# ![](media/image1.jpeg){width="0.89375in" height="0.94375in"}   Doing Business in (Nepal): 2008 Country Commercial Guide for U.S. Companies

# INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2008. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

-   [Chapter 1: Doing Business In Nepal](#ch1)

-   [Chapter 2: Political and Economic Environment](#ch2)

-   [Chapter 3: Selling U.S. Products and Services](#ch3)

-   [Chapter 4: Leading Sectors for U.S. Export and Investment](#ch4)

-   [Chapter 5: Trade Regulations and Standards](#ch5)

-   [Chapter 6: Investment Climate](#ch6)

-   [Chapter 7: Trade and Project Financing](#ch7)

-   [Chapter 8: Business Travel](#ch8)

-   [Chapter 9: Contacts, Market Research and Trade
    Events](#chapter-9-contacts-market-research-and-trade-events)

-   [Chapter 10: Guide to Our Services](#ch10)

[[]{#ch1 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 1: Doing Business In (Nepal)

-   [Market Overview](#market-overview-return-to-top)

-   [Market Challenges](#market-challenges-return-to-top)

-   [Market Opportunities](#market-opportunities-return-to-top)

-   [Market Entry Strategy](#market-entry-strategy-return-to-top)

## Market Overview [**Return to top**](#ch1)

-   With a per capita income (Gross National Product) of only \$383,
    Nepal is one of the world\'s poorest countries.

-   Limited natural resources, a landlocked location, difficult
    topography, poor infrastructure, a weak human capital base and a
    long history of public intervention in the economy are some of the
    impediments to economic growth.

-   Agriculture accounts for approximately 32.6 percent of gross
    domestic product (GDP) and 71 percent of employment.

-   In the last five years real GDP growth averaged less than four
    percent per annum.

-   The GDP growth rate for FY 2006/07 was 2.5 percent.

-   Nepal traditionally runs large trade and current account deficits,
    which are offset by equally large service, transfer and capital
    account surpluses.

-   Based on the balance of payments statistics for Nepal\'s FY 2006/07
    from mid-July to mid-July), Nepal\'s overall balance of payments
    recorded a surplus of USD 83 million. In FY 2005/2006, Nepal had
    recorded a balance of payments surplus of \$352 million, which
    declined to \$83 million in FY 2006/2007due to an increased trade
    deficit and settlement of pending dues on account of oil imports.
    The gross foreign exchange reserves went up by 14.3 percent to US\$
    2.55 billion in mid-July 2007. The current level of reserves is
    sufficient for financing merchandise imports of 10.3 months.

-   In FY 2006/07, Nepal\'s exports totaled USD 868 million and imports
    totaled USD 2.7 billion.

-   Carpets and garments constituted the vast majority of Nepal's
    officially recorded exports and are mostly exported to Germany and
    the United States.

-   India accounts for 63 percent of Nepal's total trade. During FY
    2006/07, exports to India recorded a growth of only 2.8 percent and
    exports to third countries, which have been trending downward the
    last three years, declined further by 3.1 percent in FY 2006/07. The
    decline in exports to third countries is primarily due to the
    decline in exports of readymade garments and jewelry. The decreasing
    trend of growth in exports to India is the result of frequent
    politically motivated transportation strikes and business and border
    closures, particularly in the Terai, as well as labor union
    excesses, often prompted by the Maoists, that forced major export
    oriented industries to shut down their operations for weeks and
    months together.

-   Due to the 10.3 percent import growth and below 1percent growth in
    exports, the trade gap in FY 2006/07 widened by 15.3 percent
    compared to an increase of 25 percent in FY 2005/06.

-   The U.S. is the second-largest market for Nepalese exports. Imports
    to Nepal from the U.S. are low compared to those from other
    countries. In FY 2006/07, out of total imports of USD 2.7 billion,
    only 1 percent came from the U.S. However, exports to the U.S.
    constitute 10.4 percent of Nepal's total exports in FY 2006/07.
    Exports from Nepal in FY 2006/07 totaled to USD 868 million.

-   Nepal has had fifteen governments in the last 17 years.

-   The People's Movement in April 2006 forced King Gyanendra to
    reinstate the House of Representatives, dissolved in May 2002, and
    relinquish the power he seized on February 1, 2005. The Seven-Party
    Alliance (SPA) formed a government under the leadership of Girija
    Prasad Koirala in April 2006. The reinstated Parliament and the
    government limited the powers of the King. After months of intense
    negotiations with the Communist Party of Nepal (Maoist), which had
    conducted a violent insurgency in Nepal since February 1996, the
    Government of Nepal and the Maoists signed a comprehensive peace
    agreement on November 21, 2006. Under the peace agreement, the
    Maoists vowed to shun violence and respect the democratic process.
    After promulgation of a new interim constitution and formation of an
    interim parliament, including representatives of the Maoists, in
    January 2007, and formation of an interim government with Maoist
    ministers in April 2007, the country was focused on a Constituent
    Assembly election. However, it proved impossible for the the SPA,
    later Six-Party Alliance, to reach a lasting agreement with the
    Maoists on the necessary electoral framework for the election to be
    held. As a result dates for the CA election were deferred from June
    to November 2007 and then to April 2008.

-   The continued Maoist use of terror and extortion negatively affect
    the market environment as did terror and violence by extremists
    groups in the Terai..

## Market Challenges [**Return to top**](#ch1) 

-   Nepal is a landlocked state, which makes market access a challenge.
    Surface transport into and out of Nepal is severely constrained.
    There is only one reliable road route from India to the Kathmandu
    Valley. During periods of unrest or general strikes or shutdowns
    this route can also be closed. Unrest in Terai in the last couple of
    years has seriously disrupted movement of goods in and out of Nepal.
    The only practical seaport for entry of goods bound for Nepal is
    Calcutta (Kolkata) in India, about 650 miles from the Nepal-India
    border.

-   Although the Government of Nepal (GON) is open to foreign direct
    investment, implementation of its policies is often distorted by
    bureaucratic delays and inefficiency. Foreign investors constantly
    complain about complex and opaque government procedures and a
    working-level attitude that is more hostile than accommodating.

-   A foreign company must either be registered in Nepal as a foreign
    investor under the Foreign Investment and Technology Transfer Act of
    1992, or have a permit to import and export commodities and
    services.

-   High customs tariffs imposed on most manufactured products increase
    the price of U.S. products in the Nepalese market.

-   Foreign investors in Nepal face a non-transparent legal system.
    Firms complain that basic legal procedures are neither quick nor
    routine. The bureaucracy is generally reluctant to accept legal
    precedents. As a consequence, businesses are often forced to
    re-litigate issues that had been previously settled. Furthermore,
    legislation banning foreign investment in financial, legal, and
    accounting services has made it difficult for investors to find help
    cutting through regulatory red tape.

-   U.S. firms and other foreign investors have identified pervasive
    corruption as an obstacle to maintaining and expanding their direct
    investment in Nepal. There are also frequent allegations of
    corruption by Nepalese government officials in the distribution of
    permits and approvals, procurement of goods and services, and award
    of contracts.

