Nepalese Economy

INTRODUCTION

1.1 Background of the Study

1.1.1 Nepal and Nepalese Economy

Geographically, Nepal is located at 26º22' to 30º27' north and 80º4' to 88º12' east latitude and longitude respectively. It belongs to southern Asia in upper part of Indian Sub Continent. Its total area is 147,181 Square Km. Nepal is one of the oldest countries with its own civilizations.

Nepal is a landlocked country, situating between China's Tibet Autonomous Region in the north and India in east, south and west. Situation of Nepal between two large countries with dynamic economies makes Nepal as just like a buffer state. It is a small himalayan country which is in transition since 1996 when Maoist started internal conflict which was ended in 2006. Now, Nepal is focusing

However, agriculture remains principal economic sector and occupies almost one third of Gross Domestic Product with more than two third of country’s population are dependent in the sector. In F/Y 2013/14, the contribution of agriculture to GDP was 33.87 percent. Approximately 19% of the total land is arable; 40% is forested and the rest is mountainous. Real GDP growth rate was 5.2 percent in fiscal year 2013/14. Nepal is now a country with low GDP, low GDP per capita and with low human development index. The country's GDP is about 19.34 billion USD and GDP percapita is about 700 USD in official exchange

Further more, the thesis also focuses on special case of cement production as an opportunity for foreign investors. The investment opportunities in cement industry is selected due to many reasons: First, Nepal is a country with less natural resources and thus other industrial development related to natural resources is limited. Second, Nepal contains a lot of limestone (raw material for cement), which assures that cement production in Nepal can be a most profitable and sustainable industry. Third, Nepal is a cement-shortag country with demand is very high as compared to supply. Shortage cements are now imported from India. India itself a cement shortage and less limestone contained country. Hence, the market is very big for cement in Nepal. Fourth, Governent of Nepal gives priorities in production industries including cement for foreign investors. Finally, Nepal is a country with huge two gaps: trade gap and saving gap. These all reasons are the backbone for selecting the cement industry as a most opportunistic industrial sector for FDI in Nepal. The whole thesis analytically focuses on investment opportunities in Nepal and focus will be on cement