TEN Reasons to Invest in Nepal

By Bhupendra Khanal

Many aggressive companies are staying away from Nepal, thanks to poor security situation. The power majors are considering of huge investment in Hydropower sector to export power to the power hungry states of India and China, and this is good news for Nepal. A country with very high hydro-power potential has one of the costliest energy, which simply is not acceptable. Nepal needs to reform the energy sector and prepare the base for development.

While the companies like Samsung, Kodak, LG, Kia etc have entered Nepal, their performance has not been very good in the past. The things are likely to change when Maoist are in the government. Many more companies are likely to follow the investment in this Himalayan country provided the early movers succeed. There are multiple reasons why companies would like to invest in Nepal:

1. Favorable Location: Nepal is a country between India and China, two fastest growing economies globally.

2. Power Sufficiency: Nepal is power rich (hydropower potential is more than enough for any future growth in economy).

3. Pleasant Climate: Nepal has one of the best climate on the world. The valley cities of Kathmandu, Pokhara, Surkhet and Dang are the front runners for this. Eastern city Dharan and western city Butwal are other places with comfortably moderate climate in the likes of Indian Silicon Valley, Bangalore.

4. Untapped Qualified Manpower: Nepal has very high unemployed and poorly employed qualified manpower. In terms of salary, the best man power can be got with almost half the amount in India and China. Nepal produces around 10 thousand qualified Engineers and other IT Graduates annually, and due to the lack of opportunity in Nepal most candidates make their way to US, UK, India and Australia. These candidates can be tapped by the early movers.

5. Extravagant Public: Nepal is a economy run by remittances. Nepal has poor government (comes in LDC) but the people does not seem to be poor. From Pajero to Mercedes, all vehicles are quite common in Nepalese roads. The public of Nepal are so fun loving and extravagant that it has one of the best developed liquor industry.

6. Easy Capital: Almost all the IPOs have been oversubscribed in Nepal by more than 100 times for last 5 years. It itself justifies the ready cash for the companies looking for expansion. Also, the corporate loan is available at the annual interest rate of 4-5 percent while it cost more than 10 in India. The banks in Nepal are facing excess liquidity while their Indian counterparts are struggling for getting every single deposit.

7. Hospitable Public: Nepalese people are regarded as the most hospitable public globally. Due to the emergence as a tourist destination for many decades, the people are Nepal welcome everyone who enter their homeland. They give more love than they charge for the service, the tourist say so. May be you can test it yourself, if you get some leisure before planning next investment project.

8. Everything to enjoy: Rafting in rivers, boating in lakes, mountaineering in the Himalayas, visiting Buddha’s birth place Lumbini or Sita’s birth palce Janakpur, having a Helicopter sight-seeing of the Mount Everest, tracking to the Jungles in the National Parks etc., all these are available in Nepal and all these within a few hundred kilometers. Nepal can just be the home for Nature Lovers to Religion and Culture Scholars.

9. Cheap and Quality High Class Hotels: Hotels are pretty cheap in Nepal and they have all the facilities that anyone in the World has. From Casino to quality Pubs, from well facilitated rooms to good view, swimming pools to the Billiard boards etc. everything is available in much cheaper rates, thanks to low maintenance cost. The Hotel insiders say they don’t have to spend on Air conditioning (its naturally cool). The occupancy rate is low in Nepal (due to earlier political tension) and the competition is intense, which has too contributed to lower cost.

10. Lower Interest Rate and Flexible Capital Flight Norms: Nepal has lower tax than China or India, and Nepal government has declared to make the capital flight easier for both National and International companies. This is in discussion in the council of ministry and it is likely to pass soon.
All these calls are for the companies to go and invest in Nepal. If they miss, I can only be sorry later.

