Nepal has emerged as a developing economy and has become one of the best countries to invest in a different infrastructure sector. The best sectors to invest in Nepal are illustrated in detail below. Before we dwell into that, the question that might arise in the minds of many is, why would someone invest in Nepal? Why would investing in Nepal be an alternative option for investing somewhere else? What are the reasons why investing in Nepal will be a profitable endeavor?
BEST REASONS TO INVEST IN NEPAL
The reasons to explore a business endeavor in Nepal are illustrated below:
1. Ease of doing a business
It is pretty easy to carry out a business endeavor in Nepal. The major reasons are:
- Nepal has ranked 2nd after Sri Lanka among the South Asian countries which are the easiest to work in.
- Nepal offers 100% FDI in various sectors.
- There is a chance of bilateral investment protection and double tax avoidance arrangements in Nepal.
2. Strategic location
Nepal offers a better geographic advantage than other countries do. Here’s why:
- Nepal has located between the two largest growing economies of the world, India, and China.
- Nepal has duty-free access to China for more than 4000 products, so the ease of importing products is a major contributing factor.
- Nepal also has duty-free and open border access to India.
- The biodiversity and abundant water resources available in this country are rich.
3. Low competition
Nepal is just emerging as an economy, and it is yet to become stable. Hence, the opportunities available are more and know competition makes Nepal a playground for high potential and profitability.
4. Capable human resources
- Nepal has 61% of working age people.
- Cost-effective labor can be utilized in wages lesser than that in other countries. The minimum monthly wage for a worker is USD 971.
BEST SECTOR TO INVEST IN NEPAL
Being one of the richest countries in terms of water resources, the potential that Nepal possesses in the sector of hydroelectricity is abundant. The perennial rivers in Nepal, as well as the steep geographic gradient of the country, provide ideal conditions for developing the largest hydroelectricity projects in the world. Nepal itself has not been able to use the resources that nature has gifted it, in order to create electricity, Electricity deficiency has always been a major problem in Nepal, and a business endeavor in creating electricity through water is an idea that is surely set to create profitable opportunities in the future
- Almost 40% of Nepal’s population has no access to electricity.
- Nepal is in dire need to increase its energy dependent on electricity with hydropower development.
- Electricity demand in the country is increasing at a rate of 7-9% per year.
- Shortage during the winter season makes the need to increase the production of electricity even more pronounced.
- There are about six thousand big and small rivers in Nepal. There are three major river basins namely Karnali, Koshi, and Gandaki.
- Many projects have been identified for development and a feasibility study for it has been carried out.
Nepal is a landlocked country. Transportation is difficult due to the topographical diversity that is evident in the nation. Hence the need to create more transportation facilities is dire. Cable transport, road transport, water transport, etc. are business opportunities which have a huge potential for profit.
- There are several transport providers in Nepal, however, the condition of roads and other means of transportation is in a bad state.
- Nepal has 9150 kilometers of unpaved roads on highways.
- Railways in Nepal are an emerging idea that has a huge potential for profitability.
- The country has only one international airport and the necessity for other international airports makes up for a business endeavor in the field of transport.
The economy of Nepal is dominated by agriculture. It was the major source of livelihood for more than 90 percent of the population in the late 1980s. As of now, economic growth has led to a lesser portion of the population to be dependent on agriculture. However, the idea of agriculture as a business idea has emerged in the country over the past few years. The reasons for agriculture being one of the best sectors to invest in Nepal are:
- With a growing population and more mouths to feed, agriculture and its need are arising day by day.
- Nepal has the perfect topographical, geographical, and climatical conditions to reap crops and medicinal herbs.
- Although new agricultural technologies have helped increase food production, there is still more room for further growth and business profitability.
- The conflicting goals for producing cash crops for food and industrial inputs are problematic.
- 20% of the land is cultivated in Nepal while 6.99% remains uncultivated.
- Agriculture-related labor can be found in cheaper labor wages.
Tourism is the largest industry in Nepal and rightly so. It is the largest source of foreign revenue. The major reasons why tourism can flourish as a business opportunity in Nepal are illustrated below:
- Nepal possesses eight of the ten highest mountain peaks in the world.
- Nepal is a hotspot destination for rock climbers, mountaineer and adventure seekers.
