Nepal’s costly embrace of China

Developing Nepal as a ‘bridge’ between two Asian giants was a promising proposal. The China-India-Nepal trilateral cooperation idea sparked hope that the country of 30 million would prosper side by side with its two neighbors. The two would complement each other in developing critical connectivity infrastructure to turn Nepal not just into a transport corridor but also an urbanizing economic conduit. That boundless potential of Nepal is being eroded by the ruling party’s disoriented foreign policy.

India was never interested in the trilateral idea that could possibly end its hegemony in Nepal. Against this backdrop, rather than trying to keep convincing India to get more interested in the idea, Nepal constantly pushed the southern neighbor away.

Egged on by our own government, China is now interested in all Nepali sectors, from hydropower to military. The military cooperation has not amounted to much except adding India’s suspicion of the trilateral idea—to Nepal’s great loss.  

Nepal cannot prosper without a healthy and balanced relationship with both its neighbors. However, India remains a destination of choice for those unfortunate Nepalis who can’t dream of going to Middle East by paying huge sums to state-sponsored ‘man-power’ companies.

India’s public health institutions such as the All India Institutes of Medical Sciences in New Delhi and the Christian Medical College in Vellore still lure Nepalis who cannot get good treatment in their own country whose health sector has been captured by the mafia. Kathmandu’s failure to take New Delhi into confidence could cost those poor Nepali people who rely on India to meet their vital needs like healthcare.

Nepal’s relationship with China is no cushion for poor Nepali people. China only serves the interests of its elite. Moreover, Beijing looks at Nepal from the Tibetan lens. A security-centric approach does Nepal no good at a time it needs unconditional foreign direct investment.

China’s Communist Party (CPC) is enthusiastic about distributing Mao’s red books in Nepal but struggles to define what the Belt and Road Initiative (BRI) means for Nepal. Chinese diplomats in Kathmandu openly threaten our constitutionally guaranteed press freedom. Yet they don’t seem to understand the urgent need of the Nepali people to become economically empowered so that they won’t have to wash dishes in the dhabas dotting Indian highways.

Around three million Nepalis work in India to secure two daily meals for their families back home. Nepali unskilled laborers have an open access to India’s vast markets. As India is becoming more competitive and professional, Nepal can benefit more and more from this relationship. Suppose India is tomorrow a global economic superpower and Nepal still has an open border with it—what great opportunities such a scenario bring! But for that Kathmandu has to tame its anti-India ultra-nationalism.

If the future is Asian, as Parag Khanna claims, it is as much of India as it is of China. Nepal can benefit a lot from a balanced foreign policy by pursuing trilateral cooperation rather than stand-alone relationship with neighbors. Even if this is not possible, the goal should be to carefully balance India and China, and surely not to completely throw our lot with the Middle Kingdom.

Please do not destabilize the country with a flawed foreign policy approach at the cost of the poor. India’s treatment of Nepal as just another country may have no implications for Kathmandu’s power elites but will result in devastating consequences for poor Nepalis who can’t ever think of working in Beijing’s restaurants, even as dishwashers.

This article was first published in The Annapurna Express. 

Strategy for success

This article was first published in The Kathmandu Post, April 6, 2015.

In just the last few months, China has increased its official aid to Nepal by five times, the largest Chinese investment pledge is in Nepal’s cement industry, and Chinese President Xi Jinping announced Rs 14 billion aid to Nepal during a meeting with his counterpart Ram Baran Yadav on the sidelines of the Boao Forum for Asia. Political leaders, the media, and businessmen from Nepal are visiting China more frequently. This year, Nepal and China will be marking 60 years of their bilateral diplomatic relationship. “Close neighbours are more important than distant relatives,” President Xi said during his speech at the Boao Forum.

Economic bottlenecks

At the Boao forum, President Yadav appealed to the international business community to invest in Nepal, pledging a liberal and welcoming investment regime. But he also pointed to Nepal’s problems with its economy—a lack of adequate infrastructure, a barely existent industrial base, inadequate capital, a lack of technological know-how, a shortage of skilled human resources, and low productive capacity. These bottlenecks have resulted in a lack of qualitative change in the living standard of Nepali people, despite an abundance of natural resources with enormous potential for tourism, hydropower, and agriculture.

