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 ever 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.
Lisa Choegyal is a writer, sustainable tourism specialist, and New Zealand Honorary Consul to Nepal. Based in Kathmandu since 1974, she has spent nearly five decades working across tourism, conservation, and media in the Himalayan region. She is associated with Tiger Mountain Pokhara Lodge, has consulted on ecotourism projects across 30+ countries, and has authored and edited several books on Nepal. She also contributes regularly to magazines and blogs on tourism, wildlife, and conservation.
