Foreign Nepal tourism investment four-fold

As reported in the local Nepal media, foreign direct investment (FDI) in the Nepal tourism industry swelled more than four-fold in 2012-13, reflecting rising investor interest in the industry due to higher arrivals following the end of the conflict.

According to the Nepal Department of Industry (DOI), investments soared to Rs 3.89 billion from Rs 837 million in the previous year. Tourism is the third highest recipient of FDI after the services and manufacturing sectors.

Foreign investments in the tourism industry were spread over 87 sectors. Industry insiders said that opportunities were expanding in hotels and resorts as 100 percent FDI is allowed in this sector as per the country’s commitment to the World Trade Organization (WTO).

Travel trade entrepreneur Yogendra Sakya said that the sudden spurt in FDI could be the result of a proposed five-star hotel project by a non-resident Nepali investor Shesh Ghale. Ghale has announced building a five-star property known as the Sheraton Kathmandu Hotel.

“Besides, there has been steady growth in Chinese investments in tourism.” Sakya said that apart from Ghale’s planned hotel project, there has been no significant investments.

Meanwhile, Purna Chandra Bhattarai, joint secretary at the Industry Division of the Tourism Ministry, said, “The government is taking several steps to attract foreign investment. And among all the sectors, tourism has been drawing the greatest interest among potential foreign investors.”

According to him, the future scenario of Nepal’s tourism is quite encouraging given its competitive nature. “Besides leisure activities, the government has planned to promote business and corporate tourism in Nepal.”

Business tourism is the provision of facilities and services to visitors who annually attend meetings, congresses, exhibitions, business events, incentive travel and corporate hospitality. Although investors are concerned about Nepal’s political climate at present, Bhattarai said that if politics were stable and there were a secure business climate, Nepal had huge tourism potential.

According to Travel and Tourism Economic Impact 2012 Nepal published by the World Travel and Tourism Council (WTTC), investments in the travel and tourism sector in 2012 amounted to Rs 12.5 billion, or 4.1 percent of the total investment.

The report said that investments would rise 8.2 percent in 2013. In 2011, the tourism industry attracted capital investments of Rs 12 billion.

Although the Kathmandu valley has not witnessed a significant rise in investments, tourism entrepreneurs said that massive amounts of money had been poured into infrastructure like hotels and restaurants elsewhere in the country.

The report shows that in 2012, Nepal earned Rs 36.6 billion from tourism, equivalent to 24 percent of the value of the country’s total exports. The income is forecast to grow 2.1 percent in 2013 and 4.1 percent per annum from 2013 to Rs 55.6 billion in 2023.

The WTTC report shows that Nepal is a popular destination for leisure activities. In 2012, foreign and domestic tourists spent Rs 84.8 billion, amounting to 79.6 percent of the direct travel and tourism GDP. Business travel spending amounted to Rs 21.7 billion. The report shows that the travel trade provided 553,500 jobs directly in 2012. The contribution was 412,500 in 2011.