Kathmandu. Foreign Direct Investment (FDI) has played an important role in nepal’s economic development. FDI has helped bridge the investment gap in Nepal, introduce new technologies and managerial practices and integrate the country into the global value chain.
Nepal Rastra Bank (NRB) has released the survey report for the year 2023. Article 24 has reaffirmed the importance of sustainable policy commitments in promoting a conducive investment environment. The report is based on responses from 243 enterprises drawn from a sample of 504 out of 867 active FDI approved firms. The survey shows a significant increase in both FDI inflows and stocks. Total FDI inflows increased by 6.2 per cent to Rs 8.5 billion. Total FDI shares rose 12.7 per cent to Rs 333 billion.
The paid-up capital has become the largest chunk of FDI shares. Then there are reserves and loans.
Sectoral distribution clearly shows the dominance of the industrial sector, especially hydropower and production. While the service sector has made a significant contribution to the leadership of financial services, information and communication, housing and food services, the report said.
Nepal has received investment from 60 economies. India, China, Singapore, Ireland and South Korea are the top five sources. This diversification reflects the growing attraction of international investors in Nepal.
The survey findings also show that capacity utilisation in the manufacturing sector is 47.5 per cent and the overall profitability of FDI enterprises is 10.7 per cent. In addition, the remaining foreign debt of FDI enterprises has reached Rs 59.99 billion. Most of the loan belongs to hydropower enterprises.
Although Nepal has made significant progress in attracting foreign investment, sustained reforms are needed to improve the business environment, improve infrastructure and strengthen regulatory frameworks to sustain this momentum. The insights from this survey are expected to support evidence-based policymaking, informed investment promotion and targeted regional strategies. Foreign direct investment will contribute more effectively to Nepal’s long-term, sustainable and inclusive economic growth.
