KATHMANDU, Feb 26: The government registered a bill to amend and integrate foreign investment and technology transfer related act in parliament on Monday, proposing a new provision to open public companies and other companies authorized to issue securities to float their debentures, bonds and other securities in foreign capital market.
The new provision, if endorsed by parliament, will pave the legal way for such companies to tap into the foreign money market and capital market to generate funds in foreign currency.
Earlier, only foreign direct investors were allowed to bring funds in foreign currency, while the Nepal Rastra Bank (NRB) has recently brought a policy for bank and financial institutions (BFIs) to make foreign currency borrowings from foreign institutions.
‘Remittance will be used for capital formation now’
However, the government seemed to be planning to lift restriction set by the same act for Nepali companies to go to foreign market to arrange foreign currency funding.
According to the provision introduced in the bill, any public company or those companies who have got authority to issue securities may get funding or borrow on foreign currency by issuing bonds, debentures and other securities in the capital market of foreign countries after acquiring permit from the NRB and the Securities Board of Nepal (Sebon).
Similarly, any company established in Nepal with foreign investment will also be allowed to issue securities in the domestic market for borrowing purpose. However, the borrowing either in foreign currency or local currency after issuing bonds, debentures or any other type of securities must be invested in Nepal, according to the proposed bill.
The new bill also proposes a new provision to allow any industry in Nepal established with foreign investment to get project loan or project financing from foreign government or banking institution upon the approval of the NRB.
Meanwhile, the new bill has also set a deadline for the authority to approve application of foreign investment. The government agency authorized for approval of foreign direct investment must give its approval to application for foreign direct investment within 15 days if all related documents are submitted with the application. If such application is rejected, the authorized agency must give the decision to applicants along with the basis and reasons of the decision within seven days, according to the proposed provision.
The government’s new proposal comes on the wake of growing complaints from investors that the files related to foreign direct investments get stuck for months. The deadline set in the act will help to curb red tape and delays in the approval of foreign investment proposals, according to experts.
The Department of Industry is the authorized agency for approval of foreign investment worth up to Rs 5 billion, while investment proposal above that will be approved by the Office of the Investment Board of Nepal.
