#AreaToInvestInNepal

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Potential Area for Investment in Nepal

Here I’m going to write some Potential Area for Investment in Nepal. For Complete info in this topic click here Potential Area for Investment in Nepal .

(For Complete info in Current Investing Environment in Nepal click here Business Environment in Nepal )

a.       Energy:

Nepal is rich in water resources with multiple sources of water, including glaciers, snowmelt from the Himalayas, rainfall and groundwater. Nepal’s theoretical capacity of hydropower is around 80,000 MW, out of which 43,000 MW is estimated to be economically feasible. However, installed capacity is only 750 MW of electricity, despite the fact that peak domestic demand (suppressed) is well over 1,000 MW. Demand for electricity is increasing at 7–9% per year. Nepal is targeting graduating from least developed country (LDC) status to developing country status by 2022 and aims to become a middle income country by 2030. To meet its growth aspirations, Nepal will need to add 6,000+ MW (which requires investment of approximately USD 10 billion). Consequently, a lot of industries and infrastructure projects are in the pipe- line opening up huge opportunities. In addition to energy development, investment opportunities lie in the up gradation and expansion of distribution systems (for which investment of approximately USD 2 billion is required) and transmission systems (for which investment of approximately USD 4.45 billion is required). The Power Trade Agreement (PTA) signed with India has opened up a large market for exporting electricity to India. The SAARC Framework agreement on Energy Cooperation signed during the 18th SAARC Summit in 2014 will pave the way for the eventual formation of a regional energy market.

b.      Tourism:

With the world’s highest mountain range, the Himalayas, and 8 of the 10 highest peaks in world, Nepal has long been popular among mountaineers, trekkers and adventure seekers. It also offers beautiful lakes, steep rivers and gorges, unique wildlife, historic monuments, impressive fine arts, significant religious sites and exotic cultures attracting a wide array of travelers for a variety of reasons. Nepal is also a destination for religious tourism and pilgrimages. Lumbini, the birthplace of Lord Buddha, and Pashupatinath and other Hindu pilgrimage sites are the main attractions for people following Buddhism and Hinduism. There are opportunities in developing tourism infrastructure (hotels, restaurants, roads, airports, etc). There is also great potential for expanding the market for meetings, international conferences and events (MICE). Plans to upgrade the current international airport are underway, which will increase the tourist traffic significantly. The expansion of existing tourism products and introduction of new and innovative products has potential to attract different types of tourists and extend their average length of stay.

(For Complete info in this topic click here Potential Area for Investment in Nepal)

c.       Infrastructure:

Only about 19% of roads in Nepal are all weather roads and 2 out of the 75 districts are still not connected by roads. Hence, there are many opportunities to expand the road network, for which the government is seeking to form public-private partnerships. Nepal’s main highways require expansion to accommodate the increase in traffic, which is another area for public-private partnerships. In order to cater to the needs of the growing population, the development of mass public transportation systems – bus-rapid transport (BRT), railways, monorails, airports has been prioritized. To finance these projects, the government is looking at public - private partnerships. Eight north-south corridors (roads) linking China and India through Nepal, a cross-border railway line connecting Kathmandu with China, five cross-border railway lines, ultimately connecting Kathmandu with India, a railway line along the East-West Highway, and cable cars in the hilly regions are planned.

 d.      Agriculture:

Nepal’s geography, topography, water resources and ample supply of labor give Nepal a comparative advantage in agricultural production. Nepal’s economy is largely dependent on agriculture, which accounted for about 32% of GDP and absorbs about two- thirds of the labor market. Only 25% of the total land area is cultivable land; another 33% comprised of forest land and the rest is mountains. The lowlands of the terai region produce an agricultural surplus, which caters to the needs of the food-deficient in hill areas. The Agriculture Development Strategy 2014 recommends spending NPR 502 billion in 10 years. Nepal Government is currently focusing on the modernization, diversification, commercialization and marketing of the agriculture sector. Towards this, the government plans to make available agricultural inputs, such as irrigation, electricity, transportation and agro-credit. The Nepal Trade Integration Strategy 2010 focuses on the development of cardamom, ginger, honey, lentils, tea, noodles and medicinal herbs/essentials oil as priority export products. The Trade Policy 2015 reemphasizes the need to develop these products. Good opportunities exist in agriculture production; processing, packaging and branding. Also nontimber forest products, cardamom, ginger, aquaculture, vegetables, floriculture, tea, coffee and honey offer many opportunities. There are good opportunities in input markets (such as for seeds, nurseries, fertilizers, agricultural infra- structure and technology, and agriculture financing) and, due to favorable climatic conditions, the focus on high value organic crops is increasing.

e.      Information and Communication Technology:

Nepal’s ICT sector is one of the fastest emerging sectors in the country, with huge potential for growth in the coming years. All the services related to the ICT sector are open to foreign direct investment, except for media. For telecommunications, 80% foreign ownership is allowed. The Government of Nepal has identified IT and business process outsourcing (BPO) in the Nepal Trade Integration Strategy 2010 as one of the five priority potential export service sectors. The Trade Policy 2015 also reemphasizes the importance of developing this sector. As there are only two major telecommunications companies (NTC and Ncell) dominating the sector, there is room for new firms to enter the market. Foreign BPO companies can tap into the young English-speaking population and benefit from the cost advantages offered by the low wages and low establishment and operating costs. The time zone in Nepal is also favorable for companies looking to outsource from America or Europe. There are unmet needs for the use of ICTs in governmental agencies and the private sector.

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f.        Health and Education:

Opportunities exist in developing education infrastructure, including upgrading and building educational institutions and even education cities (medical, IT, engineering, management etc.), for which the government is seeking to engage in private-public partnerships. Every year, thousands of students go abroad for further studies spending large sums of money. With more and better education institutions within country, this could be avoided. The government is also looking to develop health infrastructure, including modernization and increasing the capacity of health facilities and mobilizing privately-run hospitals by means of public private partnerships. In terms of pharmaceuticals, there are persistent shortages of quality medicines in the market presenting opportunities for manufacturers of pharmaceutical goods.

g.       Financial Sector:

Although the financial sector of Nepal is growing at a rapid pace, still 60% of Nepal’s population has no bank accounts and only 61% are served by formal financial institutions. Also, banking services are heavily concentrated in urban areas whereas 56% of the adults use banking products as compared to 36% in rural areas. Thus financial sector of Nepal still has a large untapped market for banking and financial services. Similarly, Nepal’s Insurance market has also huge potential as the penetration rate is only 1.31% in 2011.

(For Complete info in this topic click here Potential Area for Investment in Nepal)

h.      Mines and Minerals:

Nepal has an abundance of minerals used in industry and construction, including limestone (most abundant), coal, talc, red clay, granite and marble, gold, and precious and semi-precious stones (tourmaline, aqua- marine, ruby and sapphire). Recent studies have shown that Nepal may have 2.5 billion metric tons of cement grade limestone. Nepal has an estimated 5 billion metric tons of dolomite and 180 million metric tons of high grade magnetite. In recent times, the western part of Nepal has witnessed gas and oil seepage, confirming the presence of oil and natural gas in Nepal. About 10 petroleum and natural gas exploration sites have been identified so far. Nepal has more than 20 million metric tons of ore reserves in more than 80 locations. Copper occurs in Nepal in more than 107 locations.

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