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U.S. Department of State
Nepal Country Commercial Guide for FY 95-96 
Office of the Coordinator for Business Affairs  
                  Country Commercial Guide for FY 95-96 
                       TABLE OF CONTENTS 
     C:  TRADE 
                    CHAPTER I:   EXECUTIVE SUMMARY 
Nepal is a landlocked economy with per capita income levels among the 
world's lowest and limited market potential.  Nonetheless, since the 
advent of a democratically elected government in 1991, the country has 
undertaken a number of economic reforms that considerably enhance its 
attractiveness as a market for U.S. goods and services and for U.S. 
direct investment.  Reduced government regulation and greater freedom 
have unleashed domestic private sector energies.  Nepal's hydropower, 
aviation, environmental, tourism, and computer 
hardware/telecommunications markets offer attractive sales and 
investment opportunities to U.S. firms.  The presence of the large and 
growing Indian market to the south combined with preferred access for 
Nepalese manufactures into that market both make Nepal more accessible 
to the U.S. private sector and increase its attractiveness as a business 
location, particularly for manufacturing firms that propose to cater to 
northern India. 
Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following World Wide Web address:  
WWW.STAT-USA.GOV.  CCGs can also be ordered in hard copy or on diskette 
from the National Technical Information Service (NTIS) at 1-800-553-
Nepal Fiscal Year (NFY) 1993/94 (ended July 15, 1994) was the best year 
in a decade for the economy with 7.8 percent real GDP growth.  In 
NFY94/95, growth fell to four percent.  Inflation remains under ten 
percent and the currency has remained relatively stable against the U.S. 
dollar in recent years.  Further depreciation is expected in view of the 
worsening balance of payments situation.  Worrying developments include 
an increase in the current account deficit due to worsened export 
performance, especially handknotted woolen carpets and ready-made 
garments, and increasing imports and stagnating foreign investment due 
to current political instability. 
Manufacturing turned in strong performance (including an 18 percent hike 
in non-garment and non-carpet production) and tourism, construction, 
transport, and services also performed well.   Agricultural performance 
was flat because of a decline in the rice crop due to a poor monsoon, 
but there is continued strong growth in production of cash crops and 
fruits and vegetables.   In view of Nepal's variety of micro-climates 
and proximity to the vast Indian market, the outlook for agro-industry 
remains bright.  Negative signs include a downturn in exports of 
handknotted woolen carpets and no growth in ready-made garment exports. 
Government interference and importance in the economy have steadily 
decreased in the past few years.  In particular, subsidies have been 
reduced or eliminated for a number of key products with the exception of 
fertilizer and the cost of food transport to remote areas.  Recent major 
policy accomplishments have included ongoing work on tax reform 
including introducing a Value Added Tax (VAT), work on eliminating the 
"Octroi" internal transit tax, expanding the taxpayer base, and further 
simplifying and reducing customs, excise, sales, and income taxes. 
The privatization program begun under the former Nepali Congress Party 
(NCP) government has slowed under the Communist Party of Nepal United 
Marxist-Leninist (UML).  While not opposing privatization outright, the 
UML has criticized the methodology used by the NCP and has initiated a 
policy review.  Even so, there has been considerable progress in the 
past few years in terms of streamlining licensing, registration, and 
rules relating to access to foreign exchange.  For example, the 
Government of Nepal (GON) privatized the Nepal Stock Exchange and 
separated it, although incompletely, from its regulatory body.  
Additional reforms, especially in the legal area, were scheduled for 
implementation during FY94/95 but have been put on hold due to the 
dissolution of Parliament in July 1994 followed by mid-term elections in 
November of that year.  Yet further uncertainties were introduced by the 
dissolution of Parliament in June 1995 and a call for another round of 
elections in November 1995.  As per a Nepal Supreme Court decision 
rendered on August 28, 1995, Parliament was reinstated and the Nepali 
Congress and National Democratic Parties have announced their intention 
to form a coalition government.  
All year data for the balance of payments (BOP) account are lacking.  In 
general, the overall balance is a more accurate measure than the trade 
balance due to the large size of the "other services" and "miscellaneous 
capital" items.  The trade balance was becoming sharply more negative in 
NFY93/94 and that trend continued during the current fiscal year as 
well.  Current estimates are that exports fell almost a quarter and 
imports rose 13 percent in value terms for a 36 percent increase in the 
trade deficit.  While the overall balance of payments has remained 
positive in recent years due to aid inflows, preliminary data indicate a 
net outflow for NFY94/95 if the trend continues.  If so, this would be 
the first negative overall balance in a decade. 
Exports to India have been increasing significantly with major items 
representing exports by Indian firms that have recently located in Nepal 
to serve the Indian market.  Examples include soap products and leather.  
Traditional agricultural exports to India have been stable.  Exports to 
third countries, accounting for almost 90 percent of all exports, fell 
by 14 percent for the first nine months of the current fiscal year.  The 
major item, carpets, still accounts for 55 percent of all exports, but 
sales fell by 36 percent due to weaker demand in the major market, 
Germany.  The second largest export, ready-made garments mainly destined 
for the U.S. market, grew only one percent in the period.  Exports of 
pulses and nigerseeds fell. 
The Kathmandu Valley is the major consumer of imported products in 
Nepal.  While air links with major transshipment points such as Hong 
Kong and Singapore are good, surface transportation is constrained by 
being limited to one port, Calcutta, and the existence of only one 
reliable road link to India.  Recently, however, the Government of India 
has agreed in principle to permit Nepal transit facilities via the port 
of Khandela north of Bombay.  Once goods have arrived in Kathmandu, the 
compactness of the valley makes for relatively easy distribution. 
The poor state of development of the road system (22 of 75 
administrative districts lack road links altogether and the entire 
country has only some 10,000 kilometers of roads) means that national 
distribution is unrealistic for many products.  In contrast, the 
southern Terai region is both readily accessible to India and served by 
a good road network so distribution in this area is relatively easy.  
Telecommunications links are generally good, particularly in the capital 
city of Kathmandu.  The quality of international fax and telephone 
services is high.   
A World Bank-financed project, this US$ 30-40 million "dry port" to be 
located near the southern border city of Birgunj features an inland 
container terminal linked directly to India's national rail system.  
Still in an early planning stage, the project is expected to make a 
significant contribution to lowering high transportation costs. 
The United States and Nepal have traditionally enjoyed warm relations.  
Diplomatic recognition was extended in the mid-50's and the U.S. Agency 
for International Development (USAID) has been active here for over 40 
years.  The Peace Corps has been in Nepal since 1962.  The United States 
and Nepal cooperate closely in a number of international fora including 
the United Nations and U.N. Peacekeeping Operations.  The United States 
Government has been highly supportive of Nepal's new democracy and 
enjoys excellent access to top level officials and politicians across 
the political spectrum. 
The UML minority government has stated its commitment to further 
economic reforms but details remain elusive.  Privatization of state 
enterprises has been put on hold pending further study.  Current 
uncertainty in the political situation dating from mid-94 has precluded 
long-term policy planning.  Thus far, the two budgets presented by the 
minority UML government have tended to emphasize popular local spending 
programs and have avoided addressing the need for long-term 
macroeconomic stability.   Even so, the reality of the situation 
dictates that Nepal cannot lag far behind the ongoing liberalization 
process taking place in India.  In view of the August 28 Supreme Court 
decision reinstating Parliament, the Nepal Fiscal Year 95/96 budget will 
be subject to review by the expected coalition government which may also 
proceed more positively with the economic reform program.   
Given that Nepal is a landlocked country whose only access to the sea is 
via India, relations with the southern neighbor can help or harm 
business prospects.  For example, at the end of the 1980's, a dispute 
led to Indian refusal to renew the Trade and Transit Treaty with 
consequent disruption to trade.  On the other hand, India has 
historically been a major donor to Nepal.  It provides preferential 
access to its market for Nepali products with at least 50 percent Indo-
Nepal content (both materials and labor).  Economic reform and growth in 
India, with attendant increases in U.S. trade and investment, could lead 
to expanding opportunities for U.S. business in Nepal. 
Following the democracy movement in 1990, Nepal officially became a 
multiparty democracy organized along parliamentary lines under a 
constitutional hereditary monarchy.  The first general elections were 
held in May 1991.  The Nepali Congress Party (NCP) won a majority of the 
seats in the 205-member Parliament (lower house).  Other major parties 
include the conservative National Democratic Party (NDP) and the ethnic 
Nepal Sadbhavana Party (NSP).    
