Nepali firms to go multinational

Nepali firms to go multinational
eKantipur.com, 21-Jun-2007

Now is the time for established domestic companies to think of going multinational. If things go according to plan, the over four-decade long restriction on Nepali investors to invest abroad will be lifted within a month, paving the way for Nepali entrepreneurs to go multinational.

According to an official at the Finance Ministry, the government is in the final stages of amending the Ban on Nepali Investment in Foreign Countries 2021 Act, as per the long-standing demands of some potential Nepali businessmen willing to invest abroad. The government is attempting to bring policy level changes in the upcoming budget for fiscal year 2007/08.

Industrial experts and government officials say that well-established domestic service-based industries, like the food industry, have shown strong interest to expand their bases in foreign countries.

"We believe the food industry, particularly instant noodles, established-restaurant chains and cable transporters can reap benefits by going multinational once the ban is lifted," said a high-ranking official.

Finance Minister Dr Ram Sharan Mahat acknowledged the development and said that demand for lifting the ban is high from Nepali business community. "The government is positive on allowing Nepali companies to invest in foreign countries, but it will come with conditions," Dr Mahat said.

The official said the government is thinking on three ways to allow Nepali investors to invest abroad. First is through creating a mutual fund, established by financially sound banks with its majority equity participation. Organized investors, including individuals can participate in the fund by purchasing units of the fund.

Second is by allowing investments of Nepali companies through transfer of technology while the third way is by permitting Nepal-based holding companies to establish their subsidiaries in foreign lands.