Foreign Direct Investment(FDI) in Nepal

A Seminar Paper

BY

Niman Khadka

Bachelor of Business Administration(BBA)

Second Semester

TU Registration Number :

Exam Symbol Number: 36968/23

ECO 205:Seminar in Contemporary Issues of Macroeconomics

Submitted to

Faculty of Management

Degree Campus

Tribhuwan University

December 2024
 DECLARATION

I hereby declare that the Seminar paper entitled “Foreign Direct Investment(FDI) in Nepal” submitted
to the Faculty of management, Tribhuvan University, Kathmandu is an original piece of work under the
supervision of BBA Department, Degree Campus, Biratnagar, and is submitted in partial fulfillment
of the requirements for the degree of Bachelor of Business Administration (BBA). This seminar paper
has not been submitted to any other university or institution for the award of any degree or diploma.

Signature:

Niman Khadka

December 2024

ii
 SUPERVISOR’S RECOMMENDATION

The seminar paper entitled “Foreign Direct Investment (FDI) in Nepal” submitted by Niman Khadka
of Degree Campus, Biratnagar, is prepared under my supervision as per the producer and format
requirement laid by the Faculty of Management. Tribhuvan University, as partial fulfillment of the
requirements for the degree of Bachelor of Business Administration (BBA). I, therefore, recommend the
seminar paper for evaluation.

Signature:

Economics Faculty

Date……………………….

iii
 ENDORSEMENT

We hereby endorse the seminar paper entitled “Foreign Direct Investment (FDI) in Nepal” Submitted
by Puja Kumari Yadav of Degree Campus, Biratnagar in partial fulfillment of the requirements for the
degree of the Bachelor of Business Administration (BBA) for external evaluation.

Signature:

Director,BBA Faculty

Date.....................

iv
 ACKNOWLEDGMENT

I would like to take this opportunity to express my sincere gratitude to all those who have supported me
in completing this seminar paper. First and foremost, I would like to extend my heartfelt thanks to my
seminar instructor for providing me with valuable insights and guidance throughout the writing process.
Your unwavering support and encouragement have been invaluable to me.

I am also grateful to my classmates and colleagues who have contributed to the development of my
thoughts and ideas in this paper. Your suggestions and feedback have been instrumental in shaping my
understanding and making this paper what it is today. I would like to extend my special thanks to my
friends and family who have been there for me throughout the entire journey. Your love, support, and
encouragement have been a source of inspiration and motivation for me.

Finally, I would like to acknowledge all the authors, researchers, and scholars whose works I have
referred to in this paper. Your contributions to the field have been a great source of knowledge and have
played a significant role in the completion of this paper.

Thank you all for your support and help. I hope this paper will be of some value to you.

v
 Table of Contents

DECLARATION ii
ENDORSEMENT iv
ACKNOWLEDGMENT v
CHAPTER 1: INTRODUCTION 1
1.1 Background: 1
1.2 Statement of the problem 4
1.3 Objectives 5
1.4 Limitations 6
1.5 Organization of the Study 6
CHAPTER 2 :DESCRIPTIONS AND ANALYSIS 7
2.1 Literature Review 7
2.2 Methodology 8
2.3 Result and Findings 9
CHAPTER 3 :CONCLUSION 16
REFERENCES 17

vi
 Table of Figures

Figure 1:Net FDI Inflows 11

Figure 2:Approved FDI and actual Net FDI Inflows 12

vii
 Table of Tables

Table 1:Dividend Repatriation 13

Table 2:FDI Stock In nepal 14
Table 3:FDI Stock By Components 14
Table 4:FDI Stock By Sectors 15
Table 5:Province-Wise FDI Stock 16
Table 6:Foreign Loans 16
Table 7:International Invetsment position of Nepal 18

viii
 CHAPTER 1: INTRODUCTION
1.1 Background:

