Business opportunity in Nepal has been underestimated for far too long. Entangled in political revolution for almost two decades, investment in Nepal was definitely a risky proposition. However, as political agenda has now rightly shifted towards economic growth, with a stable government in place, Nepal has become the perfect place to invest.
Achieving a GDP growth of 7.5% in 2017, the signs of a revitalized economy have already been felt. In recent years, there have been notable improvements from government in eliminating crippling power cuts and crafting investment friendly bills. The drastic increase in Foreign Direct Investment in Nepal is a clear sign that it is high time to capitalize in the economic boom that is here and now.
Hydropower, tourism and cement industries are thriving. The service sector and small to medium enterprises aren’t far behind to benefit from the rapid growth in business activity in the country which has been parallel to development in infrastructure. The entrepreneurial movement has taken pace and young entrepreneurs with big visions are emerging in Nepal whose contribution can be directly felt in every sector. With the very large potential and inexpensive labor, the return on investment in this unsaturated market would definitely be higher than investing in any saturated market.
WHY 2018?
Political Consensus
After two decades of political unrest, the Central Government formed with majority and committed to promote investment and economic activities
All political parties incorporating economic issues as major agenda
Stable province and energetic local government focused and dedicated to the improvement of livelihood of people.
Regional Presence
Nepal recently signed a Memorandum of Understanding (MOU) on the framework agreement on China’s One Belt One Road Initiative (OBOR)
Government of Nepal Committed to improve connectivity with both neighboring countries through road and railway
Being a Member of South Asian Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-Sectorial Technical and Economic Cooperation (BIMSTEC) Free Trade Agreement, it savors a duty and tax-free experience
Ease of Doing Business
Nepal was ranked third after Bhutan and India among South Asian countries in the ‘Ease of Doing Business Report 2017’ by the World Bank.
Nepal has recently revised its law and regulation to make it more investment friendly and is in continuous improvement process.
100% ownership to Foreign Investors is allowed in most sectors.
Investments as per Bilateral Investment Promotion and Protection Agreement (BIPPA) signed with Finland, India, Germany, Mauritius, Qatar, United Kingdom, and France Mean a more friendly investment opportunity.
Double Taxation Avoidance Agreement signed with Austria, China, India, Korea, Mauritius, Norway, Pakistan, Qatar, Sri Lanka and Thailand.
Location and geographical convenience
Nepal is located between two of the world’s largest economies known for their highly accelerated economic growth: India and China
It has an access to the market of approximately 2.7 billion population.
Open border and a duty free trade with India and a duty free access to China for over 8000 products.
Capable Human Resources
Government initiation to improve technical skill and competence of work force required for rapid economic development
Out of 28 million population 61% are the working population.
Participation of women population is comparatively high among the South Asian countries.
The labor cost is low.
Where to Invest?
a. Hydroelectricity
Being the second richest country in hydroelectricity potential, Nepal has a huge future in this sector. Supported by its geographical inclination, Nepal has a large number of steep, eternal rivers; development of massive hydroelectricity projects is a possibility. Since Nepal is a developing nation with a crunch of funds, resources haven’t be used to their potential. Also, India, the southern neighbor will always have a demand for clean and cheap electricity due to which there is always a market for the hydropower projects in Nepal. With more than six thousand large and small perennial rivers flowing all over Nepal including three major rivers Koshi, Gandaki and Karnali, there is a huge business opportunity in hydropower in Nepal.
b. Transport
Nepal is a landlocked country with a topographical diversity making transport evidently difficult. Thus, the need of proper transportation facilities is acute. There is a need of different transports such as cable transport, railways, water transport etc. As a result of geographical diversity, there is a lack of roads all over the country, and even the roads in the urban areas are in bad condition and need expansion; therefore developing better roadways and investing in new road projects are a priority for the government making this a good venture to invest in. Availability of a huge mountain range benefits the cable transport projects. Also, Railways could have a huge potential of replacing other transport facilities in the southern plains. Existence of only one international airport is a major problem and therefore a major business opportunity. Transportation projects which have big budgets are the perfect sector to invest in Nepal.
c. Agriculture
Agriculture sector being the largest contributor in the GDP of the country is the factor that dominates the economy. Till the 1980s, most people were dependent on agriculture for earning a living, however lesser number of population is reliant on agriculture as their livelihood. Agriculture as business is still not seen as a profitable venture by a large segment of population.