The international community, however, has been hearing of these frustrating problems from Nepali leaders for decades. These problems continue to exist not because some outside forces are imposing them, but because there is a lack of political willingness on the part of the Nepali leadership to change things and lead the country towards prosperity.

Whatever foreign support Nepal receives, either from China or from any other country, cannot be credited to Nepal’s diplomacy. It is a haphazard in-pouring of aid money from different countries as and when they decide. President Yadav reiterated that Nepal would enthusiastically participate in the new multilateral lender, the Asian Infrastructure Investment Bank (AIIB), proposed by China. But does Nepal know what kind of projects it would like the AIIB to fund? Will Nepal be able to lobby strongly to have its representation in the bank’s administration? What is Nepal’s strategy for the bank? Where are the public discussions on such issues and what kind of homework has been done so far?

Highlighting China’s ‘Belt and Road’ initiative—a framework for organising multinational economic development along the revived Silk Road Economic Belt and the Maritime Silk Road—and the AIIB, President Xi has said that all Asian countries will benefit from a rising China. The prosperity of smaller countries is important for China’s continuous growth and to attain political power in the world order, but that will not necessarily make all small, underdeveloped countries prosperous. The prosperity of such small countries like Nepal lies in their political course and the development strategies these countries adopt.

China is striving, in the words of Chinese foreign policy maven Yan Xuetang, for achievement. Thus, one of its strategies is ‘peripheral’ or neighbourhood diplomacy. Nepal could benefit tremendously from this policy, but it does not mean much if Nepal does not map its own destiny.

Understanding China

The question is simple: does Nepal want to receive a lot of support and gifts without understanding the source enough and knowing their intentions? The Nepal government has yet to conduct serious research and analysis on the strategic relationship it should cultivate with China in order to gain desired support in areas that are important for Nepal’s long-term economic prosperity while also making certain that our interests do not collide with our neighbour’s.

Nepal needs investment, as President Yadav emphasised at the Boao Forum, in all sectors from small-scale industries to mega hydropower projects, which China can well afford. But as China is advancing its economy by letting the private sector excel in all areas, investment will not come without a cost-benefit analysis. Yes, Nepal will continue to receive state support, but that will not be enough in the days to come. For that reason alone, Nepal has to work on attracting the Chinese private sector in tandem with the Chinese government.

Chinese interests

China’s interest in Nepal results from multiple sources, such as the former’s eyes on the enormous South Asian market, the Tibet issue, and the objective of winning over neighbours. These Chinese interests should be understood well if Nepal seeks to capitalise on China’s rise. Nepal is undergoing a process of state restructuring and institutionalising democratic institutions. That does not bar it from designing a mechanism that will work on understanding and analysing the China factor in the country’s development process. The Investment Board of Nepal (IBN), established to attract and facilitate foreign direct investment (FDI) in the country, for instance, can start a unit to conduct primary homework on developing a platform to study China’s development strategy and how outbound Chinese FDI makes its way to various projects across the world and what Nepal should aspire to get from President Xi’s pet projects—the AIIB and the ‘Belt and Road’ initiative.

The haphazard inflow of Chinese aid and investment in different projects can result in more corruption and might contradict Nepal’s domestic policies, as has often been the case whenever Nepal received Chinese investment on a large scale. As President Xi said at the Boao Forum, history shapes the future and it has to be studied well to draw lessons from. Nepal has little time to play with dice; it must learn from the mistakes it has made. It is time to shift from a ‘strategy for survival’ to a ‘strategy for success’.

Poudel is a researcher at the Beijing-based ThinkIN China, an academic community

Cleaning the drainage

This article was first published in The Kathmandu Post, March 24, 2017

In the last three months, Nepal hosted three mega summits: the Power Summit, the Infrastructure Summit and the Investment Summit. The central message was that Nepal needs to attract foreign investment to overcome infrastructure deficits and attain the desired double digit economic growth rate. Political forces also reiterated their support for this initiative, and committed to facilitating the investment process in the priority sectors of energy, agriculture, tourism and infrastructure. 