Foreign direct investment (FDI) is an important source of external financing for many countries
around the world. Along with financial resources, FDI facilitates the transfer of technological
know-how, managerial and organizational skills and access to foreign markets along with
enhancing productive activities of the host economy. Generally forign investment refers to the
trans-border flow of private capital of wan individual or company in the form of investment.
According to the Foreign Investment and Technology Transfer Act, 2019 (2075) “Foreign
investor” means any foreign individual, firm, company, Non-resident Nepali or foreign
government or international agency or other corporate body of similar nature that makes foreign
investment, and also includes, in the case of a foreign investor that is an institutional foreign
investor, the ultimate beneficiary of such an institution. (NRB(2021))

FDI is a significant source of development financing, and enhance production & productivity by
providing new investment, globally successful technology, management expertise and export
markets. Foreign investment, especially FDI, not only nourishes domestic investment resources but
also acts as a source of foreign exchange and can relax balance of payment constraints. Therefore,
all countries, particularly developing and least developed countries, seek to attract Foreign Direct
Investment (FDI) for the package of benefits it brings along with it into the host country economy.

Nepal has initiated institutional and legal reforms in recent decades with the aim of promoting FDI
to complement the resource gap in capital formation. Gradual liberalization of FDI inflows in
various sectors has been encouraged by creating investment friendly environment and prioritizing
foreign investment related reforms.

Some of them include:

a) Foreign Investment Policy, 2015

b) Foreign Investment and Transfer of Technology Act, 2019 (FITTA)

c) Public-Private Partnership and Investment Act, 2019

d) Industrial Enterprises Act, 2020

e) Institutional reforms such as establishment of One Stop Service Center to

facilitate foreign investment

f) Nepal Rastra Bank Foreign Investment and Foreign Loan Management by-

law, 2021
 2

Reliable FDI statistics is crucial for regular analysis of direct investment trends and is
integral for cross-border financial analysis. The identification of sources of foreign
investments (partner countries) and recipient industries is of primary interest for policy
makers to address the important issue of attracting and making the most of international
investment and to formulate proper policy framework.
In this reference, this study makes an attempt to examine FDI in 2020/21.This paper consists of
three sections, Introduction, Description and Analysis and Conclusion. In the introduction
section, background of the study, statement of the problem, research questions, objectives of the
study rationale of the study and methods are presented. In the second section, review of literature
and descriptions and analysis are offered.Finally, conclusion from the data analysis has been
derived in the last section of the study .
 3

Role of Foreign Direct Investment

Most developing countries lack resources required to meet the financial requirements of economic
development. They require foreign capital and technology for socio-economic development.
Previously, much of the resource gap was managed through foreign loans and grants, but due to
the world wide economic and financial crisis , many donor countries curtailed their Official
Development Assistance and therefore, foreign private capital remained the only alternative source
available to many developing countries.

Thus, foreign investment can assist industrial growth and hence, economic development

in several ways, like:

1. It supplements domestic private capital.

2. It demonstrates the way in which industrial expansion and development could take place.

3. It brings in technical know-how and managerial expertise.

4. It can develop the organized capital market in the country.

5. It promotes employment opportunities and also helps national savings.

6. It, in the form of collaboration imparts training and development to entrepreneurs and

promoters.

The basic objective of promoting foreign investment and technology transfer is to make the
economy more viable, dynamic and competitive through maximum capital, human and other
resources. It is clearly stated in the preamble of FITTA (1992) that whereas, in the process of
industrialization of the country, it is expedient to promote foreign investment and technology
transfer for making the economy viable, dynamic and competitive through maximum mobilization
of limited capital, human and other natural resources (rajan, 2019)
 4

