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6 industry sector_ms yam kumari khatiwada

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Presentation by Ms. Yam Kumari Khatiwada, Secretary, Ministry of Industry, Commerce and Supplies

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6 industry sector_ms yam kumari khatiwada

  1. 1. BUILDING INDUSTRIAL BASE AND CREATING JOBS An overview of Industrial Sectors in Nepal with Policies and Opportunities Yam Kumari Khatiwada Secretary, Government of Nepal
  2. 2. PRESENTATION OUTLINE 1 1. NEPAL: FACTS AND FIGURES 2. SECTORAL STATUS 3. INVESTMENT POTENTIAL IN NEPAL 4. POLICIES AND INCENTIVES 5. ONE STOP SERVICE CENTER 6. OPPORTUNITIES
  3. 3. 27.10 13.26 11.37 7.97 7.60 5.39 2.05 1.19 0.62 Agriculture and forestry (27.10%) Wholesale and retail trade (13.26%) Real estate, renting and business activities (11.37%) Transport, storage and communications (7.97%) Construction (7.60%) Manufacturing (5.39%) Hotels and restaurants (2.05%) Electricty gas and water (1.19%) Mining and quarrying (0.62%) NEPAL: FACTS AND FIGURES Source: Economic Survey, 2017/018/ CBS, Nepal INDIA CHINAArea : 147,187 sq. km Population : 29.3 Million (2017) GDP : USD 30 Billion (2018 -2019) Economic Growth Rate 6.7 % (First quarter) Geographic Location Land-Linked Country; linking India and China Sectoral contribution to GDP (2017 – 2018) Agriculture : 27.10 % Industry : 14.2 % Service : 57.6 % Composition of Gross Domestic Product (2017/18) Enhance production, productivity and quality Import substitution and export Employment generation/job creation Goals
  4. 4. INDUSTRIAL STATISTICS: Percentage of Registered Industries in various sectors up to 2018/19 Total Registered Industries and Employment up to 2018/19 38% 28% 21% 6% 4% 1%1%1% MANUFACTURING (38.48%) SERVICE (27.69%) TOURISM (21.45%) AGRO AND FORESTRY BASED (5.87%) ENERGY BASED (4.37%) 1030 1640 42002 44672 149263 152504 412803 714570 0 100000 200000 300000 400000 500000 600000 700000 800000 Large Medium Small Total NumberofregisteredIndustries Industry Category Number of Registered Industries up to 2018/19 Total number of Employment up to 2018/19 Total : 44672 Source: Department of Industry, GoN
  5. 5. INVESTMENT POTENTIAL IN NEPAL OVERVIEW OF CURRENT FDI Total amount of Foreign Investment (USD in million) 0 100 200 300 400 500 600 700 2013/14 2014/15 2015/16 2016/17 2017/18 USD,AmountinMillion Years No. of Employment from Foreign Investment (1989/90 to February 2019) 40% 26% 20% 5% 4% 3% 1% 1% MANUFACTURING (40%) SERVICE (26%) TOURISM (20%) ENERGY BASED (5%) AGRO AND Forestry BASED (4%) MINERAL (3%) CONSTRUCTION (1%) INFORMATION TECHNOLOGY (1%) Total: 2,718.36 Million USD Source: Department of Industry, GoN
  6. 6. INVESTMENT POTENTIAL IN NEPAL Country wise total Investment from the 1983/84 to February 2019 (USD. in million) INDIA CHINA (MAINLAND) CHINA (HONG KONG) SOUTH KOREA USA BRITISH VIRGIN ISLAND UK SINGAPORE MAURITIUS JAPAN UNITED ARAB EMIRATES Series2 907.74 812.22 270.17 118.99 87.78 78.32 52.87 43.78 33.36 29.55 28.99 907.74 812.22 28.99 0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 900.00 1,000.00 USDamountinmillion Countries Source: Department of Industry, GoN
  7. 7. INVESTMENT POTENTIAL IN NEPAL NEPAL AS INVESTMENT DESTINATION POLICY/INSTITUTION PROCEDURE REFORMS  Introduction of over 3 dozens of legal reform  Provision of one Stop Service Center  Introduction of online/automation in registration and payment FEW COMPETITORS AND VIBRANT MARKET  Limited competition due to few prominent foreign players  Rapidly growing consumer base YOUNG AND ENERGETIC, HUMAN RESOURCES  Young, energetic, educated & trained work force  61% between ages 15 and 65 ACCESS TO MARKETS  Market access to India and China.  Duty-free access to India  Duty-free access to China for over 7,787 products  Everything but Arms (EBA) Arrangement for market access to EU  Duty & quota-free market access on textile items to US through TIFA  Member of WTO, SAARC, BIMSTEC  Power Sufficiency, New Power Projects under progress  Special Economic Zones  Cross Border Economic Zones  Industrial Districts  Industrial Village  Industrial Corridors  Product Specific Industrial Area INFRASTRUCTURE DEVELOPMENT
