The business opportunity in Nepal has been underestimated for far too long. Entangled in political revolution for almost two decades, investing in Nepal was definitely a risky proposition. However, as the political agenda has rightly shifted towards economic growth, with a stable government, Nepal has become the perfect place to invest.
Achieving GDP growth of 7.5% in 2017, signs of a revitalized economy have already been felt. In recent years, there have been notable improvements by the government in eliminating crippling power outages and crafting investment-friendly bills. The drastic increase in foreign direct investment in Nepal is a clear sign that it is time to capitalize on the economic boom in the here and now.
The hydropower, tourism and cement industries are driving. The service sector and small and medium-sized enterprises are not far behind to benefit from the rapid growth of business activity in the country, which has been paralleled by the development of infrastructure. The entrepreneurial movement has accelerated and young entrepreneurs with great visions are emerging in Nepal whose contribution can be directly felt in all sectors. With the great potential and cheap 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 instability, the Central Government was formed with a majority and promised to promote investment and economic activities
All political parties incorporate economic issues as their main agenda
Stable province and energetic local government focused and dedicated to improving people’s livelihoods.
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 by road and rail
Being a member of the South Asia Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-Sectoral Economic and Technical Cooperation (BIMSTEC) Free Trade Agreement, you enjoy a tax and duty free experience.
The ease of doing business
Nepal ranked third after Bhutan and India among South Asian countries in the World Bank’s ‘Ease of Doing Business Report 2017’.
Nepal has recently revised its law and regulations to make it more investment friendly and is in a process of continuous improvement.
In most sectors, 100% ownership by foreign investors is allowed.
Investments under the Bilateral Investment Promotion and Protection Agreement (BIPPA) signed with Finland, India, Germany, Mauritius, Qatar, UK and France mean a friendlier investment opportunity.
Agreement to Avoid Double Taxation signed with Austria, China, India, Korea, Mauritius, Norway, Pakistan, Qatar, Sri Lanka and Thailand.
Location and geographic convenience
Nepal sits between two of the world’s largest economies known for their very fast economic growth: India and China.
It has access to the market of approximately 2,700 million inhabitants.
Open border and duty free trade with India and duty free access to China for more than 8000 products.
capable human resources
Government initiation to improve the technical skill and competence of the labor force required for rapid economic development
Of the 28 million inhabitants, 61% are active population.
The participation of the female population is comparatively high among South Asian countries.
The labor cost is low.
Where to invest?
A. hydroelectricity
Being the second richest country in hydroelectric potential, Nepal has a great future in this sector. Supported by its geographical inclination, Nepal has a large number of steep and eternal rivers; the development of massive hydroelectric projects is a possibility. Since Nepal is a developing nation with a shortage of funds, the resources have not been used to their full potential. Also, India’s neighbor to the south will always have a demand for clean and cheap electricity, so there is always a market for hydroelectric projects in Nepal. With more than six thousand large and small perennial rivers flowing throughout Nepal, including the three main rivers Koshi, Gandaki and Karnali, there is a huge business opportunity in hydropower in Nepal.
b. Transport
Nepal is a landlocked country with a diverse topography that obviously makes transportation difficult. Therefore, the need for suitable transportation facilities is acute. There is a need for different transportation such as cable transportation, railway, water transportation, etc. As a result of the geographical diversity, there is a lack of roads throughout the country, and even the roads in urban areas are in poor condition and need expansion; therefore, developing better roads and investing in new road projects are a priority for the government, making this a good company to invest in. The availability of a large mountain range benefits cableway projects. Furthermore, the railways could have great potential to replace other transportation facilities in the southern plains. The existence of only one international airport is a big problem and, therefore, a great business opportunity. Transportation projects that have large budgets are the perfect sector to invest in Nepal.
against Agriculture
The agricultural sector, which contributes the most to the country’s GDP, is the factor that dominates the economy. Until the 1980s, most people relied on agriculture for a living, however, a smaller number of the population depends on agriculture for a livelihood. Farming as a business is still not seen as a profitable venture by a large segment of the population.
Nepal is geographically and topographically suitable for agriculture and with perfect climatic conditions. This is also a positive factor for growing and harvesting rare medicinal herbs. New technologies that contribute to agriculture are very rare, which makes the chances of introducing them a great investment opportunity in Nepal. Producing cash crops as a business idea could be a profitable business as commercial farming projects are not yet large in Nepal.
d. Tourism
With a diverse geographical condition, a very rich and divergent culture, Nepal attracts a magnificent number of tourists making tourism a leading economy. Eight of the world’s ten highest peaks and various other mountain ranges inhabit the country, making it a hub for mountaineers, climbers, hikers and other adventure seekers. Nepal is the birthplace of the Buddha and home to many Hindu and Buddhist shrines, which attract a large number of pilgrimages each year. Temples and monuments dating back in history and having great archaeological significance, are also welcomed annually by many archaeologists. The number of tourists entering Nepal is increasing 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, a new desert and a new adventure unfold in one of the remote areas of Nepal. The country has a large number of qualified porters and guides who could be hired for very low wages. All these factors make tourism perhaps the best sector to invest in Nepal.
my. Infrastructure
Infrastructure development is one of the vital needs of Nepal. Due to the great earthquake of 2015, there were devastating losses in the main areas of the Kathmandu valley and other areas, which demanded the dire need to create earthquake-proof infrastructures. Since transportation facilities need a lot of improvement, this could also be a sector to invest in. The Nepalese government has always supported investors trying to work in the infrastructure sector.
F. Information technologies
The IT field has dominated the world right now and Nepal is no exception. Nepal has a large number of skilled IT graduates who could be hired at very low wages. As it is a proximate interest in the Nepali scene, surely new talents and ideas could be explored. IT companies emerging as a new business venture; the competition is less if you decide to invest right now.
gram. Mines and Minerals
Nepal is located in the central part of the Himalayan Belt, which makes it very rich in minerals. The Himalayan region consists of groups of metallic and non-metallic minerals. Nepal is also known for exporting a variety of beautiful decorative stones. Even with the presence of large amounts of minerals scattered throughout the Himalayas, Nepal itself has not been able to extract these minerals. Existing mineral extraction businesses are fewer in number and ineffective. There are ample opportunities for investors who could invest in cement works, lime mining, coal, magnetization, talc clay, etc. So if someone decides to invest in this sector, this could be a very profitable business in Nepal.
H. Health education
The health sector is in a very bad 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. Also, the education sector is largely lagging behind. Many students go abroad each year in search of a quality education. These should be good reasons to invest in Nepal.
I. Telecommunications
With the increase in population and the growth of business and technology, telecommunications are a pressing need. There are only a few telecommunication companies in Nepal and therefore less competition. The geographical conditions of the country are challenging, even the existing networks have not reached the remote areas. This creates a great opportunity for anyone who wants to start a profitable business in Nepal.
Nepal is moving towards a liberal foreign investment policy and aims to create a favorable investment environment to attract foreign investment in the nation. The Nepalese government strongly encourages foreign investment, either as joint ventures with Nepali investors or as 100 percent foreign-owned companies. With comparatively lower taxes and ease of doing business, Nepal is one of the most ripe investment destinations for both Nepali and foreign investors.
