In an invitation to investors in the United Arab Emirates (UAE), Chandra Dhakal, president of the FNCCI, has suggested collaboration in agro-processing in the agriculture sector, a partnership in banking and finance, and recognizing the contribution of the Nepali workforce in the UAE, Dhakal also suggested investments in technical schools to enhance the skill set of the workforce.
The ICT sector, aligning with the UAE’s digital success, was highlighted as a potential avenue for collaboration. A study conducted by the Integrated Development Studies (IIDS) in 2022 revealed that information technology services exports from Nepal have become the largest export in the country. The study indicated that Nepal exported approximately 515 million USD worth of information technology services in 2022. This significant growth in information technology service exports signals a promising opportunity to attract international investment.
According to Dr. Rajib Subba, an Information Technology expert and visiting faculty at King’s College, “The Information and Communication Technology (ICT) sector in Nepal is making significant strides, particularly in outsourcing and software development. The country is positioning itself as a burgeoning business hub. However, certain challenges need attention. The government lacks a comprehensive strategy and has inadequate infrastructure, hindering the sector’s full potential, so clear infrastructure and legal frameworks are imperative.”
Foreign Direct Investment (FDI) guidelines must transparently address taxation, gains, and returns. To attract international investments, a streamlined approach is essential, such as establishing a one-window policy or a dedicated agency encompassing the entire spectrum of foreign investment processes—from initiation to growth—would facilitate a conducive environment for flourishing investments.
The urgency for the above is highlighted by Axiata Group, one of the largest foreign investors in Nepal, deciding to withdraw from the country. The statement from the group cites, “The decision to withdraw from Nepal is based on a thorough evaluation of the prevailing business environment. This evaluation led to the conclusion that continuing operations under the current conditions of unfair taxation and regulatory uncertainties was no longer sustainable for Axiata.” The government of Nepal is gearing up for an investment summit scheduled for April 2024. The summit aims to attract both domestic and foreign investors to the country, presenting a platform for discussions and collaborations that could potentially address concerns raised by investors like Axiata Group.