  8. 8. INVESTMENT POTENTIAL IN NEPAL NEPAL AS INVESTMENT DESTINATION DTAA AND BIPPA  DTAAs with 11 Countries  BIPPAs with 6 Countries.  Additional Agreement with Potential Countries in Pipeline. FDI TRADE CONNECTIVITY  Up to 100% foreign ownership in almost all sectors.  Easy Entry, Operation, Repatriation and Exit of Investment  National Treatment, Provision of No Nationalization and due process for expropriation  Existing Port Facility with India and China.  Exploring Additional Connectivity and Port Facility  Railways and Water ways Mode of Transportation under Progress  Transport transit agreement with China  MOU on BIMSTEC grid interconnection  MOU on power trade with Bangladesh  Transshipment procedural using electronic cargo tracking system on third country consignment via India  Non-tourist visa of 6 months for study, research & survey for potential foreign investors  Business visa to foreign investors, representatives and their family members during investment period. VISA
  9. 9. INVESTMENT POTENTIAL DOMESTIC ENVIRONMENT 24.1% of total industrial investment has been made in the manufacturing based industries in the first eight months of FY 2017/18. Regular power supply and creation of favorable industrial environment is supporting the sector’s expansion The production of manufacturing sector was estimated to grow by 8.0 percent in the FY 2017/18 Private sector’s Associations like FNCCI, CNI, NCC are actively involved on policy advocacy Competitive provincial government providing incentives to attract FDI Source: Economic Survey 2017/18, GoN
  10. 10. • Intellectual Property Right Act • Company Act and Insolvency Act • Partnership Act • Industrial Enterprise Act • Foreign Currency Exchange Act • Land Act • Custom Act • Foreign Investment & Technology Transfer Act • Special Economic Zone Act • Public Private Partnership (PPP) and Investment Act • Labour Act and Labour Rule • Hedge Fund Regulation • Industrial Enterprise Regulations • Land Use Act POLICIES REFORMS / INCENTIVES Act, RECENT MAJOR REFORMS IN INVESTMENT RELATED INSTRUMENTS Rules and Regulations Act in Progress
  11. 11. NEPAL’S TAX SYSTEM (INCENTIVES) • 100% (first 10 Years) 50% (next 5 Years) for Energy Based Industries • 100% (first 7 Years) 50% (next 3 Years) for Mining Based Industries • 100% (first 10 Years) 50% (afterwards) for Industries Inside SEZ (Mountain or Stipulated hilly areas ) • 100% (first 5 Years) 50% (afterwards) for Industries Inside SEZ (Others) • 100% (first 5 years) 50% (next 3 years) for Dividend tax in SEZ • 100% (first 5 Years) 50% (next 3 Years) for Tourism and Aviation industries having the international flight with the capital of Rs. Two billion. • 50% for Technology Based Industries • 25 % on Production Based Industry (Except Liquor and Tobacco) • 100% (first 5 Years) 50% (next 3 Years) for Industries with Capital One Billion and Employment 500 person • 40% on Construction and Management Industry (Road, bridges, Airports, Tunnel road or operation of Tram and Trolley Buses) CORPORATE TAX REBATE • 100% for Importation or purchase of machinery equipment and their parts (hydro or renewable energy) • 100% for Raw materials sold for industries inside SEZ and finished products produced inside SEZ INCOME TAX REBATE VAT REFUND Source: Tax Act, 2001
  12. 12. OTHER INCENTIVES  The dividend tax will be exempted for those special or tourism related industries which will use its whole profit for the expansion of their production capacity.  Only 4% customs duty will be applicable for the importation of machinery equipment which will be used in production process.  Blended facilities will be granted for export oriented industries.  Land ceiling is not applicable if the size of the land has already been included in DPR of the project.  Concession and facilities for industries to reduce pollution and minimize adverse environment effect  Government will develop Industrial Infrastructure such as approach road to mines and electricity grid connectivity to large industries like Cement.  Concessional rates on importing Chinese goods from Tibet through Letter of Credits  Rebate of 3–5% on the existing customs rate for goods of Indian origin imported from India PREFERENTIAL DUTY  Generally no duty on the export of products from Nepal, except for agro products, industrial raw materials and mineral  Five percent cash incentives for export in third country and India as well through LC  Duty Drawback  Bonded Warehouse EXPORT INCENTIVES Source: Excise Act, 2002; Custom Act, 2007: VAT Act, 1995, GoN Source: www.ird.gov.np
  13. 13. ONE STOP SERVICE CENTER
  14. 14. OPPORTUNITIES SHOWCASED PROJECT 1. Bhairahawa (Completed) 2. Simara (Under Construction) 3. Simara GPZ (Under Construction) 4. Panchkhal (Under Construction) SPECIAL ECONOMIC ZONE 1. Gorkha 2. Jumla 3. Dhangadi 4. Jhapa 5. Siraha 6. Rautahat 7. Dhanusha 8. Nuwakot 9. Kapilvastu 10. Nepalgunj 11. Kailali SEZ IN PIPELINE SIMARA SEZ District Simara, Bara Site Area(Total) 568.9 Ha Showcased Area (Block B and C) 121 Ha (Approx.) Total Cost Rs 15 Billion (Approx.) Employment 40,000 nos. (Approx.)
