FOR JAPANESE INVESTORS
For Japanese investors
WHY JAPAN MATTERS HERE
Capital with a long horizon
Japanese companies held roughly USD 2.1 trillion of direct investment abroad at the end of 2024, second only to the United States. What matters more here is how that money tends to behave.
In Vietnam, Bangladesh and India it has taken much the same shape each time: a long partnership rather than a quick stake, close attention to quality and process, and a slow, thorough look before committing. Capital seeking a short holding period does not behave that way.
Nepal needs the first kind. Hydropower, manufacturing, agricultural value chains, training people — none of them pay back quickly, and all of them assume whoever starts intends to stay.
So we do not treat all investment as equally welcome. We work with Japanese companies that mean to stay.
ALREADY BUILT
Japan is not a newcomer here
2019–2026
Nagdhunga Tunnel
A 2,688-metre road tunnel through the Chandragiri range on the western approach to the Kathmandu Valley, and Nepal's first modern road tunnel. Built by Hazama Ando under a JICA yen loan that reached ¥22.3 billion, and inaugurated on 28 July 2026. For seven years Nepali engineers and site crews worked to Japanese specification and Japanese quality control.
Grant aid
BP Highway (Sindhuli Road)
A 160-kilometre trunk road linking Kathmandu with the eastern Terai, built with Japanese grant aid over roughly two decades. It remains one of the larger road projects in the country's history.
Ongoing
Kathmandu Valley water supply
JICA financed the treatment plants that process raw water from the Melamchi scheme. The Kathmandu Valley's supply runs through those plants.
Ongoing
Road improvement and bridges
The 9.1-kilometre Kathmandu–Bhaktapur road improvement project, plus a long series of bridge projects across the country. A good number of Nepal's regional bridges came from Japanese cooperation.
Health
Tribhuvan University Teaching Hospital
The teaching hospital at Maharajgunj in Kathmandu was built and equipped with Japanese cooperation. A large share of the country's doctors trained there.
Private sector
Private-sector presence
JETRO counts 35 Japanese companies across 46 establishments in Nepal (2025). The most active private pattern is software: Japanese firms running their own development centres in Kathmandu, several with in-house Japanese-language training for their engineers. The base is small, which is precisely where the room is.
None of this is our work. It is the ground we start from, and it is why a Japanese name opens doors in Nepal that other names do not.
THE FDI PICTURE
Nepal's inward investment, as it actually is
NPR 333bn
Nepal's realised inward FDI stock
From 60 countries, up 12.7% year on year. About USD 2.5bn at 2024's average rate of roughly NPR 134 to the dollar.
Source：Nepal Rastra Bank, FDI Survey 2023/24mid-July 2024
NPR 8.5bn
Gross annual FDI inflow
In the same year, FDI enterprises repatriated NPR 12.6bn in dividends — more left as dividends than arrived as new investment. That single line is the clearest measure of how small this market still is.
Source：Nepal Rastra Bank, FDI Survey 2023/24FY2023/24
31.9%
Share of approved FDI that actually arrived
Cumulative, FY1995/96–2023/24. In FY2023/24 alone, NPR 69.8bn was approved against NPR 8.4bn of net inflow — 12.0%. The investment commitments reported in Nepal cannot be read as money on the ground.
Source：Nepal Rastra Bank, FDI Survey 2023/24as of FY2023/24
62%
Share of FDI stock in Bagmati Province
The province containing the Kathmandu Valley. Koshi follows at 13.5% and Gandaki at 13.1%; Lumbini and Karnali together account for under 1%. In practice, site selection starts here.
Source：Nepal Rastra Bank, FDI Survey 2023/24mid-July 2024
The country ranking changes depending on which number you read. On money that actually arrived, measured by the central bank, India leads. On approved commitments, recorded by the Department of Industry, China leads. The distance between the two tables is the distance between what gets announced in Nepal and what lands.
- 01IndiaNPR 107.6bn32.3%
- 02ChinaNPR 33.8bn10.2%
- 03SingaporeNPR 27.7bn8.3%
- 04IrelandNPR 23.1bn7.0%
- 05South KoreaNPR 20.2bn6.1%
- 06AustraliaNPR 19.7bn5.9%
- 07United StatesNPR 17.6bn5.3%
- 08West IndiesNPR 14.8bn4.4%
- 09Isle of ManNPR 11.4bn3.4%
- 10Hong KongNPR 11.0bn3.3%
- 16JapanNPR 3.4bn1.0%
Source: Nepal Rastra Bank, FDI Survey 2023/24, as of mid-July 2024. West Indies and Isle of Man are conduits; they indicate the routing of the money, not the nationality of the investor behind it.
- 01ChinaNPR 226.9bn44.3%
- 02IndiaNPR 106.8bn20.9%
- 03Hong KongNPR 29.6bn5.8%
- 04South KoreaNPR 26.0bn5.1%
- 05United StatesNPR 18.0bn3.5%
- 06United KingdomNPR 14.4bn2.8%
- 07Cayman IslandsNPR 13.1bn2.6%
- 08British Virgin IslandsNPR 11.1bn2.2%
- 09SingaporeNPR 9.4bn1.8%
- 10SpainNPR 7.6bn1.5%
- 14JapanNPR 3.8bn0.74%
Source: Department of Industry, “Foreign Investment in Nepal 2024”, cumulative to the end of FY2023/24. The Economic Survey 2025/26 puts cumulative approvals at NPR 625.6bn by mid-March 2026, with China at 48% and India at 17.9% — China's weight has grown further since.
