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Not so long ago, an interesting statement was heard from the government of Nepal: the country is ready for new trends in economic development, so it is happy to accept any business, especially foreign business, in its territory. And this entailed changes in the law. Now it is much more profitable and easier to have a business in Nepal than it was before. The country is actively looking for foreign investors, because with the parliamentary crisis, the state’s economy has become more elastic and mobile. Nepal can definitely be seen as a hidden potential lucrative destination for foreign investment.
This article qualitatively immerses us in the current political and economic environment in Nepal and also looks at the external circumstances that affect the future development of the country’s financial system. The article goes point by point through the most important factors that have a positive or negative impact on the economy and also points out the most profitable areas to invest in, including the development of telecommunications in Nepal.
Social and Political Changes in Nepal
Until the parliamentary crisis, the country had a very low, near-zero FDI index, which, of course, had a negative impact on Nepal. The country’s development strategy was mainly carried out according to so-called five-year plans, whose management was concentrated in a single center, the government. The rapid growth trends of the state’s economic and financial systems were made possible by a change in the state’s policy toward entrepreneurship and foreign business.
And so, the long-awaited changes for the better came throughout the country. This has also affected the bureaucratic part – the laws have become much more loyal to entrepreneurs and businessmen. The government’s willingness to embrace the new is also evident in the great interest in foreign investment inflows. This policy saw a $0.5 billion agreement signed with the MSA in 2017, so by 2019 the minimum investment requirements had already exceeded $415,000. This seems incredible when you consider that back in 2006 the FDI numbers were -$7 million.
Nepal has set an ambitious and very open goal of cooperating with foreign organizations and enterprises and attracting their representative offices to its territory. Thanks to the unceasing flow of FDI, the country now ranks third among all South Asian states in terms of foreign inflows, according to the World Bank. In an effort to maintain the unity of the economic system, the Nepalese government has also become more loyal to local businesses, but in reality this is not always the case.
Reasons for Investing in Nepal
Nepal, unlike other Asian countries, is a very economically and politically advanced state. This is possible because of a number of factors, which are discussed in the sections below. Each of them is an objective reason for the potential benefits you will derive from investing in Nepal’s development.
Geographic Position
Nepal sits on the world map between India and China, the two “dragons” of the East. There is a potential opportunity for the economy of this South Asian country to open its borders to foreign businesses and business people. In this way, Nepal can become an important eastern economic center where the two leading economies of Asia, the Indian and the Chinese, meet. This will also have a beneficial effect on Nepali development.
Both India and China have openly demonstrated their willingness to cooperate with Nepal. Thus, India willingly accepts export products imported from Nepal, thereby approving the price and quality of the goods. The advantage of cooperation with this South Asian country is also the ease of transporting products. China, for its part, has included Nepal’s territory in its multi-billion dollar Beijing Belt and Road asset, making it clear how important it is to have good relations with this small state.
Staff Resources
There are far more workers in this South Asian country than there are jobs. This is the reason why more than 50% (about 15 million) of the people in Nepal are unemployed. With at least 30 percent more potential workers, the state can make ten times as much profit. One way in which this can be achieved is by accelerating the development of entrepreneurship in Nepal.
However, the training of specialists in Nepal is at the highest level. Hundreds of specialists graduate from the country’s universities every year, and in general, the level of education in the state is unparalleled. Usually you can find qualified medical professionals, IT specialists and construction workers here. However, most of them find their vocation only abroad – for example, in China, the Gulf countries and Australia.
In a little while, Nepal itself will be developing new professional fields that require free hands, so the problem of unemployment in the country will be completely solved. This will be possible because the economy is already in motion, so investment in any area of the economy will pay off in almost one profitable way.
Natural Resources
Nepal has many natural resources that play an important role in economic sectors such as hydropower and agriculture. Electricity for all Nepalis is generated by numerous rivers (there are several thousand of them), which provide more than 40,000 megawatts of energy to the country. All this, together with the geography of the place and its climatic conditions, makes Nepal one of the leading countries in South Asia for the development of the agricultural sector.
Telecommunications Industry in Nepal
There are other sectors of the economy in Nepal that deserve our attention, such as the telecommunications industry. Even though this sector has only recently emerged, there are already specialists who take into account consumer demand and bring Nepal’s telecommunications to the global level. The international experience of Abdo Romeo Abdo is a case in point.
Romeo is originally from Lebanon, but he feels like a fish in water in the international markets of the telecommunications industry. And now he is already the founder and co-founder of many companies, one of which is Ncell, the main mobile operator in the state of Nepal. In the near future, Abdo Romeo Abdo plans to light up the telecom market with two more new projects in this field. All this and much more indicates that the demand for telecommunications in Nepal is the most important indicator by which investing in this sector will be more profitable than ever.
Potential Barriers to Future Development
The hybrid regime of the country’s political system seems to suit the government of Nepal. For the people there are also advantages, because the country has finally embarked on the democratic “rails” of development, which so far echoed the authoritarian past of the state. Some citizens were concerned about the fact that all transformations were peaceful, but now sometimes the question arises whether there will be any global changes in the structure of the country.
Global changes are not taking place because the state has once again decided to take the reins of the economy into its own hands. The main decisions on further economic development are still taken by the country’s leadership, but new ties and agreements with foreign investors are also supported, attracting foreign entrepreneurs to develop their business on the territory of the South Asian state as well. Political issues have no impact on the current course taken by the state of Nepal – opening up to foreign business and new investments.
Unfortunately, to a large extent, the country’s economy has stalled in its development because of the indecision of officials, who have literally folded their hands at the seams. The government noticed this and decided to take drastic measures – the traditional five-year plans were revised, and today’s development plans are a perfect example of this.
Conclusion
Despite uneven growth spurts, Nepal is still a potentially lucrative country in the eyes of investors. Processed and “polished” sectors such as agriculture, hydropower, and medicine are perfectly matched by emerging sectors such as the telecommunications industry. On top of that, the country is dominated by a hybrid political regime, which means that the government will always be very friendly to new beginnings, especially to foreign investment and entrepreneurial support.