## Market Opportunities [**Return to top**](#ch1)

-   Nepal\'s overall potential as a market for U.S. exports is modest.

```{=html}
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-   Best prospect sectors for U.S. product sales include
    telecommunications equipment, computers and peripherals, hydropower
    equipment, and aircraft parts. U.S. computers and peripheral
    equipment and telecommunications equipment are highly competitive in
    the local market.

-   Best prospect sectors for U.S. investment are hydropower and civil
    aviation infrastructure construction.

-   Prospects in hydropower include the 750 megawatt West Seti Project,
    which is being developed by an Australian consortium, and three
    projects at the Karnali, Koshi and Gandaki river basin sites, which
    Nepal's Department of Electricity Development (DOED) has opened for
    development through foreign investment. Nepal expects to add
    approximately 2,537 megawatts to its generating capacity over the
    next decade.

-   A number of major projects are under way that hold potential for
    U.S. business. In FY 2007/08, the first year of the interim
    Three-Year Development Plan, Nepal Telecom (NT) plans to spend
    approximately USD 94.7 million on expansion of telecom services in
    Nepal. In the civil aviation sector, the Ministry of Culture,
    Tourism, and Civil Aviation (MOCTCA) plans to build a number of
    airports and invite global tenders from interested foreign
    investors. MOCTCA had invited proposals twice from foreign companies
    in last two years to develop the airports on
    Build-Own-Operate-Transfer (BOOT) basis but due to the ongoing
    insurgency and a hostile political situation in the past, foreign
    investors stayed away.

-   Business opportunities exist within the ongoing NT Telecommunication
    Development Project (FY 2007-08 to FY 2009-10) for equipment sales.
    .

## Market Entry Strategy [**Return to top**](#ch1)

-   Relationship-building in Nepal is essential to conducting business.
    For large-scale business ventures, investors or suppliers are
    encouraged to visit.

-   To access the Nepali market, foreign companies generally should use
    local representatives and agents. Supplying government projects
    offers opportunities for large volume sales, but requires an
    authorized local representative or agent.

-   The U.S. Embassy\'s Political/Economic Section handles commercial
    matters and provides agent/distributor services for U.S. companies
    to assist in selecting a reliable partner. It works closely with the
    Senior Commercial Officer in New Delhi, who is responsible for
    India, Nepal and Bangladesh. Requests for these paid services are
    normally routed through U. S. Export Assistance Centers, available
    through the U.S. Department of Commerce
    (<http://www.buyusa.gov/home/us.html>).

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch2 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 2: Political and Economic Environment

For background information on the political and economic environment of
the country, please click on the link below to the U.S. Department of
State Background Notes.

<http://www.state.gov/r/pa/ei/bgn/5283.htm>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch3 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 3: Selling U.S. Products and Services 

-   [Using an Agent or
    Distributor](#using-an-agent-or-distributor-return-to-top)

-   [Establishing an Office](#establishing-an-office-return-to-top)

-   [Franchising](#franchising)

-   [Direct Marketing](#direct-marketing-return-to-top)

-   [Joint Ventures/Licensing](#joint-ventureslicensing-return-to-top)

-   [Selling to the
    Government](#selling-to-the-government-return-to-top)

-   [Distribution and Sales
    Channels](#distribution-and-sales-channels-return-to-top)

-   [Selling
    Factors/Techniques](#selling-factorstechniques-return-to-top)

-   [Electronic Commerce](#electronic-commerce-return-to-top)

-   [Trade Promotion and
    Advertising](#trade-promotion-and-advertising-return-to-top)

-   [Pricing](#pricing-return-to-top)

-   [Sales Service/Customer
    Support](#sales-servicecustomer-support-return-to-top)

-   [Protecting Your Intellectual
    Property](#protecting-your-intellectual-property-return-to-top)

-   [Due Diligence](#due-diligence-return-to-top)

-   [Local Professional
    Services](#local-professional-services-return-to-top)

-   [Web Resources](#web-resources-return-to-top)

## Using an Agent or Distributor [**Return to top**](#ch3)

Local agents normally work as an exporter\'s sales representative on a
commission basis. Specific responsibilities depend on the terms of the
contract. The agent normally works on a commission ranging between 5 and
15 percent of the sales price, depending upon the nature of the product
or service offered. The Embassy Political/Economic Section can help in
finding a buyer, partner, agent or distributor. Through the paid 'Gold
Key Service,' the Section provides a list of pre-screened potential
agents, distributors, sales representatives, and other strategic
business partners in Nepal.

The distributor not only sells on a commission basis, but also buys and
keeps goods in stock for resale, does local marketing, and handles
after-sales product servicing as required. The distributor usually works
on a profit margin so the commission rate and responsibilities (pricing,
advertising, market promotion, after-sales service, etc.) should be
defined in the contract. The distributor\'s commission in Nepal normally
ranges between 15 to 30 percent, again depending upon the nature of the
product. Use of a local distributor is more effective when selling
consumer goods.

Hiring a commission agent to assist in winning a contract can be
effective when selling development-oriented goods such as construction
services or heavy equipment, selling to government departments or
competing in an international tender exercise.

## Establishing an Office [**Return to top**](#ch3)

[]{#franchising .anchor}Any U.S. company that desires to undertake
business in Nepal can register the company after submitting the
following documents required under the Company Act of 2006:

a\) A notarized copy or translation in Nepali or English of the law or
license under which the company was incorporated and established.

b\) A notarized Nepali version of the memorandum and articles of the
company.

c\) The complete address of the head office of the company.

d\) A list of the directors, managing agents, manager, secretary, etc.
of the company along with their names, positions, contact details, and
shareholdings, if any.

e\) The name and address of resident representative(s) of the company in
Nepal empowered to accept on its behalf time limits, notices, etc.
issued to it.

f\) The proposed location where business will be, or is being, conducted
in Nepal and the full address of the company\'s office.

## Franchising [**Return to top**](#ch3)

Franchising is not yet a common sales method in Nepal. There is untapped
potential for ventures that cater to the tourist, resident expatriate,
and Nepali middle-class markets. A few U.S. franchise companies have
entered the Nepali market, particularly because Kathmandu and Pokhara
are major foreign tourist centers that offer a large market base. Under
the Foreign Investment and Technology Transfer Act of 1992, the
Government of Nepal\'s Department of Industry grants permission to
establish franchises. Since trademark and brand names registered in a
foreign country do not automatically qualify in Nepal for trademark
protection, the trademark and brand name must first be registered in
Nepal under the Patent, Design and Trademark Act of Nepal of 1965 to
prevent any possible infringement.

## Direct Marketing [**Return to top**](#ch3)

Direct marketing is usually not cost-effective in view of the small
Nepalese market for U.S. products and generally unreliable service
offered by the local post office. Direct marketing via fax has been used
to a limited extent and local firms are increasingly interested in the
commercial potential of the internet. Nepal has thirty-two Internet
Service Providers (ISPs), and many Nepali businesses, tourist agencies,
and industries have home pages. Eight satellite/cable TV networks in
Kathmandu, six private TV channels and two state-owned broadcast TV
channels provide additional marketing opportunities to reach audiences.

## Joint Ventures/Licensing [**Return to top**](#ch3)

Nepal officially encourages foreign investment and technology transfer
under the Foreign Investment and Technology Transfer Act (FITTA) of
1992. Investment in the form of equity shares and reinvestment of
earnings from share capital and loans are defined as foreign investment.
Under FITTA, technology transfer refers to any transfer of technology
made by agreement between an industry and a foreign investor as follows:
(a) use of any technological right, specialization, formula, process,
patent or technical knowledge of foreign origin, (b) use of any
trademark of foreign ownership, and (c) acquiring any foreign technical
consulting, management and marketing service. While technology transfer
arrangements are legally permissible, the GON has not yet determined
where they are to be registered.

Foreign investments through joint ventures or wholly foreign-owned
enterprises are allowed in most industries. However, foreign investment
is not permitted in defense-related industries, cigarettes, and alcohol
(excluding 100 percent export-oriented industries). Potential investors
are invited to contact the American Embassy for current information on
prohibited industries.

## Selling to the Government [**Return to top**](#ch3)

Government fiscal regulations relating to procurement of goods and
services state that goods worth up to Rs. 150,000 (USD 2,375) can be
purchased directly from the market. For goods worth between Rs. 150,000
(USD 2,375) and Rs. 1,000,000 (USD 15,850), procurement is to be made by
inviting price quotes from at least five suppliers. For amounts over Rs.
1,000,000, (USD 15,850), procurement should be made via tenders or
bidding. For procurements, each Government department or project
publishes its own tenders by following the procedures mentioned under
the Financial Administration Regulations of 1999. Goods and services are
generally procured from the supplier or contractor who quotes the lowest
price. Notices of tender calls for major projects having sufficient lead
time (a minimum of 45 days) are disseminated to U.S. businesses via the
U.S. Department of Commerce Trade Opportunity Program (TOP). Many firms
find the use of a local distributor or commission agent effective in
dealing with government sales, as many tenders have a lead time of less
than two weeks for bid submission. Opportunities to sell to the GON are
available in the telecommunications, hydropower, and civil aviation
sectors.

## Distribution and Sales Channels [**Return to top**](#ch3)

The channel of distribution and sales used by most national and
international manufacturers/sellers is the conventional three-fold
distribution system (Manufacturer - Distributor/Wholesaler - Retailer).
Most U.S. exporters sell through a Nepal-based intermediary, such as a
trading company or a local agent or distributor. Indirect local sales
channels are most suited to selling U.S. goods and services in Nepal.
Most high-value electronic and electric appliances and machinery
products enter into Nepal by air cargo via the Tribhuvan International
Airport in Kathmandu. However, bulk goods such as foodstuffs, large
machinery items, vehicles, fertilizer, construction materials, and
various raw materials are brought by ships to Calcutta (Kolkata) or the
nearby deepwater port of Haldia in India, and then shipped either via
truck or rail. In the latter case, more than ninety percent of goods
enter through the Raxaul-Birgunj crossing on the India-Nepal border. An
Inland Container Depot (ICD) at Birgunj started commercial operation in
September 2004. Although at the start of its operation, the ICD handled
only overseas consignments brought in via rail directly from Calcutta or
Haldia ports to Birgunj, since February 1, 2005 it has also handled any
cargo between Nepal and India. Major distribution centers in Nepal are
Birgunj, Biratnagar, Bhairahawa, Nepalgunj, and Kathmandu.

## Selling Factors/Techniques [**Return to top**](#ch3)

When selling in the local market, U.S. businesses should be aware that a
local agent is generally necessary to conduct sales and marketing
effectively. Foreign companies selling high volume and/or high value
products and services normally deal directly with buyers to meet a known
demand rather than invest in promotional marketing. There are no
specific packaging requirements and most products can use the English
language for both sales and labeling purposes.

For product introduction, U.S. companies can visit potential buyers and
make presentations or send product catalogs, brochures or other
materials directly to the target customers via email, fax, post or
courier. Alternately, companies planning to launch consumer products or
look for a business partner in Nepal normally use exhibitions, trade
shows, trade missions, catalog and video shows, and advertising media
such as newspapers, radio and television for market introduction and
brand recognition. For companies/products that already have a presence
in the Nepalese market, participating in trade shows and catalog and
video shows through a local agent/distributor can be an effective way to
introduce new products into the market and to promote brand recognition.

## Electronic Commerce [**Return to top**](#ch3)

The internet had a late start in Nepal compared to many developing
nations. As of January 2008 there were 35 internet service providers
operating with around 62,586 accounts and the total number of Internet
users was approximately 350,000 nationwide. Roughly 30% of these
accounts are commercial, which primarily use the internet to promote
their products and services and communicate with foreign businesses.
Activity is concentrated in Kathmandu and half a dozen other cities in
Nepal. To date, relatively little business activity is online, but it is
growing. As of February 5, 2008 the total number of registered
commercial websites in Nepal is 8,478. Many businesses such as airlines,
hotels, and travel agents rely heavily on internet service for dealing
with their foreign partners.

Electronic commerce websites in operation are mostly based outside Nepal
where credit card verification services are available. Credit card
transfers, and transfers from e-banking websites are accepted but
Nepalis who do not have a dollar account cannot make payments in foreign
currency. Foreign exchange is regulated and is not freely available.
There are a few business-to-business websites. The most popular ones are
[www.muncha.com](http://www.muncha.com/),
[www.thamelmall.com](http://www.thamelmall.com/), and
[www.bitarak.com](http://www.bitarak.com/). These sites are mostly used
to send gifts during religious festivals. Frequent users are Nepalis
residing abroad and delivery of goods is done primarily within Nepal.

## Trade Promotion and Advertising [**Return to top**](#ch3)

Newspapers, radio and television are the main advertising media used for
trade promotion. Television serves only a limited section of Nepalese
consumers, primarily the more affluent urban population, but newspapers
and radio reach most parts of Nepal. Selection of advertising media thus
depends on the target group. TV advertising is the most appropriate
means to reach the urban middle and upper classes. For basic consumer
products, advertising in newspapers and via radio is more appropriate.
Advertising costs are lower for newspapers and radio than for
television. Since the size of the market is so small, there are no BSP,
FUSE or Single Company Promotion services available in Nepal. Names and
addresses of major newspapers, and radio and television stations are
given below. Inclusion in this list does not constitute U.S. Government
endorsement.

1\. The Rising Nepal (English-language daily)\--Government-owned

Dharma Path

P.O. Box 23

Kathmandu, Nepal

Phone: 977-1-4255730, 4227493

FAX: 977-1-4244428

E-mail: gopa@gorkhapatra.org.np

Internet:
[http://www.gorkhapatra.org.np](http://www.gorkhapatra.org.np/)

2\. The Kathmandu Post (English daily)

Shantinagar, Naya Baneshwor

P.O. Box 8559

Kathmandu, Nepal

Phone: 977-1-4480100

FAX: 977-1-4470178

Email: <kanti@kpost.mos.com.np>

Internet:
[http://www.kantipuronline.com](http://www.kantipuronline.com/)

3\. The Himalayan Times (English daily)

APCA House

Baidya Khana Road

P.O. Box: 11651

Singha Durbar, Kathmandu, Nepal

Tel: 977-1-4770504, 4771489

Fax: 977-1-4770701

E-mail: <marketing@thehimalayantimes.com>;

marketing@apcanepal.com

Internet:
[http://www.thehimalayantimes.com](http://www.thehimalayantimes.com/)

4\. Radio Nepal

Singha Durbar

P.O. Box 6034

Kathmandu, Nepal

Phone: 977-1-4241921/ 4223910/ 4243569

FAX: 977-1-4221951

Internet: <http://www.radionepal.org/index.htm>

5\. Nepal Television

Singha Durbar

P.O. Box 3826

Kathmandu, Nepal

Phone: 977-1-4228436

Fax: 977-1-4227452

Email: neptv@vishnu.ccsl.com.np

Internet: <http://www.catmando.com/ntv/>

6\. Space Time Network Pvt. Ltd.

Channel Nepal

Business Development Division

Satellite Television Service,

Shantinagar, Kathmandu, Nepal

Phone: 977-1-4487750/1/2

Fax: 977-1-4487749

Email: <space@col.com.np>

Internet: <http://www.spacetimenetwork.com/chan_nep04.htm>

7\. Subisu Cable Net Pvt. Ltd

G.P.O. BOX: 6626

Baluwatar, Kathmandu, Nepal

Tel: 977-1-4429616 -Hunting line; 4429617

Fax: 977-1-4430572; 977-1-4240165

E-mail: info@subisu.net.np

URL: http://www.subisu.net.np

## Pricing [**Return to top**](#ch3)

Pricing formulas are determined by the availability of similar products,
the level of demand for the product in the Nepalese market, and total
costs required to bring the product to market. Before selecting a
pricing strategy, the exporter should obtain as much information as
possible from local agents, market research, potential customers, and
competitors. Exporters should factor in various tariffs and taxes, which
are levied on all imported products. Examples include: customs tariffs
ranging from 5 percent for certain agricultural products to 80 percent
for four-wheel vehicles; the 13 percent value added tax (VAT); the 5
percent special tax; and the 1.5 percent local development tax. In the
case of vehicle import, an additional excise duty of 32 percent is
levied on the gross value, which includes the invoice price, customs
tariff, VAT, local development tax, and special tax. Interested
businesses can request hard copies of the complete tariff schedule
directly from the Department of Customs:

<http://www.customs.gov.np/tariff.html>)

Pricing structures in Nepal are erratic. Imported goods are priced
higher than locally produced goods. Imported goods\' prices reflect
transportation costs and other mark-ups. Indian manufactured goods, when
available, are cheaper than imports from more distant countries. When
determining a price for U.S. products in Nepal, the exporter should keep
in mind competition from India, which has an open border with Nepal.
Chinese manufactures, mainly consumer goods such as appliances, shoes,
and textiles, find a ready market and are imported via Tibet. Products
from the European Union, Japan, South Korea, and Taiwan are also popular
and help determine the local price for goods and services.

## Sales Service/Customer Support [**Return to top**](#ch3)

After-sales service and product guarantees are very important for
customers, especially for durable products. Given long shipping times to
Nepal, doubts about after-sales service and availability of spare parts
affect product choice. It is therefore preferable to make arrangements
with a local agent/distributor for reliable after-sales customer service
and support. Foreign companies selling vehicles, high-value machinery
items, electrical and electronic goods in Nepal have arrangements in
place for such services with their local agents or distributors. Often
the parent company provides the technical know-how and machinery for
such services whereas the local company provides the services.

## Protecting Your Intellectual Property [**Return to top**](#ch3)

In order to prevent infringement of intellectual property rights (IPR),
patents and trademarks should be registered with Nepal\'s Department of
Industries in accordance with the Patent, Design and Trademark Act of
1965. Nepal is not a signatory to any international conventions
protecting patents, copyrights, or trademarks, so registration in the
United States does not automatically result in protection in Nepal. When