Is FDI enough?

Investors from eight countries pledged investments totalling $13.5 billion in the Investment Summit. The question is whether an inflow of FDI alone will trigger the economic take off required to attain and maintain a double digit economic growth rate. It is necessary to sustain this growth rate for a decade for Nepal to be a middle-income country by 2022. 

Nepal is beset by numerous problems that hinder prosperity; almost everyone from bureaucratic, political, academic and development sectors can pinpoint different obstacles. What’s more, everyone has a set of recommendations on how the country should be developed, and everyone believes that there is someone to blame. Several development partners and academicians have made policy recommendations that the government is trying to implement; however, this has not yet helped to accelerate economic development. National pride projects have been delayed, capital expenditure is low and the productive sector is sluggish. Large sections of the society are disappointed with the governance of Nepal’s current political parties, and claim that they are responsible for the sad state of affairs. However, the emergence of some new political parties with fresh leadership has led to renewed political initiatives. 

Against this backdrop, it is important to focus on one particular area to bring about change so as to embark on the road to economic prosperity. This entails an understanding of Nepal’s current problems from the perspective of behavioural economics. The reason behind this proposition is the fact that Nepal’s development activities have been in limbo, not due to the lack of resources, but because of the behavioural tendencies of Nepal’s politicians, bureaucrats, development workers and citizens. I am drawing this conclusion based on my visits to over two dozen districts in the last three months, during which I interacted with local people, representatives from local government bodies, and development workers at the ground level. 

communities clean to building small infrastructure. 

From the beginning of modern Nepal, the economy has been subject to political transitions. All political systems have been unable to address the structural problems impeding economic growth. While reforms in the early 1990s were instrumental in effecting positive change, they neglected to address problems of land use patterns and rent-seeking mentality. Thus, government policies have been unable to match people’s expectations. Perhaps the second generation of reform initiatives currently underway will do better. 

While policy reform initiatives are undoubtedly a foundation for economic development, they are not enough. These policy reform initiatives need to be accompanied by a change in the deep-rooted structural socio-economic Nepali mindsets. The lahure mentality of Nepali society is ever present. In earlier days, youths used to leave for India in the hope of military recruitment, or for employment in the Indian labour market. Now, they aspire to leave for South Korea, Japan, Europe and America, or to get a job in the Middle East and Malaysia. There are few incentives for young people to stay in Nepal.

Despite exponential technological advancements and the creation of efficient tools for agriculture activities, Nepal’s agriculture sector remains at the subsistence level. Tools for commercialising agriculture and starting agro-businesses are unfeasible when people in the Tarai lack simple irrigation systems. And although pompous slogans abound in the tourism sector, there are no well-planned tourist destinations. Trekking routes lack standard safety measures, and historic places such as the Gorkha Durbar, Lamjung Durbar, and the Janaki Mandir are in a state of dilapidation. 

No clear policy frameworks

Recent discussions have proposed ways to bring in billions of FDI in diverse sectors, highlighting the fact that these investments could complement the goal of economic development. These discussions focus on Nepal becoming a ‘bridge’ between China and India, thus establishing a trilateral mechanism for cooperation among the three countries. This would facilitate Nepal’s participation in China’s One-Belt, One-Road (OBOR) initiative and create a regional energy cooperation mechanism in South Asia. These are external factors that could accelerate the economic growth rate; however, none of these are in the implementation phase. The government lacks a clear framework to execute plans connected with foreign policy. Though the economy is in need of an immediate push, the implementation of these mechanisms and the subsequent results seem distant. 

Behavioural perspective

People at the local level have a tendency of staying idle, with the expectations that the state will provide something. However, the state often fails to meet even the basic expectations of these people. Instead of initiating and participating in ‘doable’ activities, individuals and communities have a proclivity for refraining from such enterprises expecting things to be done by the government. While it is the responsibility of the government to meet the expectations of its citizens to a certain level, there is an increasing reliance on the state to do everything, from keeping 

Political instability and corrupt leaders are the main causes of Nepal’s socio economic backwardness. Leaders and politicians exhibit a general lack of responsibility towards the nation’s economic development. One of the reasons behind this mindset could be that the incentive structures have been distorted right from the beginning, with the opening up of the economy in the early 1990s. While some development initiatives have been taken by the people, such initiatives are on a very minimal scale. The inflow of FDI and the resultant development of infrastructure will certainly lead the country towards economic development. But behavioural change in our public and private sectors are prerequisites for such advancements. 