1.2 Statement of the problem

Nepalese economy suffers from serious structural constraints accompanied by unprecedented

political turmoil. Economy is strangulated by landlocked position, rugged topography with limited
cropland, poor resource base, a high extent of poverty, and rampant corruption. However, Nepal
has enormous economic potential comprising water resources, tourism, human resources and
biodiversity, which require huge spending through bilateral and multilateral assistance and private
sector participation to exploit potential ensuring targeted growth of 6.2 percent during the Tenth
five year plan. In a poverty-stricken economy like Nepal where internal resources are extremely
limited, not enough to supplement current expenditures and dependence on foreign aid (grants and
loans) is increasing with poor performance shown by economic growth rate, and where political
conflict is getting momentum, the role of Foreign Direct Investment (FDI) is crucial not only to
sustain development activities but also for poverty alleviation. Thus, no one can deny the role of
foreign investment in economic growth and development of the country. An assessment of the FDI
policies in the pre-democratic and post-democratic period in Nepal is thus recognized as the
problem of the present study.

 What is the current status of FDI in Nepal?

 What is the growth trend of FDI in Nepal?
 Despite of enormous resources, Nepal is lacking inward FDI. What factors are
affecting Nepal‟s FDI?
 5

1.3 Objectives

The basic purposes of the study are to analyze the situations of FDI condition and analysis past,
present and future condition of FDI in Nepal. It also aims to identify leading factors causing in FDI
and aims to suggest mechanism to combat with FDI Problems. The major objectives of this study
are-

1. To examine the overall structure of foreign direct investment in Nepal.

2. To analyze the trend of foreign direct investment in Nepal.

3. To analyze the existing laws and policies relating to foreign direct

investment in Nepal.

4. To suggest the way of promoting foreign investment in Nepal.

Rationale of FDI

FDI is an important source for the developing countries, which has plenty of resources but is
economically weak with a deficiency in finance, technology and competitive management. FDI
introduces new technology, knowledge, skills, new management practices, etc to the recipient
economy. Based on Investment across borders reports (2010), world bank points the benefits of
FDI as, ”A global network of 80,000 multinational corporations and 800,000 foreign affiliates
have helped create millions of jobs, transferred technology, modern skills, fos-tered competition,
and contributed to the fiscal standing of many economies”. Foreign direct investment (FDI) plays
an important role boosting industrial development and promotion of manufactured exports for the
developing countries.

FDI helps mobilization of capital, human and natural resources of the country, which in turn
supports to make the economy dynamic and competitive. FDI is an important source of inflow of
capital for economic growth and employment generation in developing countries. It also provides a
package which constitutesnew technologies and management techniques, financial and market
access for the production and movement of goods and services. Though, attracting foreign direct
investment has become the major challenges for host countries as it faces the challenges of
identifying the major factors that motivate and affect the FDI location decision. That's why Nepal
 6

is at a point wherefrom it can excel for economic goals via FDI. Foreign investment is critical to
enhance the transfer of capital, modern technology, management and technical skill, increase
culture. This article attempts to explore the growth and trends as well as condition of FDI. The
results show a significant association between the changes in FDI on Employment. The finding of
multiple regression analysis between FDI and employment indicates that FDI is a significant
predictor of employ

1.4 Limitations

 This survey is solely based on the list of industries that have taken FDI approvals

from NRB which differs in number than those registered in Department of Industry,

Government of Nepal.

 As the primary focus of the survey is to collect FDI stock, it includes only the

descriptive statistics.

1.5 Organization of the Study

The present study is organized in five chapters. They are as follows:

 Chapter -one introduces the background of the study, which includes; statement of the
problem, rationale of the study,objectives of the study, limitations and organization of the
study.
 Chapter -two introduces literature review, which includes; review of related studies.
 Chapter -three introduces research methodology, which includes research design, source of
data, statistical tools used, data processing and analysis and definition of some of the major
terms used in the study.
 Chapter four incorporates with the analytical part of the study.
 The last chapter -five presents the summary, conclusion of the study.
 7

