Investment Environment
and Incentives in Nepal
Presented by: Mr. Mikio TAMADAJICA Foreign Investment Expert
Investment Board Nepal (IBN)1

Nepal: Country Profile
Official Country Name

Federal Democratic Republic of Nepal

CapitalKathmandu

Population

28.72 million (about 3 million people in the Kathmandu Valley)Area

147,181 square km (about 1/3 of Japan)

Altitude

59 to 8,848 meters (Mt Everest)

Language

Nepali, written in Devanagari script; English is widely used in business

Religion

Hinduism 81.3%, Buddhism 9.0%, Islam 4.4%, Kirat 3.1%, Christianity 1.4%

Currency

Nepalese Rupee (NPR)(July 30, 2018 - Central Bank)
US $ 1 = NPR 109.55; JP ¥ 1 = NPR 0.99

Foreign exchange reserves

US$ 10.08 billion (Mid-July 2018)

Corporate tax

General corporate 25% However, infrastructure, road construction 20%

Nepalese Japanese society

Regular members: 176 people; supporting members

Japan Chamber of Commerce 40 member companies (July 2018)
and Industry (JCCN)
Population: (Projected) Population Census 2011, Central Bureau of Statistics (CBS); Foreign exchange reserve: Nepal Rastra Bank (NRB) – Central Bank of Nepal2

Direct International flights from Kathmandu
TurkeyIncheonSeoul

DammamDohaDubai
Abu Dhabi

New Delhi

Kathmandu

Lhasa
ParoDhaka

MuscatChengduKunming

Kolkata

HongKong

MumbaiBengaluru

Note: Direct flight from Kathmandu to
Osaka to be added soon

Guangzhou

Bangkok

Kuala Lumpur

Singapore

Osaka

Indian States neighboring Nepal

Source: https://www.census2011.co.in/states.php;
Nepal: Census 2011 - CBS

Biratnagar
Customs Office

Nepalgunj Road
Railway Station

To New Delhi(1275 km)Nanpara Junction
Railway Station
Bahraich RailwayStation

To New Delhi(540 km)
To Kolkata Port
(576 km)
To Mumbai(2000 km)

Index
Country Border
Major Road

Source: Google Maps

To Kolkata Port
(856 km)Benefits of investing in Nepal
1.

2.

3.

Export market;• India (Population: 1,342,512,706)• China (Population: 1,415,045,928)• SAARC (Population: 1,788,388,852)

Incentives;• Special Economic Zones: Tax exemption• Bonded Warehouse Facility: Export oriented industrial• Industrial Districts: Development and management bythe government• Corporate Tax Rate: Lower than in other SAARC
countries

Working population (17.053 million) (Source: WorldBank Data Bank)• Minimum wage (about $ 120 per month) (Source: Ministryof Labor, Employment and Social Security, GON)

4.

Nepal-India border：
Birgunj dry port

Assembly plant: Difference in import duty
between components and final products
6Special Economic Zone (SEZ)
Income tax 100% exemption for the first 5years; 50% for next 5 years
100% exemption for SEZ for 10 years inmountainous area
• Started development in 2013 to promote
Tax exemption for the first 5 years on profit
exportdividends; 50% for next 3 years• Under the jurisdiction of Ministry ofRebate on land and building rent
Commerce, Special Economic Zone
Authority (SEZA)
Zero VAT facilities• Established in 14 domestic sites• One stop window at SEZA
Customs duty concessions
Strikes and protests prohibited

Source: Special Economic Zone Act, 2015

40% tax exemption for infrastructure provided
by BOOT
7

Industrial Districts (IDs) under development
Industrial District

Location

Area (Ha)Situation

Damak

Jhapa

1,419

637 Ha acquired

SagarnathSarlahi

2,027

Master Plan being
prepared

Lamki

Kailali

743

Master Plan completed

Satakhani

Surkhet743

Master Plan completedTotal

5 announced by GON, 5 to beannounced as of Nov 5, 2018

8,607

10 others inoperation (295 Ha)

Source: ID Brochure, 2018

209 Ha under Lease
Contract9Bonded WarehousesystemNecessary documents

Bonded Warehouse Registration• Get license from customs offices (1 year validity)
Import raw material• With bond covering 115% of Import duty (10% isservice charge for Bonded Warehouse)• Process raw material in Bonded Warehouse
Export the final products• Import duty free as ‘Made in Nepal’• 10% service charge is exempted as ‘Made inNepal’
Get customs duty and fee refund

For bonded warehouse registration- Company registration- Foreign investment approval- Industry registration- L/C for raw material import- Bond covering import duty plus 15%
For Nepal origin “Made in Nepal”
Certificate of origin to be issued by:- Federation of Nepalese Chambers ofCommerce and Industries (FNCCI)- Nepal Chamber of Commerce (NCC)

SEZ, ID and Dry Port locations near the Indian border
Motorcycle Assembly Plant(Nawalparasi District)

Tribhuwan InternationalAirport

Nepalganj

Dry port
SEZID

Bhairahawa
Birgunj
SimaraSource: Nepal Investment Guide, 2018

Biratnagar (Approx.

700 km from Kolkata Port)

Assembly Plant (Motorcycle)
A recently established motorcycle assembly industry inNepal:• Manufactures up to 30 motorcycles per day• Components supplied by parent company from India• Operations under direct supervision of parentcompany• Investment in the assembly unit: NPR 700 million(approx. US$ 7 million)

Price range of two-wheelers in Nepal:
US$ 1,700 to US$ 41,000
Average price rates of most popular twowheeler segments in Nepal:
Motorcycles (200 cc): US$ 4,000
Scooters: US$ 1,900• No. of employees: 50• Import tax on finished motorcycle is 30%• Import tax on Motorcycle parts is 5-15%• Excise duty of finished motorcycle is 40-100%• Excise duty of motorcycle parts is 5%

Source: The Himalayan Times (Dec 25, 2017)12

Total duty on selected products by HS code
HSDescription
Import Excise duty
VAT
code
Duty
Motorcycles and Mopeds
8711 Motorcycles and30
40-100 (based 13mopeds
on engine cc)
8714 Motorcycle and moped 5-15513parts and accessories

Source: Customs tariff 2017/18 – DOC, MOF; Finance bill 2018

Total duty

105.66 - 193.8
35.56 - 36.45

Japan DeskatInvestment Board Nepal
JAPAN DESK at IBN
East Building of Federal Parliament Building
New Baneshwor, Kathmandu, Nepal
Contact Number: +977-1-4475277,4475276, 4475278, 4475280, Ext no.: 209
Email address: japandesk@ibn.gov.np
Representative: Mikio TAMADA, JICA Expert
Incharge: Rajiv SHAKYA, Consultant
IBN Japan Desk has been established as an invitation to Japanese investors in Nepal.
14

Grow together

Mr. Mikio TAMADAJICA Foreign Investment ExpertInvestment Board Nepal (IBN)
Mail: tamada.mikio@friends.jica.go.jp
Narayanhiti Palace Museum, Kathmandu

Aganchen, Hanuman Dhoka Palace,Kathmandu Durbar Square

Photo Credit: JICA Nepal15