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Government of Nepal has adopted an open and liberal policy to pave the way for
the accelerated economic and social development of the country. Especially in
the field of industry and trade, the government policy is aimed at giving the
private sector a dominant role. The private initiatives and enterprises are
expected to increase efficiency and productivity. The government's role will be
that of a facilitator providing infrastructure and conducive environment for
investment.
Forms of Foreign Investment
As per the Foreign investment and Technology Transfer Act of Nepal (1992),
"Foreign investment" means following investment made by a foreign investor in
any industries.
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Investment in Shares (equity)
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Reinvestment of the earnings (Dividend) of shares
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Investment made in the form of loan and loan facilities
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Use of any technological rights specialization, formula, process, patent, or
technical Know-how of foreign origin.
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Use of any trade mark of foreign ownership,
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Acquiring any technical consultancy, management and marketing service
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Foreign investors are permitted to own up to 100 percent equity share in small,
medium and large-scale industries. Foreign investment is allowed in all areas
except the few as mentioned below.
Industries not to be granted permission for foreign Investment:
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Cottage Industries. ( cottage industries are Handloom, Pedal Loom, Warping,
Dyeing and printing, tailoring ( other then readymade Garments), Woollen
carpet, etc
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Service (Business such as Hair Cutting, Beauty Parlour, Tailoring, Driving
Training, etc.).
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Arms & Ammunition Industries.
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Gunpowder, Explosives.
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Industries related to Radio-Active Materials.
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Real Estate Business (excluding Construction Industries).
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Film Industries ( National Languages and other recognized languages of Nation)
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Security Printing.
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Bank notes &Coins
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Retail Business.
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Travel Agency.
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Trekking Agency.
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Water Rafting.
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Pony Trekking.
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Horse Riding.
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Cigarette, Bidi (Tobacco), Alcohol (excluding those exporting more than 90% ).
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Internal Courier Service.
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Atomic Energy.
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Tourist Lodging.
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Poultry
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Fisheries.
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Bee-keeping.
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Consultancy Services such as Management, Accounting, Engineering and Legal
Services.
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Technology transfer is possible even in areas where foreign investment is not
allowed.
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Government policy
Industrial Enterprises Act 1992 has guaranteed against nationalism of privately
owned industries enterprises. The government does not interfere in the fixation
or control of prices of industrial products. Industries can approach any
commercial bank directly to open letter of credit for the import of machinery
or raw materials needed for the industry. Recommendation or import license from
either department of industries or department of commerce or Nepal Rastra Bank
( central Bank of Nepal) is not necessary. Except industries that affect
security and public health, other industrial activities do not require
obtaining any license or permission for establishment and operation. They just
need to be registered with the concerned Department. Reparation of profits,
dividend, technical and managerial fees, and certain portion of salaries of
foreign experts have been guaranteed Non- tourist visa for carrying out studies
for investment and business/residential visa for foreign investors have been
provisioned and the procedures have been further simplified. At international
level, Nepal has taken numerous steps to promote foreign investment in the
country. Some of the key institutional arrangements that have been achieved so
far are
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Nepal is a member of World Intellectual Property Organisation (WIPO)
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Nepal has entered into Bilateral Investment treaties with countries such as
France, Germany, Mauritius and United Kingdom.
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Nepal has also entered into Double Taxation Treaties with 9 countries, namely,
India, Norway, China, Pakistan, Sri Lanka, Austria, Thailand, Mauritius and
republic of South Korea.
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To ensure access to the vast potential market, Nepal is the member of WTO,
SAFTA and BIM-STEC
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Nepal is also a signatory to the convention on the settlement of Investment
Dispute between the state and Nationals of Others States and a member of the
International center for the settlement of investment Disputes (ICSID),
associated with the World Bank.
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Procedural to get approval from Department of Industries (DOI)
Any foreign individual or company that are willing to invest in Nepal will have
to get prior approval from the DOI. Foreigners can invest in Nepal in the
following Mode.
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Foreign Equity Investment in New Industries
To get approval from DOI in Foreign Equity Investment in New Industries, the
following document will be required.
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Project report
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Joint Venture Agreement (JVA), in case of more then one investors
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Citizenship certificate of local party/or certificate of incorporation
including Memorandum of Association and Articles of Association, if local party
is a company.
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Copy of Passport or foreign party/or certificate of incorporation, including
Memorandum of Association and Articles of Association, if participant is a
company.
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Bio-data/company profile of the foreign party
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Financial Credibility of the foreign Investor provided by a home country Bank
or domiciled country bank.
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Authority letter from the concerned companies or individuals to carry out any
necessary work on their behalf, if applicable.
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Technology Transfer in an existing Nepalese Industry
To get approval from DOI in Technology Transfer in an existing Nepalese
Industry, the following document will be required.
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Technology Transfer Agreement
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Citizenship certificate of local party/or certificate of incorporation
including Memorandum of Association and Articles of Association, If local party
is a company
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Copy of Passport or foreign party/or certificate of incorporation, including
Memorandum of Association and Articles of Association, if participant is a
company.
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Bio-data/company profile of the foreign party
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Industry Registration Certificate
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Copy of the minute of the Board of the recipient Company
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Authority letter from the concerned companies or individuals to carry out any
necessary work on their behalf, if applicable.
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Foreign Investment in an Existing Industry by Share transfer
To get approval from DOI in Foreign Investment in an Existing Industry by Share
transfer, the following document will be required.
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Request from the share transferor
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Request from the share transferee
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Share Transfer agreement
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Copy of minute of the Board meeting of Nepalese company regarding inclusion of
foreign investor into the company
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Copy of minute of Board meeting, certificate of incorporation and company
profile of the foreign party if the participant is a company.
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Copy of passport and Bio-date of foreign party, if participant is an individual
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Financial credibility certificate of the Foreign Investor provided by a bank.
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Current Shareholders' list as certified by the Company Registrar's office
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Audit Report
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Tax clearance certificate
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Authority letter from the company concerned to sign on behalf of the companies.
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Loan Investment in an Existing Nepalese Industry
To get approval from DOI in loan Investment in an Existing Nepalese Industry ,
the following document will be required
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Loan Agreement
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Certificate of incorporation including Memorandum of Association and Articles
of Association of the lending company
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Company profile of the lending agency
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Industry Registration certificate
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Copy of the minute of the Board of the recipient company regarding the loan to
be acquired
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Authority letter from the company concerned to sign on behalf of the companies.
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Service
The firm will provided the following services
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Incorporation of joint venture company
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Foreign Equity Investment in New Industries
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Technology Transfer in an existing Nepalese Industry
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Foreign Investment in an Existing Industry by Share transfer
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Loan Investment in an Existing Nepalese Industry
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Drafting of Joint venture agreement
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Drafting of technology transfer agreement
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Drafting of loan investment
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Drafting of project report
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Drafting of IEE, AIE report
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