Beijing, Feb 19: Nepal is offering "preferential" policies to Chinese companies for large-scale investments, Nepalese envoy here has said in the wake of China's strategic push into Nepal through road and rail links.
"Nepal is offering preferential policies to Chinese companies which want to invest in the country, though challenges remain such as limited public land and power supply, slow Internet speed and language barriers," said Leela Mani Paudyal, Nepalese Ambassador to China.
Chinese enterprises are encouraged to cooperate with Nepalese firms to develop products and services, relocate their manufacturing bases to Nepal, Paudyal said at a seminar yesterday here.
The Nepalese government has rolled out different corporate income tax rebates based on the types and locations of industries, Binod Prasad Acharya, Economic Minister at the Nepalese embassy, said at the seminar. "For example, there is a 100 per cent exemption for 10 years and 50 per cent exemption in the following five years in the field of energy, and a 100 per cent exemption for five years in the tourism industry when investing more than 2 billion Nepalese rupees," he said.
In addition, 100 per cent foreign investment is allowed in almost all industries, and technology transfer is possible in all industry sectors, he said.
In terms of investment volume, China became Nepal's second-largest investor in 2016, after India.
China had invested in 1,121 projects by the end of 2016, totalling 3.79 billion yuan (USD 552 million), the daily report said.
China and Nepal signed a landmark transit treaty last year to reduce dependence on India for supplies.
Beijing is pressing ahead with its investment push into Nepal with rail and road connectivity through Tibet despite fall of Oli government which was replaced by Pushpa Kamal Dahal alias Prachanda who observers say is trying to follow a more balanced policy between India and China.
"As most of the country's land is private, you have to negotiate with many people. We suggest Chinese investors establish an industrial zone here, for which we will provide land and other facilities. This will also help other investors," Paudyal said.
In addition, Nepal has an insufficient supply of power, but this is also a potential area for investment by Chinese companies, he said.
Chinese investors may need professional interpreters to overcome language barriers, but the problem may be alleviated in the coming years, as the country has sent many students to China to learn Chinese, including 200 in Beijing, Paudyal
The ambassador also suggested foreign investors find a reliable local business partner in Nepal to help them understand the laws and culture of the country.