Nepal greets Chinese firms with preferential policies

Companies encouraged to relocate manufacturing

Nepal is offering preferential policies to Chinese companies which want to invest in the country, though challenges remain such as limited public land and power supply, slow Internet speed and language barriers, the Ambassador of Nepal to China said Friday.

Chinese enterprises are encouraged to cooperate with Nepalese firms to develop products and services, relocate their manufacturing bases to Nepal, and help their South Asian counterparts climb the value chain,” Leela Mani Paudyal, Nepalese Ambassador to China, said at a seminar held in Beijing on Friday.

The Nepalese government has rolled out different corporate income tax rebates based on the types and locations of industries, Binod Prasad Acharya, economic minister at the Nepalese embassy, said at the seminar.

“For example, there is a 100 percent exemption for 10 years and 50 percent exemption in the following five years in the field of energy, and a 100 percent exemption for five years in the tourism industry when investing more than 2 billion Nepalese rupees,” he explained.

In addition, 100 percent foreign investment is allowed in almost all industries, and technology transfer is possible in all industry sectors, the economic minister said.

In terms of investment volume, China became Nepal’s second-largest investor in 2016, following India. China had invested in a total of 1,121 projects by the end of 2016, totaling 3.79 billion yuan ($552 million).

However, some challenges and weaknesses remain, such as limited public land, power shortages, slow Internet connectivity and difference in languages, according to Paudyal.

“As most of the country’s land is private, you have to negotiate with many people. We suggest Chinese investors establish an industrial zone here, for which we will provide land and other facilities. This will also help other investors,” Paudyal told the Global Times.

In addition, Nepal has an insufficient supply of power, but this is also a potential area for investment by Chinese companies, he said.

Chinese investors may need professional interpreters to overcome language barriers, but the problem may be alleviated in the coming years, as the country has sent many students to China to learn Chinese, including 200 in Beijing, Paudyal said.

He added that slow Internet speed is another weakness, which remains unresolved at the present time.

The ambassador also suggested foreign investors find a reliable local business partner in Nepal to help them understand the local laws and culture.