Although the Parliamentary term is set at five years, the Congress Party 
lost control of its majority in July 1994.  General elections held in 
mid-November gave 88 seats to the UML, 83 to the NCP, 20 to the NDP, 
four to the leftist Workers' and Peasants' Party, three to the NSP, and 
victories for seven independents.  As a coalition government could not 
be formed, the UML formed a minority government in accordance with 
Nepal's constitution.  In June of 1995, the Congress Party called for a 
special session of Parliament at which it intended to call for a "no-
confidence" vote against the UML.  The UML Prime Minister retaliated by 
asking the King to dissolve Parliament and to set new elections for 
November 23, 1995. 
In a decision released at the end of August, Nepal's Supreme Court ruled 
that the dissolution of Parliament was unconstitutional.  It is now 
anticipated that the NCP, NDP, and NSP parties will form a coalition 
government which could take office in September.  If the coalition 
proves stable, its rule could extend as far as the end of the current 
Parliament's tenure, November 1999. 
The Nepali Congress Party is one of the oldest democratic parties in 
Nepal and has traditionally followed a socialist economic philosophy.  
After coming to power in 1991, it adopted more pragmatic economic 
policies and seems committed to further economic reform including 
liberalization and privatization of state enterprises. 
The UML was formed by the unification of two leftist parties in 1990 and 
espouses a more radical economic line.  To date, the UML has not 
reversed the former economic liberalization but has adopted a "go-slow" 
policy emphasizing further study.  Implementation and long-term planning 
have been hindered by continuing political uncertainty.   
The National Democratic Party largely represents the previous ruling 
elite.  Its economic policies closely parallel those adopted by the NCP.  
There are three main sales channels in Nepal: 1) direct - exporter 
(manufacturer/supplier) sells directly to the customer in Nepal; 2) 
indirect U.S. -  exporter sells through a U.S.-based intermediary, such 
as an export management or trading company; and 3) indirect local - 
exporter sells through a Nepalese agent or distributor.  Indirect local 
sales channels are most suited to selling U.S. goods and services in 
The local agent normally works as an exporter's sales representative on 
a commission basis to sell a product in Nepal. Specific responsibilities 
depend on the terms of the contract and reflect business norms 
prevailing in Nepal.  The agent normally works on a commission ranging 
between five and 15 percent of the sales price, depending upon the 
nature of the product or services offered. 
The distributor not only sells on a commission basis but also buys and 
keeps goods in stock for resale, does local marketing, and handles 
after-sales product servicing as required.  The distributor works on a 
profit margin so the commission rate and responsibilities (pricing, 
advertising, market promotion, after-sales service, etc.) should be 
defined in the contract.  The distributor's commission in Nepal normally 
ranges between 15 and 30 percent, again depending upon the nature of the 
Hiring a commission agent to assist in winning a contract can be 
effective when selling development-oriented goods such as construction 
services or heavy equipment and for selling to government departments 
and competing in an international tender exercise.  Use of a local 
distributor is more effective when selling durable and nondurable 
consumer goods. 
Franchising is not yet a common sales method in Nepal.  However, a 
recent instance involving introduction of an Australian fast food 
franchise, via the master franchise agent in India, has proved highly 
successful.  There is limited scope for further such ventures if they 
cater to the tourist, resident expatriate, and Nepali middle class 
Direct marketing is not cost-effective at present in view of the small 
and limited Nepalese market for U.S. products and generally unreliable 
service offered by the local post office.  Direct marketing via fax has 
not been tried here but could be effective in reaching a target business 
audience.  Two new cable TV networks in Kathmandu provide a marketing 
opportunity to reach an elite audience not previously available. 
Nepal officially encourages foreign investment and technology transfer 
under the Foreign Investment and Technology Transfer Act (FITA) of 1992.  
Investment in the form of equity shares and reinvestment of earnings 
from share capital and loans are defined as foreign investment made by a 
foreign investor.  Technology transfer refers to any transfer of 
technology made by agreement between an industry and a foreign investor 
as follows:  (a) use of any technological right, specialization, 
formula, process, patent or technical knowledge of foreign origin, (b) 
use of any trademark of foreign ownership, and (c) acquiring any foreign 
technical consulting, management and marketing service.  While 
technology transfer arrangements are legally permissible, the Government 
of Nepal has not yet determined where they are to be registered so no 
instances of such arrangements exist at present.  
Foreign investment via joint ventures or wholly foreign-owned 
enterprises are allowed in any industry providing that fixed investment 
exceeds Nrs. 20 million (US$ 400,000).  This minimum size of investment 
effectively bars most direct foreign investment in the services sector.  
In its July 1995 budget document, the UML Government announced that it 
would consider lowering or dropping this minimum.  However, any such 
change will likely require an amendment to the FITA.  Technology 
transfer may be allowed in cottage and small-scale industries and 
medium-scale industries with fixed assets of up to Nrs. 20 million.  
Foreign investment is not permitted in defense related industries, 
cigarettes, and alcohol (excluding 100 percent export oriented 
Any foreign company which desires to undertake business in Nepal shall 
have the company registered after submitting the following documents 
required under the Company Act: 
a)  An authentic copy or translation in Nepali or English of 
the law or license under which the company was incorporated 
and established. 
b)  Authentic Nepali version of the memorandum and articles 
of the company. 
c)  Full address of the head office of the company. 
d)  A list of the directors, managing agent, manager, 
secretary, etc. of the company along with full particulars. 
e)  Name and address of resident representative or 
representatives of the company in Nepal, who is or are 
empowered to accept on its behalf time limits, notices, etc. 
issued to it. 
f)  The main place where the business of the company will be 
or is being run in Nepal and the full address of the 
company's office located at such place. 
Market promotion can be done by sending advertising directly to the 
target group of customers via the post or messenger.  Facsimile messages 
may be more reliable and are certainly faster in the case of Nepal.  
Telemarketing, exhibitions, trade shows and trade missions, catalog and 
video shows, advertising media such as newspapers, radio and television, 
etc. are used for market promotion.  These can be done by the exporter 
directly or through a local agent/distributor.  Direct marketing will 
likely not be cost-effective in view of the small size of the market.  
Participating in trade shows and catalog and video shows through a local 
agent/distributor can be an effective way to introduce new products into 
the market and to promote brand recognition. 
Newspapers, radio and television are the main advertising media used for 
trade promotion.  Television serves only a limited section of Nepal's 
people, primarily the more affluent urban population,  but newspapers 
and radio reach most parts of the country.  Selection of advertising 
media thus depends on the target group.  TV advertising would be most 
appropriate if the target group is the urban middle and upper classes.  
For a basic consumer product, advertising in newspapers and via radio 
will be more appropriate.  Advertising costs are lower for newspapers 
and radio than for television.  Below are names and addresses of major 
newspapers, radio and television. 
1.  The Rising Nepal (English daily) 
    Dharma Path 
    P.O. Box 23 
    Kathmandu, Nepal 
    Phone: 977-1-227493 
    FAX: 977-1-224381 
2.  The Kathmandu Post (English daily) 
    Shantinagar, Naya Baneswore 
    P.O. Box 8559 
    Kathmandu, Nepal 
    Phone: 977-1-474798/474/963 
    FAX: 977-1-470178 
5.  Radio Nepal 
    Singha Durbar 
    P.O. Box 6034 
    Kathmandu, Nepal 
    Phone: 977-1-226436/215773 
    FAX: 977-1-212951 
6.  Nepal Television 
    Singha Durbar 
    P.O. Box 3826 
    Kathmandu, Nepal 
    Phone:  977-1-228234/214548 
7.  Shangrila Channel (P) Ltd. 
    Sangarsh Chamber, Gyaneshwor 
    P.O. Box 5852 
    Phone:  977-1-415299/411137 
    Fax:  977-1-416333 
8.  Space-Time Network 
    Nepal Satellite Cable Television 
    Iceburg Building, 3rd Floor 
    Putali Sadak, Kathmandu 
    Phone:  977-1-419133, 220839 
    Fax:  977-1-419504  
Pricing strategy depends on the competitive situation, the level of 
demand for the product in the Nepalese market, and total costs required 
to bring the product to market.  Before selecting a pricing strategy, 
the exporter should obtain as much information as possible from market 
research, potential customers, and competitors.  When establishing a 
price for U.S. products in Nepal, the exporter should keep in mind 
competition from India, the closest neighbor having open borders with 
Nepal.  Products from the European Community, Japan, Taiwan, and 
increasingly China also find a ready market here. 
