Foreign direct investment (FDI) has become an integral part of cross-border economic integration and globalisation in recent decades. For developing and emerging economies like Nepal, FDI plays a crucial role in complementing domestic investments, filling technology and skill gaps, integrating into global value chains, and ultimately promoting inclusive growth and sustainable development.
Despite notable progress, Nepal still faces challenges in creating an enabling environment for productive FDI aligned with its development priorities. This contemporary book Commercial Law by Dr Newal Chaudhary undertakes a comprehensive examination of foreign direct investment (FDI) laws, policies and procedures in Nepal from a commercial legal perspective.
The book comprises seven chapters with each chapter rigorously analysing various aspects related to FDI and international investment law. Nepal’s development trajectory and prosperity will be significantly shaped by its ability to attract quality foreign direct investment (FDI).
Despite impressive progress, substantial work remains to enhance Nepal’s competitiveness as an investment destination. This comprehensive and well-researched book by the author is a timely contribution that rigorously examines the opportunities and challenges associated with FDI in Nepal.
Inside the book
The book serves as an invaluable reference guide for all stakeholders interested in Nepal’s investment climate. With its rigorous analysis of laws, policies and global trends, it will benefit academics, professionals, policymakers, investors and the general public. It provides a comprehensive blueprint for reforming the FDI regime to unleash Nepal’s immense promise.
The book delves into the importance of technology transfer and absorption for Nepal to advance socio-economic goals. The forms of FDI that foster productivity growth, diversification and global integration are emphasised. Suggested measures for building human capital, research capabilities and absorptive capacity are pragmatic. The focus on emerging technologies and industry 4.0 transformation is forward-looking.
Chapter one introduces the concept, types, importance and risks associated with FDI. It explains the research methodology, objectives and theoretical foundations governing FDI. The principles, motives and historical evolution of global foreign investment flows are summarised. The concepts of liberalisation, and privatisation and their impacts on FDI are discussed.
Chapter two traces the historical development of international investment law through a literature review. It examines multilateral agreements and conventions by the UN, WTO, World Bank and regional organisations that shaped global investment norms. Bilateral investment treaties and flagship agreements like NAFTA are analysed. Nepal’s own treaties and evolving legal approach to foreign investment are evaluated.
Chapter three extensively reviews Nepal’s regulatory framework governing FDI. Constitutional provisions, major legislations, policies, plans and reforms are examined. Important laws like FITTA, PPP Act, Companies Act, and their provisions are analysed. Statistical trends in FDI inflows, sectoral distribution and country sources are summarised. Dispute resolution mechanisms and major court cases are reviewed to draw insights.
Chapter four evaluates issues of balancing investor rights and public interest. It discusses state regulatory powers and analyses provisions in Nepali laws related to expropriation, compensation and dispute settlement. Standards like fair and equitable treatment, the most favoured nation clause are examined vis-à-vis global practices. Measures for investment promotion and FDI screening are suggested.
Chapter five explains the critical role of technology transfer and intellectual property rights for productivity and economic growth. Different modes of technology transfer through FDI are analysed both for the manufacturing and services sectors. Laws governing patents, copyrights, trademarks and industrial design in Nepal are reviewed in light of international conventions.
Chapter six undertakes an empirical analysis of FDI in Nepal. It analyses theories, models and empirical evidence to draw important findings. Gaps in policies, procedures, human capital and institutions are identified along with regulatory challenges. Priority sectors for FDI promotion are highlighted based on competitive advantages and development needs.
Chapter seven summarises the main suggestions and conclusions emerging from the research. It recommends both legal and institutional reforms to create an enabling business environment. Pragmatic measures are suggested to attract higher FDI inflows that support sustainable development and structural transformation of the Nepali economy.
Evaluation
The book reflects the author’s expertise, contemporaneous research and rigorous analysis of a complex subject. A major highlight is the comparative approach adopted while evaluating Nepal’s FDI policies, laws and institutions vis-à-vis regional peers and global standards.
This helps identify relative strengths and weaknesses in Nepal’s approach more objectively. The initial theoretical foundation provides context before delving into Nepal-specific legal and economic issues. The historical review also equips readers with an evolutionary perspective on international investment law and Nepal’s own FDI liberalisation process.
The writing style is lucid with logical organisation and transition of topics within and across chapters. The extensive literature review encompassing academic articles, government reports, laws, cases and treaties is impressive. The analytical depth in reviewing major statutes and bilateral investment treaties is commendable.
The evaluation of dispute settlement provisions and investor-state cases provides valuable insights and lessons. The focus on intellectual property rights and new technologies is forward-looking with lessons for Nepal’s own IP reform efforts. Similarly, the analysis of technology transfer channels and human capital strategies is pragmatic. Identification of competitive sectors suited for FDI promotion is well-informed by economic logic and evidence.
The suggestions cover a wide gamut ranging from policy and regulatory reforms to institutional coordination and capacity building. Detailed reform measures are recommended keeping in mind implementation challenges in the Nepali context.
The conclusions flowing from the preceding evidence-based analysis are robust. In summary, this contemporary reference book makes a valuable contribution to the academic and policy discourse on utilising FDI for Nepal’s development. It balances theoretical rigour with practical insights to appeal to a wide readership spanning students, researchers, professionals, bureaucrats, investors and the general public. The extensive research, objective analysis and pragmatic recommendations are truly noteworthy.