Nepal is geographically and topographically fit for agriculture and with perfect climatic conditions. This is also a plus factor for growing and reaping rare medicinal herbs. New technologies contributing to agriculture is very rare, making the possibilities of introducing this is a huge investment opportunity in Nepal. Production of cash crops as a business idea could be a profitable business as commercial agricultural projects are still not big in Nepal.
d. Tourism
Bearing a diverse geographical condition, a very rich and divergent culture Nepal attracts a magnificent number of tourists making tourism a leading economy. Eight out of the ten world’s highest peaks and other various mountain ranges dwell in the country which shapes it as a hub for mountaineers, rock climbers, hikers and others who seek adventures. Nepal is the birthplace of Buddha and a home to a lot of Hindu and Buddhist shrines, attracting a huge mass of pilgrimages on a yearly basis. The temples and monuments dating back to history and having huge archeological importance, a lot of archeologist are also welcomed annually. The number of tourists entering Nepal is inclining at an exponential rate, with foreign tourists staying in the country for an average of 11.78 days. The unique flora and fauna is another reason for the possible growth of tourism. Every year a new attraction, new wilderness and new adventure unfolding in one of the remote areas of Nepal. The country has a whole lot of skilled porters and guides who could be hired in a very low wage. All these factors make tourism perhaps the best sector to invest in Nepal.
e. Infrastructure
Infrastructural development is one of the vital needs of Nepal. Due to the large earthquake in 2015, there were devastating losses in the major areas of Kathmandu valley and other areas, which called for a dire need of creation of earthquake proof infrastructures. Since the transportation facilities need a lot of improvement, this could be a sector to invest in as well. The Nepalese government has always been supportive of investors trying to work in the infrastructure sector.
f. Information Technology
IT field has dominated the world at this point and Nepal is no exception. Nepal has a mass of skilled IT graduates who could be hired in very cheap wages. As it is an upcoming interest in the Nepalese scenario, new talents and ideas could surely be explored. IT companies emerging as a new business venture; the competition is less if you decide to invest right now.
g. Mines and Minerals
Nepal lies in the central part of the Himalayan Belt, making it very rich in minerals. The Himalayan region consists of clusters of metallic and non-metallic minerals. Nepal is also known for exporting a range of beautiful decorative stones. Even with the presence of bulks of minerals scattered all around the Himalayan range, Nepal itself has not been able to extract these minerals. The existing mineral extraction businesses are less in number and are not very effective. Ample opportunities exist for the investors who could invest in cement factories, lime extraction, coal, magnetize, talc clay etc. So if anyone decides to invest in this sector, this could be a very profitable business endeavor in Nepal.
h. Health & Education
Health sector is in a very poor state in Nepal. It needs a lot of improvisation and improvement. Therefore, it would be very profitable for someone who is interested in investing in Nepal in this sector. Likewise the education sector is largely lagging. A lot of students go abroad each year for quality education. These should be good reasons to invest in Nepal.
I. Telecommunication
With the increment of population and growing business and technology, telecommunication is a pressing need. There are only a few telecommunication companies in Nepal, and therefore less competition. Geographical conditions being challenging in the country, even the existing networks have not reached the remote areas. This generates a massive opportunity for anyone wanting to conceive a profitable business in Nepal.
Nepal is moving towards a liberal foreign investment policy and is aiming to create an investment friendly environment to allure Foreign Investments in the nation. Foreign investment both as joint venture operations with Nepalese investors or as 100 percent foreign-owned enterprises are highly encouraged by the Nepalese government. With comparatively lower taxation and ease of doing business, Nepal is one of the ripest destinations to invest for both Nepalese and Foreign Investors.