After-sales service and product guarantee are very important for 
customers, especially when they are buying durable products.  Given long 
shipping times to Nepal, doubts about after-sales service and 
availability of spare parts will affect product choice.  It is therefore 
preferable to make an arrangement with the local agent/distributor for 
reliable after-sales service and support. 
GON fiscal regulations relating to procurement of goods and services 
state that goods worth up to Rs. 5,000 (US$ 100) can be purchased 
directly from the market.  For goods worth between Rs. 5,000 and Rs. 
150,000 (US$ 3,000), procurement is to be made by calling for quotations 
from at least five suppliers.  For higher amounts, procurement should be 
made via tenders or bidding.  Goods and services are generally procured 
from the supplier or contractor who quotes the lowest price.  Notices of 
tender calls for major projects having sufficient lead time (a minimum 
of 45 days) are being disseminated to U.S. businesses via the U.S. 
Department of Commerce Trade Opportunity Program (TOP).  For other sales 
opportunities, use of a local distributor or commission agent is more 
In order to prevent infringement of intellectual property rights, the 
product and its trademark should be registered with Nepal's  Department 
of Industries in accordance with the Patent, Design and Trademark Act, 
1965.  Nepal is not a signatory to any international conventions 
protecting patents, copyrights, or trademarks so registration in the 
United States does not automatically result in protection in this 
country.  When registering a trademark of foreign origin, a copy of the 
home registration with application form, deed of assignment and four 
copies of the representation sheet should be included in the 
application.  Trademark registration is valid for a period of seven 
years and can be renewed for an additional period of seven years. 
Use of a local attorney for preparing required documents will ease 
unnecessary delays in the process.   The U.S. Embassy can provide a list 
of local attorneys thought to be reliable. 
1 - Computers/Peripherals (CPT, CSF) 
Nepal's overall potential as a market for U.S. exports is modest. Total 
U.S. exports to Nepal in NFY93/94 amounted to only US$ 8 million.  
However, U.S. computers and peripheral equipment successfully compete in 
the local market and the total import of computer hardware is estimated 
at around US$ 20 million.  Customs statistics understate U.S. market 
shares as much American  equipment is imported via distributors in Hong 
Kong or Singapore and is not captured in official statistics for 
bilateral trade.  
2 - Telecommunications Equipment (TEL) 
Local microwave TV services depend on U.S. firms for much of their 
equipment as does a cable network.  There is also demand for paging and 
cellular phone systems.  Although the GON has not yet issued licenses 
for such a cellular phone system, it recently announced a tender 
regarding which details are to be made public in September 1995.  The 
Nepal Telecommunications Corporation is also steadily expanding its 
landline phone system and will continue to issue tenders for optical 
fiber lines, digital switching equipment, and telephone sets. 
3 - Aircraft and Parts (AIR) 
The mushrooming of private domestic airlines in Nepal will provide 
opportunities for the sale of short-hop passenger turboprop aircraft, 
especially used equipment.  However, the GON has not yet relaxed its 
restrictions on the use of single-engine aircraft for passenger flights.  
At present, there is only one U.S.-made Cessna single engine aircraft in 
Nepal, a "Caravan" 208.  It is used for chartered passenger flights and 
cargo.  Domestic Nepalese private airlines prefer twin engine turboprop 
aircraft such as the Canadian Twin Otter, the British Avro, the German 
Dornier, and the Chinese-built Y-12, though the Y-12 has gained a poor 
reputation for reliability and service.  Nepal's government-regulated 
domestic fare structure makes it difficult for private airlines to turn 
a profit and produce sufficient revenue flow to add to their fleets.  
The national flag carrier, the Royal Nepal Airlines Corporation (RNAC), 
has traditionally preferred Boeing aircraft for its international 
routes, but financial problems make it difficult for the airline to 
purchase any new aircraft.  Nepal's mountainous terrain makes the Global 
Positioning System (GPS) an ideal solution for air navigation in Nepal.  
Some airlines are already experimenting with hand-held GPS systems.  The 
market for rotary wing aircraft is growing, particularly for tourism-
related passenger and cargo services.   
4 - Water Resources Equipment/Services (WRE) 
Nepal is trying to move ahead with major hydroelectric projects such as 
Kali Gandaki "A."  With the recent cancellation of the Arun III 
hydroelectric project by the World Bank, the Government is placing even 
greater emphasis on development of small and medium size projects.  
Private investment is a top priority and laws and regulations have been 
revised to permit this.  When such projects get underway, there should 
be opportunities for sales of U.S. equipment and engineering services. 
5 - Autos/Light Trucks/Vans (AUT) 
An electric vehicle project sponsored by USAID may lead to market demand 
for small electric taxis and vans within the next few years.  The 
pollution caused by diesel vehicles is compelling Nepal to explore 
alternatives and a recent decision by the GON to reduce the customs duty 
to five percent for electric vehicle parts and ten percent for electric 
buses, cars, and vans (compared to 110 percent plus sales tax for diesel 
and gasoline powered vehicles) should stimulate demand for such 
equipment in the Kathmandu Valley. 
6 - Renewable Energy Equipment (REQ) 
There is scope for increasing U.S. exports of solar power equipment 
components to Nepal.  Such equipment is well suited to hilly regions 
which are not connected to national or local electrical grids.   
Windpower units could also find applications in the agricultural sector 
for pumping water. 
7 - Management Consulting Services (MCS) 
Current visa and service investment rules make it difficult to set up 
and maintain consultancy services in Nepal.  When and if these rules are 
relaxed, there will be opportunities for entrepreneurs to set up small 
consultancy and market research services to service local businesses and 
foreign assistance projects. 
8 - Medical Equipment and Drugs/Pharmaceuticals (MED and DRG) 
These categories grouped together traditionally have topped the list of 
U.S. exports to Nepal.  Sales should continue to grow steadily.  
Given the small size of Nepal's market in terms of purchasing power and 
the fact that most of the population is engaged in subsistence 
agriculture, there is extremely limited scope for exports of U.S. food 
products.  In 1993/94, total imports of agricultural products from the 
United States reached about US$ 250 thousand.  The statistics reveal 
that exports of powdered milk and dry fruits (almonds) have been 
relatively strong recently.  Rising incomes and the concentration of 
tourist facilities in the Kathmandu Valley have resulted in the import 
of some prepared foods from the United States, mainly via brokers in 
Singapore and Hong Kong. 
Nepal is totally dependent on imports for fertilizers such as urea.  The 
Government engages in open tenders for import of such items and U.S. 
firms have proved competitive in the past. 
There are two main investment opportunities in Nepal:  hydropower and 
tourism.  While Nepal has some 36,000 megawatts in proven hydro 
potential, less than one-half of one percent of this has been exploited.  
In addition to growing domestic demand, India is a potential market for 
larger projects.  Recent cancellation of the Arun III hydroelectric 
project by the World Bank has given even greater impetus to the 
Government's efforts to attract private foreign investment in the power 
sector.  There is currently one U.S.-Nepal joint venture working to 
develop a 36 mw site in Nepal.   
Nepal's rugged and beautiful terrain and interesting culture have 
enduring fascination for tourists.  Indeed, most current U.S. direct 
investment in the country is concentrated in the tourism-related areas 
of hotel, restaurants, and casinos.  Other projects with U.S. 
involvement are in the planning stages. 
The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 60 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment bring to the U.S. 
economy, the Government of the United States undertakes initiatives, 
such as Overseas Private Investment Corporation (OPIC) programs,  
investment treaty negotiations, and business facilitation programs that 
support U.S. investors. 
Import tariffs are generally assessed on an ad valorem basis.  Nepal 
uses the Harmonized Tariff System (HTS) for classification purposes.  
Import duty rates vary from zero to 60 percent.  Live animals, fish, and 
most primary products are exempt from import duties.  Machinery or goods 
related to basic needs are charged at a five percent rate.  Products 
hazardous to health such as cigarettes and liquor are taxed at 60 
percent.  Goods imported into Nepal are also liable for a sales tax of 
10 and 20 percent for basic necessities and luxury items, respectively.  
Custom duties are generally assessed on the cost, insurance, and freight 
(c.i.f.) value. 
All imports may be brought in without a license except for banned or 
quantitatively restricted items such as (a) products injurious to health 
(such as opium and morphia or liquors containing more than 60 percent 
alcohol); (b) arms and ammunition, explosive materials (or products 
required for production of explosive materials, and guns and bullets; 
(c) communications equipment including computers and home entertainment 
products such television sets and VCRs; (d) valuable metals and jewelry; 
and (e) beef and beef products. 