CHAPTER 2 :DESCRIPTIONS AND ANALYSIS

2.1 Literature Review

In the past several theoretical and empirical studies have been conducted regarding economic
growth performance of Nepal.Some of the empirical studies have been reviewed in this section
and also made data presentation description and analysis.Kharel Khom Raj had conducted a
study titled"FOREIGN DIRECT INVESTMENT IN NEPAL: A STUDY ON ITS IMPACT ON
EMPLOYMENT" and found that total numbers of projects as well as total investment under joint
ventures have been added every year. There is mostly increase in the number of foreign approved
projects as well as amount of foreign investment in Nepal. Despite the liberal policy and attractive
incentives provided by the government, the overall picture of FDI is not encouraging. The pattern
and trends of FDI suggest that liberal policy framework is no longer adequate to attract foreign
investment.

.Similarly,Maharjun Babu Krishna had also conducted research titled"A STUDY ON FOREIGN
DIRECT INVESTMENT IN NEPAL" and concluded that the FDI inflow in Nepal is
remarkablethe study shows that the number of industries established under FDI was very
insignificant during these periods. One of the main causes behind this slow increment might be the
restrictive laws and policies adopted by the government. The policies were not investment friendly.
The flow of FDI is highest into the manufacturing sector, which is mainly because the goods
produced in this sector are consumed in the market easily and also gets relatively easy access to the
international market. The goods which are easily sold in the market attract more FDI. Along with
this, availability of cheap labor cost has also attracted FDI in this sector.

Likewise,Bhattrai Rajan had conducted a study titled"FOREIGN DIRECT INVESTMENT IN

NEPAL: PAST, PRESENT AND FUTURE",The study shows that the number of industries
established under FDI was very insignificant during these periods. One of the main causes behind
this slow increment might be the restrictive laws and policies adopted by the government. The
policies were not investment friendly. (k.c, 2019)
 8

2.2 Methodology

 This study is primarily based on survey data collected from companies that have taken
FDI approvals from Nepal Rastra Bank (NRB). Structured questionnaire has been
prepared and administered through field survey and email correspondence. For
verification of the data and information collected, financial statements of surveyed
companies have been reviewed in addition.
 Data and information are also gathered from various governmental, non-governmental
agencies and FDI related published reports. This study has adopted a descriptive
approach to present the results and findings of the survey.
 The population is classified into three distinctive groups based on the size of the
capital of companies. Accordingly, the survey has been conducted across all groups.

FDI Compilation Method

 Organization for Economic Cooperation and Development (OECD, 2008) disaggregates

FDI stock or position into equity and debt. Equity positions of FDI stock cover all
components of shareholders’ funds (proportionate to the percentage of shares held by
foreign direct investors). Therefore, it includes equity, contributed surplus, reinvestment of
earnings, revaluations, as well as any reserve accounts. Debt positions of FDI stock include
loans and borrowings, and debt from foreign direct nvestors.
 This survey distinguishes the equity portion of FDI stock under paid-up capital and
reserves headings, and the debt portion of FDI stock under loans heading2 and
disaggregates FDI stock by major industry sectors based on International Standard
Industrial Classification.
 The final FDI stock reported in this survey consists of two parts: aggregation of FDI
stock as reported by the sampled units and estimation of FDI stock for other non- sampled
firms. The estimation has been made based on the ratio derived from theFDI stock value
reported by firms with respect to their approved amount for investment. (NRB(2022))
 9

2.3 Result and Findings

Gross FDI inflows increased by 1.2 percent to Rs.19.9 billion in 2020/21. The Divestment of
foreign investment (repatriation of investment) during 2020/21 Remained at Rs.396.7 million
which is around 2.0 percent of gross FDI inflows (NRB, 2022).