registering a trademark of foreign origin, a copy of the home
registration with application form, deed of assignment and four copies
of the representation sheet should be included in the application.
Trademark registration is valid for a period of seven years and can be
renewed for an additional period of seven years. Similarly, the
Copyright Act of 2002 offers only limited protection for copyrighted
works, which must in any case be registered in Nepal to qualify for
protection. Nepal's accession to the World Trade Organization (WTO) in
April 2004 obligates Nepal to draft new legislation and to amend many
laws to become compatible with WTO requirements. These binding
provisions of the WTO also obligate Nepal to improve its trade practices
and IPR protection regime regardless of the government in power. Please
also refer to Chapter 6, the Investment Climate Statement.

## Due Diligence [**Return to top**](#ch3)

U.S. businesses should check the bona fides of a Nepali company before
appointing it as a local agent/ distributor and/or entering into a trade
deal. Most Nepali business bona fides cannot be checked via traditional
U.S. business channels. The Political/Economic Section of the U.S.
Embassy in Kathmandu will prepare an International Company Profile (ICP)
for U.S. businesses on request. It is a paid service and normally routed
through the Department of Commerce, U.S. Export Assistance Center near
you. Businesses may wish to contact the following organizations to
obtain profiles of some Nepali businesses.

Nepal Chamber of Commerce

E-mail: <chamber@wlink.com.np>, fax: 977-1-4229998

The Federation of Nepalese Chambers of Commerce and Industry

E-mail: <fncci@mos.com.np>, fax: 977-1-4261022

The Nepal-USA Chamber of Commerce and Industry

E-mail: <nusacci@.ccsl.com.np>, fax: 977-1-4478020

## Local Professional Services [**Return to top**](#ch3)

Use of a local attorney for preparing required documents can limit
unnecessary delays in the process of finalizing business contracts with
trading partners and other local agents. A list of local attorneys is
available on the U.S. Embassy Kathmandu website:
<http://kathmandu.usembassy.gov/>. On request, the Political/Economic
Section of the U.S. Embassy also provides lists of companies for other
professional services such as market research agencies, advertising
agencies, customs clearance houses, freight forwarding agencies and
transport companies.

## Web Resources [**Return to top**](#ch3)

Popular B2B websites: [www.muncha.com](http://www.muncha.com/),
[www.thamelmall.com](http://www.thamelmall.com/),
[www.bitarak.com](http://www.bitarak.com/).

The Rising Nepal (Government Owned English daily):
[http://www.gorkhapatra.org.np](http://www.gorkhapatra.org.np/)

The Kathmandu Post (English daily):
<http://www.kantipuronline.com/ktmpost.php>

The Himalayan Times (English Daily):
[http://www.thehimalayantimes.com](http://www.thehimalayantimes.com/)

Nepal\'s Department of Industries:
[http://www.doind.gov.np](http://www.doind.gov.np/)

Department of Customs, GON:
[http://www.customs.gov.np/](http://www.customs.gov.np/index.php)

Nepal Chamber of Commerce:
[http://www.nepalchamber.org](http://www.nepalchamber.org/)

Federation of Nepalese Chambers of

Commerce and Industry: [http://www.fncci.org](http://www.fncci.org/)

U.S. Embassy Kathmandu website:
[http://kathmandu.usembassy.gov](http://kathmandu.usembassy.gov/)

U.S. Export Assistance Center: <http://www.buyusa.gov/home/us.html>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[]{#ch4 .anchor}

# Chapter 4: Leading Sectors for U.S. Export and Investment 

-   [Agricultural Sector](#agricultural-sectors-return-to-top)

**Commercial Sectors**

-   [Medical Equipment and Drugs/Pharmaceuticals (MED and
    DRG)](#franchising-fra)

-   [Aircraft and Aircraft Parts (AIR)](#resources3)

-   [Telecommunications Equipment and Services
    (TEL)](#telecommunications-equipment-and-services-tel)

-   [Computers/Peripherals (CPT, CSF)](#resources3)

-   [Water Resource Equipment/Services (WRE)](#leadinsector4)

-   [Franchising (FRA)](#franchising-fra)

## Medical Equipment and Drugs/Pharmaceuticals (MED and DRG)

### Overview [**Return to top**](#ch4)

  ------------------------ -------------- ------------ -------------------
                           2006           2007         2008 (estimated)

  Total Market Size        15             15           16

  Total Local Production   2              2.5          NA

  Total Exports            0              0            0

  Total Imports            NA             NA           NA

  Imports from the U.S.    7.05           6.6          NA
  ------------------------ -------------- ------------ -------------------

Average Exchange Rate (Selling Rate of Central Bank) for USD 1 was NRs.
72.69 in 2006, NRs. 70.64 in 2007, and NRs. 64.07 till December 2007.
Value in USD millions.

Sales in this sector may continue to grow, as the degree of medical
training and services a middle class can afford increase. At present
most imported drug and pharmaceutical products are imported from India.
Demand in this sector has continued to grow in spite of the political
situation. In contrast, total imports of medical equipment have declined
over the last two years. The decline is largely attributed to the
worsening security and political situation in the country. This market
has the potential to bounce back as the security situation improves.

### Best Prospects/Services [**Return to top**](#ch4)

X-ray machines, Ultra Sonographic machines, electrocardiogram machines
and other testing equipment. Instruments and appliances used in medical,
surgical, dental or veterinary sciences, including electro-medical and
sight testing.

### Opportunities [**Return to top**](#ch4)

Private sector medical facilities are expanding quickly in Nepal. In
recent years, almost half a dozen medical colleges and hospitals have
opened up in various parts of Nepal. These colleges and hospitals have a
constant need for upgrading their testing and treatment facilities to
make their services competitive. They therefore need to import modern
medical equipment on a regular basis.

### Resources [**Return to top**](#ch4)

Most procurement and supply orders are placed in local newspapers. The
Political/Economic Section of the U.S. Embassy posts such trade leads on
the U.S. Embassy website: <http://kathmandu.usembassy.gov/> and the
BuyUSA Nepal website: <http://www.buyusa.gov/nepal/en/>. For information
on trade leads, U.S. businesses may contact the Commercial Specialist of
U.S. Embassy Kathmandu, Mr. Tapas Gupta, at: <GuptaTK@state.gov>.

## Aircraft and Aircraft Parts (AIR)

### Overview [**Return to top**](#ch4)

  ------------------------ ------------ -------------- -------------------
                           2006         2007           2008 (estimated)

  Total Market Size        20           40             40

  Total Local Production   0            0              0

  Total Exports            0            0              0

  Total Imports            NA           NA             NA

  Imports from the U.S.    1.87         5.27 thru Nov  NA
  ------------------------ ------------ -------------- -------------------

Average Exchange Rate (Selling Rate of Central Bank) for USD 1 was NRs.
72.69 in 2006, NRs. 70.64 in 2007, and NRs. 64.07 till December 2007.
Value in USD millions.

The mushrooming of private airlines in Nepal in the early 1990s
initially provided opportunities for the sale of short-hop passenger
turboprop aircraft, including both used and new aircraft. However,
declines in the tourism industry over the last five years drove at least
five domestic airlines into bankruptcy, and, as a result, adversely
affected the market for aircraft and parts. Opportunities for growth in
this sector may occur following a successful peace process and
transition to democracy.

### Best Prospects/Services [**Return to top**](#ch4)

All kinds of aircraft parts, accessories, and ground equipment
accessories and spares.

### Opportunities [**Return to top**](#ch4)

Domestic Nepalese private airlines still in operation prefer twin-engine
aircraft such as the Beechcraft 1900D, Canadian Twin Otter, and Dornier.
One carrier operates a few Fokker-100 jet aircraft. The national flag
carrier, Nepal Airlines Corporation (NAC), has traditionally preferred
Boeing aircraft for its international routes, but financial problems and
poor government stewardship have made it difficult for the airline to
purchase any new aircraft.

### Resources [**Return to top**](#ch4)

Information pertaining to GON policies and regulations can be obtained
from the regulator, Civil Aviation Authority of Nepal, via email:
<dgca@caanepal.org.np>. For additional information and assistance, U.S.
businesses may wish to contact the Commercial Specialist of the U.S.
Embassy Kathmandu Mr. Tapas Gupta at: <GuptaTK@state.gov>.

## Telecommunications Equipment and Services (TEL)

### Overview [**Return to top**](#ch4)

  ------------------------ -------------- ------------ -------------------
                           2006           2007         2008 (estimated)

  Total Market Size        65             42           120

  Total Local Production   0              0            0

  Total Exports            NA             NA           NA

  Total Imports            NA             NA           NA

  Imports from the U.S.    0.19           0.953        NA
  ------------------------ -------------- ------------ -------------------

Average Exchange Rate (Selling Rate of Central Bank) for USD 1 was NRs.
72.69 in 2006, NRs. 70.64 in 2007, and NRs. 64.07 till December 2007.
Value in USD millions.

In the last five years, telecommunications services in Nepal have
witnessed significant growth. Currently, there are four companies
providing telephone services in Nepal. Of the four, the government-owned
Nepal Telecom is the biggest operator. The other three companies, a
U.S.-Nepal joint venture, a Russia-Kazakhstan-Nepal joint venture, and
an India-Nepal joint venture are operating in very limited geographical
areas. Nepal Telecom is fast expanding its geographical reach and range
of services, which offers excellent investment potential. Local
microwave and cable TV services depend on U.S. firms for much of their
equipment, as do Kathmandu's eighteen satellite/cable TV networks. Due
to Nepal\'s rough topography, satellite services for phone and internet
will likely find a market in Nepal.

### Best Prospects/Services [**Return to top**](#ch4)

A wide variety of telecommunications equipment, including switching,
radio and transmission equipment, telephone sets, videophones, and
networking equipment.

### Opportunities [**Return to top**](#ch4)

Nepal Telecom has established a mobile telephone service, is expanding
its landline phone system, and will continue to issue tenders for
optical fiber lines, digital switching equipment, and telephone sets.
Under the GON's plans for commercialization and privatization, Nepal
Telecom was converted into a public limited company in June 2004, but
the GON still owns one hundred percent of shares. Although the GON has
plans to disinvest 49 percent of the company, it has not yet set a
timeline. When available for privatization, Nepal Telecom represents an
excellent investment opportunity for U.S. companies. The World Bank has
an ongoing telecommunications sector reform project, which might provide
opportunities for U.S. companies.

### Resources [**Return to top**](#ch4)

For information regarding Nepal Telecom ongoing and future projects,
U.S. businesses may contact Nepal Telecom via email at:
<sugat.kansakar@ntc.net.np> or visit their website at
[www.ntc.net.np](http://www.ntc.net.np/). Information pertaining to GON
policies and regulations can be obtained from the Ministry of
Information and Communications, Telephone: 977-1-4242562; Fax:
977-1-4227310 and from the regulator, Nepal Telecommunications
Authority, E-mail: <info@nta.gov.np>, <ntra@nta.gov.np>,
<ntra@wlink.com.np>, or via website at
[www.nta.gov.np](http://www.nta.gov.np/). For further information and
assistance, businesses may contact the Commercial Specialist at U.S.
Embassy Kathmandu, Mr. Tapas Gupta at: <GuptaTK@state.gov>.

[]{#resources3 .anchor}

## Water Resource Equipment/Services (WRE)

### Overview [**Return to top**](#ch4)

  ------------------------ -------------- ------------ -------------------
                           2006           2007         2008 (estimated)

  Total Market Size        4.0            4.0          10.0

  Total Local Production   0              0            0

  Total Exports            0              0            0

  Total Imports            NA             NA           NA

  Imports from the U.S.    0.556          0.717        NA
  ------------------------ -------------- ------------ -------------------

Average Exchange Rate (Selling Rate of Central Bank) for USD 1 was NRs.
72.69 in 2006, NRs. 70.64 in 2007, and NRs. 64.07 till December 2007.
Value in USD millions.

Nepal's large hydropower potential represents enormous opportunity for
U.S. investors for direct foreign investment or joint ventures with
Nepalese private as well as public sector enterprises. While Nepal has
some 83,000 megawatts in hydroelectric potential, less than one percent
of this potential has been developed. On the other hand, the northern
states of India bordering Nepal have chronic power shortages with
limited domestic sources in the form of costly thermal power generating
plants to meet the ever-increasing internal demand. Despite agreements
struck with India in 1996 and 1997, which define the terms for joint
development of hydropower projects (the Mahakali Treaty) and sanction
cross-border trade in private electric power, the Indian power market
has not yet significantly opened up to producers in Nepal. In a positive
development, India's Electricity Act of 2003 has removed major
impediments and created potential power-trading opportunities with
Nepal. On December 18, 2006, the Department of Electricity Development,
Nepal invited offers for 3 potential hydropower projects, 300 MW - Upper
Karnali, 402 MW-Arun III, and 600 MW-Budhi Gandi projects for
development through foreign investment. On January 24, 2008, the
Ministry of Water Resources decided to award the 300 MW Upper Karnali
project to an India power devloper GMR Energy Ltd. A government team is
currently negotiating on the 402 MW Arun III project with another India
company. When developed, these projects would offer a huge opportunity
for equipment sales.

### Best Prospects/Services [**Return to top**](#ch4)

Hydropower projects, hydropower generation machines, turbines,
generators, power control machineries, surveying instruments, and
transmission wire are prospects for investment.

### Opportunities [**Return to top**](#ch4)

Nepal has a variety of public and private hydroelectric projects. The
\$453 million, 144 MW Kali Gandaki A Project, constructed with financing
by the Asian Development Bank, started commercial production in April
2002. The first fully private power development project \-- the \$100
million, 36 MW Upper Bhote Koshi Project involving two U.S. firms, Harza
Engineering and Panda Energy \-- started commercial production in
January 2001. These and other projects developed by state-owned power
producer Nepal Electricity Authority (NEA) offer substantial opportunity
for equipment sales. While there are a number of large-sized hydropower
projects, including Pancheshwore and Karnali-Chisapani, waiting for
foreign investment, current prospects for equipment sales include the
750 MW West Seti Project, which is being developed by an Australian
consortium. On December 18, 2006, the Department of Electricity
Development, Nepal invited offers for 3 potential hydropower projects
(300 MW - Upper Karnali, 402 MW, Arun III, and 600 MW Budhi Gandi
projects) for development through foreign investment. When developed,
these projects would offer a huge opportunity for equipment sales.

According to India's Electricity Act of 2003, Indian consumers can enter
into a direct commercial relationship with a generating company or
trader in Nepal. In such cases the State Regulatory Commission will not
regulate the price of power. The Electricity Act also granted customs
and excise duty waivers on imports of power, and a 10-year tax holiday.
Nepal's Department of Electricity Development grants licenses for
projects developed by both foreign and domestic private sector
investors. Nepal Electricity Authority (NEA), the state-owned
corporation, has been granted a license by the government to develop the
309 Megawatt Upper Tamakoshi hydropower project, which again has the
potential to offer significant equipment sales opportunities In another
development, the GON has consented to divide the NEA into three
companies for generation, transmission, and distribution within a year.
This would open additional investment opportunities for U.S. companies.

### Resources [**Return to top**](#ch4)

Information pertaining to projects offered for private development,
policies and regulations can be obtained from the regulator, Department
of Electricity Development, via email: <doed@pshdp.wlink.com.np>, or
access further information via website at http://www.doed.gov.np. For
opportunities in projects developed by the Nepal Electricity Authority,
U.S. businesses may wish to contact: <nea_misd@info.com.np>, or access
further information via website at
[www.nea.org.np](http://www.nea.org.np/). For additional information and
assistance businesses, please contact the Commercial Specialist at U.S.
Embassy Kathmandu, Mr. Tapas Gupta, at: <GuptaTK@state.gov>.

## Computers/Peripherals (CPT, CSF)

### Overview [**Return to top**](#ch4)

  ----------------------- ------------- --------------- ------------------
                          2006          2007            2008 (estimated)

  Total Market Size       25            30              35

  Total Local Production  0             0               0

  Total Exports           0             0               0

  Total Imports           NA            NA              NA

  Imports from the U.S.   0.202         0.492 thru Nov  NA
  ----------------------- ------------- --------------- ------------------

Imported U.S. manufactured computer hardware and other peripheral
equipment are mostly transshipped through Hong Kong and Singapore, and
therefore are not reflected in the figures of direct U.S. Exports to
Nepal. Average Exchange Rate (Selling Rate of Central Bank) for USD 1
was NRs. 72.69 in 2006, NRs. 70.64 in 2007, and NRs. 64.07 through
December 2007. Value in USD millions.

U.S. computers and peripheral equipment remain highly competitive in the
local market. U.S. brands enjoy strong preference and loyalty from
buyers. Over the years, the visibility of U.S. products has
significantly increased. Leading U.S. companies in this sector are
represented through their authorized distributors and representatives in
Nepal. In view of market size, volatility of sales, and legal
restrictions in opening a sales outlet, U.S. companies are advised to
hire a distributor/representative.

### Best Prospects/Services [**Return to top**](#ch4)

Computer components, hardware, monitors, and uninterrupted power
sources.

### Opportunities [**Return to top**](#ch4)

Total annual imports of computer hardware are estimated at around
\$25-35 million, generally involving goods transshipped through Hong
Kong or Singapore. Customs statistics understate the U.S. market share
because American equipment is often imported via distributors in
intermediate ports such as Hong Kong or Singapore and therefore not
captured in official statistics. Since the market size is extremely
small and opportunities for regional re-export are negligible,
investment opportunity in this sector is not available.

### Resources [**Return to top**](#ch4)

The Computer Association of Nepal (CAN) organizes an annual trade event
entitled CAN Info-Tech. It is an event for showcasing IT innovations,
products and services. A record number of 415,645 visited the show held
from January 29 to February 3, 2008. For further information, businesses
may wish to contact: The Computer Association of Nepal at:
<info@can.org.np>, or visit their website at
[www.can.org.np](http://www.can.org.np/). Information pertaining to GON
policies and regulations can be obtained from the High Level Commission
for Information Technology, E-mail: <info@hlcit.gov.np> or via its
website at [www.hlcit.gov.np](http://www.hlcit.gov.np/). For other
information and assistance, businesses may wish to contact the
Commercial Specialist of U.S. Embassy Kathmandu, Mr. Tapas Gupta, at:
<GuptaTK@state.gov>.

## Franchising (FRA)

### Overview [**Return to top**](#ch4)

  ------------------------ -------------- ------------ -------------------
                           2006           2007         2008 (estimated)

