The Government of Nepal has identified foreign investment promotion as an important strategy for the development and promotion of industrial activities in Nepal. Important measures under these policy reforms include simplification of procedures, trade liberalization, tariff rationalization, tax reform, financial sector reform with full convertibility of Nepalese rupees in current account.
Why invest in Nepal?
1. Overall policies and laws conducive to foreign investments
2. Liberal tax policy for foreign investments
3. Investment-friendly legal provisions, eg. labour laws, procedures of settlement of disputes, liquidation and other pertaining legal matters made to meet the international standard and friendly to foreign investment
4. Bonded warehouse & duty- draw-back facilities on export
5. Full repatriation of profits, dividends, principals and interest on foreign loan allowed
6. No private industries or their properties to be nationalized
7. Friendly and diligent workforce readily available in the labour market
8. Availability of natural resources, especially in the hydroelectricity sector, to be tapped for processing and exporting
9. India and China, the two most populous global markets, as immediate neighbors providing ample possibilities for export of goods and services
10. Provision of resident/business visas for investors
11. Nepalese people willing to warmly welcome foreign friends to come and stay in Nepal
Procedure for Investment in Nepal
- As a foreign investor you must first submit a project proposal (see requirements below) and environmental impact assessment to the Department of Industry to obtain a Letter of Approval.
- You then need to register your company at the Company Registrar’s office and obtain a Company Registration Certificate.
- Then you need obtain a Permanent Account Number (PAN) from Inland Revenue Office or the Taxpayers Service Office. More information under the Taxes tab.
A) Documents to submit to get a letter of approval as a foreign equity investor in a new industry
- Project report (3 copies)
- Joint venture agreement (JVA), if more than one investor (2 copies)
- Citizenship certificate of a local party, or certificate of incorporation, including memorandum of association and articles of association, if the local party is a firm
- Passport of a foreign party or certificate of incorporation, including memorandum of association and articles of association, if the participant is a firm
- Bio-data or company profile of the foreign party
- Financial credibility certificate (FCC) of the foreign investor issued by a home country bank or a domicile country bank (1 copy)
- Authority letter from the companies or individuals concerned to a local person or company to carry out necessary work on their behalf, if applicable
- A deposit ranging from $47 to $235, depending on size of investment, will need to be paid. It is refunded once the investment project enters into operation.
B) Documents to submit to get a letter of approval as a foreign investor in an existing industry by share transfer
- Share transfer agreement (2 copies)
- Minutes of board meeting of Nepalese company regarding inclusion of foreign investor in the company
- Minutes of board meeting, certificate of incorporation and company profile of the foreign party, if the participant is a company
- Passport and bio-data of foreign party, if the participant is an individual
- Financial credibility certificate of the foreign investor issued by a bank
- Current shareholders’ list as certified by the Company Register’s Office
- Auditor’s report
- Tax clearance certificate
- Authority letter(s) from the companies concerned to sign on their behalf
C) Registering the company
You can register your company in person or online at www.ocr.gov.np.
A current provision has stipulated 15 days as maximum time to register a company provided that all the legal requirements are met. In practice registration usually takes between 3-7 days. After registration the applicant you will be awarded with a Certificate of Incorporation.
The application requirements are described below.
Documents to submit to register at the Office of the Company Registrar
- Letter of Approval from the Department of Industry
- Articles of association or statutes
- Identity document or passport
- The project proposal that was sent to the Department of Industry
- Application of reserved company name (obtained from the Office of Company Registrar or online at www.ocr.gov.np
- Authorization letter or power of attorney (for representatives)
- A fee ranging from $112 to $224, depending on the size of the investment.
Large Investments
If your project is related to infrastructure, infrastructure finance, chemicals, large healthcare or requires an investment of over $118 million (see attached list) you must submit it for approval to the Investment Board, instead of the Department of Industry.
The Investment Board is chaired by the Prime Minister and is designed both to expedite the approvals process and facilitate access to land and other requirements. The Board also has a mandate to negotiate specific terms and incentives, both fiscal and financial.
For more information please visit at:
http://www.theiguides.org/public-docs/guides/nepal
Potential Areas of Foreign Investment
Energy: Hydro Power project; Solar/wind energy
Tourism: Hotel; Resort; Golf Courses; Air services; Hot-air Ballooning; Cable Car; Amusement Park
Manufacturing: Light engineering industries; Dry cell battery; Medical instruments; Pollution preventing accessories; Paper; Cement; Jute; Leather Products; Aluminum industry; Chemical/organic fertilizer and pesticides/insecticides, bathroom fittings, electrical appliances, electrical accessories.
Agriculture and forestry: Herb/food/fruit/vegetable processing; Mushroom; Dairy; Floriculture; Sugar; Animal feed
Mineral: Cement; Petroleum/natural gas exploration/production; Construction materials (clay, sand gravel, boulder, marble, stone); Exploration/processing of quartz; Glass and mica production
Service: Freight forwarding; Nursing home; Domestic air services; Computer software and data entry; Photo scanning and off-set printing
Textile: Spinning and integrated Textile mill; Sericulture and silk production
Modes of Foreign Investment
- Foreign loan and capital
- Reinvestment of foreign investment earning
- Patent of foreign products
- Use of foreign owned trademarks and investment in share (equity)
Modes of Technology Transfer
- Use of any technological right, specialization, formula, process, technical know-how of foreign origin.
- Use of any trademark of foreign origin.
- Use of any foreign technical consultancy management & marketing services.
- Technology transfer is allowed in all type of industries.