Nepal’s development bottleneck is not due to a lack of resources or policies per se. It is largely owing to the behavioural problems plaguing our leaders, bureaucrats and people in general. A large number of improvements could be made efficiently, and without state intervention. Development is a matter of conscious realisation where every individual works to improve the larger society. In the absence of this conscious realisation, nothing can help. 

On wrong track

First published in Republica Daily

Nepal-China-India
Last January, the Department of Industry (DoI) released updated statistics showing that China had overtaken India to become the largest contributor of foreign direct investment (FDI) to Nepal over the previous six months. Does this increased FDI inflow from China mean anything at all, or is it just another statistic? Is it time for Nepal to rethink its economic and political ties with its two giant neighbors?
Yes, we believe this is the right time.
It is naïve to believe that China and India are interested in a prosperous and stable Nepal. The only thing they care about is their interests, whether security-related or geostrategic. The idea of being a ‘vibrant bridge’ between the two rising economies seems a distant fantasy, since Nepal can neither bring them to a common table, nor are they interested in any such mechanism.
Traditionally, compared to China, Nepal has been much closer to India. But Nepal needs to revisit at least the last few decades and evaluate what it gained by being closer to India. Nothing!
If Nepal wants to speed up its economic development by attracting FDI from both China and India, first it has to maintain ‘equi-proximity’ with the two neighbors. Nepal needs to work on scientific management of its border with India, and India needs to support Nepal in the same since border issues have been a major problem for both the countries.
The establishments of China and India are not very interested in dealing with Nepal and acknowledging it as a partner in development. Rather, both of them are inclined to deal with Nepal through their intelligence agencies and bureaucracy. Nepal has to understand this and be firm in dealing with its neighbor with clarity and respect. This is also the reason Nepal should maintain an organized border with India.
It can be argued that Nepal has gained a lot from the open border, but it has also lost a lot. In bilateral talks, Indian officials use issues of illegal re-export of beetle nuts and Chinese umbrella to Indian market to bully Nepali government officials. It is reported that Nepali businessmen import lentils from India and re-export to Bangladesh. Officials at Indian Embassy in Kathmandu try to humiliate Nepali officials for letting businessmen carry out these illegal imports, but do not take action against Indian businessmen who export those lentils illegally in the first place.
The South Block does not hesitate to deploy officials in its Kathmandu embassy to deal with journalists, opinion makers, and of course, businessmen and political cadres. Officials at the Indian Embassy allegedly distribute money from their drawers. But their beneficiaries would rather cover their eyes than admit this dirty truth.
Coming to China, it does not seem interested in dealing with Nepal as a special case and as a neighbor. Rather, it puts Nepal in the basket of ‘least developed countries’ along with many African countries. A good example is China’s decision to provide zero-tariff facility to 7,787 goods and services from all LDCs. China does not give any special treatment to Nepali goods and services—in which Nepal has comparative advantage—that it does not give to other LDCs. China is more interested in African countries to counter the West and prove its rising economic and political power in world politics.
In September 2013, Prof Wang Jisi from Peking University gave a talk in Beijing, China’s dilemma: marching West, thinking East. He mentioned India and other neighboring countries like Burma several times as he talked about China’s development, its foreign policy and neighbors, but there was no mention of Nepal. When asked about his views on Nepal, he briefly stated that Nepal is important to China because of Tibet. This shows that China and Chinese scholars are not much interested in Nepal.
Nepal neither has military strength to compete with its neighbors, nor the ability to deploy intelligence officials in Beijing, Delhi or border areas. Being a poor country between two giants, it has let itself be used by its ‘friendly neighbors’. Sometimes, they seem gentle and sometimes anything but..
Political parties should understand that the country’s future relies largely on their policies. They are the ones who should steer the country’s economy and politics.
The China-Nepal-India trilateral cooperation proposed by Nepal in 2010 has been taken very lightly in both Beijing and Delhi. That means neither country is ready to sit down with Nepal again. China and India are emerging giants in world politics. The two compete in many areas, from trade to military strength. Nepal should understand there is no space for it in the same table. It should not take any kind of action to please the southern neighbor at the cost of alienating the northern neighbor, or vice-versa.
Nepal should understand that having a scientifically organized border with India and allowing Chinese investors into Nepal without the fear of India is the only way of filling the infrastructure gaps. If Nepal allows India to build a 1,450 km highway in Tarai with its own contractors, then why not let China build a railway network in northern Nepal?
This does not mean Nepal should allow its land to be used by either power as they want. But if it wants to maintain equidistance with its neighbors, it should be more organized in dealing with India. The long relationship with India didn’t help us develop, but rather made Nepal more vulnerable, both politically and economically. Now it is time to be more professional and diplomatic with both neighbors and focus on building the country’s economy.
Poudel is a graduate student at Tsinghua University and Sapkota is a PHD candidate at Renmin University in Beijing

