The concrete corridors of Singha Durbar echo with government gravitas, their office windows
soberly shrouded in net curtains. Kathmandu diplomats calling on Nepali ministers are familiar
with the regular request to “please encourage your country’s private sector to invest in Nepal.”
Despite the polite rhetoric, official efforts to stimulate growth in international business and
even to implement the existing foreign investment regulations have been less than half-hearted
even since before Covid laid waste to Nepal’s economy and tourism.
Today’s ambassadors are likely to be all too aware of the perils of foreign direct investment in
Nepal. Many are sadly familiar with issues that their nationals have faced, having heard a litany
of complaints and frustration in navigating the labyrinthine permit processes, inexplicable
delays, uncertain tax assessments, local partners running amok, and banking holdups—not only
repatriation of profits but even remitting funds into Nepal is not straightforward. The Single
Window Service Centre envisioned as per the revised Foreign Investment and Technology
Transfer Act remains an empty promise.
The current environment for entrepreneurs is in danger of being as difficult and uncaring as
never before. The 2021 US Embassy Investment Climate Statement usefully summarized overall
FDI
issues in Nepal last month citing “political instability, widespread corruption, cumbersome
bureaucracy, and inconsistent implementation of laws and regulations” as being deterrents to
potential investors. In contrast, a recent International Finance Corporation report on cultural
tourism in the Annapurnas was unhelpfully steeped in wishful thinking and seemed rooted in
some bygone era.
Role of foreigners in Nepali tourism:
Tourism started in the 1950s when Boris Lissanevitch converted a royal palace into a heritage
hotel, brought the first tour group, and introduced fine food and liquor. Colonel Jimmy Roberts
invented trekking with Mountain Travel Nepal in 1964 and supported mountaineering
expeditions to employ Sherpas and share his passion for the mountains. John Coapman, Jim
Edwards, and Chuck McDougal brought global attention to Chitwan’s wealth of wildlife with the
creation of Tiger Tops, which opened with a four-room treetop lodge in 1965. Air travel was
ponderous in those days, roads were scarce and communication was basic. When I arrived in
1974, we still depended on telex, telegrams, and an unreliable crackly telephone line for
reservations.
The first foreigners may have been an eccentric and colorful bunch, but they did understand
international tourism. As guests in this country, they realized that nurturing local people and
protecting the historic culture and natural environment was good both for Nepal tourism and
their business. They left a legacy that still resonates in a very different world today.
Struggles of international investments in tourism: Tourism is intrinsically international by nature. At
one time, Nepal cleverly extracted the best out of foreign investors, exploiting their know-how
and networks, and made sure that they contributed to Nepal’s tourism priorities, enriched the
local economy, and provided tangible advantages for Nepalis. Early investors helped put Nepal
on the map as one of the most exciting and hospitable nature- culture-adventure destinations in
the world, and made Nepal a leading sustainable tourism example in Asia. While these external
factors have motivated tourists to visit Nepal, the country needs to work on its internal
dynamics if it is to leverage the opportunities forged by the early investors’ branding.
Nepal needs to be realistic and pragmatic about what is needed to create favorable conditions to
attract international investment if the country is serious about playing a tourism role on the
world stage. There are currently ample examples of struggling foreign investors in the tourism
sector. The first stop of any potential foreign investor is to consult with the experience of those
who went there before them. Private sector operators get nervous when they hear stories about
goalposts moving, policy fluidity, trial by media, and a fickle judiciary. Wedged between the two
largest nations on earth, perhaps just beneath the surface of the national psyche, there is a
distrust of outsiders and a preference to rely on family and cartels.
So, whilst the diplomatic community encourages their compatriots to visit the enduring beauty
of Nepal, until things change, it remains hard for them to genuinely recommend Nepal as a focus
for new tourism business investment.
Exercising diplomacy for tourism:
Nepal has exemplary resources to offer foreign visitors, including the high Himalaya, a rich
living culture, exquisitely built heritage, and intact biodiversity. The healthy outdoors,
mountains, adventure, nature, and wildlife will appeal to pent-up demand from the post-pandemic source markets once tourism restarts if we can get our positioning and product
packaging right. Nepal boasts models of regenerative and responsible tourism practices that
surveys consistently indicate will be highly ranked as new normal essentials by discerning
future travelers.
The highly experienced Nepali tourism sector has demonstrated that, on our own, we have been
unable to lift Nepal tourism out of its pre-Covid negative spiral of increasing numbers of visitor
arrivals but decreasing daily expenditure and reliance on low-cost neighboring segments. Nepal
can consider using high-quality brands, international partners, and foreign expertise to better
compete in tomorrow’s world and attract the sort of tourism that would best benefit the people
of Nepal.
We need to attract new markets, lengthen visitor stays, and increase the yield from tourism
revenue by creating fresh attractions, upgrading current ones, and promoting new destinations
with local people around the country. This will respond to post- Covid tourist needs rather than
the current building boom of mid-range hotels in Kathmandu (and elsewhere) with no apparent
market demand or thought as to who will be sleeping in all those new rooms or what they will
be prepared to pay.
