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I am an EU citizen and interested in starting a coffee processing company in Nepal. Already have a Nepali business partner, and we'd be both shareholders of the company we want to establish.
Could somebody elaborate on the requirements of obtaining a long-term business visa that would allow me to realize this project in Nepal.
(The following is based on Internet research only, as I have not yet tried the process. But I looked everything up in more than one source and use official sources where available, so it should be pretty close.)
The main requirements are as follows:
You need ≥5 million NPR (~44,000 USD in 2018) to invest in your business in Nepal. Because that is the minimum investment to get your "licence to invest", which you need to get your business visa.
(I'm listing the sources and other details in a section below. Also as explained there, I have no final confirmation if the minimum investment threshold is still in force.)
The business you want to invest in must be open to foreign investment. Some are not, see the negative list.
Your investment will be made in an existing or (in your case) new company of the "private limited liability" or "public limited liability" company type. Foreigners can't invest in proprietorship or partnership firms. (source)
You follow the rest of the process for foreign investments (forms, documents, fees etc.). See here how this process looked in practice (as opposed to in the law) in 2013.
You also follow the application process for a business visa (more details).
Even on the official "Invest Nepal" website by the Ministry of Industry, they mention (here):
Existing investors may apply for either the residential or business visa.
This is because a permanent residential visa is open for those who invested 100,000 USD or more at one time. From the "Nepal Investment Guide 2018" (an official document by Investment Board of Nepal), page 17:
Any foreign investor who has made an investment equivalent to more than USD 100,000 at any one time and in convertible foreign currency can be granted a residential visa on the recommendation of the Department of Industry/Investment Board Nepal. The validity period of this visa is one year at a time.
If the investor, making a lump sum investment equivalent to more than USD 100,000 in convertible currency, happens to be a company, only one shareholder authorised by that company and his/her dependents may be granted residential visas.
The business visa requirements from the website of Nepal's embassy in Paris (here):
The business visa shall be granted to the following foreigners and their family on the recommendation of concerned agency:
- Foreigners having obtained license to make investment in any business or industrial enterprise within Nepal or authorised representatives of such business or industrial enterprise.
- Foreigners having obtained license to invest to carry on export trade from Nepal.
- Foreigners visiting Nepal from third country who export goods manufactured in Nepal through purchase or who place a purchase order for export.
Now to obtain the "licence to invest" in Nepal, one has to meet the requirements for that. According to the Ministry of Industry's "Invest Nepal" website (here), investments can be purchasing shares, making loans, in-kind investments and reinvesting earnings originating in Nepal, but:
However, as per the decision of the Governemnt made on September 5, 2012, the minimum amount of FDI [i.e. foreign direct investment] has increased to NPR 5 million [ca. 44,000 USD / 39,000 EUR in 2018] for each investor from USD 20,000 […].
Originally, no minimum investment was required, but the business visa scheme was quite exploited by non-entrepreneurs (see this article from 2004). So probably that's why a minimum investment was introduced and later even increased.
According to the analysis paper "Foreign Direct Investment: Towards Second Generation of Reforms" (on page 23 / PDF page 37) this seems to mean that each investment made into any one business by a single investor has to meet that minimum amount so that making clusters of smaller investments is not possible (emphasis mine):
The introduction of minimum cap of US$ 50,000 in foreign investment is against the spirit of Foreign Investment and Technology Transfer Act 1992. Therefore, it should not be applied to any sector of the economy, especially Information Technology, in the name of protecting domestic industries as it discourages foreign investors from investing further in Nepal. It should be repealed by a court as it was brought forward by an administrative process. In addition to this, it causes negative impact on idea based industries as the investment in small clusters is more beneficial.
(This quote mentions 50,000 USD while I mentioned 44,000 USD above. I think this is just because the amount mentioned in the rule, 5 million NPR, was 50,000 USD in 2013 when the quoted text was written, and is 44,000 USD now due to inflation.)
The quote above also confirms, as a second source, that a minimum investment amount exists. You might get the first business visa by promising to invest such an amount (not sure yet), but extending it would then not work unless you really invested it in Nepal.
However, strangely the "Nepal Investment Guide 2018" (an official government document by Investment Board of Nepal) does not mention any minimum investment amount. So there is still a chance that the information on the government website quoted above is already outdated and that the minimum investment does no longer apply. So better check that with a local lawyer in Nepal first.