China removes hurdles in citrus export

Nepal and China have signed a memorandum of understanding (MoU) in order to address the issues related to quality standard of Nepali agricultural products exported to China. The MoU was signed at the third meeting of the Nepal Tibet Trade Facilitation Committee (NTTFC), which concluded on Thursday in Tibet.

“We have signed an MoU with China so that our citrus products can have access to the Chinese market,” said Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supplies (MoCS). “Quarantine related issues are the major obstacles to increasing our export to China. This is a step towards further improvement.” 

The meeting that basically discussed problems related to tariff and non-tariff barriers has been successful in terms of removing barriers, Upadhaya said, “China has assured us that it would further support Nepal to upgrade the quality and capacity of Nepali laboratories at different customs points.”

The meeting that was led by Mei Yubao, deputy secretary general of the government of Tibet Autonomous Region China from the Chinese side had complained about Nepal´s certificate of origin (CoO). “Chinese side was expressing concerns over the Nepali CoO. Basically, they were saying that the CoO issued were not technically sound.” In response, the Nepali side has assured that the weaknesses would be improved. 

Additionally, China has agreed to construct parking yard on the border points so that the problem of congestion can be removed. “The meeting has been successful in developing a mechanism in order to resolve the day-to-day problems that the traders from both the countries face,” Upadhaya said. “There will be focal persons from both the countries in the border area to facilitate traders.” 

China has provided the preferential treatment to 4,721 Nepali products. However, Nepal has failed to tap the potential market of China and boost trade. According to Trade and Export Promotion Center (TEPC), trade deficit with China shot up to Rs 38.2 billion during fiscal year 2009/10 from Rs 11 billion recorded in 2005/06.

Different studies on Nepal-China trade reveal that the China has been negating the preferential treatment it has provided to the Nepali products. “China brings up different issues such as quarantine and language,” said Dr Ratnakar Adhikari, presenting a paper in a seminar organized by Institute for Foreign Affairs, on Friday in Kathmandu .

Nepal-China talk to address problems faced by Nepali traders

China has approached the Nepali government to hold bilateral trade talks as soon as possible in order to ease the tariff and transit related barriers on quarantine and customs, among others, that Nepali businesspeople are facing for a long time.

“The Chinese team has come to have a preliminary meeting in order to fix the third meeting of Nepal-Tibet Trade Facilitation Committee (NTTFC),” Naindra Prasad Upadhyay, joint secretary of the Ministry of Commerce and Supply (MoCS), told Republica on Sunday.

However, the two sides have not yet finalized the date for bilateral talk which will be held in China this time. The last meeting was held in Kathmandu in May 2011.

According to Upadhyay, the agendas for the meeting have not been finalized yet. “We will start working on agendas once we set the date for meeting,” he said. “There are chances that we would get invitation from China within this week with a date of the meeting.”

Nepal and China, in the second meeting of NTTFC, had agreed to ease the quarantine and transit issues.