  15. 15. OPPORTUNITIES SHOWCASED PROJECTINDUSTRIAL DISTRICTS Industrial Estates In Operation (10 IDs) Balaju, Patan, Bhaktapur, Rajbiraj, Hetauda, Pokhara, Butwal, Nepalgunj, Dharan and Surkhet Industrial District (ID) under construction(6 IDs) Damak, Naubasta, Motipur, Mayurdhap, Shaktikhor, Daiji Proposed Industrial District (7 IDs) Sagarnath, Lamki, Gorkha, Tanahu, Surkhet, Dang, Kavre, Dailekh NAUBASTA ID District Banke Site Area 265.29 Ha Total Cost Rs 7.9 Billion (Approx.) Employment 18,000 nos. (Approx.) MOTIPUR ID District Rupandehi Site Area 550.49 Ha Total Cost Rs 9.07 Billion (Approx.) Employment 40,000 Nos. (Approx.)
  16. 16. POTENTIAL SECTOR FOR INVESTMENT Manufacturing Industry Mines and Minerals Based Industry Including Oil and Gas Industry Pharmaceutical Industry Energy Based Industry Hotel and Tourism Based Industry Industrial Districts and Special Economic Zone Infrastructure Development IT Based Industry Service oriented Industry
  17. 17. OPPORTUNITIES POTENTIAL INDUSTRY PROJECT THAT NEPAL IS OFFERING FOR THE INVESTMENT SUMMIT 2019 PROJECT NAME PROVINCE LOCATION PROJECT MODALITY Integrated Solid Waste management Project (ISWMP) 2, 3 & 5 Project 1: Butwal, Tilottama, Devdaha, Sainamaina, Siddharthanagar; Project 2: Janakpur, Chhireshwarnath, Mithilla, Bardibas, Dhanushadham; Project 3: Jeetpur-Simara, Kalaiya, Mahagadhimai, Nijgadh, Kolhabi; Project 4: Ratnanagar, Kalika, Rapti, Khairahani; Project 5: Dhulikhel, Banepa, Panauti, Namobuddha, Panchkhal PPP Special Economic Zone (Block B & C) 2 Simara (Bara) PPP Industrial Park 5 Motipur (Rupandehi) & Naubasta (Banke) PPP Chemical Fertilizer Plant 2 Dhalkebar, Dhanusa District PPP
  18. 18. SOME IMPORTANT CONTACTS INVESTMENT BOARD OF NEPAL http://www.ibn.gov.np/ DEPARTMENT OF INDUSTRY https://www.doind.gov.np/ INDUSTRIAL DISTRICT MANAGEMENT http://www.idm.org.np/ DEPARTMENT OF MINES AND GEOLOGY https://www.dmgnepal.gov.np/ MINISTRY OF INDUSTRY,COMMERCE AND SUPPLIES https://www.moics.gov.np/ SPECIAL ECONOMIC ZONE https://www.seznepal.gov.np/ OFFICE OF THE COMPANY REGISTRAR http://www.ocr.gov.np/index.php/en/ MINISTRY OF FINANCE https://mof.gov.np/en/
  19. 19. THANK YOU

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