Net FDI inflows to Nepal increased by 0.2 percent to Rs.19.5 billion in 2020/21

Figure 1:Net FDI Inflows (NRB(2021))

The recent trend of FDI realization shows that there is a huge gap between approved FDI and
actual net FDI inflows in Nepal. The FDI approval may indicate an intended investment (the
approved investment may not actually take place) or there may be significant time lags between
approvals and actual investments. In some instances, the realization of the approved investment
may take place over several years as usually seen in projects with longer gestation period. Hence,
there is a gap between FDI approval and actual FDI inflows. Between 1995/96 and 2020/21, total
actual net FDI inflow stood around 36.5 percent of total FDI approval.
 10

Figure 2:Approved FDI and actual Net FDI Inflows

Source: (MOICS(2021))

Dividend Repatriation

In 2020/21, for dividend repatriation by companies with foreign investment, approval equivalent to
Rs.26.1 billion was provided. The highest dividend repatriation approval was for information and
communication sector followed by the manufacturing sector.

Sectors 2018/19 2019/20 2020/21

1 Agriculture,Forestry and Fishing - - -
2 Construction 161.7 50.0 -
3 Electericity,gas,steam and air 2762.2 32.3 3816.2
Conditioning
4 Manufacturing 9779.7 7527.1 6747.7
5 Mining and Quarrying - - -
6 Accomodation and Food services 11.4 42.9 -
7 Education 347.7 347.7 303.0
8 Financial and Insurance Services 2167.5 4799.6 868.3
9 Human Health and Social Work - 2.3 -
10 Information and Communication 12541.7 - 13984.1
11 Transport and Storage - 4.1 -
12 Other 11.1 97.1 357.3
Total 27783.0 12903.1 26076.6

Table 1:Dividend Repatriation Source: (NRB(2021))

 11

FDI Stock in Nepal

The stock of FDI in Nepal increased by 14.8 percent during 2020/21 and stood at Rs.227.9 billion
as of mid-July 2021 . The paid-up capital, reserves and loans increased by 13.7 percent, 7.3 percent
and 41.5 percent respectively. The foreign liability of Nepal in terms of direct investment stands at
Rs.227.9 billion as of mid-July 2021.

S.N. Components As of Mid-July Percent Change

2018 2019 2020 2021 2019-20 2020/21

1 Paid-up capital 76850.3 88158.3 108072.3 122885.5 22.6 13.7

2 Reserves 107392.0 78381.9 67071.9 71982.1 -14.4 7.3

3 Loans 16305.1 16379.4 23376.6 33079.3 42.7 41.5

Total FDI Stock 200547.4 182916.6 198520.8 227946.9 8.5 14.8

Table 2:FDI Stock In Nepal
Source: (NRB's previous survey Report in FDI)

Paid-up capital is the major component in FDI stock accounting for 53.9 percent of total FDI stock
. The share of reserves and loans in total FDI stock stood at 31.6 percent and 14.5 percent
respectively. In 2019/20, paid-up capital, reserves, and loans accounted for 54.4 percent, 33.8
percent and 11.8 percent of total FDI stock respectively.

S.N. Components As of Mid-July

2018 2019 2020 2021
1 Paid-up Capital 38.3 48.2 54.4 53.9
2 Reserves 53.5 42.8 33.8 31.6
3 Loans 8.2 9.0 11.8 14.5
Total FDI Stock 100.0 100.0 100.0 100.0
Table 3:FDI Stock By Components
Source: (NRB's previous survey Report in FDI)
 12

FDI Stock by Sectors

Electricity, gas, steam and air conditioning sector has the highest FDI stock of Rs.70.1 billion
(30.8 percent of total) followed by manufacturing sector (Rs.67.4 billion) and financial and
insurance services sector (Rs.61.4 billion).