All products other than banned ones or those under quantitative 
restriction may be exported freely.  Banned items include articles of 
archeological and religious importance, controlled wildlife and by-
products, narcotic substances, articles related to explosive materials 
or required for the production of arms and ammunition, industrial raw 
materials (such as raw leather, raw wool, imported raw materials, parts, 
capital goods), and other goods such as logs and timber.  Items subject 
to quantitative restriction are subject to notification by the 
Government of Nepal from time to time.  Past examples have included 
foodgrains, oilseeds, and some types of pulses (lentils).  In general, 
the export to India of all types of goods imported from countries other 
than India is prohibited. 
Documents required for shipment to Nepal include a commercial invoice, a 
customs declaration form, clearly marked and labeled packaging, and a 
certificate of origin.  Similarly, documents required for shipment from 
Nepal include the following.  If sent by air:  a customs declaration 
form, a copy of the export license (if applicable), a commercial 
invoice, a certificate of origin, a copy of the letter of credit or 
advance payment statement from a bank, a foreign exchange declaration 
form, a packing list, a photocopy of income tax registration 
certificate, airway bill, and an authorization letter are required.  In 
addition to the above except for the airway bill, the following 
documents are required for surface shipment:  transport manifesto (one 
copy per truck), customs transit declaration, and transit declaration 
invoice for goods in transit via India or Bangladesh to a third country 
destination.  Special documentation such as visa stamps from the 
National Productivity and Economic Development Center are essential for 
export of ready-made garments to the United States. 
Goods, including vehicles, machinery, and equipment, may be imported 
temporarily for special purposes such as domestic exhibitions or fairs 
by making a refundable deposit of the applicable duty.  Such goods must 
be taken out of the country within three months of the completion of the 
work unless the duty has been paid and the item sold for the use of 
others or retained for personal use.  An extension of the three month 
period may be granted on appropriate and reasonable grounds upon payment 
of an additional ten percent of the applicable duty amount.  If the duty 
is not paid or the goods are not re-exported within six months of entry, 
action may be taken on a charge of smuggling. 
No special labeling or marking are required by law.  For Customs 
purposes, the packaging and labels of a shipment should clearly identify 
country of origin and destination, and include a commercial invoice with 
a list of items in the package, a Customs Declaration Form, and a 
certificate of origin. 
The following products are prohibited for import: 
1.  Products injurious to health:  a) narcotic drugs such as opium and 
morphine; and b) liquor containing more than 60 percent alcohol. 
2.  Arms and ammunition and explosives (except under import license of 
His Majesty's Government):  a) materials used in the production of arms 
and ammunition; b) guns and cartridges; c) caps other than those of 
paper; and d) arms and ammunition and other explosives. 
3.  Communication equipment:  wireless walkie-talkie and similar other 
audio communication equipment (except under import license of His 
Majesty's Government). 
4.  Valuable metals and jewelry (except permitted under bag and baggage 
5.  Beef and beef products. 
6.  Any other product as per notification of His Majesty's Government in 
the Nepal Gazette. 
Nepal does not follow ISO 9000 series.  No standard is required by law 
for import of products other than food products.  For food products, the 
importer is required by law to have a sample tested by the Food Research 
Laboratory under the Food Act and Nepal Standard (Certification Mark) 
Act.  Nepal has established its own standards for various food products. 
Nepal has not established Export Processing Zones (EPZ).  However, any 
industry exporting 90 percent or more of its products is entitled to 
enjoy facilities as if it were established in an EPZ.  No tax, duty or 
fee is levied on the machinery, tools and raw materials utilized by the 
industry in manufacturing the export products.  Export-oriented 
industries may also enjoy bonded warehouse facilities.  Raw materials 
can be imported via entry in a passbook without paying any custom duty 
or sales tax.  The same value of raw materials is deducted from the 
passbook upon export of the finished product.  The industry must also 
submit a bank guarantee which must be sufficient to cover applicable 
Duty exemptions of ten and five percent have been given to imports from 
the Tibet Autonomous Region of the People's Republic of China and member 
countries of the South Asia Association for Regional Cooperation (SAARC) 
and designated most favored nations, respectively. 
Nepal is not a member of Free Trade Arrangement although it has ratified 
the South Asia Preferential Trade Agreement (SAPTA). 
The Government officially welcomes foreign direct investment.   The GON 
began carrying out policy and regulatory changes in industry, trade, 
finance and the Stock Exchange beginning in 1992.  At present, there are 
some 130 operating joint ventures in Nepal today.  Indian-invested 
ventures lead the list with about 40 percent of the total number.  U.S.-
Nepal joint ventures number about ten.  Japan, South Korea, China, and 
Germany are also relatively prominent.  Multinational investors based or 
looking to expand in the growing Indian market are expressing an 
interest in investing in Nepal.  Policy changes have allowed business 
people to operate in sectors that were previously Government monopolies.  
Licensing and regulations have been simplified, 100 percent foreign 
ownership is allowed, and extensive tax holidays exist.  New banking 
institutions and a growing stock exchange provide alternative sources of 
investment capital.  However, foreign banks are effectively barred from 
opening branch operations and access to the domestic stock is denied to 
all except domestic individuals and firms. 
There continue to be problems due to poor infrastructure; lack of direct 
access to seaports; lack of trained human resources; few raw materials; 
lack of adequate electricity and water; nontransparent and capricious 
tax administration; inadequate economic legislation; and unclear rules 
regarding firing workers. 
Politicians and Government officials realize that more changes are 
needed and are open to suggestions from the private sector.  The recent 
promise by the GON to consider relaxing the required fixed capital 
investment minimum (US$ 400 thousand) is a step in the right direction. 
No rules exist on acquisitions, mergers, takeovers, and so-called 
"greenfield" investments starting from scratch.  There are certain 
preconditions that foreign investors must fulfil after which there is no 
discrimination.  These conditions are noted in the following section.  
The screening criteria require that the proposal fall within the 
"industry category," that it is environmentally sound, and that the 
proposed investment does not fall under restricted categories (hazardous 
to health, defense, environmentally damaging) and that it meet the 
minimum investment level of US$400,000 needed for foreign investment. 
There is general screening of foreign investment.  Each proposal must be 
approved by the Industrial Promotion Board (IPB) which is headed by the 
Minister of Industry.  The purpose of the approval is to see whether the 
proposed investment meets the criteria laid down in Nepal's industrial 
policy.  Since current administrative procedures do not allow for the 
establishment of guidelines for automatic approval, each foreign 
investment proposal must be considered individually.  This has led to 
long delay in some cases. 
Screening mechanisms are routine and non-discriminatory.  The IPB meets 
only once a month and there is no fixed time for meetings so delays in 
the approval process are common.  The Department of Industry (DOI) is 
attempting to designate a set date for the meeting so that investors may 
know to submit their proposals in time for a quick decision.  In 
contrast to past practice, the DOI is bound to make its decision within 
30 days provided that the information supplied by investors is adequate. 
Under the Nepali Congress Party, GON policy was to sell loss-making 
state-run enterprises to the domestic private sector.  Foreigners were 
allowed to bid on larger enterprises which might not be affordable to 
Nepalese.  While not mentioned in official policy, there is a general 
concern about the prospect of increased domination by Indian business 
interests.  The current Communist Party of Nepal United Marxist-Leninist 
government has not rejected the privatization policy outright but 
appears prepared to proceed with such on a highly selective basis. At 
any rate, no new privatizations have been announced in the nine months 
since the party took control of government in December of 1994. 
There is discrimination against foreign investors at the time of the 
initial investment with respect to a minimum fixed capital requirement 
but there is none thereafter as regards incentives and facilities 
provided by the Government.  While an investment minimum is required at 
the initial stage, there are no further restrictions as to the amount of 
investment required of foreign investors except for limits on small 
investments in the cottage industries, small businesses, and the 
agricultural sector. 
Government subsidies for research and other development programs are 
Six-month visas are provided to prospective investors for the purpose of 
conducting feasibility studies.  A residence visa is available to 
foreign investors but it must be renewed annually.  To obtain a six-
month visa, applicants must provide biographic information and a 
description of relevant work and professional experience.  The process 
can be expedited if the person can be readily identified as a legitimate 
business representative.  Endorsement by a recognized foreign industrial 
enterprise is one means of accomplishing this. 
There is no favored treatment of foreign investors in terms of 
incentives in that the same incentives are available to both domestic 
and foreign investors.  The following are incentives provided by the GON 
to investors. 
