July 14, 2021 Sujeev Shakya

Let Nepalis invest abroad

Stifling investment laws will now push the next wave of out-migration.

In India, when the economy had all the potential but did not allow Indians to invest abroad legally (or hire international consultants, partners and bring about foreign investments), many felt the need to migrate to a country where they could unleash their entrepreneurial potential. No wonder we see so many second generation Indians, the children of such entrepreneurs, leading global businesses and prominent organisations. Nepal could learn from this and open up to the world. But apart from low-end migration that benefits the agents connected to political powers, there is no legitimate interest to open up anything else. Nepalis by virtue of an archaic law cannot invest outside Nepal. Of course, there are many who are doing it as evident in the reports and various other documents in the public domain. People have to circumvent laws, and the easiest is to give up Nepali nationality to take a foreign one to integrate to the global business world.

Export with hands tied

It is impossible for Nepalis to open subsidiaries or companies outside Nepal and many companies who have export market potential are facing challenges due to these issues. In Rwanda, where one can open a company in less than an hour, they are baffled with the knowledge that a Nepali firm cannot open up a subsidiary or invest legally. With 37 percent of Nepali exports consisting of services export, Nepali companies need to spend money for technology, skills and business promotion abroad like never before. Yet we do not see that being made an easy task.

Companies who are doing great export business, like Goldstar shoes, cannot open an office in another country and have to fight to just remit money to pay for advertising or other expenses. The hiring of consultants has been made into a big nightmare, as if every foreign consultant is either a hidden evangelist or a front for laundering money. Reputed consultants refuse to work with Nepali firms as they do not have the patience for the paperwork and delay in receiving payments.

It is impossible for a Nepali company to recruit on campus at the best universities in the US, as there is no way foreign exchange permits are going to be provided. When we are working in foreign markets with teams comprised of foreign consultants, it becomes very difficult to manage the permits. The current scheme of things makes working as a global company out of Nepal practically impossible. This, even though the added revenue would flow back to Nepal.

With Nepali companies growing in size, there is no other option but to set eyes outside Nepal. Take a Nepali bank—it is impossible to grow at this current pace without opening branches or acquiring banks outside Nepal. The same goes for good restaurant chains that have started in Nepal that can expand to other markets. The high-end handicraft industry is the same; we experienced this first-hand by exploring taking Nepali artisans to Cambodia and setting up a factory producing high-end Nepali gold jewellery using world-class international packaging, marketing and business development.

It is interesting that despite such difficulties, private sector umbrella organisations and other bodies are silent on the matter. We cannot understand whether it is their awkwardness to bring this up with the political masters they do business with or it is the deep sense of protectionist mindset wherein they are least bothered about finding legitimate ways of expanding outside Nepal. Perhaps many family-run firms have set up self-serving superstructures where members of the family hold different passports and have mastered the art of branching.

Mitigate or Perish

Many young Nepalis have started businesses headquartered in global hubs. Their operations in Nepal are barebones, with just enough money to pay salaries and office overheads. These young Nepalis are very clear that if they move the entirety of their operations to Nepal, they will perish. The Non-Resident Nepali Association (NRNA) that could have helped to lobby for change has become yet another political organisation that serious entrepreneurs and professionals want to stay away from. Many of us are in a similar crossroad, where it is becoming increasingly frustrating to deal with the challenges of doing business out of Nepal whilst taking up global work.

On top of this, the treatment that professionals working at such firms get at the immigration counters at departure makes one question why one is living in this country. For young women team members, especially first-time travellers, the questions they have to answer and the way they are treated make one understand why many take the first opportunity to shun Nepali citizenship.

The current politics cannot be an excuse to fix this. Any government that wants economic growth needs to now realise that the economy cannot leapfrog without foreign investments and firms expanding abroad. The story of the large scale migration of talent from India can repeat itself here if the government is not open to change.