S.N Sectors As of Mid-July Percent Change

.
2019 2020 2021 2019/20 2020/21
Amount Share in
Total
1 Electricity,gas,steam 36662.2 54660.9 70147.3 30.8 49.1 28.3
and air conditioning
2 Manufacturing 52188.9 56066.8 67352.0 29.5 7.4 20.1
3 Financial and 50230.1 54288.4 61339.5 26.9 8.1 13.1
Insurance Services

4 Accomodation and 7944.6 11846.4 12975.9 5.7 49.1 9.5

food services

5 Information and 28262.9 12618.5 10858.2 4.8 -55.4 -14.0

Communication

6 Education 1687.2 1877.0 1926.4 0.8 11.2 2.6

7 Construction 414.1 470.1 492.0 0.2 13.5 4.7

8 Human Health and 350.8 365.2 338.9 0.1 4.1 -7.2

Social Work

9 Agriculture,Forestry 114.2 220.5 240.9 0.1 93.1 9.2

and fishing

10 Mining and Quarrying 69.1 -1.2 -2.9 -0.001 -101.7 141.9

11 Transport and Storage -1678.2 -2772.2 -6515.9 -2.9 65.2 135.0

12 Other 6673.6 8880.4 8734.7 3.8 33.1 -1.6
Total 182919.6 198520.8 227946.9 100.0 8.5 14.8
Table 4:FDI Stock By Sectors
Source: (Field Survey)

FDI stock of transport and storage decreased as a result of significant decline in

reserve position of the companies within the sector.

 13

Province-Wise FDI Stock

Bagmati province constitutes the highest share of FDI stock (56.1 percent) whereas Karnali and
Sudur Paschim Province account for less than 1.0 percent of total FDI stock.

Province FDI Stock Share in Total(%)

Koshi 36775.9 16.1
Madhesh 20321.2 8.9
Bagmati 127977.3 56.1
Gandaki 26824.3 11.8
Lumbini 14282.2 6.3
Karnali 45.0 0.0
Sudhur Pascgim 1741.0 0.8
Total 227946.9 100.0
Table 5:Province-Wise FDI Stock
Source: (Field Survey)

Foreign Loans

As of mid-July 2021, the outstanding foreign loan (excluding direct loans from foreign direct
investors) of FDI companies stood at Rs.40.7 billion. Such loans was Rs. 29.6 billion a year ago .
The companies in hydropower sector have utilized more foreign loans as the outstanding loan of
this sector stood at Rs.20.4 billion in mid-July 2021.

Sectors 2019 2020 2021

Electricity,gas,steam 19572.1 20921.2 20427.3
And air conditioning
Manufacturing 52.4 4891.2 10265.8
Financial and Insurance 3526.3 3497.5 7508.5
Services
Transport and Storage - - 1866.4
Information and - - 530.6
Communication
Accomodation and food - - 139.4
Services
Other - 242.1 0.0
Total 29552.0 40737.9
Table 6: Outstanding Foreign Loans
Source: (Field Survey)
 14

Capacity Utilization

The survey also captures the capacity utilization of manufacturing companies with FDI. The
capacity utilization stood at 64.9 percent on average9 during 2020/21 which was 44.1 percent a
year ago.

Sales from Operation and Profitability

The survey also captures data on sales from operation of FDI companies. The total sales of
surveyed companies during 2020/21 stood at Rs.381.5 billion which was Rs. 347.7 billion a year
ago. Similarly, the average10 return on equity (ROE) of surveyed FDI companies stood at about
14.7 percent for 2020/21, which was around 15.6 percent a year ago.

International Investment Position Of Nepal

IP is the statement that shows at a point in time the value and composition of financial assets of
residents that are claims on nonresidents and liabilities of residents of an economy to non-
residents. 4.2. As of mid-July 2021, the foreign assets increased 0.9 percent to Rs.1481.1 billion
compared to an increase of 35.9 percent in the previous year. The foreign liabilities increased 15.4
percent to Rs.1401.0 billion compared to an increase of 36.2 percent in the previous year (Table
12). Consequently, net IIP remained positive at Rs 80.1 billion, which was Rs.253.5 billion in the
previous year.

