Government to raise foreign investment threshold to $200,000

Government to raise foreign investment threshold to $200,000

The government is planning to revise its threshold for foreign direct investment (FDI) by four fold from the existing $50,000 to $200,000. Ministry of Industry is holding discussions to hike the threshold to control low-end foreign investment that has not contributed to industrial growth and employment generation, informed industry secretary Krishna Gyanwali. Our experience showed that some of the low-end investors have also ulterior motive, he said, adding that the move is aimed at encouraging quality investment by attracting genuine investors. “Instead of increased number of investors, Nepal needs huge investment for industrialisation, to create massive employment generation and propel economic growth.” We received complaints from various quarters that foreign investors have been registering industries in Nepal to receive visa and prolong their stay for ‘other activities’ rather than operating industries, he added. The ministry had raised the threshold from $20,000 to $50, 000 in September 2013. Likewise, the ministry is also planning to introduce sector specific foreign direct investment threshold in six sectors including hydro power, transportation and related infrastructures, agriculture, tourism, mines and minerals and manufacturing industries. The new draft FDI policy has barred foreign investors from investing in hydro power projects below 30 MW and less than three-star hotels in tourism sector. Likewise, the threshold for transportation infrastructure has been planned at $10 million. “The proposed draft also envisions the minimum threshold for agriculture and mines and minerals, manufacturing sectors at $2 million.
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