  Total Market Size                                    

  Total Local Production                               

  Total Exports                                        

  Total Imports                                        

  Imports from the U.S.                                
  ------------------------ -------------- ------------ -------------------

(No data for franchising is available)

Very few franchises exist in Nepal. Significant untapped potential
exists with only a few foreign companies currently in the fast
food/dessert market. Due to the sizeable tourist presence and expatriate
communities of cities such as Kathmandu and Pokhara, franchising
potential exists in sectors such as fast food, coffee houses, clothing
and sports equipment. While there is no long-term track record for the
performance of franchised businesses within the Nepalese market, foreign
companies, mostly Indian, are entering the market.

### Best Products/Services [**Return to top**](#ch4)

Fast food chain restaurants.

### Opportunities [**Return to top**](#ch4)

Although the present franchise market is very small (an estimated \$4.25
million in 2004), it has potential. Demand consists of 70% locals and
30% foreigners. There are no known Nepal-based companies that franchise.
Market growth is projected at 25% through the first few years of
establishment. Key benefits of a franchise lie in brand name equity, and
quality consistency. Market entry should take a long-term view. With an
annual tourist arrival of approximately 400,000 and a sizeable
expatriate community, fast food franchises hold excellent potential in
Kathmandu and Pokhara. A more favorable climate for expansion of
franchises to cities such as Birgunj, Biratnagar, and Bharahawa is
expected when the security situation of the country improves and
political stability is regained.

### Resources [**Return to top**](#ch4)

Since the franchise sector is a potential growth sector, research data
or trade leads are not available. The Political/Economic Section of the
U.S. Embassy keeps track of strong expressions of interest in U.S.
franchises by the local business community. For information on potential
local partners, U.S. businesses may contact the Commercial Specialist of
U.S. Embassy Kathmandu, Mr. Tapas Gupta, at: <GuptaTK@state.gov>.

## Agricultural Sectors [**Return to top**](#ch4)

Agriculture accounts for approximately 38 percent of gross domestic
product (GDP) and 71 percent of employment in Nepal. The purchasing
power of the average Nepali, compounded with heavy reliance on
agriculture, both in terms of share in GDP and in employment generation,
means that Nepal does not offer a potential market for U.S. agricultural
products. The shortfall in domestic consumption and production of
agricultural products is mostly met by imports from India because Indian
agricultural products are competitive in terms of cost and quality.
Geographical proximity, a porous border and traditional trade relations
give Indian agricultural products easy access to Nepalese markets.

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch5 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 5: Trade Regulations and Standards

-   [Import Tariffs](#import-tariffs-return-to-top)

-   [Trade Barriers](#trade-barriers-return-to-top)

-   [Import Requirements and
    Documentation](#import-requirements-and-documentation-return-to-top)

-   [U.S. Export Controls](#u.s.-export-controls-return-to-top)

-   [Temporary Entry](#temporary-entry-return-to-top)

-   [Labeling and Marking
    Requirements](#labeling-and-marking-requirements-return-to-top)

-   [Prohibited and Restricted Imports](#twentythree)

-   [Customs Regulations and Contact
    Information](#customs-regulations-and-contact-information-return-to-top)

-   [Standards](#standards-return-to-top)

-   [Trade Agreements](#trade-agreements-return-to-top)

-   [Web Resources](#twentysix)

## Import Tariffs [**Return to top**](#ch5)

Import tariffs are generally assessed on an *ad valorem* basis. Nepal
uses the Harmonized Tariff System (HTS) for classification purposes.
Import duty rates vary from zero to 80 percent. Live animals, fish, and
most primary products are exempt from import duties. Machinery or goods
related to basic needs are charged at a five-percent rate. Products
hazardous to health, such as cigarettes, are taxed at 80 percent and
liquors are taxed at 40 percent. Custom duties are generally assessed on
the cost, insurance, and freight (CIF) value. Goods imported into Nepal
are also liable for a Value-Added Tax (VAT) of 13 percent and Local
Development Tax of 1.5 percent. Both of these taxes are levied on CIF
plus customs duty value.

Special Duty Reductions of five or ten percent have been given to
imports from the Tibet Autonomous Region of the People\'s Republic of
China, member countries of the South Asian Association for Regional
Cooperation (SAARC) and designated most favored nations.

Nepal has not established Export Processing Zones (EPZ). However, any
industry exporting 90 percent or more of its products is entitled to
privileges equivalent to those normally provided by an EPZ \-- i.e., no
tax, duty or fee is levied on the machinery, tools and raw materials
utilized by the industry in manufacturing the exported products.
Export-oriented industries may also enjoy bonded warehouse facilities.
Raw materials can be imported via entry in a passbook without paying any
custom duty or VAT. The same value of raw materials is deducted from the
passbook upon export of the finished product. The enterprise must also
submit a bank guarantee sufficient to cover applicable duties.

## Trade Barriers [**Return to top**](#ch5)

There are no major tariff or non-tariff trade barriers on imports.
Technical standard barriers are applied to a very small number of
manufactured products, such as vehicles and refrigerators. Vehicles
imported into Nepal must qualify under the Euro I standard, and
refrigerators must be chlorofluorocarbon (CFC) gas-free.

## Import Requirements and Documentation [**Return to top**](#ch5)

Documents required for shipment to Nepal include a commercial invoice, a
customs declaration form (CDF), clearly marked and labeled packaging,
and a certificate of origin. Similarly, exported items sent by air
require a CDF, a copy of the export license (if applicable), a
commercial invoice, a certificate of origin, a copy of the letter of
credit or advance payment statement from a bank, a foreign exchange
declaration form, a packing list, a photocopy of the income tax
registration certificate, an airway bill, and an authorization letter.

All imports may be brought in without a license except for banned or
quantitatively restricted items, such as (a) products injurious to
health (including illicit drugs \-- see section on Prohibited Imports
further in this Chapter); (b) arms and ammunition, explosive materials
(or products required for production of explosive materials, and guns
and bullets); (c) communications equipment, wireless walkie-talkies and
other similar audio-communication equipment (except under government
import license); (d) valuable metals and jewelry; and (e) beef and beef
products (dietary restrictions of the majority Hindu religion prohibit
the consumption of beef). The GON does not require open general licenses
for imports.

Traders need to show their general export/import license and taxpayer's
certificate to import the goods they deal in. If the end user, for
example, a project office, a company or an institution, is importing
some goods directly, it will have to produce a copy of its corporate
registration certificate and taxpayer's certificate in order to obtain
foreign currency approval from Nepal Rastra Bank (Nepal\'s central bank)
and for customs clearance of the consignment.

## U.S. Export Controls [**Return to top**](#ch5)

All products, other than those banned or those under quantitative
restrictions, may be exported freely from Nepal. Banned items include
articles of archeological and religious importance, controlled wildlife
and by-products, narcotic substances, articles related to explosive
materials or required for the production of arms and ammunition,
industrial raw materials (such as raw leather, raw wool, imported raw
materials, parts, capital goods), and other goods such as logs and
timber. Items subject to quantitative restriction are subject to
notification by the GON from time to time. Past examples have included
food grains, oilseeds, and some types of pulses (lentils). As a rule,
the re-export to India of goods not of Indian origin is prohibited.
Other than banned items, there are no U.S. government export controls
companies must abide by when exporting to Nepal.

## Temporary Entry [**Return to top**](#ch5)

Goods \-- including vehicles, machinery, and equipment \-- may be
imported temporarily for special purposes such as domestic exhibitions
or fairs by making a refundable deposit of the applicable duty. Such
goods must be taken out of the country within three months of the
completion of work. Goods can stay in-country if the duty has been paid
and the item is sold or retained for personal use. An extension of the
three-month period may be granted on appropriate and reasonable grounds
upon payment of an additional ten percent of the applicable duty amount.
If the duty is not paid or the goods are not re-exported within six
months of entry, the GON may bring smuggling charges. The GON places no
legal restrictions requiring warranty for products imported temporarily
for a specific purpose.

## Labeling and Marking Requirements [**Return to top**](#ch5)

[]{#twentythree .anchor}Nepalese law requires no special labeling or
marking. For customs purposes, the packaging and labels of a shipment
should clearly identify country of origin and destination and include a
commercial invoice with a list of items in the package, a customs
declaration form (CDF), and a certificate of origin. Department of
Customs information can be found via website at
[http://www.customs.gov.np](http://www.customs.gov.np/).

## Prohibited and Restricted Imports [**Return to top**](#ch5)

The following products are prohibited for import:

1\. Products injurious to health: a) narcotic drugs such as opium and
morphine; and b) liquor containing more than 60 percent alcohol.

2\. Arms, ammunition and explosives (except under government import
license): a) materials used in the production of arms and ammunition; b)
guns and cartridges; c) caps other than those of paper; and d) arms,
ammunition and other explosives.

3\. Communications equipment: wireless walkie-talkies and other similar
audio communication equipment (except under import license of the GON).

4\. Valuable metals and jewelry (except permitted under bag and baggage
regulations).

5\. Beef and beef products.

6\. Any other product as per notification of the GON in the Nepal
Gazette, published by the Department of Printing. Such notices can be
obtained from the Department of Printing by making a request to the
Director General at fax: 977-1-4228774.

## Customs Regulations and Contact Information [**Return to top**](#ch5)

All customs-related information, tariff structures, special provisions,
rules and regulations are available at the GON\'s Department of Customs
website, [http://www.customs.gov.np](http://www.customs.gov.np/).
Specific questions related to customs can be forwarded to the Department
of Customs by e-mail: <npdoc@ntc.net.np>.

## Standards [**Return to top**](#ch5)

-   [Overview](#overview-return-to-top-6)

-   [Standards Organizations](#standards-organizations-return-to-top)

-   [Conformity Assessment](#conformity-assessment-return-to-top)

-   [Product Certification](#product-certification-return-to-top)

-   [Accreditation](#accreditation-return-to-top)

-   [Publication of Technical
    Regulations](#publication-of-technical-regulations-return-to-top)

-   [Labeling and Marking](#labeling-and-marking-return-to-top)

-   [Contacts](#contacts-return-to-top)

###  Overview [**Return to top**](#standards-return-to-top)

Nepal generally follows internationally recognized standards; it does
not follow the ISO 9000 series. Standards-developing bodies include the
Nepal Bureau of Standards and Metrology (NBSM) and the Department of
Drug Administration. Food product standards are generally set under the
Food Act and Nepal Standard (Certification Mark) Act. The law regarding
the import of products other than food products, cars and refrigerators
does not mandate any standards. The then Ministry of Population and
Environment, now the Ministry of Environment, Science and Technology,
introduced the Nepal Vehicle Mass Emission Standards Act in December
1999 to control pollution. These standards are similar to EURO 1, and
comprise levels of nitrogen with provision for type approval and
conformity of production of the vehicles.

###  Standards Organizations [**Return to top**](#standards-return-to-top)

The Nepal Bureau of Standards and Metrology (NBSM) is the only
authorized agency of the government to develop technical standards for
different products. NBSM is currently working on developing Standards
and Labeling programs for electrical appliances. The Department of Drug
Administration regulates the consumption and quantification of modern
drugs for human use in Nepal.

#### NIST Notify U.S. Service

Member countries of the World Trade Organization (WTO) are required
under the Agreement on Technical Barriers to Trade (TBT Agreement) to
report to the WTO all proposed technical regulations that could affect
trade with other Member countries. **Notify U.S.** is a free, web-based
e-mail subscription service from the U.S. National Institute of
Standards and Technology (NIST) that offers U.S. businesses an
opportunity to review and comment on proposed foreign technical
regulations that may affect your access to international markets.
Register online at Internet URL:
[http://www.nist.gov/notifyus/](http://www.nist.gov/notifyus/%0D)

###  Conformity Assessment [**Return to top**](#standards-return-to-top)

Standards for testing the quality of food and the processes for testing
food products are governed under the Food Act and Nepal Standard
(Certification Mark) Act, which requires the importer to have a sample
tested by the Department of Food Technology and Quality Control. The
Department of Drug Administration approves the consumption and
quantification of modern drugs for human use and issues licenses of
import of any drugs in Nepal. Quantification of modern drugs for human
use is governed under the Cosmetics, Devices and Drugs Act 1980.

###  Product Certification [**Return to top**](#standards-return-to-top)

Except for drugs/medicines, no product certification for any other
branded products is required. For imports of drugs/medicines into Nepal
the importer must obtain prior approval from the Department of Drug
Administration. Certification is not required for patent drugs
manufactured by recognized manufacturers in those cases where the
Department of Drug Administration has already approved the drugs\'
chemical composition.

###  Accreditation [**Return to top**](#standards-return-to-top)

There are no accreditation bodies in Nepal. Accreditation of labs is not
required.

###  Publication of Technical Regulations [**Return to top**](#standards-return-to-top)

Finalized acts and regulations issued by the GON are published in the
Nepal Gazette and are made available by the Department of Printing. U.S.
entities can comment or challenge these regulations by email or
notification to the appropriate department.

###  Labeling and Marking [**Return to top**](#standards-return-to-top)

Nepalese law does not mandate special labeling or marking. For customs
purposes, the packaging and labels of a shipment should clearly identify
country of origin and destination and include a commercial invoice with
a list of items in the package, a customs declaration form (CDF), and a
certificate of origin.

### Contacts [**Return to top**](#standards-return-to-top)

1\. Nepal Bureau of Standards and Metrology (NBSM)

P.O. Box 985

Balaju, Kathmandu, Nepal

Telephone: 977-1-4356810, 4350818

Fax: 977 1 4350689

E-mail: <nbsm@nbsm.gov.np>

Director General: Sita Ram Joshi

2\. Department of Drug Administration

Madan Bhandari Path-4

Bijulibazar, New Baneshwor

Kathmandu, Nepal

Telephone: 977-1-4780432, 4780227

Inspection Hotline: 977- 01-2042383

Facsimile: 977-1-4780572

Email: <dda@healthnet.org.np>; director@dda.gov.np

Chief Drug Administrator: Bhupendra Bahadur Thapa

Pharmacist-in-Charge: Prakash Raj Pant

3\. Department of Printing

Singha Durbar, Kathmandu, Nepal

Telephone: 977-1-4244525

Facsimile: 977-1-4228 774

Director General: Kedar Bahadur Bogati

4\. Ministry of Environment, Science and Technology

Singha Durbar, Kathmandu, Nepal

Telephone: 977-1-4245 367 / 368 / 369,

Facsimile: 977-1-4242 138

Email: [info@most.gov.np](mailto:info@mope.gov.np)

Website: [http://www.moest.gov.np/](http://www.mope.gov.np/)

5\. Department of Food Technology and Quality Control

P.O. Box 21265

Babarmahal, Kathmandu, NEPAL

Kathmandu, Nepal

Telephone: 977-1-4262 430, 4262 369

Facsimile: 977-1-4262 337

Email: <dgdftqc@mail.com.np>

Website: http://www.spsenquiry.gov.np/

Director General: Mr. Uttam Kumar Bhattarai

6\. Ministry of Agriculture and Cooperatives

Agribusiness Promotion Section

Ministry of Agriculture and Cooperatives

Singha Durbar, Kathmandu, Nepal

Telephone: 977-1-4228 137, 9841 441383

Facsimile: 977-1-4225 825

Email: hbtiwari@moac.gov.np

Email: hari_babutiwari@yahoo.co.uk

Senior Agricultural Economist: Dr. Haribabu Tiwari

For further information on standards businesses may contact the
Commercial Specialist at U.S. Embassy Kathmandu, Mr. Tapas Gupta, at:
<GuptaTK@state.gov>

## Trade Agreements [**Return to top**](#ch5)

[]{#twentysix .anchor}Multilateral:

Nepal has ratified the South Asian Association for Regional Cooperation
(SAARC) Agreement on a South Asian Free Trade Area (SAFTA). Member
states signed the SAFTA Agreement during the 12th SAARC summit held in
Islamabad in January 2004.. The SAFTA agreement came into effect in
January 2006 and subsumed the ongoing trade liberalization process under
the South Asian Preferential Trade Agreement (SAPTA). Under SAFTA, the
seven SAARC nations (Nepal, Bhutan, India, Bangladesh, Pakistan, Sri
Lanka, and the Maldives) have pledged to cut tariff rates on a
product-by-product basis. Following the third round of trade
negotiations in 1998, a total of 5,000 items, from all member countries,
are now entitled to preferential duty treatment in one or another of the
participating countries.

Nepal became the 147th member of the World Trade Organization (WTO) on
April 23, 2004. It is the first least developed country to join the WTO
since 1995. Nepal had until December 2006 to be in full compliance with
its WTO obligations. Compliance would have required major changes in
Nepal\'s trade and customs related laws and regulations. However, due to
prolonged political instability, such changes are largely on hold and
Nepal is not in full compliance with its WTO obligations.

In February 2004, Nepal became a member of the Bay of Bengal Initiative
for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which
was founded in 1997. Other members include Bangladesh, Bhutan, India,
Burma, Sri Lanka and Thailand. BIMSTEC's objectives are similar to those
of WTO except that it seeks to establish a much more comprehensive free
trade area through deeper and substantial sector coverage of services
and an open and competitive investment regime. A BIMSTEC free trade
agreement was expected to be finalized in the second summit scheduled
for February 2008 in New Delhi, India. Previously scheduled summits were
delayed due to political developments in Bangladesh and Nepal.

Bilateral:

Nepal has signed bilateral trade treaties with 17 countries. From the
point of view of Nepal's trade volume and trade relationship, the trade
treaty signed with India in 1996 is the most important. Out of Nepal's
total trade of USD 3.58 billion in FY 2006/07, trade with India
accounted for 63 percent. Except for some items under quantitative
restrictions, the trade treaty puts Nepal in a unilateral duty-free
trade regime with India.

## Web Resources [**Return to top**](#ch5)

WTO and Nepal: <http://www.moics.gov.np/wto_&_nepal/index.html>

NEPAL and the BIMSTEC: <http://www.mofa.gov.np/bimstec.htm>

BIMSTEC Official Site: <http://www.bimstec.org/>

Bilateral Trade Treaties:
<http://www.tpcnepal.org.np/tagree/tradeagreement.htm>

Department of Customs:
[http://www.customs.gov.np](http://www.customs.gov.np/)

Ministry of Environment, Science & Technology:
[http://www.moest.gov.np/](http://www.mope.gov.np/)

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch6 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 6: Investment Climate

-   [Openness to Foreign
