Nepal’s Outbound FDI Reform Needs a Blanket Amnesty

It is a well-known fact that Nepali businesses have been  discreetly investing  abroad for decades. These investments did not emerge a desire to operate outside the system nor from any intent to bypass national  policy. They emerged from necessity. For years, Nepal’s regulatory structure did not offer a formal path for outward investment, even as the country’s private sector matured
and its entrepreneurs became more globally aware.  The gap between ambition  and available space  widened steadily, and discreet overseas moves became a quiet but natural response.

Nepal’s market—energetic and full of entrepreneurial spirit—remains limited in scale. Industries develop,  innovate, and then quickly confront the boundaries of a compact economy. Growth needs room. It follows a rhythm found  in life itself: a baby eventually outgrows its cradle. There is nothing wrong with the cradle; it has served its purpose well. But once the child grows, the same cradle becomes restrictive rather than nurturing. At some point, a larger environment becomes essential.

The same principle applies to education. A student completes school, but if the next level of learning is not available, he moves to another institution. Stepping outward is not an act of dissatisfaction; it is the logical continuation of growth. Nepali businesses reached this point long ago. Their skills, exposure, and networks matured ahead  of the regulatory environment around them. They observed global markets, travelled widely, built relationships, and recognised that their aspirations required engagement beyond Nepal’s borders.

Regulatory unpredictability intensified this pressure. Policies shifted  with political cycles. Interpretation varied from office to office. Businesses struggled to make long-term plans—not because they lacked vision, but because clarity and consistency were  not always present.
Entrepreneurs who rely on predictable environments to take calculated risks were forced to navigate a landscape that frequently changed shape.

Yet for many years, Nepal maintained strict restrictions on outward foreign  direct investment, guided by a conservative belief that outbound capital automatically meant capital flight. In reality, capital was already flowing outward—not because businesses wanted to siphon resources from Nepal, but because Nepal did not provide  the framework needed for the next stage of expansion. When  globalisation accelerated in the late nineties and early 2000s, Nepali entrepreneurs spotted large opportunities abroad that were  simply not available at home.

With no legal channel  to invest overseas, businesses adapted discreet routes: offshore structures, joint ventures, nominee arrangements, and foreign incorporations. These were  not schemes to undermine the national economy; they were  the only available tools for participating in a world that had moved  ahead  while domestic policy remained behind.

This is why the government’s recent decision  to open  the door to outbound FDI is both significant and long overdue. It reflects a vital shift in mindset—from viewing outward investment as a threat to recognising it as an essential component of global economic participation. It acknowledges the maturity of Nepal’s private sector and legitimises what entrepreneurs have long been  doing. Most importantly, it brings policy in line with global economic reality.

Allowing official outbound investment enables businesses to register overseas ventures openly, collaborate transparently with global partners, and bring their international activities  into the formal financial system. It restores confidence by signalling that Nepal trusts its private sector to compete globally. And it positions Nepal to integrate more effectively with regional and global value chains.

A logical and practical  next step would be allowing earlier overseas investments—those made discreetly because no legal channel existed—to be declared under  a blanket amnesty. Many economies at similar stages of financial reform  have adopted this approach. India’s 2015 compliance window  allowed individuals and companies to declare  foreign assets under  structured amnesty. Indonesia’s 2016 Tax Amnesty Programme became one of the largest asset-regularisation efforts in the world. South Africa’s Special Voluntary Disclosure  Programme enabled citizens to declare  foreign income and assets under a safe mechanism. Italy, Turkey, and the Philippines each created voluntary disclosure frameworks that effectively served as blanket amnesties during periods  of policy transition.

These global examples show that when  nations recognise historical constraints and offer a blanket amnesty instead of punishment, transparency increases, trust deepens, and financial systems grow stronger. Nepal can benefit from the same approach. Providing an amnesty would acknowledge the realities  of the past while encouraging businesses to integrate their overseas activities  into the formal economy with confidence.

The opening  of outbound FDI reshapes Nepal’s financial landscape in meaningful  ways. For decades, banks sensed that money  was moving abroad but could not track the flows. Without formal channels, financial institutions were  unable  to develop instruments to support outward investment or evaluate the international exposure of clients. Liquidity planning suffered because significant global activity existed outside the banking system.

A formal regime changes this dynamic. Banks can now document outward flows, design products for cross-border business, and manage  foreign exchange more strategically. It strengthens balance sheets by replacing invisible outflows with recorded and regulated movement. It boosts Nepal’s credibility within the international financial community by signalling that the country has begun  modernising its capital account responsibly. And it positions the financial sector to support globally oriented entrepreneurs in a more  structured way.

The broader economy stands to gain even more. Outward investment helps open  new markets for Nepali products and services,  brings advanced technologies home, and exposes businesses to global management standards. Firms returning from international markets often  become more innovative, efficient, and competitive. As overseas ventures mature, they generate dividends, royalties,  and profits that eventually return to Nepal, helping diversify the nation’s narrow economic base. Countries with small domestic markets—such as Singapore, Mauritius, and the UAE—have long embraced outward investment as a tool to strengthen their domestic capability. Nepal now begins this transition.

For too long, Nepal viewed  FDI only through the lens of what enters the country. The opening  of
outbound investment completes the circle. It signals readiness. It signals maturity. And it reflects confidence in the nation’s private sector. Nepali entrepreneurs have demonstrated resilience, creativity, and global adaptability for decades. Now, for the first time, policy supports the direction in which they were already moving.

For years, Nepali businesses expanded abroad quietly because they had no formal alternative. What was once  discreet out of compulsion can now be open  by design. With clarity, legitimacy, and global confidence, Nepal can finally convert outward ambition  into inward strength.

(This opinion artilcle was originally published in December 2025 issue of New Business Age magazine.)