Keynote Address by The Rt. Hon’ble Pushpa Kamal Dahal ‘Prachanda’, Prime Minister of Nepal, at the Interaction Programme with the Business Community in New Delhi, September 16, 2016
Presidents and office bearers of Chambers of Commerce and Industries from India and Nepal,
Senior officials from the Government of India,
Members in my delegation,
Ladies and Gentlemen:
Thank you for providing me this opportunity to interact with the leaders of Indian business and industry.
I have brought with me the captains of Nepali businesses and industry as part of my delegation.
Our message is clear that in an age of globalization, we can find better future only if Government and Private sector march together.
I hope our business delegation will fully utilize the valuable time by engaging with their Indian counterparts in explaining business and investment linkages between the two countries.
Many of you are aware of Nepal’s political transformation. My Party led the ten year long armed struggle from 1996 to 2006. It was a struggle against poverty, backwardness and injustice deeply entrenched in our society for centuries. Thousands of people sacrificed their lives dreaming for a ‘New Nepal’ – a developed and prosperous place where justice would prevail. Dream of New Nepal had two facets – political justice and economic betterment.
After entering into the peace process, we spent the last ten years in the process of political transformation – from armed struggle to peaceful, democratic and inclusive political process. With the promulgation of the Constitution last year, we have been able to lay the foundation of justice-based polity. We are aware of the demands for further improvement in sharing socio-economic benefits. My Government is committed to accommodate the demands in the best possible manner.
While political process has started to take a course, economic agenda of ‘New Nepal’ is yet to take a concrete shape. After political settlement, the economic prosperity is our sole agenda, for which foreign investment is vital. As politics is getting stabilized, law and order situation has been significantly improved. Nepal is therefore, being a safer destination for foreign investment.
When it comes to growth and development, India, under Prime Minister Modiji’s leadership is setting a great example. Being on the top among major economies in receiving FDI, you are the favourite destination for foreign investors and Indian investors have their investment in many countries around the world.
My message to the business leaders in India – if far flung corners of the world can be your destinations, why cannot the next door Nepal? Nepal, though a small country, can be an attractive business avenue, by which you have the market of 2.5 billion populations in its two neighboring countries.
Tell us precisely what we need to do for you and your investment there. We are ready to listen and reform. Let’s make a common pledge: You commit to make Nepal your next home for business. We commit to create the best possible business environment for you.
Dear business leaders,
In terms of policy orientation, Nepal is pursuing a liberal economic policy. Government is only a facilitator and we see multiple role of private sector as key actors, as innovators, as entrepreneurs and as leaders in the domain of economic growth and development.
Over the years, we have taken steps to promote trade, investment and the growth of private sector. In our pursuit of growth and development, we have reduced tariffs, simplified tax regimes and focused on the development and operation of trade related infrastructure. You will find Nepal much ahead of many countries in offering attractive incentives for investment. Yet we believe more can be done to reform the investment regime. We are continuously working on this.
Our Parliament has recently endorsed the SEZ Bill. This provides strong incentives for industries including liberal labour law. We plan to establish SEZs in major industrial centers of the country, most of which will be in the plain land next to Nepal-India border.
We have made administrative procedures simple and Doing Business environment is gradually improving. Investment Board of Nepal, whose CEO is with us today, provides big investors all kinds of advices related to investment in Nepal as well as one door services and facilitation.
We have favorable fiscal environment. Our tax slabs are low. There is no income tax on dividends and export earnings. We exempt tax, duty and fee on the key inputs used by an export industry. In this pursuit, similar simplified tax arrangements by India may support trade and investment for mutual benefits.
We permit full repatriation of income earned from investment. The same rule is applicable to reinvestment. Foreign companies registered in Nepal can purchase, own and sell land. We provide various sector-specific incentives of various kinds and scope.
There is no discrimination between Nepali and Indian investors. Our law guarantees that no private industry will be nationalized. We are in process of ratifying BIPPA signed with India. Double taxation avoidance agreement has also been signed.
Public private partnership is sought and promoted, including in large scale infrastructure projects.
We have abundant labour force, which is cheaper and reliable. Latest census shows that the working age population has increased to 57 percent, which is high even from developing country standard. We have improved industrial relations including through reform in labour law.
The pattern of trade and investment in the 21st century is shifting. Economies are integrating and production process is disintegrating. Value chains are on the rise, strengthening of which would be beneficial to both our countries.
As infrastructure remains at the core of economic development, we have given top priority to cross-border connectivity. Our cross border infrastructures are improving. Railway connectivity is being established at 5 different points and modern integrated check posts at 4 places.
Both of our countries are working in concert to improve cross border roads. Bilateral Motor Vehicle Agreement has been signed and operationalized between the two countries to make movement easy.
We have opened up almost every sector for foreign investment. These include manufacturing, hydropower, tourism, services, IT, mining and agro based industries.
Hydropower offers us vast potential for development. Proper utilization of Nepal’s hydropower resources could help transform our economic landscape. Our two countries can seriously work together to convert huge water resources into wealth.
We have already reached two big hydropower deals with Indian companies. We have signed Power Trade Agreement with India. We are encouraged that Government of India is reviewing its policy and regulation to implement the free market provisions of the PTA.
Transmission infrastructure is being strengthened. First double circuit cross border transmission line is now operational and second cross-border transmission line is being developed.
Tourism is another lucrative sector for investors. We are gifted with beauty of nature and treasures of culture and civilization, in which we are closely linked with India.
We are receiving a larger number of tourists from India every year – as pilgrims, vacationers and business delegations. It’s an opportunity to invest in facilities to cater to this growing number.
Development of supporting infrastructure is essential to drive tourism industry. We are developing regional international airports at two prime touristic hubs of Pokhara and Lumbini, and more are in the pipeline. Investing in tourism sector will definitely be a wise decision.
Agriculture and herbal processing is another area where we invite your investment. This is viable because of varied altitude and topography available in Nepal.
I am confident that today’s interaction will help infuse much needed confidence among the prospective investors to move forward with concrete business and investment proposals in Nepal.
Before I conclude, I would like to share with you that I have had productive discussions with Prime Minister Modiji and other senior ministers in his cabinet about expanding and consolidating economic and commercial ties between our two countries. We also discussed promoting bilateral cooperation for the development and expansion of cross border connectivity in all forms. I am encouraged by positive response received from the Indian side. All we have to do is to capitalize this opportunity.
I thank you for your patience and once again for this opportunity.