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Foreign investments in Nepal's tourism industry up fourfold
Publication Date : 19-08-2013
Foreign direct investment (FDI) in Nepal's tourism industry swelled by more than four times from last year to this year, reflecting rising investor interest in the industry due to higher arrivals following the end of the conflict.
According to the Department of Industry (DoI), investments soared to 3.89 billion Nepali rupees (US$38 million) from 837 million rupees in the previous year. Tourism is the third highest recipient of FDI in the country, after the services and manufacturing industries.
Foreign investments in the tourism industry were spread over 87 sectors. Industry insiders said that opportunities were expanding especially in the hotel and resorts industry, as 100 percent of FDI is allowed in this sector as per the country’s commitment to the World Trade Organisation (WTO).
Travel trade entrepreneur Yogendra Sakya said that the sudden spurt in FDI could also be the result of a proposed five-star hotel project by a non-resident Nepali investor Shesh Ghale. Ghale has announced building a five-star hotel, the Sheraton Kathmandu Hotel.
“Besides, there has been steady growth in Chinese investments in tourism.” Sakya said.
Meanwhile, Purna Chandra Bhattarai, joint secretary at the Industry Division of the Ministry of Culture, Tourism and Civil Aviation said, “The government is taking several steps to attract foreign investment. And among all the sectors, tourism has been drawing the greatest interest among potential foreign investors.”
According to him, the future scenario of Nepal’s tourism is quite encouraging given its competitive nature. “Besides leisure activities, the government has planned to promote business and corporate tourism in Nepal.”
Business tourism is the provision of facilities and services to visitors who annually attend meetings, congresses, exhibitions, business events, incentive travel and corporate hospitality.
Although investors are still concerned about Nepal’s political climate at present, Bhattarai said that if the country's politics were stable and there were a secure business climate, Nepal had huge tourism potential.
According to the Nepal Travel and Tourism Economic Impact 2012 published by the World Travel and Tourism Council (WTTC), investments in the travel and tourism sector in 2012 amounted to 12.5 billion rupees, or 4.1 per cent of the total investment.
The report said that investments would rise by 8.2 per cent in 2013. In 2011, the tourism industry attracted capital investments of 12 billion rupees.
Although the Kathmandu valley has not witnessed a significant rise in investments, tourism entrepreneurs said that massive amounts of money had been poured into infrastructure like hotels and restaurants elsewhere in the country.
The report shows that in 2012, Nepal earned 36.6 billion rupees from tourism, equivalent to 24 per cent of the value of the country’s total exports. The income is forecast to grow 2.1 per cent in 2013 and 4.1 per cent per annum from 2013 to 55.6 billion rupees in 2023.
The WTTC report shows that Nepal is a popular destination for leisure activities. In 2012, foreign and domestic tourists spent 84.8 billion rupees, amounting to 79.6 per cent of the direct travel and tourism gross domestic product. Business travel spending amounted to 21.7 billion rupees.
The report showed that the travel trade provided 553,500 jobs opportunities in 2012. In 2011, it opened up 412,500 jobs.
*US$1 = 99.93 Nepali rupees