Foreign Investment Commitments Rise Sharply, but GenZ Movement Casts New Doubts Over Nepal’s Investment Climate

Nepal has seen noticeable improvement in foreign investment commitments in recent years, with the past three months alone attracting more than Rs 35 billion in pledged inflows. However, the momentum has been clouded by the recent GenZ movement, which has shaken investor confidence and reignited concerns about safety, political stability and the overall business environment. While headline numbers appear encouraging, the underlying sentiment among investors has become increasingly cautious.

According to the Department of Industry, Nepal received foreign investment commitments worth Rs 35.13 billion between mid-July and mid-October. During this three-month period, a total of 311 industries received approval for foreign investment. The commitments span large, medium and small-scale enterprises, with seven large industries, four medium-sized industries and 300 small industries securing pledges. In the month of Ashoj alone, 75 small industries received commitments worth more than Rs 2.04 billion, reflecting growing interest in Nepal’s micro and small enterprise sector.

To date, Nepal has approved foreign investment in 7,550 industries, amounting to a total commitment of Rs 865.59 billion. This long-term expansion shows that investors have increasingly looked to Nepal as an emerging market—albeit one with complex regulatory and political challenges. The composition of investment in recent months further highlights Nepal’s growing appeal in technology-driven sectors.

In terms of sectoral trends, the information technology sector has recorded the highest number of approved industries. Of the commitments received between July and October, 162 IT-based industries secured foreign investment worth Rs 153.7 million. This signals a shift in investor appetite toward digital services, outsourcing and tech-enabled ventures—fields where Nepal has shown growing talent potential and competitive cost advantages.

But when measured by investment amount rather than number of industries, the tourism sector emerges as the leader. A total of 103 tourism-focused industries received commitments worth Rs 1.46 billion, showing renewed international interest in hotels, resorts, adventure tourism and hospitality projects. Additionally, 15 manufacturing industries secured commitments amounting to Rs 211 million, while the agriculture sector attracted foreign investment worth Rs 40 million across 11 industries. The services sector saw 19 industries receive commitments worth Rs 181 million, indicating diversified investor interest.

The broader trend over the last few fiscal years also paints a positive picture. Nepal’s foreign investment inflow grew by 41.8 percent in FY 2081/82, reaching Rs 15.02 billion, compared to Rs 8.47 billion in FY 2080/81. The Department of Industry approved Rs 74.97 billion in foreign investment in FY 2081/82, up from Rs 61.90 billion the previous year. By Asar 2082, the cumulative approved foreign investment had reached Rs 651.45 billion, underscoring Nepal’s long-term potential as a developing investment destination.

However, despite this growth trajectory, the GenZ movement has altered the investment sentiment dramatically. The violent turn of events and damage to commercial properties—particularly large hotels and business complexes—has heightened fears among both domestic and foreign investors. The protests have exposed vulnerabilities in Nepal’s security preparedness, raising concerns that political instability could quickly escalate into targeted threats against business assets.

Investors are now questioning whether Nepal can guarantee a safe and predictable investment environment. The apprehension is particularly visible among large-scale investors who typically require long-term stability before committing significant capital. Analysts warn that even a temporary disruption in investor confidence can have long-lasting consequences for sectors such as tourism, hospitality, manufacturing and technology outsourcing.

Nevertheless, observers say the situation remains salvageable—provided the government responds with strong crisis management, ensures security readiness, and communicates effectively with the investor community. If Nepal can demonstrate stable governance and protect commercial infrastructure, the current momentum in foreign investment could still translate into long-term economic gains. The coming months will, however, be a critical test of how effectively Nepal can rebuild trust in its investment climate.