The FDI Illusion: Why Nepal’s Rising Approvals Hide a Falling Investment Story
Summary
Nepal’s latest foreign investment survey shows approvals rising on paper while actual inflows, stock growth in real terms, and project realization all remain weak. The country is also sending out more money through dividends and debt than it is receiving in new foreign capital.
Key Points
- FDI stock crossed Rs. 340 billion, but Nepal’s foreign investment performance weakened in real terms and lagged behind South Asia’s strong inflow growth.
- Realized inflow was only 11.25 percent of approved FDI in 2024/25, while dividend repatriation reached Rs. 33.9 billion and exceeded gross inflows.
- Hydropower and manufacturing, the two largest FDI sectors, both declined, while Chinese investment showed accumulated losses and transport and storage recorded a negative stock.
- The article also criticizes inconsistencies and sampling limits in the NRB FDI Survey, arguing that approvals are being celebrated more than actual capital arrival.
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