FDI commitment nosedives by 80 percent

FDI commitment nosedives by 80 percent
eKantipur.com, Jan 22 2007

As deteriorating industrial relations drove away investors, fresh commitments for foreign direct investment in the country suffered a whopping decline by 80 percent during the first half of the current fiscal year.

Statistics of Department of Industries (DoI) show that new foreign investment commitments for the period totaled a mere Rs 252.36 million, whereas the country had received FDI commitment of Rs 1.25 billion during the same period last year.

“Restoration of peace raised prospects of attracting more FDI. However, the protracted labor stir had its negative impact,” said a senior official at the department, elaborating the reason for the decline in foreign investment.

He informed the Post that the number of foreign investment ventures registering with the DoI went down close to half the number of similar period last year. DoI issued operation license to 36 new FDI ventures as of mid-January 2007. In the same period last year, a total of 70 FDI ventures were registered with the DoI.

The total project cost and total fixed cost of FDI ventures registered during the period this year stood at Rs 287.99 million and Rs 224.67 million respectively. Those figures were Rs 1.86 billion and Rs 1.31 billion respectively in the same period last year.

The new ventures, if they begin operations, would generate additional employment opportunity for 1,220 persons.

The very claim of investors that manufacturing sector has been badly hurt by the labor stir was reflected in the trend of FDI commitments as well, as contrary to the past, FDI coming into the manufacturing sector went down drastically this year.

Number of foreign investment projects under manufacturing sector slid to 7 from 25 for the similar period last year. The FDI commitment in the sector also plummeted to Rs 82.74 million, whereas in the same period last year, it was Rs 654.87 million.

As a result, service sector became the largest FDI attracting sector during the period.

The sector received a total FDI commitment of Rs 128.99 million through 21 new projects. However, the FDI received under the sector is a mere one fourth of what was received during the same period last year.

As usual, no FDI commitment came under agriculture sector. Tourism sector received 7 new projects with FDI commitments totaling Rs 33.54 million, while one project was registered under the construction sector with FDI commitment of Rs 7.09 million.

Those two sectors had lured FDI commitments worth Rs 97.72 million and Rs 28.23 million during the same period last year.

Likewise, the largest chunk of FDI commitments came from China during the period, whereas regular topper, India, stepped down to the fourth position after South Korea and Japan.

According to DoI statistics, the country received FDI commitments of Rs 94.63 million from China. FDI commitments from South Korea, Japan and India totaled Rs 48.80 million, Rs 36.74 million and Rs 21.30 million respectively.