Finance Minister Announces Policy Reforms for Investment Promotion in Budget

Kathmandu. Finance Minister Dr. Swarnim Wagle has announced that appropriate policy and legal arrangements will be made for investment promotion, economic reform, and smooth service delivery through the budget for the upcoming fiscal year 2083/84. He stated this while presenting the budget statement in a joint meeting of the Federal Parliament on Friday. The budget mentions that several laws, rules, procedures, and directives will be formulated, replaced, or amended. It is also mentioned that a bill to amend some Nepal Acts will be presented in the parliament to immediately repeal 15 laws previously announced. According to the new budget, the Companies Act will be amended to clarify issues such as conflict of interest and disclosure of information, and to facilitate the company dissolution process. Agreements for foreign investment protection and double taxation exemption will be made with more countries. The Insolvency Act, 2063 will be amended to address the financial problems of consumers, micro, small, and medium enterprises. To promote investment, a Limited Liability Partnership Act will be drafted, which is expected to encourage angel investment in venture capital and private equity funds. The government has also made arrangements for loan security with 'first loss recovery' to ensure financial access for small and medium enterprises. The budget announces that the provision for Nepali citizens to invest abroad will be made easier. The Industrial Enterprise Act will be amended to require only information to be provided to the Department of Industry regarding capacity enhancement, ownership change, and capital increase of industries. Similarly, the Foreign Investment and Technology Transfer Act will be amended to remove the need for prior approval from Nepal Rastra Bank for investment repatriation, with only information submission required. The scope of foreign investment will include convertible instruments, project-based funding, and other hybrid instruments, and the provision of prior approval in the automated approval process for foreign investment will be removed. The government will simplify the process of sending service fees, royalties, and technology payments abroad. Legal provisions for the recovery of outstanding dues will be made, and a law for the protection of intellectual property will also be enacted soon. Based on the analysis of past overall economic activities, loans will be provided based on the credit rating of individuals and businesses. A separate tribunal will be established for the speedy resolution of commercial disputes, and the Mediation Act will also be improved, as mentioned in the budget. To enable non-resident Nepalis to participate in the secondary market of securities, legal provisions related to foreign investment approval, investment accounting, profit repatriation, and capital gains tax will be amended. Furthermore, the Civil Code, 2074 will be amended to allow foreign investors, international organizations, branches of multinational companies, or individuals investing in Nepal to lease apartments or houses in residential areas or government-designated locations for residential purposes for a long-term lease, not exceeding 25 percent of a total unit, as informed by Finance Minister Wagle.