Bhupendra Khanal is the manager of Marketelligent and blogs about Nepal at VisionDevelopmentNepal

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47 thoughts on “TEN Reasons to Invest in Nepal”

  1. there are more reasons needed to be added in the above points. one of them is market………………. we have a very small market. and demand is too little to maximize utilization of resources, investment, to reduce production cost…………………………………. to increase market govt. have to approach small and medium countries like pakisthan, bangladesh, srilanka, thailand, countries from africa, latin america etc for free tradeagreement ………………………………. ………
    there should be some clauses included like protecting agro products, if trade deficiency is more than 25% the importing nation should impose importing tax to bring trade deficiency back to less then 25% within certain time, …………….. if it could not be done then counter part can impose tax to bring down trade deficite………………..
    ……………………………………. Govt. should act now in this kind of agreement and later sign free trade agreement with larger countries…………………………….

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  2. It is just the fantasy of immature author.The most important thing for investment are
    1.rule of law
    2.friendly labour law, and
    3.business friendly government

    It there anything in Nepal.If location would have been major factor, why would Somalia(at the horn of africa) be so poor?

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  3. Really good job done by Bhupendra… 🙂
    Its really good to know that we have many resource and facility for growing industry demand and everything is available with the minimal cost.

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  4. correction…………………………… first exporting nation should impose export tax to bring trade deficite below 25% and if it does not work then importing country can impose tax to bring down trade deficite below 25%……
    ………………………………. nepal should form a trade org. based on this ideology and should name it WTOPA -world trade org. for poverty alleviation

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  5. I agree with the author and cheer him for being positive. But I also agree with Bidhur too. Just putting the good points forward only does not help. We also have to look at the current situation in Nepal.

    1) Do you/I think that we can invest in any areas right now?
    2) Do you/we think that our investment will not go in vain?
    3) Will there be any favorable condition for more investment ?
    4) How can the investor be sure that there will not be any disruption in the daily work ?
    5) Will anyone interfere with the investors business without his consent?

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  6. This post reflects the naivety of the author. Some of the points the author has mentioned in the list are just ridiculous.

    If you read the post as an investor, you feel that the author has no idea what the heck he is talking about.

    Point no 1: Proximity to India or China: How am I benefitted by investing in Nepal? Tell me What ECONOMIC incentive Nepal provides that India or China does not. Give me facts. I need at least 10 economic incentives just to think about moving my bussiness to Nepal.
    2. Power: Are you talking about 2050 AD? Nepal does not have enough power to sustain existing industries/economy .Did you forget that Nepal has 40hrs/week of Load shedding right now?

    3. Climate: We do not have extreme weather. However southern Nepal gets pretty hot during summer. Oh I remeber, we have most of our major arteries devastated during almost every monsoon.

    4. I do not even want to do it anymore. call me cynical, unpatriotic or whatever, Nepal has failed as a state to allure foreign investements. Period. There could be hundred reasons NOT to invest in Nepal.

    For obvious reasons mentioned earlier in the post, Nepal has the least favorable environment for investment. Look at the labor law and political meddling. Political instability and Nepal Bandhs. Unfreindly laws and cartelling. With maoists in the power and their henchmen making calls for the daily operations of Nepali industries, it is only gonna get worse.

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  7. I must agree with most of the points above, however ready access to uninterupted electricity is not currenlty possible – the potential is there, the hydro is certainly a great resource, but the stability of electricity flow needs to be secured – and also fuel and gas – this needs to be sorted otherwise transportation can come to halt and this will affect logistics

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  8. As long as Girija is alive Nepal will never prosper only him and Koirala family will. HE cares about himself and his diaper not the country.

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  9. first the country need to be transformed, eradicating this bihari style politics. peace should be established from east to west . without peace in the country who will like to invest?!! need of great dictatorship, who can either solve the problem of terai /autonomous/ or sweaping out these agitating group, if can.! terai need peace.
    maoist should not be given the chance to transform the country in to republic like N.Korea or China. democracy should be preserved.

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  10. Well, here we go again a happy go lucky Nepali dreams about all the positive things of our country. There is nothing wrong in day dreaming, as long as they are not too long and does not sway us away from the reality.

    Reading through his 10-commandments I felt like he is trying to persuade investors to blind fold their eyes about this almost failed country of ours. (Sorry this is not our perspective neither http://www.nayanepalnews.com/ believes this).

    However, in the investment package they should include the huge losses they incur due to bandhas that successfully happens even if a frog from the road calls it for….