However, Nepali traders have allegedly said that the government has failed to raise the issues that have reduced Nepal´s export to China. “Nothing substantial has been done to help improve Nepal´s export to China after the second meeting of NTTFC in 2011,” Rajesh Kaji Shrestha, president of Nepal-China Chamber of Commerce (NCCI) said. “There would be no progress this time as well. I am not hopeful.”

Upadhyay, who is also looking after the Nepal-China trade in the MoCS, said that he had discussed all the transit and quarantine related problems that Nepali business people are facing in the preliminary meeting last week. “I have raised the issues that are affecting our export growth to China,” Upadhya said.

A recent study on Nepal-China Trade conducted by a regional think-tank, South Asia Watch on Trade, Economics and Environment (SAWTEE), with the assistance of United State Agency for International Development (USAID), has said Nepal´s trade agreement with China has failed to uphold national interest. “The letter of exchange (LoE) signed between Nepal and China in May 2010 has turned out to be a barrier itself for the export growth of Nepal,” the report says.

Shrestha, complaining the government inefficiency to have a better negotiation, said that the Nepali business people were facing multiple problems in the border areas. “China definitely is a huge market but we can´t tap it until the transit and quarantine related issues are addressed,” he said.

According to Trade and Export Promotion Center (TEPC), trade deficit with China shot up to Rs 38.2 billion during fiscal year 2009/10 from Rs 11 billion recorded in 2005/06.

Investment climate improving in Nepal: Chinese investors

A visiting business delegation of Chinese private sector has expressed interest to investment in various areas in Nepal, ranging from electrical equipments production to hydroelectricity.
Cheng Huihong, chairman of International Enterprise Management and Investment Association (IEMIA), said Chinese investors were looking forward to invest in Nepal.
“Chinese investors having expertise in areas like hydropower, hotel, restaurant business, electrical equipment, medicine, food, art and Buddhism are eager to invest in Nepal," Huihong said at an interaction organized by Nepal-China Chamber of Commerce (NCCI) here on Monday.
Huihong is in Nepal leading a 15-member business delegation.
Rajesh Kaji Shrestha, president of NCCI, requested Chinese investors to come to Nepal with investment. “We are ready to support you from our part to protect your investment," Shrestha said.
According to a press release issued on Monday, Shrestha invited the Chinese investors to invest in hydropower, agriculture, tourism and banking sector. “I propose for joint venture investment approach of Nepali and Chinese business people,” the release quoted Shrestha as saying during the interaction.
Shrestha also assured Chinese business people that the NCCI would try its best to push for a favorable investment climate in the country.
"We are seeing the investment environment improving in Nepal,” the release quoted Huihong as saying. “This is the reason why we are interested to invest here.”
According to the release, NCCI and IEMIA will soon ink an agreement to make joint investment in areas like hydropower and banking.

Chinese investors interested on mega projects, travel trade industry

A delegation of Chinese investors, comprising businessmen from different provinces of China, has approached Investment Board showing its interest to invest in Nepal in a range of areas from restaurant business to mega projects like hydroelectricity.

According to officials, the delegation inlcuding Cheng Huihong, chairman of International Enterprise Management and Investment Association, Ji Kaiping, president of Beijing Kaiping Real Estate and Tourism Investment Group, Cui Hao, board in chief of Hong Kong Hua Xia Er NV Investment Group also met with Prime Minister Babu Ram Bhattrai on Wednesday and discussed investment prospects in Nepal.

"The 15-member delegation from China is pretty eager to invest in Nepal," said Radhesh Pant, CEO of the Investment Board. He added during his discussion with the team, the Chinese investors expressed interest to invest in Lumbini in order to develop it as a major tourist destination.

During discussions, the Chinese investors said they had own priority areas of intvestment. Besides big projects, they showed interest to invest in hotels, food productions, tea trading, cement factory, pharmaceutical industry and restaurants.

"They also explored the possibility of making investments in food production industries and exporting the products to India," Pant told Republica.

The delegation during the discussions had projected themselves as a group of serious investors from China. They are even leaving for Lumbini on Friday to get the first hand information on the prospect of investment there.

The Chinese delegates also expressed happiness on the recent political development. "They are very positive in terms of bringing investment in Nepal," said Pant.