Descriptions As of Mid-July Percent Change

2019 2020 2021 2019/20 2020/21

Assests 10801029. 1467785.6 1481123.9 35.9 0.9
9
Liabilities 891246.5 1214285.6 1401003.4 36.2 15.4
O/W Direct Investment 182919.6 198520.8 227946.9 8.5 14.8
Net International 188856.4 253499.9 80120.5 34.2 -68.4
Investment
Position (IIP)
Table 7:International Invetsment position of Nepal
Source: (NRB(2022))
 15

The foreign assets is comprised of direct investment, portfolio investment, official reserve assets
and other investments, which includes other equity, currency and deposits, loans, trade credit and
advances and other account receivables. Official reserve assets constitute the highest share of
foreign assets (87.7 percent) followed by other account receivables (5.2 percent) and currency and
deposits (5.1 percent).

As of mid-July 2021, the official reserve assets increased 1.9 percent to Rs.1298.9 billion
compared to an increase of 36.0 percent in the previous year. Other account receivables, and
currency and deposits under foreign assets decreased 12.1 percent and 14.0 percent respectively in
the review year.

The foreign liabilities cover direct investment, portfolio investment and other investments, which
includes other equity, currency and deposits, loans, trade credit and advances, other account
payables and special drawing rights. Loans constitute the highest share of foreign liabilities (70.6
percent) followed by direct investment (16.3 percent) and trade credit and advances (8.3 percent).

As of mid-July 2021, foreign loan liabilities increased 16.0 percent to Rs.988.8 billion compared to
an increase of 38.4 percent in the previous year. Direct investment and trade credit and advances
under foreign liabilities increased 14.8 percent and 42.1 percent respectively in the review year.
 16

CHAPTER 3 :CONCLUSION

Foreign Direct Investment (FDI) has become a significant source of private external finance in
many countries. It is more important in developing economies because it allows transfer of
technology, skills and access to global markets, in addition to financial resources. Nepal has also
been striving to increase FDI to promote domestic production.. This report presents the latest data
of FDI stock in Nepal and provides the estimates of inward direct investment position or the FDI
stock at book value and country-wise as well as sector-wise distribution of FDI stock at the end of
2020/21.

Net FDI inflows to Nepal increased by 0.2 percent to Rs.19.5 billion in 2020/21. The recent trend
of FDI realization shows that there is a huge gap between approved FDI and actual net FDI inflows
in Nepal. The FDI approval may indicate an intended investment (the approved investment may
not actually take place) or there may be significant time lags between approvals and actual
investments. In some instances, the realization of the approved investment may take place over
several years as usually seen in projects with longer gestation period. The stock of FDI in Nepal
increased by 14.8 percent during 2020/21 and stood at Rs.227.9 billion as of mid-July 2021 . The
paid-up capital, reserves and loans increased by 13.7 percent, 7.3 percent and 41.5 percent
respectively.

Similarly,according to province wise, Bagmati province constitutes the highest share of FDI stock
(56.1 percent) whereas Karnali and Sudur Paschim Province account for less than 1.0 percent of
total FDI stock.As of mid-July 2021, the official reserve assets increased 1.9 percent to Rs.1298.9
billion compared to an increase of 36.0 percent in the previous year. Other account receivables,
and currency and deposits under foreign assets decreased 12.1 percent and 14.0 percent
respectively in the review year. As of mid-July 2021, foreign loan liabilities increased 16.0 percent
to Rs.988.8 billion compared to an increase of 38.4 percent in the previous year. Direct investment
and trade credit and advances under foreign liabilities increased 14.8 percent and 42.1 percent
respectively in the review year.
 17

REFERENCES

Field Survey, 2.

k.c, K. (2019). Foreign Direct Investment in Nepal.

MOICS(2021), a.

NRB(2021).

NRB(2021).

NRB(2022).

NRB's previous survey Report in FDI, a. f.

rajan, B. (2019). FOREIGN DIRECT INVESTMENT IN NEPAL: PAST, PRESENT AND

FUTURE .