1.  Cottage industries are exempt from sales tax, excise duty, and 
income tax.  Foreigners are not permitted to invest in this sector. 
2.  There is no income tax on profits from exports.  Customs, sales tax, 
and excise duties are reimbursed within 60 days on raw materials used in 
the production of export items. 
3.  Manufacturing industries are exempt from income tax for five years 
from commencement of commercial production.  An additional two-year 
income tax exemption is granted when: 
     a.  Industries fall under the National Priority List.  This list 
consists of 31 areas including such items as modern sugar and oil mills; 
dairy, fruit and vegetable seed production; tea and coffee farming; 
fruit processing; the paper industry; pharmaceuticals; fertilizer; 
pollution control devices; infrastructure; computer software; and 
precision goods. 
     b.  Firms that utilize 90 percent or greater local raw material 
content even if the investment category is not included in the National 
Priority List. 
     c.  Firms that employ more than 600 workers. 
     d.  Firms that invest more than 750 million Nepalese Rupees 
(US$15 million). 
4.  Industries are entitled to a reduction in tax rate on each income 
tax slab or corporate tax of five percentage points. 
5.  Industries in remote areas are granted a 60 percent rebate on income 
tax and a 35 percent rebate on excise duties. 
6.  No taxes, duties, or fees are to be levied on machinery, tools, and 
raw materials utilized by industry. 
There is no discrimination against foreign investors with respect to 
export/import policies, nontariff barriers, and import price controls.  
However, the GON does encourage imports from India as there is a 
bilateral Trade Treaty that provides preferential access to the Indian 
market for Nepali goods with at least 50 percent Indo-Nepali material 
and labor content.  In practice, the GON provides a 20 percent rebate on 
duties levied on goods coming from India. 
The GON currently has foreign exchange reserves equivalent to eight 
months of import cover.  While these have been declining of late, there 
is currently no problem in repatriating funds related to approved 
investments in convertible currency.  In fact, 100 percent of profits 
and 100 percent of sales value can be repatriated for approved 
Government clearance is needed for repatriation.  To obtain this 
clearance, the investor must show a balance sheet, proof of investment, 
and declaration of dividend in accordance with approved clauses.  If all 
required documents are presented, the DOI normally approves the 
application within 15 days after which local commercial banks can make 
provision for the exchange. 
In the event that the Overseas Private Investment Corporation (OPIC) 
pays an inconvertibility claim due to a firm's inability to repatriate 
profits or investment, local currency accepted by OPIC would be made 
available, pursuant to the bilateral agreement providing for the OPIC 
program, to the U.S. Embassy on a priority basis for U.S. Government 
expenses.  Estimated annual USG local currency expenditures in Nepal are 
on the order of US$ two million, including US$ 500,000 for accommodation 
exchange.  Nepali rupees are purchased by the Embassy at the official 
rate of exchange.  The currency is currently depreciating at a gradual 
pace against the U.S. dollar. 
The Industrial Enterprise Act of 1992 states that "No industry shall be 
nationalized."  There have been no cases of nationalization in Nepal nor 
are any anticipated. 
Companies can be sealed or confiscated if they do not pay taxes in 
accordance to Nepalese law.  There are no official policies either 
extant or in the offing that lead the Embassy to conclude that official 
expropriation should be of concern to prospective investors.  There have 
been instances in the past where unscrupulous local partners have used 
the tax or regulatory system to seize control of a joint venture firm 
from the U.S. investor.  Such cases have not involved major Nepalese 
business houses, however.    
In the event of a dispute with a foreign investor, the concerned parties 
are encouraged to settle the dispute through consultation in the 
presence of the Department of Industry.  If the dispute cannot be 
settled in this manner, it will be referred to arbitration according to 
the arbitration rules of the United Nations Commission for International 
Trade Law (UNCITRAL).  The GON is currently considering permitting 
stipulation of legal jurisdiction other than Nepal in shareholder 
agreements and contracts involving larger foreign investments, 
particularly in the hydropower and tourism sectors. 
According to GON officials consulted, there have been only three 
investment disputes relating to foreign investors.  One has been 
resolved as the two partners involved in the dispute came to an 
understanding.  Local partners can and do make use of corruption to 
contravene both the letter and the spirit of the law. 
There is an effective means of enforcing property rights as all such 
transactions must be registered and property holdings cannot be 
transferred without following procedures.  Even so, property disputes 
account for half of the current backlog in Nepal's court system and such 
cases can take years to be settled.  Judgments from foreign courts are 
not accepted as all judgments must be made in Nepali courts. 
There is a provision for liquidation in the Company Act.  Claimant 
priorities are:  1) government revenue, 2) creditors, and 3) 
shareholders.  Monetary judgments are made in local currency. 
Secured interest in property is secured in the Department of Revenue.  
Machinery collateral is valid in the courts. 
Arbitration must be carried out in accordance with UNCITRAL rules.  
Nepal is a member of the Multilateral Investment Guarantee Agreement 
(MIGA).  Nepal does not accept international arbitrators.  Nepal is not 
a member of nor does it plan to become a member of the International 
Center for the Settlement of Investment Disputes (ICSID - also known as 
the Washington Convention) and/or the New York Convention of 1958 on the 
Recognition and Enforcement of Foreign Arbitral Awards. 
Beyond fulfilling legal requirements as to minimum investment amount, 
pollution parameters, restricted sectors, etc., no performance 
requirements are imposed on foreign investments in Nepal.  There is no 
local content or export performance requirement. 
In the case of foreign investments, there is no requirement that 
nationals own shares, that the share of foreign equity be reduced over 
time, or that technology be transferred on certain terms. 
In general, there are no conditions on investment imposed by the GON.  
However, industries are being encouraged to locate outside the Kathmandu 
Valley due to concern regarding growing pollution and overpopulation in 
the capital.  The GON expects that most employees will be Nepalese, but 
managerial, supervisory, and advisory positions can be filled by 
expatriates.  Employment of foreigners must be approved by the 
Department of Immigration. 
Investors are required to disclose proprietary information to the 
Government only if they wish to register patent rights. 
There are limitations on foreign investment such as requirements for 
minimum investment amounts.  Foreigners are excluded from investing in 
cottage industries, small enterprises, agriculture, alcohol, cigarettes, 
defense, and industries which present a health hazard.  Foreigners 
cannot participate in other than industrial activities which are defined 
to include services. 
Private entities have the right to acquire and dispose of interests in 
business enterprises freely.  The GON is moving towards competition 
between private and public enterprises.  Most of the former public 
monopolies in banking, domestic airlines and trade have already been 
The legal system protects property rights.  According to Government 
officials, patent rights are also protected but the same cannot be said 
in general of intellectual property rights in that existing rules are 
not effectively enforced. 
Patent registration is valid for seven years and can be extended for an 
additional seven years for a total of 14 years. 
The Copyright Law is 30 years old and does not mention modern forms of 
intellectual property such as computer software.  The country is not a 
party to any major IPR international agreement so foreign works are not 
protected unless they have been registered in Nepal. 
Trademarks can be registered first for seven years and be renewed 
thereafter.  There is no obvious problem with trademark infringement. 
Original formulas can be patented.  Protection of trade secrets is 
informal at best. 
The computer industry is relatively undeveloped except for small 
assembly operations although some firms are engaged in software 
development.  As mentioned, modern forms of intellectual property are 
not recognized in Nepal's present copyright legislation,  For example, 
there is no protection of semiconductor chip layout design. 
The GON has adopted a fairly transparent policy and implemented a number 
of laws so as to free up the private sector and foster competition.  
There is no discrimination in granting industrial approvals and the 
Government has ended many public monopolies. 
Tax, labor, health and safety, and other laws and policies to avoid 
distortions or impediments to the efficient mobilization and allocation 
of investment exist.  In particular, health and safety regulations are 
included in the Labor Act but they are not properly enforced. 
Credit is allocated on market terms.  Foreign-owned companies can obtain 
loans on the local market. 
The private sector has access to a variety of credit instruments. These 
-public issues 
-finance companies 
-joint venture commercial banks 
Legal, regulatory, and accounting systems are not fully transparent and 
consistent with international norms.  Though auditing is mandatory, 
professional accounting standards are low and many practitioners are 
either poorly trained or lacking in business ethics.  Under the 
circumstances, published financial reports are unreliable and investors 
are better advised to rely on general business reputation except in a 
very few cases where international accounting standards prevail. 