    Investment](#openness-to-foreign-investment-return-to-top)

-   [Conversion and Transfer Policies](#thirtytwo)

-   [Expropriation and
    Compensation](#expropriation-and-compensation-return-to-top)

-   [Dispute Settlement](#dispute-settlement-return-to-top)

-   [Performance Requirements and
    Incentives](#performance-requirements-and-incentives-return-to-top)

-   [Right to Private Ownership and Establishment](#thirtynine)

-   [Protection of Property
    Rights](#protection-of-property-rights-return-to-top)

-   [Transparency of Regulatory
    System](#transparency-of-regulatory-system-return-to-top)

-   [Efficient Capital Markets and Portfolio
    Investment](#efficient-capital-markets-and-portfolio-investment-return-to-top)

-   [Political Violence](#political-violence-return-to-top)

-   [Corruption](#corruption-return-to-top)

-   [Bilateral Investment
    Agreements](#bilateral-investment-agreements-return-to-top)

-   [OPIC and Other Investment Insurance
    Programs](#opic-and-other-investment-insurance-programs-return-to-top)

-   [Labor](#labor-return-to-top)

-   [Foreign-Trade Zones/Free
    Ports](#foreign-trade-zonesfree-ports-return-to-top)

-   [Foreign Direct Investment
    Statistics](#foreign-direct-investment-statistics-return-to-top)

-   [Web Resources](#web-resources-return-to-top-2)

## Openness to Foreign Investment [**Return to top**](#ch6)

Although the Government of Nepal (GON) is open to foreign direct
investment, implementation of its policies is often distorted by
bureaucratic delays and inefficiency, political instability, pervasive
corruption and persistent insecurity. At present, there are 1,336
foreign investment projects in Nepal, worth a total of approximately USD
1.85 billion according to official GON statistics. Indian ventures lead
the list with 373 projects and over 43 percent of total foreign
investment. The U.S. ranks second with 106 ventures and 13 percent of
total foreign investment. China, Japan, South Korea, UK and Germany are
also prominent.

Government policy changes over the past four years have signaled to
foreign investors that Nepal is open for business. In 2005, the
government opened some service sectors to foreign investment. Progress
has been made in allowing private operations in some sectors that were
previously government monopolies, such as telecommunications and civil
aviation. Licensing and regulations have been simplified and 100-percent
foreign ownership is now allowed in some sectors. New banking
institutions and a small stock exchange provide alternative sources of
investment capital.

Nevertheless, significant problems remain. They include lack of direct
access to seaports (currently all products imported by ship from third
countries enter through Kolkata), difficult land transport, lack of
trained personnel, scarce raw materials, inadequate power (especially
outside the Kathmandu Valley), insufficient water supply,
non-transparent and capricious tax administration, inadequate and
obscure commercial legislation, difficulty in obtaining long-term visas
for investors, and unclear rules regarding labor relations. Policies
intended to establish a \"one window policy\" and simplify necessary
interactions between investors and the host government have produced few
results. Furthermore, there is often a wide discrepancy between the
letter of the law and the law\'s implementation. Foreign investors
constantly complain about complex and opaque government procedures and a
working-level attitude that is more hostile than accommodating. The
government is aware of the deficiencies in Nepal\'s investment climate
but has done very little to move toward more investor-friendly
arrangements.

In terms of some positive steps the Foreign Investment and Technology
Transfer Act of 1992 abolished the minimum capital investment
requirement and eliminated significant barriers to foreign investment.
The Act also now allows for foreign investment in legal, management
consulting, accounting and engineering services up to the limit of 51%.

Policies regarding hydropower generation have changed to open the sector
to private development and the government is currently revising the
Electricity Act under which hydro-power generation licenses are granted.
A hydropower policy intended to simplify the licensing procedure and
break the monopoly of the Nepal Electric Authority (NEA) over all
aspects of generation, transmission and distribution was announced in
October 2001. These policy changes were expected to boost the flow of
foreign investment into the hydropower sector by involving the private
sector in the generation, transmission, and distribution of power.
Although a few sizable private-sector hydropower projects have either
begun operation or are in the planning stages, persistent political
instability and the poor security environment continue to discourage
long term investment in this sector. In addition, few of the 2001 policy
changes have been fully implemented. The licensing process remains
lengthy and cumbersome and the government has not yet passed the
legislation necessary to unbundle the functions of the NEA and create an
independent regulatory body. Private sector development of hydropower
for export has also been limited by domestic politics and the
government\'s inability to finalize a blanket electric power trade
agreement with India, the only potential market for any exportable
electricity produced in Nepal.

Legislation

The most significant foreign investment laws are: the Foreign Exchange
(Regulation) Act 1962; Foreign Investment and One Window Policy of 1992;
the Foreign Investment and Technology Transfer Acts of 1992; the
Immigration Rules of 1994; the Customs Act of 1997; the Industrial
Enterprises Act of 1992; the Electricity Act of 1992; the Privatization
Act of 1994 and the annual Finance Act that is passed every fiscal year.
Currently the Finance Act 2007/08 is in force.

The 1965 Patent, Design and Trademark Act and the 2002 Copyright Act
define the terms and conditions of intellectual property rights
protection. The Copyright Act includes all types of electronic and audio
video materials, provides for financial penalties as well as
imprisonment, and provides for confiscation of sold and published
unauthorized materials. The offender also has to pay compensation
claimed by the copyright holder. However, the revised Copyright Act is
not up to the level required for trade-related intellectual property
rights under the World Trade Organization. Revisions are likely, as
Nepal acceded to the WTO in April 2004.

The Foreign Investment and One Window Policy of 1992 restates the
desired benefits from foreign investment; lists acceptable forms of
investment; allows for foreign shares up to 100 percent in business
areas not on a \"negative list\"; establishes currency repatriation
guidelines; and outlines visa arrangements, arbitration guidelines, and
a special \"one window committee\" for foreign investors. The Foreign
Investment and Technology Transfer Act (FITTA), as revised in 1996,
eliminated the minimum investment requirement and clarified rules
relating to business and resident visas. In general rule, under the
FITTA all agreements related to foreign investment are governed by
Nepalese law and subject to arbitration in Kathmandu under UNCITRAL
Rules. However, foreign law can govern in cases where the foreign
investment exceeds Nepali rupees (NRS) 500 million (approximately USD
7.9 million) and the parties include a choice of law provision in their
agreement. The FY 2007/08 Finance Act outlines customs, duties, export
service charges, sales, airfreight and income taxes, and other excise
taxes that affect foreign investment. The Immigration Rules of 1994
describe visa regulations. The Customs Act and the Industrial
Enterprises Act, as revised in 1997, establish invoice-based customs
valuations and eliminate many investment tax incentives, installing in
their place a lower, uniform rate. The Electricity Act defines special
terms and conditions for investment in hydropower development. The
Privatization Act of 1994 authorizes and defines the procedures for
privatization of state-owned enterprises to broaden participation of the
private sector in the operation of such enterprises.

Institutional Arrangements

The Department of Industry is designated as the \"one window servicing
agency\" with the Industrial Promotion Board (IPB) as a focal point for
foreign investment under the Foreign Investment and Technology Transfer
Act. The Department of Industry facilitates corporate registration, land
transfers, utility connections, administrative services agreements, and
coordination among various agencies. The Industrial Promotion Board
(IPB), chaired by the Minister of Industry, Commerce and Supplies, is
the primary government agency responsible for foreign investment. The
IPB is intended to coordinate policy-level institutions, establish
guidelines for economic policies, approve or disapprove foreign
investment proposals, and determine applicable investment incentives.
The Department of Industry (under the Ministry of Industry, Commerce and
Supplies) registers and classifies foreign investments. It also serves
as the secretariat for the \"one window servicing agency,\" which
manages the income tax and duty drawbacks granted to some foreign
investments.

Current administrative procedures do not allow for automatic approval of
foreign investments. Foreign investors are required to obtain licenses
for manufacturing or service sector investments, and each license
request must be considered individually. Investments below NRS 1 billion
(approximately USD 15.63 million) are referred to the Department of
Industry for action and are typically approved at the Department level
without the involvement of the IPB. However, investors frequently
complain about bureaucratic delays and lack of transparency in procuring
investment licenses. In most cases, one to six ministries other than the
Ministry of Industry review the business proposal and provide input
prior to consideration by the IPB.

The Department of Electricity Development under the Ministry of Water
Resources is the responsible agency for licensing new foreign and
domestic investments in hydropower projects. However, decisions on
project proposals that involve foreign investment are invariably taken
by the Ministry of Water Resources itself. Similarly, Nepal Rastra Bank
(NRB), the central bank of Nepal, is responsible for issuing licenses to
operate commercial banks and financial institutions. The Insurance Board
(IB) is responsible for issuing licenses to operate insurance companies,
both life and general. The Civil Aviation Authority of Nepal (CAAN) is
responsible for granting operating licenses to both domestic and foreign
airlines operators and the Nepal Telecommunications Authority (NTA) is
responsible for issuing licenses for operating any type of
telecommunications and information technology services.

Licensing of new investments can be time-consuming. Some foreign
investors have reported that the licensing process requires a good
lawyer and great patience. The law\'s mandate that the IPB make a
licensing decision within 30 days of submission of an application is not
generally implemented because of the legal proviso that all necessary
information must have been submitted. In practice, multiple meetings are
usually required before the information is deemed sufficient.

Eligible Sectors

Foreign investment proposals must fall under existing industry
categories, which include agriculture and forestry, manufacturing,
electricity (water and gas), construction, hotels and resorts, transport
and communication, housing and apartments, and a restricted range of
services. To comply with its WTO commitments, on December 2005 Nepal
opened service industries and a few other sectors to foreign investment.
This was accomplished through a GON decree amending certain provisions
of the Foreign Investment and Technology Transfer Act 1992. These new
sectors include business and management consulting, accounting,
engineering and legal services, travel and trekking services, tourist
lodging, international retail sales services, and production of alcohol
or cigarettes. Foreign investment is forbidden in the defense sector and
the IPB will not license foreign investments that are judged to be
either hazardous to general health or the environment.

Foreign investors are permitted to acquire real estate in the name of
the business entity they own, but are not allowed to acquire real estate
as personal property. Although local law permits foreign investors to
buy shares on the local stock exchange, in practice foreign investment
in the stock exchange is not yet opened to the foreign investors. This
is mainly due to the provisions of the Foreign Investment and Technology
Transfer Act 1992 which requires approval of Department of Industry for
a foreigner to buy shares in a Nepalese company. Also, in cases of
investment in banks and insurance companies, prior approval of the
regulator is required. Further, approval of Nepal Rastra Bank is also
required for such purchase of shares under the Foreign Exchange
(Regulation) Act 1962. All of these hurdles make investment in the local
stock market unattractive to foreign investors. Foreign investors are
allowed to buy shares of government corporations by participating in the
bidding for privatization of such corporations. In such cases, Nepal's
Ministry of Finance sells the shares to the buyer after carrying out a
lengthy screening during the bidding process. Through an amendment in
the licensing policy of financial institutions, on July 26, 2006, the
NRB increased the maximum foreign equity participation limit in domestic
financial institutions to 85 percent from 67 percent. With the recent
amendment, equity participation of foreign investors in joint venture
financial institutions can range between 20 - 85 percent with the
remaining shares open for purchase by the general public. Joint venture
financial institutions with less than 50 percent foreign equity
participation are required to earmark at least 30 percent of their
shares for sale to the general public.

The Privatization Act of 1994 generally does not discriminate between
national and foreign investors. However, in cases where proposals from
two or more investors are identical, the government gives priority to
Nepali investors. To date fifteen state-owned corporations have been
privatized, seven corporations have been liquidated and two other
corporations have been closed. The last privatization completed by the
government was in January 2006. Out of the fifteen corporations
privatized so far, foreign investors have taken over only two of them.
The privatization process of three other state-owned corporations, which
was underway in early 2006, is currently on hold due to major political
developments after April 2006.

On April 13, 2004 the state-owned telecom operator, Nepal
Telecommunications Corporation (NTC), was converted into a company and
the name changed to Nepal Telecommunications Company Limited, but
ownership of the company remained entirely with the government. NTC is
among few state-owned enterprises that have been drawing good returns
for years largely due to their historical monopolies. At the time of
conversion of NTC into a company, the estimated amounts of paid-up
capital and authorized capital of the corporation stood at 15 billion
Nepali rupees (USD 238 million) and 25 billion Nepali rupees (USD 397
million) respectively. On January 6, 2008, the GON announced that it
would sell 10 percent of NTC to the general public and 5 percent to NTC
employees. The government is expected to float the shares to the public
by April 2008.

Since 2003 the World Bank has been working to restructure two of the
largest state-owned commercial banks, the Rastriya Banijya Bank
(\"National Commercial Bank\" or RBB) and Nepal Bank Limited (NBL) to
prepare them for privatization. However, the reform, revitalization, and
professionalization of these institutions are long-term tasks and the
banks are not expected to be ready for privatization until late 2009 or
2010.

Visas

The GON offers different types of visas to investors and businesses.
Potential investors are generally given six-month visas to conduct
research and feasibility studies. To obtain a six-month visa, applicants
must provide biographic information and a description of relevant work
and professional experience. If the Department of Industry can readily
identify the applicant as a legitimate business representative, the
process can be expedited. Endorsement by a recognized foreign industrial
enterprise is one means of accomplishing this. However, the Foreign
Investment and Technology Transfer Act allows a foreign investor to have
only one residential representative in Nepal. In cases where the foreign
investor wishes to have more than one representative, the visa process
becomes difficult. In the past, investors have even had problems
obtaining visas for general managers responsible the Nepalese operation.

Business visas are generally issued to approved investors for a period
of one to five years. However, investors describe the business visa
process as bureaucratic and time-consuming. Many say they spend more
than 24 work hours per visa, over a period of 20 to 30 days.

Although the GON began issuing five-year, multiple-entry visas to
resident foreign investors and their families in 1998, in actuality it
has issued very few, granting most investors only a one-year visa. In
1999, Nepal lowered its business visa fees; fees range from USD 250 for
a five-year visa to USD 100 for a one-year visa. A non-tourist visa,
however, costs USD \$60 per month for the initial six-month period. This
visa period can be extended for another six months or more at an
additional \$60 per month.

## Conversion and Transfer Policies [**Return to top**](#ch6)

The Foreign Investment and Technology Transfer Act of 1992, permits
foreign investors to repatriate all profits and dividends, all money
raised through the sale of shares, all payments of principal and
interest on any foreign loans, and any amounts invested in transferring
foreign technology. Foreign nationals working in industry are also
allowed to repatriate 75 percent of their salaries, allowances, and
emoluments, etc. Repatriation facilities (such as opening accounts or
obtaining permission for remittance of foreign exchange) are made
available on the recommendation of the Department of Industry, which
normally provides approval of the original investment.

However, convertibility is difficult and not guaranteed. Repatriation of
any funds needs approval from the concerned GON department and Nepal
Rastra Bank, which regulates foreign exchange. In most cases, approval
must be obtained from the Department of Industry. In other cases, such
as telecommunications, the Nepal Telecommunications Authority (NTA) must
approve the repatriation. In joint venture cases, NRB and the Ministry
of Finance must approve. Because commercial banks only process the
applications but do none of the oversight, the process slows down when
it reaches the NRB, which must verify the authenticity of all requests.
In the end, an overworked and inefficient banking system is to blame for
slow approval of foreign exchange facilities. The actual experience of
American and other foreign investors suggests that there are
discrepancies between the government\'s stated policy of repatriation
and its implementation.

To repatriate funds from the sale of shares, foreign investors apply to
the Nepal Rastra Bank. For repatriation of funds connected with
dividends, principal and interest on foreign loans, technology transfer
fees, expatriate salaries, allowances, and emoluments, the foreign
investor applies to the Department of Industry, and then to the Nepal
Rastra Bank. At the first stage of obtaining remittance approval,
foreign investors must submit remittance requests to a commercial bank.
Generally, foreign investors rated services provided by private banks as
satisfactory. However, final remittance approval must be made by the NRB
foreign exchange department, at which stage the process slows down
significantly. For this reason, foreign investors rated the Nepal Rastra
Bank\'s administration of exchange regulations as unsatisfactory.

The Finance Act of FY O7/08 has added, on an exceptional basis, a 5
percent tax on capital gains and an additional 5 percent to the existing
tax on repatriation of foreign dividends.

In general, Nepalis are not permitted to invest outside of Nepal.
Exceptions, however, can be granted on a case-by-case basis and policing
of the prohibition is weak. In 1995, a private airline was permitted to
invest in a regional carrier based in Kolkata, however, the Nepalese
airline stopped operation and closed down in 2005. Again, in 2006
another private airline operator formed a joint venture with a regional
