The disruption caused by the Covid-19 coupled with months-long political instability affected the flow of foreign direct investments in the last fiscal 2020-21 of Nepal,  with total FDI recorded a fall of around 14.81 percent in comparison to the previous year. 

According to the Department of Industry, foreign direct investment pledges fell 14.81 percent to $270 million in the fiscal year 2020-21 ( which ended mid-July).  Most investors backed away from their commitments as Covid-19 ruined travel plans as well as tumultuous political instability.

In the fiscal year 2019-20, the country received $317 million in FDI. 

Despite the slowdown, investments from China still dominates the country’s FDI with over 60 percent share. India is the second biggest contributor of FDI with around 30 of the total share. 

“Investment pledges dropped because the coronavirus prevented travel,” Jiblal Bhusal, the director-general at the Department of Industry, was quoted as saying by The Kathmandu Post. He added most prospective financiers could not visit Nepal to follow up on their investment plans.

The spillover effect of lockdowns that began in March 2020 and the second lockdown that started in April 2021 has put investors in a “wait and watch” situation, Bhusal said. “Despite the severe situation, foreign investment pledges in the last fiscal year were good,” he said.

(SAM)