Watch it on the NIICE Nepal YouTube channel

EVENT REPORT

The Nepal Institute for International Cooperation and Engagement (NIICE) hosted an online conference titled “Enhancing Nepal-China Relations: Prospects of Investment in Nepal.”, in collaboration with the Embassy of Nepal in Beijing, China. In the backdrop of China’s ambitious Belt and Road Initiative (BRI), an infrastructure development strategy consisting of railways, roadways, pipelines, optic fibre lines, etc, spanning across Asia and Africa, Nepal signed an MoU on BRI with China in 2017, intending to attract massive investment from China on mega projects.

The first in the line of speakers was Mr Vishnu Prakash, the Nepalese ambassador to the Republic of China, who expressed his aim to disseminate information about investment opportunities in Nepal, particularly in the agriculture, tourism and education sectors from abroad. Nepal is a virgin land for investment, but it aims to graduate from an under-developed country by 2026 and become a middle-income by 2030. The trade deficit in China can be balanced by exports of Nepalese products, generating investment for the Nepal Ministry of Agriculture and Livestock. As the birthplace of Buddha and ripe in natural resources, biodiversity, and cultural heritage, Nepal promises to be a tourist hotspot. Nepal also seeks to strengthen its academic relations with China with the high levels of Nepali students transferring to China for technological, medical, and agricultural education with scholarships via CSC programmes. The BRI has paved the way for the Nepal-China Cross Border train and an agreement on a trans-Himalayan Multi-Dimensional Connectivity Network in 2018.

Shabnam Shivakoti, the joint secretary of the Ministry of Agriculture and Livestock, took over the stage to further promote the Nepal agricultural sector's potential to Chinese investors. She began her presentation with factual data relating to the industry, including its share in GDP and population involved in farming and livestock, the population dependent on the agrarian sector for livelihood and the growth rate of various departments under the agricultural sector. China is Nepal’s second-largest trading partner, but it still has a substantial trade deficit with China, and there is a growing need to increase the stagnant bilateral trade. The low labour wages, regional and bilateral agreements, logistic facilities, ICDs/ICPs, customs and freight forwarder services make Nepal an attractive and convenient hub of economic relations. She also glossed over the the key agricultural policies in Nepal, such as the fertilizer policy and the national safety policy as well as policies for the promotion of various agricultural products such as tea, coffee etc.

Shivakoti’s presentation also drew attention to potential investment sectors, such as emerging export crops, increasing import trends, and laboratory services, along with a government-backed priority commodity proposed for Hand in Hand investment due to their scope for branding, market diversification, high rates of return and enhanced employment in rural areas. She also talked about the challenges involved in the agriculture sector, especially due to it being an informal sector with scattered production that occasionally compromises the quality of goods. At the end of the presentation, she offered some opportunities for technical support from the government of China for trade facilitation, such as technical assistance in the certification of goods, disease surveillance and quarantine labs.

The third speaker was Mr Dhananjay Regmi, the CEO of Nepal Tourism Board, who began his colourful presentation on the scenic beauty of Nepal to attract more tourists from China, highlighting areas such as Rani Mahal and Khaptad, followed by provisions for a comfortable stay of tourists such as local homestays based on Nepal-China cultural exchange. Other attractions include clubs and casinos. There was a division of priority areas to be promoted to tourists from other countries, such as religious tourism for tourists from India, trekking for Europeans and cultural tours for Chinese visitors. There was a plan to develop a tourist market to showcase the Buddhist history of Nepal, focusing on essential sites like Lumbini. These initiatives require both government support and private-sector investment. The latter would benefit the construction of theme parks, cable cars, international convention halls, airlines, heritage hotels, film cities etc.

In 2019, Xi Jinping was recorded saying that Nepal is the favourite destination of Chinese people, and the country enjoyed high favourability with the Chinese general public so Chinese investment in Nepal would draw even more Chinese tourists. He wrapped up his talk with a slogan to promote tourism, “Nepal is for everyone, every age and for all seasons.”

