August 16, 2019 | SUDHA LUITEL
Entrepreneurship in Nepal is a challenging task. In an underdeveloped country like Nepal, there are limited business opportunities. In the article, we will try to explore some of the business opportunities for an entrepreneur in Nepal.
As per the latest World Bank annual rating, Nepal ranks in 110th position in the ease of doing business among the 190 economies of the world. On the other hand, Foreign Direct Investment in Nepal has increased by 17512.80 NPR Million reaching an all-time high in the year 2018. Nepal is continuously performing well in the economy yet there is still a lot to be explored.
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There is a legal arrangement of Special Investment Promotion Board which is chaired by the Prime Minister. This helps invite foreign investments across different sectors. The government has welcomed Foreign Direct Investment in various domestic sectors by encouraging investors to invest in local projects.
There exists a peaceful and conducive environment for investments in Nepal. The country has faced considerable improvement in key areas of investment such as protecting small scale investors, business commencement, property registrations, taxation, international trade, contract laws and as such.
Majority of the youth population
The current population of Nepal consists mainly of the young group. With the higher number of youth available, the demand for employment opportunities becomes higher. Thus investor can find skilled workers in a comparatively lower cost in Nepal.
Benefits of Neighborhood
Being a neighboring country of two giant nations, Nepal has facilities of duty-free access on its trade with India and China. This allows the investor to reap the benefits of doing trade.
Nepal has abundant natural resources. The resources are either misused or remained untouched when it comes to making benefits out of it. Huge opportunities exist at the door but they are yet to be explored.
5 BUSINESS OPPORTUNITIES IN NEPAL
1. Fertilizer and agricultural equipment
Nepal offers huge possibilities for commercializing the agriculture sector. Government of Nepal is committed to uplifting the agricultural sector. The government is currently focusing on the modernization, diversification, commercialization, and marketing of the agriculture sector. Nepal is highly dependent on foreign countries for chemical fertilizers and agricultural equipment. As a result, the expense of the nation is increasing along with the increased dependency on the second nation for fertilizers. The investors can reap the benefits from the investment in this field which will further support the idea of national production along with increased national revenue.
There is considerable growth in Tourism in recent years. The average length of stay for a tourist in Nepal is of approximate 13 days. A large number of tourist visit in March, October, and November than other months. The main aim of Tourism Policy 1995 is to develop tourism as a priority sector in Nepal. Nepal is an ideal destination for adventure tourism. Adventure seekers can enjoy a number of outdoor activities ranging from paragliding to spotting wild animals in the national parks. There is huge potential for investors in order to develop the ski resorts in the Himalayan slopes. The investors can also make an investment to create places like theme parks, water parks, amusement parks, golf driving ranges and so on.
Also since the Nepalese population has responded well to franchise restaurants, there exist more opportunities in developing themed restaurants serving specialty food. Also, the potential increase in the inflow of tourists will require more specialty restaurants to meet their needs.
3. Mining Industry
About 63 minerals have been identified in Nepal. Till 2010/11, 80 mines and quarries for 12 different minerals were in operation. An abundance amount of minerals have been used in industrial and construction works including Limestone, Coal, Talc, Clay red, Granite and marble, Gold, Semi-precious and precious stones like-aquamarine, ruby and sapphire.
The Department of Mines and Geology focuses on the exploration and evaluation of mineral resources in Nepal. It compiles and publishes consolidated information on the situation and potentialities of different minerals in the country. The investors can make investments in fuel mineral. In recent times, the western part of Nepal has witnessed and confirmed the presence of oil and natural gas in Nepal. Only about 10 petroleum and natural gas exploration sites have been identified and some petroleum companies have already sought licenses. Thus there still remains a lot as untouched part and can be explored for investments.
Similarly, Nepal has more than 20 million metric tonnes of ore reserves in more than 80 locations. Copper has been found in Nepal in more than 107 locations.
Also, recent studies have shown that Nepal may have 2.5 billion metric tonnes of cement grade limestone. Thus, investors can make huge benefits from investing in the mining sector because there is a lot to be done in this sector.
4. IT sector
The Government of Nepal has identified IT sector as one of the 5 priority potential export service sectors in the Nepal Trade Integration Strategy (NTIS) 2010. IT has a high potential to generate growth, investment, and significant profits in the years to come and is expected to be one of the most significant growth contributors to the Nepali economy. IT developer costs are lower in Nepal than in other South Asian countries. So this sector is beneficial to the investors. Nepal has been able to boost itself into the international market to become an alternate offshore outsourcing location to India, Pakistan, and other Asian countries.
IT is necessarily becoming a requirement for every kind of organization. This widens the scope of IT in Nepal and this is the right sector for making new investments. Few international IT companies have consolidated their business in Nepal and developed a niche market for their products internationally. Government of Nepal has committed seriously in establishing an IT Park with tax and other incentives. So investors can take first-mover advantages by choosing this sector for investment.
5. Energy and hydropower
Although blessed with tremendous hydropower resources, only almost 40% of Nepal’s population has access to electricity. Most of the power plants in Nepal are river-based with energy available in excess of the country’s demand during the monsoon season and deficit during the dry season.
Nepal also faces acute power shortages even when huge opportunities exist in the hydropower sector for investors to meet this gap in demand. Although there has been recent hydropower development, in the dry season, power is expected to be insufficient to meet demand in the future. Electricity consuming industries like cement plants and fertilizer plants are on track for development, which will increase demand. The PTA with India has opened up a large market for Nepali electricity in India and this can be met through investments in the hydro sector. PTA ensures non-discrimination against electricity from Nepal in the Indian market. So, there is vast potential to export electricity to the growing Indian power market.
Also, as part of its plan to electrify the entire country, the Government of Nepal plans to construct extensive transmission infrastructure. Nepal has also formulated a Transmission Master Plan study to improve transmission infrastructure and private investment will be sought for this purpose. Several cross-border connections are also being planned by the government and with the systematization of the energy and hydro sectors, this sector will be proved beneficial to the investors.