carrier based in India to operate flights in Northeastern states of
India. During the peak of the Maoist insurgency in 2004 and 2005 a few
industrial houses invested in India and Gulf countries. These represent
the few instances of approved direct foreign investment by Nepalese
nationals.

## Expropriation and Compensation [**Return to top**](#ch6)

The Industrial Enterprise Act of 1992 states that \"no industry shall be
nationalized.\" Nepal constantly reiterates this point in negotiations
with private-sector firms interested in the hydropower sector. There
have been no cases of nationalization in Nepal, nor are any anticipated.

Companies can be sealed or confiscated if they do not pay taxes in
accordance with Nepali law. There are no official policies either
existing or planned that suggest official expropriation should be of
concern to prospective investors. There have been instances in the past
in which unscrupulous local partners used the tax or regulatory systems
to seize control of a joint venture firm from a U.S. investor. Such
cases have not involved major Nepali business houses, however.

## Dispute Settlement [**Return to top**](#ch6)

In the event of a dispute with a foreign investor, the concerned parties
are encouraged to settle it through consultation in the presence of the
Department of Industry. If the dispute cannot be settled in this manner,
cases involving investments less than NRS 500 million (approximately USD
7.9 million) in value will be referred to arbitration in Nepal according
to the Arbitration Rules of the United Nations Commission for
International Trade Law (UNCITRAL). For investments that exceed this
amount, the government of Nepal will permit stipulation of legal
jurisdiction other than Nepal in shareholder agreements and contracts.

There have been two investment disputes over the past few years in which
the GON did not honor portions of contracts with foreign investors.
While the Coca-Cola Company has a pending tax dispute with the
Department of Internal Revenue, the Bhotekoshi Hydropower Company, which
currently has only a 5 percent U.S. stake, has a pending payment dispute
with Nepal Electricity Authority and the Ministry of Water Resources.
These disputes have not been frequent, but investors should be aware
that the GON might not fully comply with its contracts.

All real property transactions must be registered, and property holdings
cannot be transferred without following established procedures. Even so,
property disputes account for half of the current backlog in Nepal\'s
overburdened court system, and such cases can take years to settle.
Moreover, laws and regulations regarding property registration,
ownership and transfer are unclear, and interpretation can vary from
case to case.

Liquidation is covered either by the Company Act and Insolvency Act 2006
(2063). If a company is solvent, its liquidation is covered by the
Company Act. If the company is insolvent, therefore not able to pay
liabilities or liabilities are more than assets, then its liquidation is
covered by the Insolvency Act. Under the Company Act, the claimant
priorities are: 1) government revenue, 2) creditors, and 3)
shareholders. Under the Insolvency Act the government ranks with all
other unsecured creditors. Monetary judgments are made in local
currency.

Nepal is a signatory and adheres to the New York Convention of 1958 on
the recognition and enforcement of foreign arbitral awards and has
updated its legislation on dispute settlement to bring its laws into
line with the requirements of that convention. The Arbitration Act of
1999 allows the enforcement of foreign arbitral awards and limits the
conditions under which those awards can be challenged.

## Performance Requirements and Incentives [**Return to top**](#ch6)

The Nepal Laws Revision Act of 2000 has eliminated most tax incentives,
regardless of whether they were connected with performance requirements.
Exports, however, are still favored, as is investment in certain
\"priority\" industries. There is no discrimination against foreign
investors with respect to export/import policies or non-tariff barriers.
There is no local content or export performance requirement. There is no
requirement that nationals own shares, that the share of foreign equity
is reduced over time, or that technology is transferred. However, in the
service sectors, opened in 2005, permitted foreign investment limits
range from 51 to 80 percent; the balance of the investment is reserved
for Nepali nationals in order to form a joint venture with a foreign
investor. Foreign investment in cottage industries is still not allowed.
On the other hand, Nepal does employ tax incentives to encourage
industries to locate outside the Kathmandu Valley due to pollution and
overpopulation in the valley and an interest in developing poorer parts
of the country.

Profits from exports are taxed at 20 percent. Customs, value added tax
(VAT), and excise duties are to be reimbursed within 60 days on raw
materials used in the production of export items. In practice, however,
these duty paybacks are often extensively delayed. Although income in
certain priority industries such as garments, carpets and jewelry use to
be taxed at a concessional rate of 10 percent, the Income Tax Act 2002
removed most of these tax benefits and concessions.

The Electricity Act of 1992 governs foreign investments in hydropower
generation. This act allows developers an exemption from income tax for
the first fifteen years of a project\'s operation and provides for a
flat one percent customs rate on all imported construction materials,
equipment and spare parts, provided that such goods are not manufactured
in Nepal.

Foreign investors are not required to disclose proprietary information
to government agencies as part of the regulatory approval process. There
are no restrictions on participation by foreign firms in
government-sponsored research and development programs; however,
depending upon the nature and expertise required for the job, government
agencies sometimes limit such programs to participation by Nepali
nationals only.

## Right to Private Ownership and Establishment [**Return to top**](#ch6)

Foreigners are free to establish and own business enterprises and engage
in all forms of business activity with the exception of a few
industries. Prohibitions exist in the defense industry, real estate, and
security printing sectors. In addition, the form of public participation
is restricted in some areas. For instance, foreign banks have not yet
been allowed to open wholly-owned subsidiaries or branch operations in
Nepal.

The GON is moving slowly toward open competition in most sectors of the
economy. Former public monopolies in banking, insurance, airline
services, telecommunications and trade have already been eliminated, and
the remaining restrictions on private and foreign operations in other
areas are being scaled back.

The Competition Promotion and Market Protection Act 2006 came into
effect on January 14, 2007. The new act defines and bars
anti-competitive practices. With the enactment of the law, tied selling,
bid rigging, cartel formation, collective price fixing, market
restrictions, dial-system, market segregation, undue business
influences, syndicate and exclusive dealing have now become illegal in
the Nepal. The law also prevents companies from engaging in business
takeovers which would help establish monopolies in the market. Sale of
inferior quality goods has also been made punishable. The law\'s
effectiveness is yet to be seen, at the Government has not yet
established the necessary enforcement mechanisms. The Act was drafted
through a joint initiative of the private sector and the Ministry of
Industry, Commerce and Supplies.

## Protection of Property Rights [**Return to top**](#ch6)

The Contract Act of 2000 incorporates many new features, including
provisions recognizing mortgages, sales, appointment of agents, and
shipment of goods as contracts. Protection of intellectual property
rights is inadequate. Patents registration, under the Patent, Design and
Trademark Act 2002, is valid for seven years and can be extended twice
for a total period of twenty-one years. Nepal does not automatically
recognize patents awarded by other nations. The Copyright Act of 2002 is
similar in that it does not recognize foreign registrations. However,
the Act covers most modern forms of authorship and provides adequate
periods of protection. Enforcement is weak, with the result that much of
the software and most sound or video recordings now circulating in Nepal
are pirated. As per the commitment made by the country on its accession
to the World Trade Organization, Nepal must enact new legislation on
trade-related intellectual property rights to bring the country into
compliance with international norms. Nepal has not yet signed the World
Intellectual Property Organization (WIPO) Copyright Treaty (WCT) or the
WIPO Performances and Phonograms Treaty (WPPT).

Trademarks must be registered in Nepal to receive protection. Once
registered, trademarks are protected for a period of seven years.
Enforcement is very poor.

## Transparency of Regulatory System [**Return to top**](#ch6)

Foreign investors in Nepal face a non-transparent legal system. Firms
complain that basic legal procedures are neither quick nor routine. The
bureaucracy is generally reluctant to accept legal precedents. As a
consequence, businesses are often forced to re-litigate issues that had
been previously settled. Furthermore, legislation banning foreign
investment in financial, legal, and accounting services has made it
difficult for investors to find help cutting through regulatory red
tape.

Labor, health, and safety laws exist but are not properly enforced. Some
companies report that the process of terminating unsatisfactory
employees is cumbersome and that protective labor laws make it very
difficult to bring skilled foreign-national specialists such as pilots,
engineers, or architects into Nepal.

## Efficient Capital Markets and Portfolio Investment [**Return to top**](#ch6)

Credit is generally allocated on market terms, although special credit
arrangements exist for farmers and rural producers through the
Agricultural Development Bank of Nepal. Foreign-owned companies can
obtain loans on the local market. The private sector has access to a
variety of credit and investment instruments. These include public stock
and direct loans from finance companies and joint venture commercial
banks.

Legal, regulatory, and accounting systems are neither fully transparent
nor consistent with international norms. Though auditing is mandatory,
professional accounting standards are low, and many practitioners are
either poorly trained or lacking in business ethics. Under the
circumstances, published financial reports are unreliable and investors
are better advised to rely on general business reputations, except in
the few cases in which companies have applied international accounting
standards.

The Nepali banking system is small, fragmented, and, in some cases,
plagued by bad loans. Banking system assets totaled approximately USD
8.13 billion on 15 July 2007, the end of Nepali FY 2006-07. Banking
system capital (total deposit) in the same period totaled USD 5.93
billion. 9.65 percent of the total asset base is estimated as
non-performing as of July 15, 2007. Foreign commercial lending is scarce
and expensive. Currently, there are no resident or non-resident foreign
commercial banks that have standing credit limits for loans of a
maturity of more than one year.

There is no regulatory system to encourage and facilitate portfolio
investment in the industrial sector. Lack of transparency or regular
reporting of reliable corporate information also presents problems for
potential foreign investors. There are no legal provisions to defend
against hostile takeovers. The GON has made certain exceptions to
promote Foreign Direct Investment (FDI) in tourism and hydropower. In
these sectors, there can be 100 percent foreign investment. In 2008 the
Clean Energy Development Bank (CEDB) has plans to establish a
venture/equity fund for making investment in small and medium sized
hydropower project development. The proposed "Hydro Equity Fund" would
fill the early-stage financing gap for development of small- and
medium-sized hydropower plants in Nepal.

## Political Violence [**Return to top**](#ch6)

Nepal suffered a violent Maoist insurgency from 1996 to 2006. The
People's Movement of April 2006, jointly organized by the major
political parties of Nepal, popularly known as the Seven-Party Alliance
(SPA) and the Communist Party of Nepal -- Maoist (CPN-M or Maoists)
ultimately compelled the King to end 15 months of direct royal rule and
reinstate the Parliament that had been dissolved in May 2002. The
restored parliament initiated a ceasefire with the Maoist rebels,
stripped the King of most of his powers and launched a peace process
that included the signing of a Comprehensive Peace Agreement (CPA), the
drafting of an interim constitution and the launch of the United Nations
Mission to Nepal (UNMIN). In January 2007, an interim parliament,
including members of the restored parliament as well as nominated
members from the CPN-M and the SPA, was formed. It approved the interim
constitution and began preparing for the election of a constituent
assembly (CA) tasked with drafting a new constitution. In April 2007,
the Maoists joined the interim government. The same month the CA
election, which was scheduled for June, was postponed. In June, it was
rescheduled for November. In September, the Maoists withdrew their
ministers. In October, the election was postponed a second time. In late
December 2007, the Six-Party Alliance (two parties had reunified) and
the Maoists agreed to hold the election by April 2008. The CPN-M
rejoined the government after the interim parliament amended the interim
constitution to abolish the monarchy from the first meeting of the CA.
Current political divisions and the poor security environment,
particularly in the southern border region with India, put the CA
election now scheduled for April 10 at risk.

While the ceasefire and CPA raised hopes during the early stage of the
peace process in 2006 and even 2007, the early optimism is eroding.
Political parties have generally failed to respond to concerns of those
living outside the Kathmandu valley and certain segments of the
population -- including groups such as women, youth, lower castes, and
ethnic minorities -- have been marginalized, have little trust in the
political process, and splinter groups have increasingly resorted to
violence. The coalition government has been unable to project a united
image. Partisan lines run deep, and are evident in all government
appointments.

Tensions between the ethnic communities in the Terai, the central
government and the Maoists remain high. In January 2007, Madhesis in the
southern Terai region, fueled by their under representation in the
interim government and state agencies, clashed with security forces
resulting in the deaths of more than 30 people. In order to return
stability to the region, Prime Minister Koirala promised to amend the
interim constitution to include a federal system of governance based on
proportional representation. However, little progress has been made in
addressing the issues of the Madhesis and other ethnic communities and
widespread protests, demonstrations and strikes continue to plague the
Terai. 2007 saw the formation of over 30 separate political groups in
the Terai, all calling for recognition and many willing to use violence.

Meanwhile, the Maoists have been unable to transform themselves into a
bona fide peacetime political party, despite their leaders\' commitment
to giving up violence. Having risen to prominence by violent means, they
are reluctant to relinquish violence and continue to engage in extortion
and abductions. Although the Maoist leadership has publicly prohibited
their cadres from engaging in human rights abuses, including extortion
and kidnapping, local media continue to report numerous incidents in
which Maoist cadres extort money, kidnap, kill and threaten Nepalese
citizens.

The risk of possible violence by Maoists as well as regional extremist
groups must be taken into account by any foreign firm wishing to invest
in Nepal. The Department of State Travel Warning for Nepal, dated
September 24, 2007, urges American citizens contemplating a visit to
Nepal to obtain updated security information before they travel and to
be prepared to change their plans at short notice. Given the nature,
intensity and unpredictability of disturbances, American citizens are
urged to exercise special caution during times when demonstrations are
announced, avoid areas where demonstrations are occurring or crowds are
forming, avoid road travel and maintain a low profile. All official
travel outside the Kathmandu valley, including by air, requires specific
clearance by the Regional Security Officer. As a result, emergency
assistance to U.S. citizens may be limited. Active duty U.S. military
and Department of Defense contractors must obtain a country clearance
for official and unofficial travel to Nepal.

U.S. citizens who travel to or reside in Nepal are urged to register
with the Consular Section of the Embassy by accessing the Department of
State's travel registration site at https://travelregistration.state.gov
or by personal appearance at the Consular Section, located at the U.S.
Embassy, Maharajgunj, Kathmandu. The Consular Section can provide
updated information on travel and security, and can be reached through
the Embassy switchboard at (977) (1) 400-7200 or directly by fax (977)
(1) 400-7281. Email: consktm@state.gov, web site:
http://nepal.usembassy.gov.

U.S. citizens also should consult the Department of State\'s Consular
Information Sheet for Nepal and Worldwide Caution Public Announcement
via the Internet on the Department of State\'s home page at
http://travel.state.gov or by calling 1-888-407-4747 toll free in the
United States and Canada, or, for callers outside the United States and
Canada, a regular toll line at 1-202-501-4444. These numbers are
available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through
Friday (except U.S. federal holidays).

The U.S. Government's designation of the Communist Party of Nepal
(Maoist) as a "Specially Designated Global Terrorist" organization under
Executive Order 13224 and its inclusion on the \"Terrorist Exclusion
List\" pursuant to the Immigration and Nationality Act remain in effect.
These two designations make Maoists excludable from entry into the
United States and bar U.S. citizens from transactions such as
contribution of funds, goods, or services to, or for the benefit of, the
Maoists.

## Corruption [**Return to top**](#ch6)

U.S. firms and many other foreign investors have identified pervasive
corruption as a significant obstacle to maintaining and expanding their
direct investments in Nepal. There are also frequent allegations of
corruption by Nepalese government officials in the distribution of
permits and approvals, in the procurement of goods and services, and in
the award of contracts. There are instances where award of contracts
have been delayed or cancelled unjustifiably because participants
declined to pay bribes.

Combating corruption is the responsibility of the Commission for
Investigation of Abuse of Authority (CIAA) and of the National Vigilance
Center under the Ministry of Home Affairs. In the past, the
Parliamentary Public Accounts Committee (PAC) has also played an active
role in publicizing cases of misconduct on the part of GON officials.
Since restoration of the multi-party system, the local media has been
particularly proactive in unearthing and reporting cases of corruption
within the government. Investigative commissions and committees are
often formed to look into major cases of corruption that come to light.
Officially, giving or accepting a bribe is a criminal act, punishable by
imprisonment for one to six years, a fine, or both, depending on the
degree of offense committed.

In the past the CIAA had been proactive in prosecution of cases
involving prominent political figures and government officials. In some
cases, the Special Court for Corruption has convicted the accused and,
in at least one case, the convicted is serving a jail sentence. After
the Chief Commissioner and another Commissioner retired in November
2006, the CIAA was forced to serve with only two Commissioners. In
recent months CIAA's handling of the corruption cases has come under
fire. In June 2007 the CIAA filed a case against the Governor and one of
the executive directors of Nepal's central bank, the Nepal Rastra Bank
(NRB), for alleged misuse of funds. Critics claimed that the charges
were without merit and perhaps brought at the behest of others to deter