There is no regulatory system to encourage and facilitate portfolio 
investment in the industrial sector.  Only direct investment is 
permitted.  Stocks for a few industrial firms are listed on the Nepal 
Stock Exchange, but foreign individuals and institutions are not yet 
permitted to purchase these. 
There are no legal provisions with respect to private firm defense 
against hostile takeovers. 
There have been no civil disturbances targeted at foreign investors in 
the past five years.  However, since the advent of the democratically-
elected government in mid-1991, there have been a number of instances 
when domestic political parties have called for nation-wide "Bandh" or 
strikes.  In 1993, these succeeded in provoking a violent response by 
the police and a number of deaths resulted.  No deaths have occurred 
during mass demonstrations in 1994, however.  Thus far in 1995, only a 
handful of such strikes were called.  While disruptive to normal 
commerce and transportation, they have been mainly peaceful with only 
minor injuries resulting.  Such actions typically result in little or no 
damage to private property.  However, they have the potential to disrupt 
normal commercial activities for one or two-day periods.   
Nepal and the United States signed a Bilateral Investment Treaty (BIT) 
in 1960 which was amended in 1963 to permit extended risk investment 
guaranties to be provided by the Overseas Private Investment Corporation 
0  OPIC 
OPIC is free to operate in Nepal without restriction due to the 
existence of the BIT and the country's low per capita income level.  As 
noted above, OPIC is empowered to offer its "extended risk guaranty" 
facility to prospective U.S. investors in Nepal. 
0  MIGA 
Nepal joined the Multilateral Investment Guarantee Agency (MIGA) in 
Nepal lacks a skilled and educated labor force.  The overall literacy 
rate is only 33 percent and only 18 percent for females.  Vocational and 
technical training is poorly developed and the national system of higher 
education is severely overtaxed by the large number of students 
enrolled.  Many secondary and college graduates are unable to find 
employment in positions commensurate with their education. 
Overall labor relations are relatively good and industrial actions are 
infrequent.  However, efforts at collective bargaining are often 
hampered by unrealistic laws such as the Bonus Act which provides that 
workers must receive 10 percent of yearly profits in bonuses regardless 
of productivity improvements or lack thereof.  The country has a small 
but active labor movement.  The GON does not interfere in labor 
organizing.  Organized labor is not actively involved in influencing the 
country's receptiveness to foreign investment.  
Nepal has not established Export Processing Zones (EPZ).  However, any 
industry exporting 90 percent or more of its products is entitled to 
enjoy facilities as if it were established in an EPZ.  No tax, duty or 
fee is levied on the machinery, tools and raw materials utilized by the 
industry in manufacturing the export products.  Export-oriented 
industries may also enjoy bonded warehouse facilities.  Raw materials 
can be imported via entry in a passbook without paying any custom duty 
or sales tax.  The same value of raw materials is deducted from the 
passbook upon export of the finished product.  The industry must also 
submit a bank guarantee which must be sufficient to cover applicable 
As per the Foreign Investment and Technology transfer Act, 1992, a 
foreign investor making investment in Nepal shall be entitled to 
repatriate the following amounts outside the Kingdom of Nepal: 
a.  The amount received by sale of the whole or any part of 
the equity investment. 
b.  The amount received as profit or dividend from the 
c.  The amount received as payment of principal and interest 
on any foreign loan. 
d.  The foreign investor or a foreign technology supplier is 
also entitled to repatriate the amount received under the 
agreement for the technology transfer in such currency as 
set forth in the concerned agreement as approved by the 
Department of Industry. 
A.  Foreign national working in any industry with prior approval of the 
Department of Labor and who is from a country where convertible foreign 
currency is in circulation may repatriate salaries, allowances, 
emoluments etc. in convertible currency in an amount not exceeding 75 
(seventy-five) percent of such salaries, allowances and emoluments. 
To obtain the repatriation facility, the foreign investor or the 
technology supplier or the foreign expatriate or the concerned company 
must obtain a recommendation from the Department of Industry. 
In general, Nepalese are not permitted to invest outside of Nepal.  
There are limited exceptions to this policy which must be approved on a 
case-by-case basis, mainly having to do with export sales promotion. 
(As of mid-April 1995) 
No. of operating firms having foreign investment - 130 
No. of firms having foreign investment under construction - 28 
No. of licensed firms having foreign investment - 89 
No. of firms having foreign investment approved - 7 
Total No. of firms - 254. 
Total authorized capital - Nrs. 31 billion (US$ 620 million) 
Total fixed capital - Nrs. 27 billion (US$ 520 million) 
Total estimated foreign investment - Nrs. 6.5 billion (US$ 130 million) 
Total employment - 4,800. 
Source:  Government of Nepal, Industrial Statistics 1994/1995 
Note:  Official statistics overstate realized direct foreign investment 
as they do not measure actual inflows of foreign investment capital.   
Based on GON statistics as of July 15, 1994 for operating joint venture 
industries in Nepal, the following are the top ten foreign invested 
enterprises in Nepal ranked by authorized capital. 
                     AS OF JULY 15, 1994 
RANK          NAME              SECTOR          FOREIGN PARTNER 
1.  Bhrikuti Pulp & Paper    Manufacturing        India 
2.  Nepal Orind Magnesite    Mining               India 
3.  Gorakahali Rubber        Manufacturing        China 
4.  Jyoti Spinning Mills     Manufacturing        Philippines 
5.  Hotel Yak & Yeti         Tourism              India 
6.  Mt. Everest Brewery      Manufacturing        Philippines 
7.  Soaltee Holiday Inn      Tourism              USA 
8.  Nepal Lever              Manufacturing        India 
9.  Annapurna Textile        Manufacturing        India 
10.  Gorkha Brewery          Manufacturing        Denmark 
In terms of the number of recorded investment interests in operating 
joint ventures as of mid-94, India is far and away the most important 
foreign investor in Nepal with over 40 percent of the total by number 
and involved in five of the ten largest foreign invested enterprises.  
Japan is second, the United States third, South Korea fourth, and China 
and the United Kingdom tie for fifth place.       
Two large banks dominate the banking sector.  Nepal Bank, Ltd. is 52 
percent government-owned.  Rastriya Banija Bank is 100 percent 
government-owned.  The two account for 70 percent of deposits and loans.  
In the 1980's, the GON opened commercial banking to foreign joint 
venture banks.  Local affiliates of Emirates, Indosuez and Grindlays 
introduced modern banking techniques and allowed the rapid expansion of 
exports of handknotted woolen carpets and ready-made garments.  In 1991 
the GON eliminated interest rate controls.  In 1992, the GON further 
liberalized by allowing finance companies.  In early 1994, the GON 
privatized the Stock Exchange and permitted private brokers.  The volume 
of trading increased dramatically in the first half of 1994 but has 
since fallen, largely due to political uncertainties following the fall 
of the Nepali Congress Party Government in July 1994. 
The Nepali rupee is tied to the Indian rupee which, in turn, has a 
managed float against the U.S. dollar (the intervention currency).  
There is free convertibility between the two rupee currencies and for 
all transactions on the trade account.  In 1993, Nepalese were permitted 
to hold foreign currency accounts in Nepal for the first time.  Foreign 
accounts must be declared and taxes paid.  Disinvestment remains subject 
to GON approval. 
Foreigners are not allowed to purchase shares on the local stock 
exchange but can sell shares of firms in which they were the promoters.  
Banks are only willing to lend short term but will consider loans with 
terms up to five years.  The total amount of outstanding loans to the 
private sector is currently just over US$ 600 million.  Bank limitations 
and lack of sufficient liquidity make it difficult to borrow in excess 
of US$ 20 million from the entire banking system, plus possibly another 
US$ five million via the stock exchange. 
The preferred method of financing exports is Letter of Credit (L/Cs) 
with experimentation taking place on rolling L/Cs and other instruments.   
Agreements with the United States Export-Import Bank are in place as are 
MIGA, OPIC, and numerous bilateral arrangements.  The World Bank and the 
Asian Development Bank are active, both taking equity participation and 
making loans to local companies. 
The U.S. Export-Import Bank can lend to both the private and public 
sectors in Nepal but has not had any recent requests for its services.   
Both the World Bank and the Asian Development Bank are active in lending 
for development activities including infrastructural projects such as 
roads, telecommunications, and hydroelectric power. 