    And he is citing that hydropower helps; what about 45 hrs of weekly load shedding that we have now and importing power from india? Are we talking about first making us an energy self sustained country or just investing on industries and hoping that the foreign oil prices plummets in price as it is doing right now.

    Good article though; feels good to see and know that there are 10 points people can take Nepalese people positively for. We blog about change in Nepal and a change that’s direly needed at http://www.blog.nayanepalnews.com/

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  11. Don’t mind but it looks like 10th grader’s essay…. nothing to comment on. Please analyse the current political, economic and many other affecting factors before submitting such article….

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  12. one big reason NOT to invest in nepal (now) –
    belief in communism in general!
    just the notion that somehow this outdated and discarded-by-the-world ways is considered the solution in the country is itself reason enough NOT to invest. that the “party” knows it all and private sector is only to be seduced to be used later is antithesis to the very idea of capital investment.

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  13. Guys,
    I accept your criticisms. But there is a difference in the lines of thoughts that we have.

    I would like to tell you guys about thw two principles of leading a professional life:
    1. Cover your Ass
    2. Kick Ass

    Please follow it here.
    http://analyticsbhups.blogspot.com/2008/12/cover-your-ass-or-kick-ass.html

    See, there are many reasons why not to do. But life is not about identifying them and not doing. But by bypassing them and moving ahead.

    I can list down hundreds of reasons for not doing business in any country, be it China or India or US. And there are reasons in Nepal too. We feel the problems that Nepal face are serious and other countries mild just because we have some business in mind and we want to do that. Thats the wrong way to think.

    I will come back soon in this blog about what businesses can be done in Nepal. Hopefully you all will like it.

    Jai Nepal,
    Bhupendra

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  14. There is a similar article i had written last year in my blog.

    The competitive advantage of nation and Nepal, based on the diamond model, we have some factors and some do not.

    Probably the analysis should be based on PESTEL and diamond model to assess the attractiveness of the location and industry.

    The article can give idea about the sort of industry we can promote according to our factors existed in the country.

    The demand within the country about the particular porduct or service also gives competitive advantage to that nation.

    The structure of the businesses is another aspect.

    The supporting industry or government subsidity for the business which will be operated will be another aspect.

    Plus businesses will assess the political, economic, social, technological, ecological, legal aspects in the country before they enter.

    to read more follow the link please.

    http://okhaldhunga.wordpress.com/2008/05/05/competitive-advantages-of-nations-and-nepal/#more-41

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  15. The situation of Nepal might go anywhere seeing the current position. But we all must be positive and hope our country also starts development and that we see more investments in Nepal as well.

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  16. there are 10001 reason not to invest in Nepal. First and foremost we have elected the stupid leader like Prachande and terrorist party like Maoist to government and poll shows that there are atleast 30% moron Nepalese who voted for them period. Jai GAANDTANTRA and Jai failed state Nepal.

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  17. Caveats to whats supposedly assets:
    1. Location: Nepal is not connected to china at all. Some himalayan areas are better connected to tibet than to the country at the south.There is one import route to kathmandu which gets blocked for weeks in a year. There is no water route and port facility in india and bangladesh is next to bare minimum.
    2. Power: With all these load sheddings, its ridiculous to taunt power sufficiency as an asset.
    3. Pleasant climate: what on earth has climate to do ? Ice cold nordic countries like norway , sweden are among the most advanced.
    4.Manpower: With illiteracy at 60-70%, u cant talk about qualified manpower. Just look at poor state of public schools and the school dropout ratio from UNICEF, the scores are among the worst in world. There is nothing called technical education and more than 75% of college graduates lack basic employement qualities (valid for india as well). if manpower is cheap, its because it is untrained, and unskilled.
    5.Extravagant public: Pajeros, excessive alcohol consumption, excessive tobacco consumption is not an asset. its not even investment, rather a wasteful consumption.
    6.Easy capital: The capital market is shallow and lacks instruments for debt and equity raising. 4% lending rate is surreal, its less than inflation at 10-15%. This means negative asset yield, each asset is loosing value at 5-10% annual rate. there is no creditor protection and banks meet barely the solvency ratios.
    7.Hospitable public: may be, but when there are no flight additions, not a single extra tourist can come. the airport is literally a gauchar, unfit to be called international airport.
    8. Everything to enjoy: who cares where buddha is born. There are 10 time more tourists visiting buddhist shrine in thailand , 20 times more tourists visiting yucatan and 30 times more visitors in machu pichu, Vs ill maintained ruins in lumbini. tourism facilites are poor and there is nothing for high paying high quality tourist. apart from trekking in himalayas, there is no unique attraction which is exploitable currently
    9.3/4 five star hotel doesnt mean quality tourist accomodations. in fact in each of intl cities u ll find more than 10-20 five star hotels.
    10. low interest rate??? what is this nonsense. Capitla flight an advantage??? another BS.

