Foreign Investment In Nepal

Foreign Investment in Nepal:

Forms of Foreign Investment According to foreign investment and technology transfer Act, 1992, foreign investors are allowed to participate in an industry in the following forms:

a. Investment in share (Equity)

b. Reinvestment of earnings derived from the clause (a) above

c. Investment made in the form of loan or loan facilities

1.2 Forms of Technology Transfer "Technology transfer" means any transfer of technology to be made under an agreement between an industry and a foreign investor on the following matters:

a. Use of any technological right, specialization, formula, process, patent or technical know-how of foreign origin.

b. Use of any trademark of foreign ownership.

c. Acquiring any foreign technical consultancy, management and marketing service.

1.3 Procedural Arrangement for obtaining the permission

1.3.1 Foreign Investment in a New Industry Foreign investors desiring to invest in Nepal whether as a wholly foreign owned enterprises or in a joint venture with Nepalese promoters are required to apply to the DOI on a prescribed application form, along with following documents:

A. Project Report 1 Copies

B. Joint Venture Agreement 2 Copies

C. Citizenship certificate of local party or certificate of incorporation and company profile, if participant is a company 1 copy

D. Copy of passport of foreign party/or certificate of incorporation, if participants is a company 1 copy

E. Bio-data/Company profile of the foreign party 1 copy

F. Financial Credited of the foreign investor provided by a bank 1 copy

G. Authority letter (s) from the companies concerned

After the approval of foreign investment, up to a maximum amount (depending upon the fixed assets) NRs. 20,000.00 has to be deposited in Nepal Rastra Bank in deposit account of HMG. The amount shall be refunded to the promoters once the project comes in operation.

a. Project Report The project report should include:

a. Executive Summary of the project

b. Project background, objectives and introduction of promoters

c. Technical Aspects Climate has been made conductive by introducing the following policy measures and procedural simplifications:

a. hundred percent ownership made possible - Foreign investors are permitted to own up to 100 percent equity share in small, medium and large-scale industries.

b. Areas open for foreign investment - Foreign investment is allowed in all areas except as mentioned below. Industries not open for foreign investment

1. Cottage industries

2. Business Services such as hair cutting, beauty parlour, tailoring, driving training, etc.

3. Industries related to arms and ammunition

4. Gunpowder and explosives

5. Industries related to Radio-Active Materials

6. Real Estate Business (excluding construction industries)

7. Film making in national languages

8. Security printing

9. Bank notes and coins

10. Retail trade

11. Travel agency

12. Trekking agency

13. Water rafting

14. Pony trekking

15. Horse riding

16. Cigarette, Bidi, Alcohol (excluding those exporting more than 90% of their products)

17. Internal courier service

18. Atomic energy

19. Tourist lodging

20. Poultry

21. Fisheries

22. Bee keeping

23. Consultancy services such as management, accounting, engineering, and legal services.

Technology Transfer

Technology transfer is allowed even in cottage industries.

4. Export and import

4.1 Main features of the Export policy His Majesty's Government has adopted following policy measures to promote the export of industrial products from the country:

a. Licenses aren't required for the export of products other than banned items (such as articles of archaeological and religious importance, conserved wildlife and related articles, drugs as defined in single convention on narcotics, 1961), articles related to explosive materials, and material required for the production of arms & ammunition, industrial raw materials (such as raw leather, raw wool, all type of imported raw materials, parts, capital goods) and other goods (such as log & timber), or quantitatively restricted items as notified by His Majesty's Government in the Nepal Gazette from time to time.

In Addition to above, all type of goods imported from the countries other than India are also prohibited to be exported to India.

b. Container service has been introduced and bonded warehouse system & duty drawback scheme is allowed. Under the duty drawback scheme, import duty paid on the import of raw materials and intermediate goods required for the production of exportable products are fully refunded after export taking into consideration of the actual use.

c. Exports zero rated in VAT

d. There is no quantitative restriction on products taken by returning tourists

4.2 Export Procedures Only registered firms/companies can participate in export trade. Every export consignment can be exported through Tribhuvan International Airport, foreign post office, and the border customs offices. All consignments accompanied by following documents should be delivered to the custom