Nepal Bank Limited 
Mr. Purusottam Bahadur Pandey, General Manager 
Nepal Bank Bldg., Dharma Path 
Kathmandu, Nepal 
Phone: 223790 
Fax: 977-1-222383 
Rastriya Banijya Bank 
Mr. Guru Prasad Neupane, General Manager 
Kathmandu, Nepal 
Phone: 413422/411164 
Fax: 977-1-414256 
Himalayan Bank Ltd. 
Mr. Prithvi Bahadur Pandey, Executive Director 
Tridevi Marg, Thamel 
Kathmandu, Nepal 
Phone: 418665/225399 
Fax: 977-1-222800 
Nepal-Arab Bank Limited 
Mr. S.C. Kabadkar, Executive Director 
Kanti Path 
Kathmandu, Nepal 
Phone: 228549/227181 
Fax: 977-1-226905 
Nepal Grindlays Bank Limited 
Mr. J. F. Murray, General Manager 
Naya Banashwor 
Kathmandu, Nepal 
Phone: 228474/229333 
Fax: 977-1-228692 
Nepal Indo-Suez Bank Limited 
Mr. Michel Courzaret, Chief Executive Director 
Durbar Marg 
Kathmandu, Nepal 
Phone: 227228/228299 
Fax: 977-1-226349 
Nepal SBI Bank Limited 
Mr. Aditya Bikash Chakrabarty, Managing Director 
Durbar Marg 
Kathmandu, Nepal 
Phone: 225326/230808 
Fax: 977-1-221268 
Nepal-Bangladesh Bank Ltd. 
Mr. Kazi Khalilur Rehman, Managing Director 
Ramrukmani Sadan, Ramshah Path 
P.O. Box 9062 
Kathmandu, Nepal 
Phone: 421568/419297 
Fax: 977-1-410644 
Bank of Kathmandu Ltd. 
Mr. Chanrit Youngcharoen, General Manager 
Kamal Pokhari, P.O. Box 9044 
Kathmandu, Nepal 
Phone: 418068 
Fax: 977-1-418900 
Everest Bank Limited 
Mr. Bramha Dutta Dixit, Chief Executive 
Naya Baneshwor 
Kathmandu, Nepal 
Phone: 214878/233122 
Fax: 977-1-270986 

The main language is Nepali. However, most businessmen can speak both 
Hindi and English. A common way of greeting everyone is "Namaste" 
(Hello), pronounced "NA-MAS-TAY." A majority of the population follows 
the Hindu religion. The unique feature of Nepalese society is its 
ethnic, linguistic, and cultural diversity. The people are divided into 
a number of ethnic groups but all are of Indo-Aryan and Tibeto-Burman 
origin. Traditional and conservative in nature, the Nepalese are very 
hospitable people and take great pride in their national heritage.   
Nepal is a developing country with extensive facilities for tourists 
which vary in quality according to price and location.   
A passport and visa are required for entry.  A tourist visa for a stay 
of up to 60 days is issued at ports of entry upon arrival.  The fee for 
the tourist visa varies with the number of entries and duration of stay 
requested.  Visas can be routinely extended in Kathmandu and Pokhara for 
stays of up to four months.  A fifth month requires special approval.  
Penalties for overstaying a visa may include fines and imprisonment.  
Travelers can obtain additional information by contacting the Royal 
Nepalese Embassy at 2131 Leroy Place, N.W., Washington, D.C. 20008 
Telephone (202) 657-4550 or the Nepalese Consulate General in New York 
at Telephone (212) 370-4188. 
Public demonstrations and strikes are popular forms of political 
expression in Nepal and may occur from time to time on short notice.  
These demonstrations are usually nonviolent and not directed towards 
foreigners.  During general strikes, many businesses are closed, and 
transportation and city services are    sometimes disrupted. 
Medical care is extremely limited.  Any serious illness may require 
evacuation to the nearest adequate medical facility (usually Bangkok).  
Doctors and hospitals expect immediate cash payment for health services.  
In general, U.S. medical insurance is not valid in Nepal.  Supplemental 
health insurance which specifically covers overseas treatment and 
evacuation to the nearest adequate medical facility is useful.  
Additional information on health problems can be obtained from the 
Center for Disease Control's International Traveler's Hotline at (404) 
Petty crime, especially theft of personal property, is common.  While 
acts of violent crime in Nepal are rare, several attacks against lone 
foreign trekkers have been reported.  The loss or theft of a U.S. 
passport abroad should be reported immediately to local police and the 
U.S. Embassy.  Useful information on safeguarding valuables, protecting 
personal security and other matters while traveling abroad is provided 
in the Department of State pamphlets, "A Safe Trip Abroad" and "Tips for 
Travelers to South Asia."  They are available from the Superintendent of 
Documents, U.S. Government Printing Office, Washington, D.C.  20402 
U.S. citizens are subject to the laws and legal practices of the 
countries in which they are traveling.  Penalties for possession, use or 
trafficking in illegal drugs are strictly enforced.  Convicted offenders 
can expect jail sentences and fines. 
There have been sporadic reports of difficulties in crossing the border 
from Nepal to Tibet by land.  U.S. citizens planning to travel into 
Tibet overland from Nepal may contact the U.S. Embassy in Kathmandu for 
current information on the status of the border crossing points. 
U.S. citizens who register at the U.S. Embassy in Kathmandu can obtain 
updated information on travel and security in Nepal. 

0  National holidays (1995) 
Krishna Asthami       17 August 
Indra Jatra            8 September 
Ghatasthapana         25 September 
Dashain              1-7 October 
Tihar              23-25 October 
Constitution Day       9 November 
H.M. King's Birthday  15 January 
0  National holidays (1996) 
Prithvi Jayanti      11 January 
Basanta Panchami     25 January 
Martyr's Day         30 January 
Shiva Ratri          17 February 
Democracy Day        19 February 
Fagu                  4 March 
Ghode Jatra          19 March 
Chaite Dashain       27 March 
Ram Nawami           28 March 
New Year's Day       13 April 
Buddha Jayanti        3 May 
Janai Purnima        28 August 
Gai Jatra            29 August 
Krishna Asthami       4 September 
Indra Jatra          26 September 
Dashain         18 - 25 October (8 days) 
Constitution Day      7 November 
Tihar           10 - 12 November (3 days) 
H.M. King's Birthday 15 January 
NOTE.  Exact dates for holidays are announced by the Government at the 
beginning of each Nepali year (mid-April). 
The country has only some 10,000 kilometers of motorable roads so 
surface travel is difficult, especially so during the June - September 
rainy season known as the "monsoon."  In addition to national carrier 
Royal Nepal Airlines Corporation, six private firms offer both 
helicopter and fixed wing air service within the country to a number of 
locations.  International calls and fax facilities are readily 
available.  AT&T service is not.  Nepal has a wide variety of hotels 
ranging from five-star to budget; it is also possible to rent apartments 
and homes.  The most prevalent illnesses encountered by foreign visitors 
are respiratory infections, allergies, and gastrointestinal illnesses 
due to ingesting contaminated food and water.   
Nepal's population is estimated at about 20 million and it is growing at 
2.5 percent a year.  The main religions are Hinduism (87 percent), 
Buddhism (eight percent), and Islam (four percent). The Muslim 
population is concentrated in the southern Terai district.  There is a 
small number of Christians in the country. Nepal is a multi-party 
democracy with two houses of Parliament and a constitutional monarch.  
The lower house is elected via direct elections and the upper is either 
appointed or elected indirectly.  The main language is Nepali which is 
closely related to Hindi.  English is also spoken in the urban areas and 
is popular for business dealings.  The work week is Sunday through 
Friday.  Business hours are generally 10-4 (10-3 on Friday) for 
government offices with no lunch break and two tea breaks.  Saturday is 
the day of rest. 
     (In millions of U.S. dollars unless otherwise noted 
     and for Nepali fiscal years ending July 15) 
                       GENERAL INDICATORS 
Category                    93/94        94/95       95/96 
GDP                         3,898       4,202         4,614 
GDP Growth Rate             7.8         4.0           4.5 
GDP Per Capita                200         210           221 
Govt Spending (pct GDP)        18          20            21 
Inflation (Pct-CPI)         9.6         7.0           8.0 
Foreign Exchange Reserves 
(months of import Cover)         9.0         10.0       8.3 
Avg Exchange Rate (for US$)      49          50          51 
Foreign Debt (end CY)            1930        2400      2808 
Debt Service Ratio (pct exp)     17          18          20 
Avg Exchange Rate (NRP/US$)      49          51          52 
U.S. Assistance                  16          14          27 
Exports (F.O.B.)               400        302        370 
Imports (C.I.F.)             1,090      1,237      1,552 
U.S. Exports                     9         10         12 
U.S. Imports                  92.2        110      128.7 
US share of Imports (pct)      0.9        0.8        0.9 
US share of Exports (pct)       23         24         25 
MAIN NEPAL EXPORTS:  Handknotted woolen carpets, ready-made garments, 
soap products. 
