Review of Foreign Investment and Technology Trasnfer Act, 2075 (2019)

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A Brief Overview of the Foreign Investment and Technology Transfer Act, 2075 (2019) The prime minister of Nepal, K.P. Sharma Oli while addressing in the inaugural session of Nepal Investment Summit-2019 called Nepal almost a virgin land for investment. However, Nepal so far has not been able to create a conducive environment for foreign investors in comparison to other Asian countries such as Bangladesh, Myanmar, Sri Lanka, etc. Lack of investment friendly laws, cumbersome approval process and tedious bureaucratic hassles are considered the primary reasons for Nepal’s failure to lure foreign investors. The government of Nepal introduced three new laws; (i) Foreign Investment and Technology Transfer Act “(FITTA”), 2075 (2019), (ii) Public Private Partnership and Investment Act, 2075 (2019), and (iii) Special Economic Zone Act (First Amendment), 2075 (2019) just in time for Nepal Investment Summit to reiterate its commitment towards improving legal framework governing foreign investment in Nepal. FITTA, 2075 (“Act”) exemplifies the proverb haste makes waste as the bill was hastily prepared on the backdrop of the Nepal Investment Summit 2019 and was accorded the assent by the President in 2075/12/13 (2019/03/27), two days before the Nepal Investment Summit-2019. As a result, we now have a law that had so much potential but is merely a reflection of what was already in practice with few ambitious changes and some regressive steps. MAJOR FEATURES of FITTA 2075 1. Definition of Foreign Investment The Act defines “Foreign Investment” as the investment made by foreign investor in industry or company as follows; • Share investment in foreign currency, • Reinvestment of dividend amount obtained from foreign currency or share in industry, • Lease investment/ Lease finance, • Investment made in the venture capital fund, • Investment made in the listed securities via secondary market, • Investment made by buying share or assets of a company incorporated in Nepal, • Investment received from banking channels for the securities issued by Industry or Company incorporated in Nepal in the foreign capital market, • Investment made through technology transfer • Investment made from establishment and expansion of industry in Nepal


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