Koshi Province Investment Summit Fails to Attract Promised Foreign Investment

Biratnagar. The Koshi Province government organized the 'Koshi Province Investment Summit' with fanfare on April 18 and 19, 2082, in Biratnagar. The provincial government signed agreements to attract foreign and private investment worth NPR 157 billion for 51 projects from the summit. The government spent NPR 21.719 million solely on the promotion and management of the summit, but 16 months after the summit concluded, the agreements to attract investment remain confined to paper. The enthusiasm seen during the investment summit is now turning into disappointment. So much so that the province government's Investment Authority is now seeking investors for agreements by issuing public notices. Out of the 71 projects presented at the investment summit, investors expressed interest in investing in 51 projects. Accordingly, Memoranda of Understanding (MoUs) were signed, but so far, investment has only come in for four projects. The authority stated that the investment for these projects has reached the approval stage. According to the Chief Executive Officer of the Provincial Investment Authority, Dr. Saroj Koirala, the authority's 33rd meeting approved four projects worth NPR 2.0853 billion. "We have moved forward with four projects under public-private partnership (PPP) among those agreed upon in the investment summit, which include waste management and cold storage in Duhabi, Sunsari, a fertilizer factory in Belka, and the Rashtal project in Ramdhuni," he said. The authority's Executive Director, Dr. Saroj Koirala, stated that PDAs for 10 more projects will be completed within six months. After the investment summit, agreements were also signed for 3 more projects, bringing the total number of projects to 54. The authority claims that PDAs have been completed for 4 out of 54, and will be completed for 10 within six months. However, there has been no significant progress in the status of the remaining projects. Some investors have withdrawn, stating they will not proceed with the projects. For example, after the proponent of the 'Baruwa Business Complex & Buspark' project in Udayapur, Kamal Bahadur Karki, submitted a request to cancel the agreement citing personal reasons, the authority canceled the project and called for new proposals. Many investors who were eager to take photos and sign agreements at the investment summit are now out of contact. The authority issued a public notice on August 8, 2083, urging investors to come into contact and submit feasibility study proposals by the end of Mangsir as a final request. According to the notice, if investors do not come within the stipulated time, their agreements will be automatically canceled, and the way will be opened for new proponents. Dr. Mohan Subedi, Economic Advisor to the Koshi Province Government, argues that the lack of investors is due to a gap in understanding between the government and investors. He said, "The private sector comes saying they will take risks and mobilize investment. They only ask for policies, regulations, and land facilitation, but from the government's perspective, we become too conservative and start issuing warnings, which delays the projects." According to Dr. Subedi, the government machinery has not yet become private sector-friendly. "In these two and a half years, I have learned one thing – we must move towards private sector-friendly policies. The more convenient it becomes, the higher the implementation rate of agreed-upon projects will be," he said. CEO Dr. Koirala of the authority, however, blames political instability as the main culprit. He said, "Since we started working, 8-9 governments have changed. The Chief Minister is the chairman of the authority. As soon as the government changes, the board also changes, and the entire process gets disturbed. This has created confusion among investors." According to Dr. Koirala, the lack of human resources is another major challenge. He said, "It takes us at least three months to evaluate one project. We lack technical and legal manpower, and we have to seek representatives from various ministries; work gets delayed while coordinating their schedules." A famous project from the investment summit was the 6-kilometer 'Pod-Way' from Rani to Biratnagar Buspark. Permission has been granted to Kathmandu Podway Company for the detailed feasibility study of this project, estimated at approximately NPR 6.18 billion. Dr. Koirala said, "There might be a problem because it falls over a temple in Kathmandu, but it can be built on the road divider in Biratnagar. This will add a new dimension to tourism attraction and transportation." The authority states that the Department of Roads has already granted permission for the construction of this podway, but the investors have changed twice. The authority presents the 'Sky-Walk' in Bhedetar as its success. Dr. Koirala claims, "The Bhedetar Sky-Walk, operated under a public-private-cooperative concept under the leadership of the authority, is the first successful project in Koshi Province, from which the government has also started receiving revenue." According to a study by the Nepal Rastra Bank, only 31% of committed foreign investment in Nepal actually materializes. The results of the three investment summits held by the federal government have also not been very encouraging. In such a situation, Koshi Province setting a target of NPR 157 billion was ambitious in itself. Economist Dr. Pramod Kumar Jha said, "It is good to talk about investment during an economic recession, but achieving a target of NPR 100 billion would be a miracle. Even if only 10-20% of the desired investment comes, it would be a great achievement for the province." The main problem now is the tendency to sign MOUs but not work. According to Dr. Saroj Koirala, many investors complain about "carrying DPRs in their bags." He said, "We have set strict conditions this time. Our goal is to take at least 50% of the projects to PDA agreements within the next fiscal year 2083/084." The government has already directed the authority to prepare a draft of the necessary regulations to attract investment in the energy sector. Dr. Subedi said, "We are opening the way for the private sector by bringing in the Energy Act and regulations. We hope to see results in about a year and a half." The fact that an investment of around NPR 2 billion has been realized from a commitment of NPR 157 billion, with government expenditure exceeding NPR 20 million, clearly indicates the mistrust between the government machinery and investors. Investors say that if the government truly wants to attract investment, it needs to go beyond mere fanfare and photo sessions, and focus on resolving legal complexities, reducing political interference, and making the bureaucracy private sector-friendly. "Koshi Province is a place with a lot of potential. There is immense potential in tourism, agriculture, and hydropower," said Rakesh Surana, Chairman of the Morang Industrial Organization. "The government must be able to offer reasons why investors should invest in Koshi. They should be able to make attractive offers not only to Nepali investors but also to those who have invested elsewhere after leaving Biratnagar, and to foreigners." He added that the private sector is also ready to collaborate with external investors for investment. "Organizing an investment summit is not success in itself; being able to bring investment is success," said Surana. What sectors had investment commitments? The investment summit had agreements for 51 projects covering 8 main sectors. According to the authority's data, the largest investment was seen in the industrial production and infrastructure sectors. In the industrial production sector, there was a commitment of NPR 66.78 billion for 11 projects. This includes large projects like the Udayapur Clinker Industry (NPR 32 billion) and Green Hydrogen & Chemical Fertilizer (NPR 26 billion). Similarly, there were 9 projects in infrastructure and urban development. Agreements worth NPR 61.5 billion were made for these projects, with the Mountain Podway (Ilam-Sandakpur) worth NPR 2.5 billion and the Barahachhetra-Chatara cable car worth NPR 16 billion being the main ones. In the tourism sector, there was a commitment of NPR 12.37 billion for 12 projects. These included five-star hotels in Biratnagar and Bhedetar, Barju Lake, and various eco-tourism projects. There were 4 projects in green energy. Agreements worth NPR 9.42 billion were made, with the Agrovoltaic Solar worth NPR 5.6 billion and the Pachkhapan Hydropower Project worth NPR 1.42 billion being prominent. In the agriculture sector, there was a commitment of NPR 3.56 billion for 10 projects. This includes the establishment of industries for processing cardamom, turmeric, chhurpi, tea, and coffee. In health, education, and information technology, there were projects like R.R. International Hospital (NPR 2.48 billion) and data centers in information technology.