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NEPAL
Nepal’s sticky bureaucracy hinders investment growth
Nepal is facing another overhaul of its casino legislation, just five years after new rules were put into place, though some consultants say if the country really wants to attract more foreign investment it needs to cut regulatory red tape.
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In June, the Ministry of Tourism requested approval from the Council of Ministers for a new casino act which was said to finally put in place measures to properly regulate Nepal’s casino industry.
However, the idea was dropped in July to the dismay of many, with the ministry deciding to instead attach casino-related laws in its Tourism Act.
“We will bring the Casino Act, but not separately,” said Tourism Secretary Krishna Prasad Devkota. “We are currently discussing the issue. As per the plan, the casino law will come out as an annex to the Tourism Act that the government is currently drafting.”
Ministry officials said they were clueless about the cancellation of the plan.
“As the ministry wants to integrate the casino law into the new Tourism Act, the plan to enact a separate piece of legislation may have been cancelled,” they said.
The new communist government, formed in February after winning elections, is expected to deliver on its electoral promise to seek economic growth and prosperity in the economically struggling country. But raising funds for big-ticket infrastructure projects and attracting foreign investment mean the government will need to also follow through on pledges for greater efficiency.
Unveiling a $12.18 billion annual budget on May 29, the country’s Finance Minister, Yubaraj Khatiwada, promised to ease registration and other processes for foreign investors in Nepal.
“All procedures from business registration to repeal will be made predictable, simple and transparent. It will be based on information technology,” he told the parliament. “Nepal will be developed as an international investment destination. We will encourage foreign investment in Nepal so that it complements our national capital formation.”
He said the government will facilitate procedures to register companies by setting up “one-stop services with specific timelines.”
Experience to date for foreign investors entering the casino sector has shown the path is far from smooth. One issue in particular has been the problem of visas for skilled employees, with the government keen to ensure employment opportunities for locals.
Australia-listed Silver Heritage Group, which opened its Tiger Palace Resort in Bhairahawa earlier this year, faced problems soon after its launch. The company terminated its local partner Rajendra Bajgain after he accused it of illegally hiring foreign workers. A few days later, officials from the Inland Revenue Department visited the resort on reports it was selling alcohol without a license.
Mike Bolsover, CEO of Silver Heritage Group, was unperturbed by the incidents. He told AGB that they had already acquired one excise license to sell alcohol, but secured another after the officials’ insistence.
“The new government under Mr. K.P. Sharma Oli has pledged to improve and we are a great catalyst for FDI and Nepal’s tourism sector,” said Bolsover whose company plans to open a second integrated resort in southeast Nepal town of Dhulabari to target customers across the border in Indian state of West Bengal.
“Developing and frontier markets have many similar challenges. There’s always a need for specialized labor, mostly from overseas. There’s always a plan to transfer skills to the host country,” Bolsover said, explaining that Nepal wasn’t alone in presenting bureaucratic hurdles.
Silver Heritage Group is not the only foreign company stymied by Nepal’s obdurate bureaucracy.
In January, Dangote Cement, a Nigeriaheadquartered cement manufacturer, was denied a license to operate in Nepal, despite another government agency, the Investment Board Nepal’s approval.
Officials of Nepal’s Department of Mining and Geology said Dangote was disqualified due to a lack of skilled workers, but industry insiders said local manufacturers feared that they will lose their monopoly over the sector after the African behemoth’s entry.
Other multinational companies such as J Walter Thompson, an advertising company, and DHL, a courier service, have also faced problems.
Silver Heritage settles dispute with Nepali partner
Silver Heritage has reached a settlement with its Nepali partner, who has sold his stake in a unit of the company to a new investor.
The company and businessman Rajendra Bajgain have agreed that their vision and objective in developing Nepal’s first IR has now been met and the partnership between the two has reached its natural conclusion.
Bajgain and his brother, Nabaraj Bajgain, have sold their stake in the unit that runs Silver Heritage’s Nepal operations to Tiger Kathmandu Investment, a hotel and general construction company.
Tiger now holds 10 percent of SHL Management Services and Silver Heritage the remaining 90 percent.
India and Nepal to push tourism ties
India and Nepal held the second meeting of a joint working group on tourism cooperation in July, agreeing to promote Buddhist and Ramayana circuits and adventure tourism.
The meeting also decided to set up an industry-led India Nepal Tourism Forum. Most of Nepal’s casinos are eyeing the potential of tapping the Indian market.