MAIN NEPAL IMPORTS:  Wool, machinery and transport equipment, chemicals 
and drugs. 
Note.  U.S. exports to Nepal are understated due to extensive 
transshipment and distribution via Singapore and Hong Kong. 
See Chapter VII, Sections G and H 
ATTN:  Peter Gadzinski            ATTN:  Siddi Amatya 
Economic/Commercial Officer              Commercial Specialist 
U.S. Embassy Pani Pokhari Kathmandu, Tel:  977-1-411179; Fax:  977-1-
U.S. Mailing Address:  U.S. Embassy Kathmandu,Department of State 
Washington, D.C. 20521-6190 
Nepal - U.S. Chamber of Commerce and Industry (NUSCCI) 
Tel  :  977-1-474991,Fax  :  977-1-474990 
ATTN:  Narendra Basnyat, President 
Federation of Nepalese Chambers of Commerce & Industry: 
Tel:  977-1-233302, 230407, Fax:  977-1-227322  
Cargo Agents Association of Nepal:  Tel:  977-1-419019 
Fax:  977-1-419858 
Central Carpet Industries Association of Nepal:  Tel:  977-1-413135, 
Freight Forwarders Association of Nepal 
Tel:  977-1-411764 
Garment Association of Nepal:   Tel:  977-1-223173 
Hotel Association of Nepal:   Tel:  977-1-412705 
Fax:  977-1-415984 
Management Association of Nepal:  Tel:  977-1-224475 
National Association of Travel Agents 
Tel:  977-1-411764 
Nepal Foreign Trade Association 
Tel:  977-1-223784, Fax:  977-1-228562 
Women Entrepreneurs Association 
Tel:  977-1-525031, Fax:  977-1-411277 
Ministry of Commerce, Babar Mahal, Kathmandu 
Tel:  977-1-223489, 224805, Fax:  977-1-225594 
Ministry of Finance, Hari Bhawan, Kathmandu 
Tel:  977-1-224527, 223280, Fax:  977-1-227529 
Ministry of Industry, Singha Durbar, Kathmandu 
Tel:  977-1-226686, Fax:  977-1-220319 
Ministry of Tourism & Civil Aviation, Singha Durbar, Kathmandu 
Tel:  977-1-225870, 28840, Fax:  977-1-227758 
Ministry of Information & Communications, Singha Durbar, Kathmandu, Tel:  
977-1-227525, Fax:  977-1-221729 
Trade Promotion Center, Kupundole, Kathmandu 
Tel:  977-1-524771, 524772, Fax:  977-1-521637 
Department of Industry, Tripureshwor, Kathmandu 
Tel:  977-1-213880, 213838, Fax:  977-1-226112 
Department of Commerce, Bijuli Bazar, Kathmandu 
Tel:  977-1-227364, 227404 
Department of Immigration, Tridevi Marg, Thamel, Kathmandu 
Tel:  977-1-412337, 418573 
Company Registrar's Office, Tripureswor, Kathmandu 
Tel:  977-1-217293, 212702 
S.R. Shrestha & Co. (P) Ltd. 
Mr. Shiva Raj Shrestha, Managing Director 
Jawalakhel, Lalitpur, Tel:  977-1-522641 
Fax:  977-1-522641 
Group Three (P) Ltd. 
Research and Marketing Division 
G.P.O. Box 6227 
Kailash Kuli, Kalikasthan 
Tel/Fax:  977-1-221594 
Himalayan International Marketing Associates (P) Ltd. 
Mr. Sidharth Malhotra, Consultant 
Kathmandu, Nepal 
Phone: 212409/415006 
HIMAL, Tripureshwor, Kathmandu 
Tel:  977-1-212409 
Fax:  977-1-226293 
Human Resource & Development Center (HURDEC) 
Tel:  977-1-222685 
Fax:  977-1-222809 
ICTC, Thapathali, Kathmandu 
Tel:  977-1-227694 
Fax:  977-1-227766 
Nepal Bank Ltd., Dharma Path, Kathmandu 
Tel:  977-1-221185, 224337 
Fax:  977-1-222383, 221337 
Rastriya Banijya Bank, Tangal, Kathmandu 
Tel:  977-1-411164, 410852 
Fax:  977-1-414256 
Nepal Arab Bank Ltd. (NABIL), Kantipath, Kathmandu 
Tel:  977-1-227181, 226785 
Fax:  977-1-226905 
Nepal Grindlays Bank, Kantipath, Kathmandu 
Tel:  977-1-228474, 229333 
Fax:  977-1-228692 
Nepal Indo-Suez Bank, Durbar Marg, Kathmandu 
Tel:  977-1-228229, 227228 
Fax:  977-1-226349 
Himalayan Bank Ltd., Thamel, Kathmandu 
Tel:  977-1-418665, 225399 
Fax:  977-1-222800 
Nepal SBI Bank, Durbar Marg, Kathmandu 
Tel:  977-1-225326, 214152 
Fax:  977-1-221268 
Everest Bank, Ltd., Durbar Marg, Kathmandu 
Tel:  977-1-214878, 233122 
Fax:  977-1-270986 
Nepal Bangladesh Bank, Ramshah Path, Kathmandu 
Tel:  977-1-419297, 421568 
Fax:  977-1-410644 
Bank of Kathmandu, Kamal Pokhari, Kathmandu 
Tel:  977-1-418068 
Fax:  977-1-418900 
Standard Chartered Bank., Durbar Marg, Kathmandu 
Tel:  977-1-220129 
Fax:  977-1-220129 
Union Europeenne De CIC, Durbar Marg, Kathmandu 
Tel:  977-1-227071 
Fax:  977-1-228339 
Citibank, Hotel Yak & Yeti, Kathmandu 
Tel:  977-1-228884, 413999 
Fax:  977-1-227884 
American Express Bank Ltd., Kantipath, Kathmandu 
Tel:  977-1-229053, 214926 
Fax:  977-1-228837 
The World Bank, Hotel Yak & Yeti, Kathmandu 
Tel:  977-1-226792, 226766 
Fax:  977-1-225112 
The Asian Development Bank, Srikunj, Kamaladi, Kathmandu 
Tel:  977-1-220305, 229091 
Fax:  977-1-225063 
The Multilateral Development Bank Office 
Brenda Ebeling, Director 
14th and Constitution, NW, Washington, DC 20007 
Tel:  202-482-3399 
Fax:  202-482-5179 
Nepal Desk 
Bureau of South Asia 
ATTN:  Elaine Papazian-Etienne 
U.S. Department of State, Washington D.C. 
Tel:  (202) 647-2141 
Fax:  (202) 647-3001 
Nepal Desk, Office of South Asia  
Room 2308 
U. S. Department of Commerce, Washington D. C. 
Tel:  (202) 482-2954 
Overseas Private Investment Corporation (OPIC) 
Insurance Department 
ATTN :  David O'Hanian 
1100 New York Avenue, N. W. 
Washington D. C. 20571 
Tel:  (202) 336-8584, Fax:  (202) 337-7954 
U. S. Export-Import Bank 
Asia Division 
ATTN:  Regional Loan Officer Rita Murrell 
811 Vermont Avenue, N. W. 
Washington D. C. 20571 
Tel:  (202) 566-4632, Fax:  (202) 337-7954 
TPCC Trade Information Center 
Washington, DC 
Tel:  1-800-USA-TRADE 
US Department of Agriculture 
Foreign Agricultural Service 
Trade Assistance and Promotion Office 
Tel :  202-720-7420 
"Guide to Doing Business in Nepal,"  August 1995 
"Nepal's Energy Sector" 
"Civil Aviation in Nepal" 
Sponsored by the Computer Association of Nepal, this event proved highly 
popular in its debut in January of 1995.  To be held again in Kathmandu, 
the show features computer hardware and software from the United States. 
Himalayan Expo '96 
This event will be held in Kathmandu May 4-8, 1996 and is organized by a 
local promoter.  Next year's event is to be trade-only but will be a 
horizontal event in that a number of products will be featured.  
Himalayan Expo is the only business event of its kind in Nepal and is 
gaining stature as a regional trade show.  In 1994 and 1995, the Embassy 
sponsored highly successful USA Pavilions at the show. 
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