initiatives taken by NRB against bank defaulters. The Special Court has
postponed the hearing date ten times since the case was filed in June
2007. Most of the high profile government ministers charged with
corruption have been acquitted by the Special Court.

The Public Accounts Committee (PAC) of the Parliament restored in April
2006 has come out heavily against corruption. The new interim
constitution of Nepal has provisions to impeach the Chief Justice or
other Judges for lack of competence, bad conduct, not fulfilling his/her
responsibility honestly, and unable to perform his/her duty due to
mental or physical condition. The Judge is suspended from his/her job
for the duration of the impeachment process. The Judge will be
automatically terminated form his/her job if such motion is passed by
the Parliament by a two third majority.

## Bilateral Investment Agreements [**Return to top**](#ch6)

Nepal has signed bilateral investment treaties with India, Britain,
Germany and Norway.

## OPIC and Other Investment Insurance Programs [**Return to top**](#ch6)

The Overseas Private Investment Corporation (OPIC) is free to operate in
Nepal without restriction. OPIC is empowered to offer its \"extended
risk guarantee\" facility to prospective U.S. investors in Nepal. Nepal
is also a member of the Multilateral Investment Guarantee Agency (MIGA),
which it joined in 1993.

The Export-Import Bank of the United States (Ex-Im Bank) is the U.S.
Government\'s official export credit agency whose mission is to assist
in financing the export of U.S. goods and services to international
markets. Ex-Im Bank provides export credit insurance, loan guarantees
and project and structured finance for U.S. exporters and foreign buyers
of U.S. goods and services.

## Labor [**Return to top**](#ch6)

Nepal lacks a large labor force of skilled and educated workers. The
overall literacy rate is only 49 percent. Vocational and technical
training is poorly developed, and the national system of higher
education is overwhelmed by large enrollments. Many secondary and
college graduates are unable to find employment in positions
commensurate with their education because most of the schools and
institutions do not provide job-related training. The employment of
foreigners is also severely restricted. Under current law, the
Department of Immigration must approve the employment of foreigners for
all positions except the most senior ones. In private organizations,
however, a significant number of professionals from India may be found
in mid-level managerial positions. Existing labor legislation is not
seen as business friendly and dismissal of employees can be very
problematic.

The Constitution provides for the freedom to establish and join unions
and associations. It permits restrictions on unions only in cases of
subversion, sedition, or similar conditions. Despite the institution of
parliamentary democracy in 1990, trade unions are still developing their
capacity to organize workers, bargain collectively, and conduct worker
education programs. The three largest traditional trade unions are
affiliated with legal political parties. Total union participation is
estimated to be around 900,000, which accounts for only about 10 percent
of the total labor force. Excluding agriculture labor, a much higher
percentage of the formal sector participates in unions. The Maoists also
have an active affiliate trade union All Nepal Trade Union Federation
(ANTUF), which has been engaged in a number of disputes and has been
condemned for supporting illegal agitations.

In 1992, Parliament passed the Labor Act and Trade Union Act, and
formulated enabling regulations. However, the government has not yet
fully implemented those laws. The laws permit strikes, except by
employees in essential services such as water supply, electricity, and
telecommunications. The laws also empower the government to halt a
strike or suspend a union\'s activities if the union disturbs the peace
or adversely affects the nation\'s economic interests. Under the Labor
Act, 60 percent of a union\'s membership must vote in favor of a strike
in a secret ballot for the strike to be legal. The government does not
restrict unions from joining international labor bodies. Several trade
federations and union organizations maintain a variety of international
affiliations. While officially there is no government interference in
union registration, unions have complained of difficulties in
registering members when opposing political parties are in power.

Frequent transportation and business closures (bandhs) called by the
Maoists, political parties and other agitating groups have dramatically
affected trade and industry. Strikes are unpopular, but are widely
viewed as the only available means of political or labor protest. In
2007 labor strikes, transporter strikes and other political actions,
mainly in the Terai, closed business and transport operations for up to
120 days in the worst-affected district in the Terai. Such strikes have
severely damaged Nepal\'s business climate. The Maoist lead trade union,
ANTUF, has been aggressively trying to establishing its control in every
industry and business sectors. This has resulted in violent clashes
between the members of ANTUF and the other trade unions. Several
multinational companies, including the Coca-Cola Company, Colgate
Palmolive and Unilever, have been forced to suspend operations or reduce
production due to violent agitations, protests and persistent problem in
importing raw materials and exporting their finished products.

The Child Labor Prohibition and Regularization Act of 2000 prescribe
conditions for 14- to 16- year-old laborers, and prohibits employment of
children under the age of 16 from work in dangerous industries. More
recent legislation, including an act to combat trafficking in persons
and the interim constitution, define children as persons under the age
of 18. A number of existing laws affecting child labor are in need of
harmonization.

## Foreign-Trade Zones/Free Ports [**Return to top**](#ch6)

Nepal has no Foreign Trade Zones, Free Ports or Export Processing Zones.
However, any industry exporting 90 percent or more of its products is
entitled to import raw materials and capital goods without payment of
custom duties, excise taxes or sales taxes.

## Foreign Direct Investment Statistics [**Return to top**](#ch6)

Total No. of projects 1,336

Agriculture & Forestry 14

Manufacturing 494

Electricity, Water, Gas 23

Construction 37

Hotel & Resort 281

Transport & Communication 31

Housing & Apartment 18

Service Industries 438

Total Project Cost: USD 1,854.57 million

Total Fixed Cost: USD 1,555.53 million

Total Foreign Investment: USD 595.12 million

Total Employment Generated: 116,986

Source: Foreign Investment Division, Department of Industry, Nepal.

Note: As of October 16, 2007, India was by far the most important
foreign investor in Nepal, with about 28 percent of the projects. It was
also involved in five of the ten largest foreign enterprises. In terms
of total foreign investment, the United States is second; China, third;
South Korea, fourth; Norway, fifth; Japan, sixth; and British Virgin
Islands, seventh.

\-- U.S. INVESTMENT IN NEPAL (AS OF OCTOBER 16, 2007)

Total No. of projects 129

Agriculture and Forestry 2

Manufacturing 38

(9 units have either been cancelled or closed)

Energy Based 1

Tourism Industry 33

(2 units have been cancelled)

Service Industries 55

Total Project Cost: USD 237.20 million

Total Fixed Cost: USD 214.94 million

Total Foreign Investment: USD 80.67 million

Total Employment Generated: 10,945

Source: Foreign Investment Division, Department of Industry, Nepal.

## Web Resources [**Return to top**](#ch6)

(Insert text here)

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch7 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 7: Trade and Project Financing

-   [How Do I Get Paid (Methods of
    Payment)](#how-do-i-get-paid-methods-of-payment-return-to-top)

-   [How Does the Banking System
    Operate](#how-does-the-banking-system-operate-return-to-top)

-   [Foreign-Exchange
    Controls](#foreign-exchange-controls-return-to-top)

-   [U.S. Banks and Local Correspondent
    Banks](#u.s.-banks-and-local-correspondent-banks-return-to-top)

-   [Project Financing](#project-financing-return-to-top)

-   [Web Resources](#web-resources-return-to-top-3)

## How Do I Get Paid (Methods of Payment) [**Return to top**](#ch7)

The only readily available method of financing trade transactions in
Nepal is a Letter of Credit (L/C). As of December 2007, the GON has not
yet fulfilled its announced intent to open an export-import bank. Nepal
does not have credit rating or collection agencies.

## How Does the Banking System Operate [**Return to top**](#ch7)

Nepal Rastra Bank (NRB, Nepal's central bank) regulates the entire
banking system of Nepal and also functions as the government's bank. As
a regulator, NRB controls foreign exchange; supervises monitors and
governs operations of all banking and non-banking financial institutions
in Nepal; determines interest rates for commercial loans and deposits;
and also determines exchange rates of foreign currency. As the
government's bank, NRB maintains all government income and expenditure
accounts, issues Nepalese bills and treasury notes, as well as loans to
the government, and determines monetary policy.

Commercial lending in Nepal is governed under the Commercial Bank Act of
1974, the Finance Company Act of 1985 and the Bank and Financial
Institutions Act of 2006, which authorizes the NRB to give guidelines to
all commercial banks and financial institutions on interest rates,
interest ceilings, and areas of investment.

Two large banks dominate the commercial banking sector. Nepal Bank, Ltd.
is 40.5 percent government-owned and Rastriya Banijya Bank (\"National
Commercial Bank\") is 100 percent government-owned. Together, Nepal Bank
Ltd. and Rastriya Banijya Bank account for 60 percent of the entire
banking system's deposits and loans. Both banks reportedly have a large
number of non-performing loans and are technically insolvent. After the
expiry of a five-year contract with foreign management teams, the Nepal
Bank Ltd. is being run by Nepal's central bank, NRB, and the other bank
Rastriya Banijaya Bank is being run by a team of consultant hired by the
NRB. The process for hiring new management teams for both the banks is
currently under way.

In the 1980\'s, Nepal opened up the commercial banking sector for
foreign participation. As a result, several joint venture banks such as
Nepal Arab Bank (now NABIL Bank, a Nepal-Bangladesh joint venture),
Nepal Investment Bank, Standard Chartered Bank, State Bank of India,
Bank of Kathmandu (a Nepal-Thai joint venture), Everest Bank, Nepal Sri
Lanka Merchant Bank, Nepal Bangladesh Bank and Nepal Bank of Ceylon were
established. A large number of finance companies have also been
established. The existing banking law of Nepal does not allow branch
operation by any foreign banks. All commercial banks have correspondent
banking arrangements with foreign commercial banks, which they use for
transfers and payments.

In 1994, the government expanded the role of the Nepal Stock Exchange by
allowing private brokers to operate. The volume of trading subsequently
increased dramatically, but has since stabilized. In 1996, the GON
announced that it would permit foreign institutional investors to hold
up to 25 percent of the shares of listed firms in certain sectors such
as tourism and power.

## Foreign-Exchange Controls [**Return to top**](#ch7)

The Nepali rupee is convertible for all current account transactions.
Earners of foreign exchange are also permitted to retain 100 percent of
those earnings and to open a foreign exchange account in Nepal to hold
them. However, approval from the NRB is required for payments of any
kind to any person living outside of Nepal. NRB approval is also
required to draw, accept or negotiate any bills of exchange, promissory
notes or loans, if the payee is living outside Nepal.

Foreign investors who have received permission to invest in convertible
currency are permitted to repatriate the proceeds from the sale of that
investment, the profits or dividends from that investment, and the
principal and interest paid on any foreign loans.

One dollar is currently equivalent to approximately 63.11 Nepali rupees.
The currency value is pegged to the Indian rupee at a current rate of IR
1.0 = NR 1.60. The rate against the Indian rupee is adjusted
periodically.

## U.S. Banks and Local Correspondent Banks [**Return to top**](#ch7)

There are no U.S. bank branches operating in Nepal. The following banks
have correspondent banking arrangements with U.S. banks:

Nepal Bank Limited

Dr. Binod Atreya, Chief Executive Officer

Nepal Bank Bldg., Dharma Path

Kathmandu, Nepal

Phone: 977-1-4222397, 4221185

Fax: 977-1-4222383

Email: info@nepalbank.com.np

Rastriya Banijya Bank

Mr. Janardan Acharya , Chief Executive Officer

Central Office

Singhadurbar Plaza, Kathmandu

GPO Box: 8368

Phone: 977-1-425-2595

Fax: 977-1-422-5302

Email: <intlbkng@rbb.com.np>

Website: <http://rbb.com.np/>

Himalayan Bank Ltd.

Mr. Ashok Rana, Chief Executive Officer

Tridevi Marg, Thamel

Kathmandu, Nepal

Phone: 977-1-4227749, 4250201

Fax: 977-1-4222800

Email: <hbl@hbl.mos.com.np>

Website: <http://www.sajilo.com/himalayanbank/>

NABIL Bank Limited

Mr. Anil Shah, Chief Executive Officer

\"Nabil House\" Kamaladi

Kathmandu, Nepal

Phone: 977-1- 4429546, 4429547

Fax: 977-1- 4429548

E-mail: <nabil@nabilbank.com.np>

Website: <http://www.nabilbankltd.com/>

Standard Chartered Bank Nepal Limited

Mr. Sujit Mundul, Chief Executive Officer

Naya Banashwor

Kathmandu, Nepal

Phone: 977-1-4782333, 4783304

Fax: 977-1-4780314

Website: <http://www.standardchartered.com/np/index.html>

Nepal Investment Bank Ltd.

Mr. Prithivi Bahadur Pandé, Chairman/Chief Executive Director

Durbar Marg, P.O. Box: 3412

Kathmandu, Nepal

Phone: 977-1- 4228229, 4228231

Fax: 977-1-4226349, 4228927

E-mail: <info@nibl.com.np>

Website: <http://www.nibl.com.np/>

Nepal SBI Bank Limited

Mr. N Krishnamachari, Managing Director

Durbar Marg

Kathmandu, Nepal

Phone: 977-1-4435516, 4435613

Fax: 977-1-4435612

Email: <nsblco@mos.com.np>

Nepal-Bangladesh Bank Ltd.

Mr. Basudev Ram Joshi, Chief Executive Officer

P O. Box: 9062

Bijuli Bazar, New Baneswor, Kathmandu, Nepal

Phone: 977-1-4783972/4783975/4783976

Fax: 977-1-4784326/4780106/4780509

E-mail: <nbblho@nbbl.com.np>

Website: [http://www.nbbl.com.np](http://www.nbbl.com.np/)

Bank of Kathmandu Ltd.

Mr. Radhesh Pant, Managing Director

Kamal Pokhari, P.O. Box 9044

Kathmandu, Nepal

Phone: 977-1-4418068, 4414541

Fax: 977-1-4418990

Email: <bok@bokltd.mos.com.np>

Everest Bank Limited

Mr. Jas Pal Singh Jass, Executive Director

EBL House, Lazimpath, P.O.Box 13384

Kathmandu, Nepal

Phone: 977-1-4443863, 4443864, 4443377

Fax: 977-1-4443160

Email: <ebl@mos.com.np>

Website: <http://www.everestbankltd.com/>

## Project Financing [**Return to top**](#ch7)

Major projects in Nepal are financed through foreign consortium
financing. Infrastructure projects developed by the public sector are
funded by forming a consortium of a number of multilateral funding
agencies such as the World Bank, the Asian Development Bank and
bilateral funding agencies. Similarly, projects developed by the private
sector are funded by forming a consortium of a number of foreign
commercial lenders. Both the World Bank and the Asian Development Bank
are active in lending for development activities, including
infrastructure projects such as roads, telecommunications, and
hydroelectric power. Both provide loan and grant financing for public
sector projects and loan financing for local companies.

The United States Export-Import Bank (Ex-Im Bank) can lend to both the
private and public sectors in Nepal, but only against a public sector
guarantee. Availability of credit varies from year to year depending on
Nepal\'s updated risk rating. The Overseas Private Investment
Corporation (OPIC) can make limited financing available to projects with
U.S. investment interest. Agreements with Ex-Im Bank, OPIC and the
International Finance Corporation (IFC) are in place. There are also
numerous bilateral financing and insurance arrangements. The U.S. Trade
and Development Agency (TDA) can fund feasibility studies for projects
with significant commercial implications for exports of U.S. goods and
services. In the case of the Upper Bhote Koshi Hydroelectric Project,
for example, TDA provided a USD 500,000 grant for completion of a final
feasibility study.

The Nepali banking system is small, fragmented, and, in some cases,
plagued by bad loans. As of July 2007, the latest figures available, all
banking system assets totaled approximately USD 8.13 billion. Banking
system capital (total deposits) for the same period totaled USD 5.93
billion. As of mid-December 2007, the total amount of outstanding loans
of commercial banks to the private sector was USD 3.96billion.
Accordingly, the gross convertible foreign exchange reserve of the
banking sector reached USD 2.46 billion, enough to finance merchandise
imports equivalent to 10.3 months. Banks are only willing to consider
loans with terms of up to five years. It is difficult to borrow in
excess of USD 20 million from any combination of banks in Nepal.
Similarly, liquidity constraints restrict to less than USD 5 million the
capital that can practically be raised on the Nepal Stock Exchange
through any one public issue. There is no regulatory system to encourage
and facilitate portfolio investment in the industrial sector.

Foreign commercial lending is scarce and expensive. Currently, there are
no resident or non-resident foreign commercial banks that have standing
credit limits for loans of a maturity of more than one year. The
government has recently decided to permit foreign institutional
investors to own up to 25 percent of the shares of listed firms in
certain sectors such as hydropower and tourism. Promoters can sell their
shares and repatriate capital. Through an amendment in the licensing
policy of financial institutions, on July 26, 2006, Nepal Rastra Bank
(NRB), the central bank of Nepal, increased the maximum foreign equity
participation limit in domestic financial institutions to 85 percent
from 67 percent. With the recent amendment, equity participation of
foreign investors in joint venture financial institutions could range
between 20 - 85 percent.

## Web Resources [**Return to top**](#ch7)

Export-Import Bank of the United States:
[http://www.exim.gov](http://www.exim.gov/)

Country Limitation Schedule:
<http://www.exim.gov/tools/country/country_limits.html>

OPIC: [http://www.opic.gov](http://www.opic.gov/)

Trade and Development Agency: <http://www.tda.gov/>

SBA\'s Office of International Trade: <http://www.sba.gov/oit/>

USDA Commodity Credit Corporation:
<http://www.fsa.usda.gov/ccc/default.htm>

U.S. Agency for International Development:
[http://www.usaid.gov](http://www.usaid.gov/)

Nepal Rastra Bank (Nepal's Central Bank): <http://www.nrb.org.np/>

Foreign Exchange Control: <http://www.nrb.org.np/exchangenew.php>

U.S. Trade and Development Agency (USTDA): <http://www.tda.gov/>

United States Ex-Imbank: <http://www.exim.gov/>

International Finance Corporation (IFC): <http://www.ifc.org/>

The World Bank: <http://www.worldbank.org/>

Asian Development Bank: <http://www.adb.org/>

Rastriya Banijya Bank: <http://rbb.com.np/>

Himalayan Bank Ltd: <http://www.sajilo.com/himalayanbank/>

NABIL Bank Limited: <http://www.nabilbankltd.com/>

Standard Charter Bank Nepal Limited:
<http://www.standardchartered.com/np/index.html>

Nepal-Bangladesh Bank Ltd:
[http://www.nbbl.com.np](http://www.nbbl.com.np/)

Nepal Investment Bank Ltd.: <http://www.nibl.com.np/>

Everest Bank Limited: <http://www.everestbankltd.com/>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch8 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 8: Business Travel

-   [Business Customs](#business-customs-return-to-top)

-   [Travel Advisory](#travel-advisory-return-to-top)

-   [Visa Requirements](#visa-requirements-return-to-top)

-   [Telecommunications](#telecommunications-return-to-top)

-   [Transportation](#transportation-return-to-top)

-   [Language](#language-return-to-top)

-   [Health](#health-return-to-top)

-   [Local Time, Business Hours and
    Holidays](#local-time-business-hours-and-holidays-return-to-top)

-   [Temporary Entry of Materials and Personal
    Belongings](#temporary-entry-of-materials-and-personal-belongings-return-to-top)

-   [Web Resources](#web-resources-return-to-top-4)

## Business Customs [**Return to top**](#ch8)

Nepal is ethnically, linguistically, and culturally diverse. Traditional
and conservative by nature, the Nepalese are congenial people who take