BY SECTOR
By sector
- 01Electricity, gas and steamNPR 98.3bn29.5%
- 02ManufacturingNPR 97.6bn29.3%
- 03Financial and insurance servicesNPR 81.4bn24.4%
- 04Information and communicationNPR 26.9bn8.1%
- 05Accommodation and food servicesNPR 21.7bn6.5%
- 06All other sectorsNPR 7.0bn2.1%
Source: Nepal Rastra Bank, FDI Survey 2023/24, Appendix III, as of mid-July 2024. Table 6 of the same report transposes the accommodation and ICT rows; we follow Appendix III, which agrees with the executive summary.
WHERE JAPAN STANDS
A first-rank partner, a sixteenth-rank investor
NPR 3.4bn
Japanese direct investment stock in Nepal
16th of 60 source countries, 1.0% of the total, or about USD 25m. Up 70.4% from NPR 1.97bn and 18th place a year earlier — growth off a very small base, and we would rather say so.
Source：Nepal Rastra Bank, FDI Survey 2023/24mid-July 2024
283
Approved Japanese investment projects, cumulative
NPR 3.77bn in total, 14th of 105 economies and 0.74% of all approvals — an average of about NPR 13m, roughly USD 100,000, per project. Japan's problem in Nepal is not the number of entries but the size of each one.
Source：Department of Industry, “Foreign Investment in Nepal 2024”end of FY2023/24
74%
Share of Japan's stock sitting in services
Of NPR 3.36bn: NPR 2.48bn in services, NPR 0.85bn in industry, NPR 25m in agriculture. In electricity and manufacturing — the two largest sectors by stock — Japan is barely present.
Source：Nepal Rastra Bank, FDI Survey 2023/24mid-July 2024
That asymmetry is the reason this firm exists. The asset — what a Japanese name means to a Nepali counterparty — already exists. Almost no private investment is using it.
We do not offer that as grounds for optimism. There are reasons Japanese investment is thin here: a small market, power and logistics constraints, frequent changes of government, and an unpredictable gap between approval and the money actually landing.
What we can do is not remove them but set them out accurately in advance and carry the execution. The decision stays yours.
PRIORITY SECTORS
The seven sectors the government has opened
- 01
Energy
The largest sector by stock at 29.5%. Around 7.5% of the 42,000 MW of economically feasible hydropower has been developed. Long payback, and it assumes capital that intends to stay.
- 02
Agriculture and forestry
NPR 289m of stock, 0.1% of the total — effectively empty. Almost no foreign-invested business runs the chain from production through processing to export.
- 03
Infrastructure
Where Japan's track record is deepest. The Nagdhunga Tunnel and the BP Highway both came from Japanese cooperation, and the engineers and contractors who worked to Japanese specification are already in the country.
- 04
Tourism
NPR 21.7bn of stock in accommodation and food service, 6.5% of the total and up 17.2% year on year. It is also where most existing Japanese entrants sit.
- 05
Information technology
Exempt from the NPR 20m minimum, so a company can enter small. NPR 26.9bn of stock, 8.1% of the total, and up 36.3% year on year — the fastest-growing major sector.
- 06
Service industries
Services hold 40.5% of the stock, but 24.4 points of that is banking and insurance. Outside finance, there are few operators of any size.
- 07
Manufacturing
29.3% of the stock, yet capacity utilisation among surveyed foreign-invested manufacturers is 47.5%. The binding constraint here is power, logistics and input sourcing rather than demand.
The automatic route waives prior approval, not the rest: company registration, Nepal Rastra Bank registration and sector licensing all still apply, and the NPR 20 million minimum investment continues to apply outside IT and digital industries.
Stock, growth and capacity-utilisation figures on these cards all come from Nepal Rastra Bank's FDI Survey 2023/24, as of mid-July 2024. The hydropower potential figure is sourced on the Why Nepal page.
This site provides general information only and is not legal, tax or investment advice. Regulations change. Please confirm against current primary sources and with your own advisers before acting.
PUBLIC SUPPORT
Japanese support instruments you can use
JETRO
Overseas business support and business matching
Overseas briefing services, the local support platform for SME overseas expansion, and the e-Venue international business-matching site. Since December 2024 also part of a joint Overseas Business Support Package with JBIC, NEXI, SMRJ and JFC.
JBIC
Overseas investment loans and advisory
Financing for capital expenditure and long-term working capital, plus a dedicated overseas-investment consultation desk for mid-cap and smaller companies with paid-in capital under ¥1bn.
NEXI
Trade and investment insurance
Covers political risk and non-payment risk, particularly worth evaluating for emerging-market projects where FX and remittance questions arise.
JICA
Private-sector investment finance and partnership programmes
Equity and loans for private projects with high development impact, plus SME and SDGs business support programmes (needs-verification surveys, business-verification pilots), a realistic channel for testing a Nepal business model.
This site provides general information only and is not legal, tax or investment advice. Regulations change. Please confirm against current primary sources and with your own advisers before acting.
NEXT
The case is already in the numbers.
We can start with which instruments apply.
Eligibility depends on sector, investment size and company size. Working that out is a reasonable first step.