Govt belatedly assigns West Seti to Investment Board

Following controversy surrounding the signing of a memorandum of understanding (MoU) with the Chinese power developer Three Gorges on the 750 MW West Seti Hydropower Project, the government on Monday asked the Investment Board to take up the project enabling the latter to take further decisions on its development.
Although officials did not explicitly explain how it could impact the deal that Minister of Energy Post Bahadur Bogati inked with Three Gorges, sources said the Prime Minister´s Office has entrusted the board to take all required decisions on the project. This means it can review and even revoke it if it deems appropriate.
Legally, the whole deal of West Seti should have been handled by the board since the very beginning, as its Act clearly entrusts the board to handle the large projects, including hydropower projects of over 500 MW. “Ignoring the board while signing the MoU was a mistake in itself,” a senior official at Prime Minister´s Office told Republica.
Now that the board has been assigned to take up and steer the project´s development, he said the board will have all the authority to decide on the project.
Following the government´s signal, the board on Monday began assessing every communication made in the past between the governments of Nepal and China, and also China Three Gorges Corporation. “We are also studying the MoU in order to figure out how to move forward,” said a source at the Board.
However, as the board was unaware of interest of the Chinese government, particularly how it would react if Nepal government wanted to make some changes or scrap the MoU. “We don´t want to hurt China´s sentiment for we are still eyeing the soft loans from the Chinese Exim Bank for developing the project. MoU has complicated matters for us,” said the source.
During the bilateral communications, Investment Board is also planning to request China to resume negotiations on a soft loan of US$ 1.6 billion -- the identified project cost of West Seti for which Ministry of Finance was negotiating till recently.
“We are still discussing what will be the best model for West Seti development. Nonetheless, we are making request for resumption of talks for soft loans because we want to keep all the options open,” said the source.
"Our whole efforts at present aim at two things; one is to make the project happen, and the other is to maximize the benefits for country," he told Republica, adding how the board will steer the project will become clear only after it talks with Chinese officials, mainly those based in Kathmandu.
Meanwhile, the board on Monday wrote to the sub-committee formed by the parliament´s Committee on Natural Resources and Means to probe West Seti MoU that the board was ready to take up the project with high priority if it is brought under the board´s jurisdiction after requisite amendment and revision.

Over a dozen int'l firms knock IB door for investment

More than a dozen companies from China and India have approached the Investment Board (IB), showing interest to invest in different sectors ranging from hydropower to mining in Nepal.

Some half a dozen Indian companies have expressed strong interest to invest in airport, hydropower and transmission line, disclosed Radesh Pant, CEO of the IB.

Chinese firms approaching the board too have expressed willingness to put their money on long-term projects like hydropower, mining and infrastructure development.

“The companies are in regular discussion with us,” Pant told Republica.

He, however, refused to disclose the name of the companies, saying it would be inappropriate to name them until a final decision is made.

IB, which has been coordinating with the foreign investors in order to lure overseas investment for the upcoming Investment Year 2012/13, has also finalized its structure in order to facilitate overseas investors and deal with their issues.

Pant said the board will have five sub-divisions -- project assessment, investment generation, investor services, policy services and governance.

“Fundamentally, these units have been worked out in order to make IB a long-term professional arm of the government,” said Pant, who has been leading the government´s ambitious plan of attracting foreign investment amounting to $1 billion during the second half of 2011/12.

Pant is confident of achieving the ambitious target provided that there is conducive business environment in the country.

“Once we prepare all the legal frameworks to protect investment, I am sure we will start receiving foreign direct investment (FDI),” he said, further disclosing that investors from other countries like France, US and Japan too have shown interest to invest in Nepal.

Revision of FDI Policy

The government has taken initiatives to revise Foreign Direct Investment and One-Window Policy (FDI) policy 1992 to create a sound legal framework during the Investment Year 2012/13.

Ministry of Industry (MoI) in assistance with the United States Agency for International Development (USAID) has hired a team of experts to review the existing policy.

“We have taken service of a team of experts to get meaningful review of the existing policy,” Anil Kumar Thakur, joint-secretary of MoI, said, adding: “After getting the report, we will make necessary changes in the policy.”