Next, Dr. Long Xingchun, Professor of International Relations at Sichuan International Studies Institution started his presentation on education cooperation with Nepal, asserting that for a successful China-Nepal cooperation, there needs to be human talent needs to participate in the collaboration process. Whether elementary or higher, education is highly prioritized in China to train future doctors and engineers. It seeks to establish the same standards in Nepal through the induction of Nepalese students in China and the setting up of Confucian schools in Nepal. This includes undergraduate degrees and technical and vocational training for economic and social development. He also calls for inter-university cooperation between Chinese and Nepalese institutes so students can get diplomas from both countries. This also includes faculty exchanges and scientific research cooperation. Another initiative would be supporting Chinese institutes in running cross-border schools in Nepal, for example, a possible branch of Sichuan University in Nepal. This would function as a promotion of both education and tourism in Nepal. The two governments can also set up a ‘trainee system’ and a ‘work-study’ system to financially support students who might be unable to secure a scholarship. This would also curb the labour shortage problem in China.

Dr Huang Zhendou, the Director of the Nepal Centre of Sichuan University, spoke as the second representative of the Chinese state at the webinar, who spoke on the China-Nepal Economic Corridor under the BRI initiative. His presentation included numerical data to locate the status of the China-Nepal Economic Corridor, starting from 2003, and the conclusion was that while the scale of trade was small, unlike other South Asian countries such as India and Pakistan, there was still great potential that could push for deepening economic relations due to the complementary nature of China’s value-added exports to Nepal, and Nepal’s raw material export to China.

Nepal and China share a long civilisational history, spanning over 1600 years, and have maintained good diplomatic relations through many presidential visits between the countries. In light of a stabilizing political order and Nepal’s need for economic investment, it will significantly benefit from the connectivity opportunities that will come from the BRI. It has led to trade cooperation, such as hydroelectric projects to offer relief to electricity shortages in Nepal, roadway projects as well as the Himalayan Airlines which is Nepal’s largest overseas direct investment project in the field of civil aviation. Tourism is also a significant collaborative effort, such as Nepal’s ‘China Festival’ – a cultural brand that is jointly organised by the Nepalese government and the Chinese embassy in Nepal. COVID-19 also proved of a time of mutual help and assurance for the Chinese and Nepalese alike.

The goal is to make the most of Nepal’s geographic position and treat it as a strategic resource to enhance its role as a transit economy, strengthen its hydropower cooperation by maximum yet sustainable utilisation of its natural resources, and develop a Sino-Nepal tour corridor. It is also important to allow non-governmental organisations such as the China-Nepal Investment and Economic Trade Forum to play their role in Sino-Nepal trade cooperation. All these initiatives are an attempt to dismiss concerns of a debt trap and instead BRI as a development opportunity as the loans provided to Nepal will be mainly long-term, with low interests or even interest-free, as it is motivated by economic development in Nepal first and foremost.

The final speaker at the event was Ms Sabita Nakarmi, the counsellor at the Nepal Embassy in Beijing, who spoke on the investment opportunities in Nepal. She started with a brief outline of Nepal’s geographic location, population and constitutional machinery. She highlighted the government’s National Pride Projects, New Transformative projects and High Priority projects along with poverty alleviation, increased per capita income and literacy rate. Targets have been set for the next 10 years, including 5 international airports, railways covering 2000 km and footfall of 5 million tourists. Her graphs also showcased the industry-wise approved FDI as well as the country-wise approved FDI, and the conductive environment in Nepal such as ease of visas and market access that would be suitable for greater distribution of foreign investment in its domestic sectors. Moreover, Nepal is ranked 94th in the list of ‘ease of doing business’ as ranked by the World Bank and has started One Stop Service Centers to streamline the experience of foreign investors in Nepal. She also glosses over Nepal's policy and legal framework to enable and attract foreign investment. This also included initiatives to improve the investment climate; separated according to sectors, investors, risk mitigation and industrial infrastructure. Her presentation also included mods and methods of investment in Nepal, tax provisions, and simplification of the application process.

The event ended with a vote of thanks from His Excellency Vishnu Prakash, who expressed gratitude to all the presenters for their insightful and informative presentations.

Prepared by Shreya Das, NIICE Intern