Chapter-5 Exemptions, Facilities and Concessions to be Provided to Industries with Foreign Investment or Foreign Investors

Chapter-5 Exemptions, Facilities and Concessions to be Provided to Industries with Foreign Investment or Foreign Investors

 Facilities to be obtained by industries: (1) In addition to the exemptions, facilities, concessions or protection referred to in this Act, be provided to any industry with foreign investment, such exemptions, facilities or concessions as may be available under the prevailing Industrial Enterprises Act and other prevailing law shall.

(2)        Notwithstanding anything contained in sub-section (1), such facilities to which a sick industry is entitled in accordance with the prevailing law shall not be available to any industry with foreign investment.

  1. Facility to deal with foreign currency: (1) A foreign investor or industry with foreign investment may open an account in Nepali currency with any commercial bank, infrastructure development bank or financial institution of Nepal and in foreign currency with any bank or financial institution licenced to deal with convertible foreign currency in accordance with the prevailing law and carry on transaction accordingly.

Provided, however, that approval of the Nepal Rastra Bank shall be obtained to carry on transaction by opening an account in convertible foreign currency.

(2)        An industry with foreign investment may, in order to mitigate the foreign currency exchange fluctuation risk, use any approved derivatives equipment through a bank or financial institution.

  1. Facility of foreign currency: (1) An industry with foreign investment may, on recommendation of the foreign investment approving body, and with the approval of the Nepal Rastra Bank, obtain the foreign exchange facility for such amount as may be required for the following purposes:

(a)        To pay such remuneration as may be payable to any foreign expert, technical or managerial employee employed in the industry in accordance with Section 27,

(b)        To pay the principal or interest of any bonds or debentures issued in accordance with sub-section (1) of Section 11,

(c)        To repatriate the foreign investment or income earned in accordance with Section 20.

(2)        After obtaining approval from the Nepal Rastra Bank in accordance with sub-section (1), an industry with foreign investment may pay or use such amount as approved from the foreign currency held in the account of such industry as referred to in Section 25.

(3)        Any foreign expert, technical or managerial employee employed in an industry in accordance with Section 27 may repatriate to his or her country in convertible foreign currency such amount of saving out of the remuneration receivable by him or her, after paying income tax in Nepal in accordance with the prevailing law.

(4)        The exchange or repatriation of convertible foreign currency in accordance with sub-section (2) or (3) shall be made according to the open market exchange rate.

  1. Provision relating to experts, top-level technical and managerial employees: (1) An industry with foreign investment shall fulfill the positions of experts in its top-level management, high-level technical, managerial employees or technical employees from amongst the Nepali citizens.

(2)        Notwithstanding anything contained in sub-section (1), if an industry with foreign investment cannot fulfil the positions of experts in its top-level management, high-level technical, managerial employees or technical employees from amongst the Nepali citizens and it is necessary to transfer technical knowledge or skill through any technical or expert of another country in such an industry, the industry may employee any foreign citizen in accordance with the prevailing law.

(3)        The concerned industry shall provide details relating to the foreign citizens employed in accordance with sub-section (2) to the Department. The Department shall provide the details also to the Ministry of Finance, Ministry of Home Affairs and Ministry of Labour, Employment and Social Security.

(4)        The employees and workers employed in any industry with foreign investment in accordance with sub-section (2) shall comply with the terms and conditions referred to in the prevailing Nepal law.

  1. Provision relating to industrial security: Such industrial security shall be provided to any industry with foreign investment as may be available to any other industry established in Nepal.
  2. Facility of identity card: The Department may provide an identity card in the prescribed form to any foreign investor who makes such foreign investment as prescribed.
  3. Provision relating to visa facility: (1) The non-tourist visa not exceeding six months shall be granted to a foreign citizen who visits Nepal to make a study, research or survey for foreign investment.

(2)        The business visa shall be granted to a foreign investor or one authorized representative of him or her and the family members of such an investor or representative to stay in Nepal until the foreign investment equal to such minimum amount as prescribed is maintained.

Explanation: For the purpose of this Section, the term “family member” means the husband or wife, father, mother and minor son, daughter of the foreign investor or his or her authorized representative.

(3)        Notwithstanding anything contained in sub-section (2), in the case of an investor who makes investment exceeding the prescribed amount, such facility shall be provided only to a maximum of two persons and his or her family member.

(4)        The residential visa shall be provided to a foreign investor who makes foreign investment in an amount exceeding one million US dollars or in convertible foreign currency equivalent thereto  at one time or to the authorised representative of him or her and the family member of such a person until the foreign investment equal to such minimum amount as prescribed is maintained.

(5)        The tourist visa shall be provided to any foreign expert, technical or managerial employee to be employed in an industry in accordance with Section 27.

