for the Government of Nepal regarding adopting policy measures and creating conducive environment for investment. I would like to assure that the recommendations made here would be taken positively and incorporated in our upcoming policies and programmes. 

 

(The author is the Finance Secretary of Nepal. The article is adapted from the Opening Remarks he delivered at the inauguration of Nepal Economic Summit 2014 on February 24.)