pride in their national heritage. Business relations, as in much of
Asia, are often tied to commonalties. Foreigners must be prepared to
obtain the appropriate introductions and to spend the proper amount of
time on confidence-building before entering into serious business
negotiations. Visitors are normally greeted by saying \"Hello\" or
\"*namaste,\"* followed by a handshake. An exchange of greeting cards
follows next. Nepalese like conversing briefly before entering into
business negotiations. Normal business attire is appropriate.

## Travel Advisory [**Return to top**](#ch8)

For information, visit the State Department's Consular Information Sheet
on Nepal at: <http://travel.state.gov/travel/cis_pa_tw/tw/tw_927.html>

## Visa Requirements [**Return to top**](#ch8)

Nepal is a developing country with extensive facilities for tourists
that vary in quality according to price and location. A passport and
visa are required for entry. A single-entry tourist visa for a stay of
up to 60 days is issued at ports of entry upon arrival as well as from
Nepalese diplomatic missions abroad for USD 30.

A traveler who has been to Nepal before on a tourist visa which has
expired within the past 150 days can return on an entry visa by paying
USD 50 for 30 days at entry points or at Nepalese diplomatic missions
abroad. In addition, a visitor who wishes to stay for more than 60 days
can extend the tourist visa for 30 days by paying the equivalent of USD
50 in Nepalese currency to the Department of Immigration.

Multiple-entry business visas for one and five years can be obtained
from the Department of Immigration on the recommendation of the Ministry
of Industry by paying the equivalent of USD 100 and USD 250 respectively
(in Nepalese currency).

Travelers can obtain additional information by contacting the Nepalese
Embassy at 2131 Leroy Place, NW, Washington, DC 20008: Telephone
202/657-4550; or the Nepalese Consulate General in New York: Telephone
212/370-4188.

Visas in Nepal define the period for which a visitor has permission to
stay. Six-month visas are provided to prospective investors for the
purpose of conducting feasibility studies. To obtain a six-month visa,
applicants must provide biographic information and a description of
relevant work and professional experience. The process can be expedited
if the person can be readily identified as a legitimate business
representative. Endorsement by a recognized foreign industrial
enterprise is one means of accomplishing this. Investors describe the
business visa process as bureaucratic and time-consuming. Many say they
spent more than 24 work hours per visa, over a period of 20 to 30 days.

U.S. Companies that require travel of foreign businesspersons to the
United States should be advised that security options are handled via an
interagency process. Visa applicants should go to the following links.

State Department Visa Website: <http://travel.state.gov/visa/index.html>

United States Visas.gov: <http://www.unitedstatesvisas.gov/>

US Embassy Kathmandu website: <http://nepal.usembassy.gov/>

## Telecommunications [**Return to top**](#ch8)

Telephone facilities are fairly good in Kathmandu and other major towns
such as Pokhara, Biratnagar, Birgunj, Bhairahawa and Nepalgunj. The
quality of telephone services outside major cities is poor. Large hotels
in Kathmandu have business centers with 24-hour service available for
telephone, fax, email, and internet. Collect call services are not
available in Nepal. Private call centers, which provide telephone,
email, fax and Internet services are available at many places, but
normally operate from 8:00 in the morning to 8:00 in the evening.
Internet accessibility is through dial-up connections, which generally
makes access slow. However, broadband services are expanding in
Kathmandu and elsewhere. Cellular phone services are based on GSM
technology, although CDMA technology is also beginning to be installed.
Telecommunication services are generally more costly than in the United
States.

## Transportation [**Return to top**](#ch8)

Nepal is a landlocked country and transportation both within and across
borders is a major hurdle for doing business. When traveling to
Kathmandu, U.S. business visitors can either take the Pacific route or
the Atlantic route. U.S. airlines do not fly directly to Kathmandu but
have alliances with other foreign airlines operating in Nepal. For
visitors coming via the Pacific route, Bangkok is the major transit
port. Thai Airways operates daily direct flights to and from Kathmandu.
Nepal Airlines operates two direct flights a week to Hong Kong, two
flights a week to Dubai, two flights a week to Bangkok, and two flights
a week to Kuala Lumpur (although its flights have frequently been
subject to cancellations due to a lack of operational engines), Silk Air
operates one flight daily to Singapore. Dragon Air operates four direct
flights a week to Hong Kong. Xpressair has 1 daily flight from Kathmandu
to Kuala Lumpur. Similarly, for visitors coming via the Atlantic route,
in addition to Vienna, major European ports are connected via Doha,
Sharjah and Abu Dhabi. Austrian Airlines, Gulf Air, Air Arabia, Etihad
Airways and Qatar Airways have connecting flights to Kathmandu. Qatar
Airways has two flights daily to and from Kathmandu, Gulf Air operates
seven flights a week and Air Arabia operates one flight daily Nepal
Airlines operates two direct flights a week to Dubai. New Delhi -
Kathmandu is the most well-connected route as at least five airlines
operate flights between these two cities, with at least three flights
every day.

Nepal has one international airport in Kathmandu, 3 regional/hub
airports and 9 all-weather and 21 seasonal domestic airports spread
throughout the country. Except for the international airport in
Kathmandu, none of the domestic airports have modern navigational
facilities such as radar. Domestic air services are available for
traveling to major cities and business centers. Nepal has neither a
seaport nor a railway system. Road transportation is constrained. An
east-west highway, which passes through the plains, connects the major
cities of Nepal, but the road network with other parts of the country is
very poor.

## Language [**Return to top**](#ch8)

The official language of Nepal is Nepali and the script is Devanagari,
which is the same script in which Hindi is written. The main language of
business is Nepali. However, many businesspeople also speak both Hindi
and English. All internal documentation and correspondence in government
establishments are done in the Nepali language. Correspondence with
foreign government agencies, international organizations and private
businesses is done in English. In the private sector, English is used
for most documentation and correspondence.

## Health [**Return to top**](#ch8)

Medical care is extremely limited and generally not up to Western
standards. Serious illness often requires evacuation to the nearest
adequate medical facility (in Singapore, Bangkok or New Delhi). Doctors
and hospitals in Nepal expect immediate cash payment for health
services. In general, U.S. medical insurance is not valid in Nepal. The
Medicare/Medicaid Program does not provide for payment overseas.
Supplemental health insurance that specifically covers overseas
treatment and air evacuation to the nearest adequate medical facility is
strongly recommended. Illnesses and injuries suffered while trekking in
remote areas often require rescue by helicopter. The cost is typically
USD 3,000 - 10,000. The U.S. Embassy strongly recommends visitors obtain
travel insurance to cover such emergencies.

More common are illnesses caused by impure water or food. Some locally
bottled water may be unsafe. Drinking only boiled water or bottled water
that has been disinfected (with iodine, chlorine, etc.) is advised.
Locally bottled soft drinks, club soda, and beer are generally safe.

Additional information on health matters may be obtained from the
International Traveler\'s Hotline of the Centers for Disease Control and
Prevention (CDC) at 888/232-3228, the autofax service at 888/232-3299,
or by visiting the CDC home page on the internet at
[http://www.cdc.gov](http://www.cdc.gov/).

## Local Time, Business Hours, and Holidays [**Return to top**](#ch8)

Nepal's Standard Time is 5 hours 45 minutes ahead of GMT and 10 hours
and 45 minutes ahead of Eastern Standard Time. Nepal does not observe
daylight saving time. All government offices and banks operate a six-day
workweek from Sunday to Friday. Typical business hours are 9 a.m. - 5
p.m. Most businesses (including stores) close on Saturday, but this is
gradually changing. Sunday is a workday in Nepal for the business
community.

National Holidays (2008)

**Date Holidays Day Remarks**

January 15, 2008 Maghi Parba Tuesday

January 30, 2008 Martyr Day Wednesday

February 8, 2008 Lhosar Friday

February 19, 2008 National Democracy Day Tuesday

March 6, 2008 Mahashivaratri Thursday

March 8, 2008 Women\'s Day Saturday For ladies only

March 21, 2008 Holi Saturday

April 13, 2008 Nepali New Year Day Sunday

April 14, 2008 Ramnawami Monday

April 23, 2008 Democracy Day Wednesday

May 1, 2008 Labor Day Thursday

May 20, 2008 Buddha Jayanti Tuesday

August 17, 2008 Gai Jatra (For Kathmandu only) Sunday

August 24, 2008 Krishna Janmastami Sunday

September 2, 2008 Teej Tuesday For ladies only

September 4, 2008 Rishi Panchami Thursday For ladies only

September 18, 2008 Indrajatra Thursday

September 30, 2008 Ghatasthapana Tuesday

October 1, 2008 Eid-Ul-Fitr Wednesday

October 6-14, 2008 Dashain Holidays Thursday - Tuesday

October 26-29, 2008 Diwali Sunday - Wednesday

November 4, 2008 Chhath Tuesday

December 8, 2008 Eid-ul-Ajha Sunday For Muslims only

December 25, 2008 Christmas Day Thursday

December 30, 2008 Lhosar (Tamu) Tuesday

[]{.mark}

[]{.mark}

NOTE. Exact dates for holidays are announced by the GON at the beginning
of each Nepali year (mid-April).

## Temporary Entry of Materials and Personal Belongings [**Return to top**](#ch8)

Materials \-- including vehicles, machinery, and equipment \-- may be
imported temporarily for special purposes such as domestic exhibitions
or fairs by making a refundable deposit of the applicable duty. Such
goods must be taken out of the country within three months of the
completion of the work unless the duty has been paid and the item sold
for the use of others or retained for personal use. An extension of the
three-month period may be granted on appropriate and reasonable grounds
upon payment of an additional ten percent of the applicable duty amount.
If the duty is not paid or the goods are not re-exported within six
months of entry, the government may bring smuggling charges.

## Web Resources [**Return to top**](#ch8)

FAA Internet home page: <http://www.faa.gov/avr/iasa.htm>

U.S. Embassy\'s home page: <http://nepal.usembassy.gov/>

Department of Immigration, GON: <http://www.immi.gov.np/main.php>

Centers for Disease Control

and Prevention: [http://www.cdc.gov](http://www.cdc.gov/)

State Department's

Consular Info Sheet:
<http://travel.state.gov/travel/cis_pa_tw/cis/cis_980.html>

Austrian Airlines: <http://www.aua.com/at/eng/>

Indian Airlines: <http://indian-airlines.nic.in/scripts/index.asp>

Gulf Air: <http://www.gulfairco.com/index/index.asp>

Qatar Airways: <http://www.qatarairways.com/>

Nepal Airlines: <http://www.royalnepal-airlines.com/>

Thai Airways: <http://www.thaiair.com/>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 9: Contacts, Market Research, and Trade Events

-   [Contacts](#contacts-return-to-top-1)

-   [Market Research](#market-research-return-to-top)

-   [Trade Events](#trade-events-return-to-top)

## Contacts [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

U.S. EMBASSY TRADE-RELATED CONTACTS:

Political/Economic Section

U.S. Embassy

Maharajgunj

Kathmandu, Nepal

Tel: 977-1-4007200

Fax: 977-1-4007272

Williams S. Martin, Political/Economic Chief

Email: <MartinWS@state.gov>

Carla L. Bachechi, Political/Economic Officer

Email: [BachechiCL@state.gov](../BachechiCL@state.gov)

Tapas K. Gupta, Economic/Commercial Specialist

Email: <GuptaTK@state.gov>

Website: <http://nepal.usembassy.gov/>

U.S. Mailing Address:

U.S. Embassy Kathmandu

6190 Kathmandu Place

Dulles, VA 20189-6190

BILATERAL CHAMBERS OF COMMERCE

Nepal-USA. Chamber of Commerce and Industry (NUSACCI)

Tel: 977-1-4478020, Fax: 977-1-478020

Email: <nuscci@mos.com.np>

NEPAL TRADE AND INDUSTRY ASSOCIATIONS

Federation of Nepalese Chambers of Commerce & Industry (FNCCI)

Tel: 977-1-4262061, 4262007, Fax: 977-1-4261022

Website: [http://www.fncci.org](http://www.fncci.org/)

Nepal Chamber Of Commerce

Tel: 977-1-4222890, 4258269, Fax: 977 1 4229998

Email: <chamber@wlink.com.np>

Website: [http://www.nepalchamber.org](http://www.nepalchamber.org/)

Confederation of Nepalese Industries

303 Bagmati Chambers

Teku, Kathmandu

Nepal

Tel: 977-1-4243 711

Email: info@cnind.org

Website: http://www.cnind.org

Cargo Agents Association of Nepal

Tel: 977-1-4410403, Fax: 977-1-4419858

Handicraft Association of Nepal

Tel: 977-1-4245467, 4244231, 4243015, Fax: 977-1-4222940

Email: <handi@crft.mos.com.np>

Website: <http://www.yomari.com/han/>

Central Carpet Industries Association of Nepal

Tel: 977-1-4413135, 4422729, Fax: 977-1-4422891

Website: [www.nepalcarpet.org](http://www.nepalcarpet.org/)

Freight Forwarders Association of Nepal

Tel: 977-1-4419769

Garment Association of Nepal

Tel: 977-1-4482691, 4481773, Fax: 977-1-4482173

Website: <http://www.ganasso.org/>

Management Association of Nepal

Tel: 977-1-4224475, Fax: 977-1-4240475

Website: <http://www.man.org.np/>

Nepal Association of Tour and Travel Agents (NATTA)

Tel: 977-1-4418661 or 4419409, Fax: 977 1 4418684

E-mail: <nata@mail.com.np>

Website: [http://www.nata.org.np](http://www.nata.org.np/)

Nepal Foreign Trade Association

Tel: 977-1-4223784, Fax: 977-1-4228562

Women Entrepreneurs Association of Nepal

Tel: 977-1-525031, Fax: 977-1-411277

Hotel Association Nepal (HAN)

Tel: 412705, 410522, Fax: 977-1-424914

E-mail: <info@hotelassociation.org.np>

Website:
[http://www.hotelassociation.org.np](http://www.hotelassociation.org.np/)

GOVERNMENT OF NEPAL MINISTRIES AND OFFICES

Ministry of Finance, Singha Durbar, Kathmandu

Tel: 977-1-4259880, 4259809, Fax: 977-1-4259891

Website: [http://www.mof.gov.np](http://www.mof.gov.np/)

Ministry of Industry, Commerce & Supplies, Singha Durbar, Kathmandu

Tel: 977-1-4226686, Fax: 977-1-4220319

Website: <http://www.moics.gov.np/index.php>

Ministry of Tourism & Civil Aviation, Singha Durbar, Kathmandu

Tel: 977-1-4225870, 4228840, Fax: 977-1-4227758

Website: [http://www.tourism.gov.np](http://www.tourism.gov.np/)

Ministry of Information & Communications, Singha Durbar, Kathmandu

Tel: 977-1-4220150, 4227525, Fax: 977-1-4221729

Website: <http://www.moic.gov.np/>

Trade and Export Promotion Center, Pulchowk, Lalitpur

Tel: 977-1-5525716, 5525348, 5525898, 5525362, Fax: 977-1-5525464

Website: <http://www.tepc.gov.np/>

Nepal Tourism Board, Bhrikuti Mandap, Kathmandu

Tel: 977-1-4247037, Fax: 977-1-4227281

Website: <http://www.welcomenepal.com/>

## Market Research [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

The following research reports are available from the Nepal-USA Chamber
of Commerce and Industry:

\"Hydropower Opportunities in Nepal,\" April 1996

\"Marketing to Nepal,\" October 1996

An \"On-Line Commercial Library\" is available on the U.S. Embassy
Kathmandu web page at: <http://www.south-asia.com/USA/>

Country and Industry Market Reports are also available on the export.gov
website at: <http://www.export.gov/OneStopConsumer/OneStop/mrllogin.jsp>

To view market research reports produced by the U.S. Commercial Service,
please go to the following website:
[http://www.export.gov/marketresearch.html](http://www.export.gov/marketresearch.html )
and click on Country and Industry Market Reports.

Please note that these reports are only available to U.S. citizens and
U.S. companies. Registration is required, but free of charge.

## \`Trade Events [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

Please click on the link below for information on upcoming trade events.

<http://www.export.gov/tradeevents.html>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

[[]{#ch10 .anchor}Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# Chapter 10: Guide to Our Services

[Advocacy and Counseling]{.underline}

We provide export counseling to help you increase your exports to
Nepalese markets and get you the information and advice that you need to
succeed. U.S. diplomats and other officials will also help your company
when unanticipated problems arise: resolve payment issues, settle
disputes, win contracts, and overcome regulatory hurdles. Support can
include arranging government-to-government meetings between post
Economic/Commercial Officers, or more senior Embassy officers, and
high-level foreign government officials.

[Agent Distributor Search: Finding Business Partners in
Nepal]{.underline}

You can find qualified buyers, partners, or agents without traveling to
the country. The Embassy\'s Political/Economic Section will deliver
detailed company information on up to five prescreened Nepalese
companies that have expressed an interest in your company\'s products
and services. The service is made available for a fee.

[Gold Key Matching Service]{.underline}

The Political/Economic Section can help you find a buyer, partner, agent
or distributor. The Gold Key Service provides you with one-on-one
appointments with pre-screened potential agents, distributors, sales
representatives, association and government contacts, licensing or joint
venture partners, and other strategic business partners in Nepal. This
service is made available at fees ranging from \$300 to \$600.

[Trade Leads]{.underline}

U.S. Embassy Kathmandu keeps track of all the major trade and supply
opportunities for U.S. businesses in Nepal. Supply tenders advertised by
government agencies and projects funded by donor agencies are forwarded
to a trade leads database. Such trade leads are also available at our
BuyUSA website: <http://www.buyusa.gov/nepal/en/>. All of our trade
leads are provided as a free service for U.S. exporters.

[International Company Profile]{.underline}

The Political/Economic Section of the U.S. Embassy in Kathmandu will
prepare an International Company Profile (ICP) for U.S. businesses on
request. It is a paid service and normally routed through the Department
of Commerce, U.S. Export Assistance Center near you. Before you do
business with a prospective agent, distributor, or partner, the
International Company Profile will give you the background information
you need to evaluate the company.

[Catalog Events]{.underline}

U.S. Embassy Kathmandu occasionally organizes catalog events. Depending
on the interest of local companies, the Political/Economic Section
determines which industry sector has the best potential for U.S.
businesses. Catalog exhibition programs are organized in coordination
with U.S. Commercial Service, New Delhi. We display your marketing
materials, collect sales leads from interested local buyers, and then
assist you as you follow up with the local contacts.

Web Resources:

BuyUSA website: <http://www.buyusa.gov/nepal/en/>.

Department of Commerce

U.S. Export Assistance Centers:
<http://www.sba.gov/oit/export/useac.html>

The U.S. Commercial Service offers customized solutions to help your
business enter and succeed in markets worldwide. Our global network of
trade specialists will work one on one with you through every step of
the exporting process, helping you to:

-   Target the best markets with our world-class research

-   Promote your products and services to qualified buyers

-   Meet the best distributors and agents for your products and services

-   Overcome potential challenges or trade barriers

For more information on the services the U.S. Commercial Service offers
U.S. businesses, please click on the link below.

<http://www.buyusa.gov/nepal/en/tradeopps.html>

[Return to table of
contents](#doing-business-in-nepal-2008-country-commercial-guide-for-u.s.-companies)

# 

U.S. exporters seeking general export information/assistance or
country-specific commercial information should consult with their
nearest **Export Assistance Center** or the **U.S. Department of
Commerce\'s Trade Information Center** at **(800) USA-TRADE**, or go to
the following website: [http://www.export.gov]()\
\
To the best of our knowledge, the information contained in this report
is accurate as of the date published. However, t**he Department of
Commerce** does not take responsibility for actions readers may take
based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other
commercial arrangements. **The Department of Commerce** can assist
companies in these endeavors.