(6)        The body giving working approval and work permit for the non-tourist visa shall make decision whether or not to give working approval or work permit, after completing the necessary procedures not later than fifteen days.

(7)        Other provisions relating to visa facility shall be as prescribed.

  1. Provisions relating to land:(1) A foreign investor shall have to manage such land as may be required for the industry, by purchasing it on his or her own or through other means in accordance with the prevailing law.

(2)        Notwithstanding anything contained in sub-section (1), if a foreign investor is unable to purchase or manage the necessary land on his or her own for the operation of the industry as prescribed and makes a request, setting out the content, for the purchase or acquisition of the land, the foreign investment approving body shall make necessary recommendation, coordination and facilitation for that purpose.

(3)        If such land as in excess of the ceiling is required for an industry which is operated or to be operated with foreign investment, for the establishment and operation of the industry, the body registering the industry shall make necessary recommendation, coordination and facilitation in accordance with the prevailing law. The land that is not subject to such ceiling shall be used only for the same purpose for which it has been purchased.

(4)        Other provisions relating to the provision of land in lease to an industry with foreign investment and to the ceiling of land shall be in accordance with the Industrial Enterprises Act and the prevailing law.

(5)        Other provisions relating to the land to be provided to any industry to be operated with foreign investment shall be as prescribed.

  1. National treatment to be accorded: (1) In respect of the terms applicable to the management, maintenance, use, transfer and sale of any foreign investment made in Nepal by a foreigner, subject to this Act and other prevailing law, after the commencement of this Act, such foreign investment shall, after the investment is brought into, and until it remains in Nepal, be accorded national treatment no less favourable than that accorded to any investment made by a Nepali person, in respect of the terms applicable to the management, maintenance, use, transfer and sale of such investment.

(2)        Notwithstanding anything contained in sub-section (1), in the case of a foreign investment approved prior to the commencement of this Act, the provisions contained in the prevailing law relating to foreign investment in force at the time of making such an investment shall apply, and no change shall, without his or her consent, be made that may prejudice to any facility obtained by any foreign investor in accordance with that law.

(3)        The following protection shall be accorded to any industry with foreign investment in accordance with sub-section (1):

(a)        The industry, enterprise with foreign investment shall be accorded the same treatment as accorded to any industry of the same nature with investment made by a Nepali citizen.

(b)        The industry, enterprise with foreign investment shall be free to determine the price of goods and services, subject to the prevailing law.

(c)        No industry, enterprise with foreign investment shall be prevented from doing trade, as prescribed, being limited to that industry.

(d)       No industry, enterprise with foreign investment shall be restricted to repatriate profit, investment, pay interest of, and repay the principal of, a loan.

(4)        Notwithstanding anything contained in sub-section (1), national treatment shall not apply in respect of the following matters:

(a)        Matters relating to the creation of such intellectual property rights, limits thereof, transfer of title thereto or provisions requiring compulsory licensing for the use thereof as specified in any agreement made under the World Trade Organisation,

(b)        Matters relating to the exemption or facility, if any, granted to any domestic industry or goods in accordance with the prevailing Nepal law relating to public procurement,

(c)        Matter relating to any grant or concession to be made or provided by the Government of Nepal,

(d)       Matter of non-commercial services to be provided by the Government of Nepal,

(e)        Such measures relating to financial services as may be adopted or managed by the Government of Nepal upon considering appropriate on matters such as matters relating to the protection of investors, participants in the securities market, insurance policy holders or insurance policy claimants, or relating to financial institutions having liability to safeguard the financial interests of any persons or relating to maintaining soundness, morality or financial responsibility of financial institutions,

(f)        Matters involving liability or provision to accord special treatment by the Government of Nepal because of being a party to any regional or multilateral economic, monetary organisation or organisation of similar nature to which the Government of Nepal is or will be a party,

(g)        Matters relating to the terms that may be specified by the regulatory body in accordance with the prevailing law in respect of repatriation of investment to a foreign country, repayment of loan (including principal, interest and fees), payment of service fees,

(h)        Matters relating to the protection of human, animal and plant health or the environment.

  1. Nationalisation or expropriation not to be made: (1) No industry with foreign investment in accordance with this Act shall be nationalised.

(2)        No industry shall, except for a public purpose, be expropriated directly or indirectly. If it is required to expropriate it for the public purpose, due process referred to in the prevailing law shall be fulfilled.

  1. Change in terms, services and facilities: Notwithstanding anything contained elsewhere in this Act or the prevailing law, if any provision made in a manner to change the terms of foreign investments and any exemption, facility or concession receivable by foreign investors is to the disadvantage of any foreign investor having obtained approval prior to the making of such provision, such a change shall not apply to such an investor.