Nepal's net FDI increases by 36.1% in FY 2023/24

KATHMANDU: In the fiscal year 2023–2024, Nepal experienced a notable increase in net Foreign Direct Investment (FDI), totaling Rs 8.40 billion. This corresponds to a 36.1 percent rise over the previous fiscal year. A total of Rs 8.47 billion in FDI inflow was left throughout the time after foreign investors withdrew Rs 739 million. This represents a significant increase above the net foreign direct investment (FDI) of Rs 5.96 billion recorded in FY 2022–2023 (when FDI was Rs 7.76 billion in total and Rs 1.80 billion was withdrawn).

Even with the rise, Nepal only received 12 percent of the Rs 70.02 billion in promised FDI. Compared to the previous fiscal year, when the promised sum was Rs 38.40 billion, this represents a significant improvement. The difference between FDI that has been committed and that has been accomplished emphasizes the continuous difficulties in turning promises into real investments.

The Nepal Investment Summit 2024, which drew international investors and resulted in the creation of an automated online system for FDI permits, might be held partially responsible for the increase in FDI realization. Once this system was put into place in the final two and a half months of FY 2023–2024, investors were able to promptly get approval certificates upon the filing of their applications. The system also removed the condition that FDI in the IT sector have a minimum of Rs 20 million.

Despite this improvement, Nepal's net FDI inflow for the most recent fiscal year was much less than that of FY 2021/22, when the country received a net FDI inflow of Rs 18.56 billion from a pledged sum of Rs 54.15 billion. Despite the improving trend, the numbers remain lower than the higher investment levels observed in prior years.