- Nepal is the birthplace of Lord Buddha and the go-to destination to observe unique architecture and heritage.
- The number of international tourists entering Nepal is growing at an exponential rate, with foreign tourists staying in the country for an average of 11.78 days.
- Wilderness activities and the presence of unique flora and fauna is another reason why tourism is yet to flourish properly in Nepal.
- Each day, new routes, new destinations, new trials, and new adventure activities are opening up in remote locations of Nepal, creating a void, to be filled in by carrying out tourism-related activities to the locations.
- Nepal consists of highly skilled guides and porters, who can be hired for a comparatively lower wage.
- The warm and welcoming inhabitants of the country attract more and more tourists into the country every year. Tourism is hence one of the best sectors to invest in Nepal.
Infrastircute development is another one of the best sectors to invest in Nepal. The creation of infrastructure is vital to the success of the country’s economic condition and the government of Nepal is always on the lookout for companies that offer infrastructure building services. The reasons why infrastructure business can flourish in Nepal are:
- Underdeveloped forms of transportation call for the need to create it properly.
- The 2015 earthquake has resulted in an increased need to create strong, earthquake-proof infrastructures.
- Postal and telephone services remain deficient in rural areas and are in the need for proper creation for a sustainable future.
- Labor is cheap in Nepal.
6. INFORMATION TECHNOLOGY
Information Technology has surely taken over the world, and Nepal is no exception to the case. With the availability of highly educated IT individuals at a cheaper price in the country, companies are emerging as a new business endeavor in Nepal. The reasons why IT is considered to be one of the best sectors to invest in Nepal are illustrated below:
- The presence of highly skilled labor at a cheaper wage.
- The cost of infrastructure required to create offices in Nepal is lesser in comparison to that in other countries.
- Increased interest of Nepalese individuals in the field of IT has created a bunch of new talent, willing to explore a career in the field of IT and possessing the proper expertise to do so.
- With the increment in the number of IT practicing professionals, it is competitively easier to choose the best among them, in order to create quality products and services. All of this at a cheaper price in comparison to other countries.
7. MINES & MINERALS
Lying on the central part of the Himalayan belt, the mountainous nation of Nepal is rich in natural resources like water, minerals, forests, and agricultural products. Nepal is filled with metallic and non-metallic mineral deposits as well as construction materials and decorative stone. The reasons why the mines and minerals business is concerned to be the best sectors to invest in Nepal are illustrated below:
- Nepal prides on the presence of a huge amount of mineral despite strewn all across its Himalayan vicinity.
- There is less number of mineral extracting businesses and fewer feasibility study has been done on the matter.
- The outputs obtained from some business endeavors on the field, do not give satisfactory results.
- There are ample opposites for the investors to invest in industries like cement, industrial lime, dead burnt magnesite, agriculture lime, brine water, coal, limestone, talc, clay, etc.
- Investment in the potential mineral resources has proven to be highly rewarding.
8. FINANCIAL INSTITUTIONS
Financial institutions provide financial services acting as a financial intermediary. While most of these financial institutions are regulated by the government, there are a huge number of opportunities for private investors to invest in financial institutions and gain some profitability. The reasons why financial institutions can be a profitable business endeavor in Nepal are.
- Depository institutions, contractual institutions, and investment institutions are gaining popularity in the Nepali market.
- Financial institutions are critical parts of the countries economies.
9. HEALTH & EDUCATION
Health and education are another one of the best sectors to invest in Nepal. The sector of health needs a lot of improvement. This is the major reason why the health sector has become a profitable sector in the market of Nepal. Education is another sector that needs a lot of improvement. People in the country are becoming more interested in allowing their children to achieve quality education in the best schools and colleges possible. Starting up a good educational institution or a qualitative health institution is surely set to provide a lot of profitability.
10. TELECOMMUNICATION SERVICE PROVIDER
The last but not the least sector that one should absolutely invest upon is the telecommunication sector. With the increment in the population of people living in Nepal, the need for increased communication services is dire. What are the reasons for investing in a telecommunications service provider? Read on to find out:
- Telecommunication companies are less in number in Nepal. There is lesser competition if a telecommunication service provider of high quality comes into question.
- Due to the difficult territory of this country, telecommunication services have not reached the nooks and crannies. This calls for a perfect opportunity of creating telecommunication services providers in the remote areas of Nepal.