    the article lacks content and analysis. what was the write smoking?

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  18. Khanal:

    Are you on some Himalayan hash or something? Wake up & smell the coffee man… You are living in a la la land.

    Political stability is the key to development or economic activity. We have none. There is capital flight due to militant trade unions. What the hell are you talking about. Get off you high horse!

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  19. Completely Agree with arts. first we should look at us .. ourself ,, we are in what position . ?
    Lets stop saying hypothethical things. be practical . and yes I am optimistic person ,.. but .. optimism is not that . we should not face with the grim reality ,rather move ahead clearing the hurdles. .
    yorajan
    usa

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  20. Unless the atitude of the neplese SYSTEM & society changes, we shall not see any major investments in this country.
    Politicians running this country are no more than bunch of idiots. They have no long term vision. They are only interested in their vote banks.
    As long as the beurocracy of this country will be dominated by the politacians we will not be abel to impliment any long term policy.
    The country needs a common national economic agenda which all the political parties should abide for atleast 15 years.

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  21. I wish. We all wish.

    But without going into the over 100 reasons not to invest here here is the top 5:

    1. Political instability – with gun slinging so called communists who are actually thugs running amock.

    2. 10 hours of load shedding per day.

    3. Unions – and more unions with all pollitical agendas and no real labour/management agendas to increase productivity.

    4. Lack of infrastructure.

    5. Bandhs, tire burning, closing dowen factories, roads,schools with no notice and worse with ridiculous issues. Which brings us back to communists running the show with their thugs going amock with no law and order.

    Nice thoughts author but you’re dreaming.

    -Do you even live in Nepal?
    If no – we understand the naivity.
    If yes- explain the crankiness.

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  22. FYI-

    Surya Nepal factory – an FDI has been closed for days – our largest tax payer.
    Dabur Nepal – always has union problems – they have moved 50% of their operation back to India – another FDI.
    Bottlers Nepal – always closing down – thats coca cola.

    hydro power investors from foreign lands have mostly given up.

    even foreign managment like hyatt had to literally threaten to leave because of ridiculous bandhs at the hotel.

    maoists want to nationalise all education and health institutes – why would an idiot come open up something successful just for it to be nationalised anyway????

    I(t seems we are living in a defunct nation with a party that practices defunct and failed ideologies – what do you expect the end result to be?

    And why would the educated who are abroad want to come back here – to hear rant and lala land nonsense from uneducated thugs and murderers about a mass murderer called mao and get beaten black and blue or worse if you beg to differ?

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  23. If we all think we are as positive as we think we are why not get together and invest? You might be a part of a business that I need help with, he might be a part of a business that she needs. Why don’t we all get together? We can all go back to barter system and get everyone satisfied.
    Yes! Yes! That was just a thought, my point is if we don’t create opportunities who will? Are you all hoping a white knight will come and rescue us? People wake up!! Snap out of your dream land!! The writer here was just trying his best to show us a good side of our country, if all of you are so angry with what you have in your country why do you call yourself a part of it.
    I understand words don’t get heard, there is frustration but if we give up on HOPE what is there to LIVE for?
    Ahh, about the comment on having written an essay like a 10th grader, I wish our 10th grader could write as good as that! I am sure if that was the case we would have seen a little more progress in our country than what we have right now!

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  24. Is this guy on marijuana or something when he wrote this ? Dude time to get your head out of your ass and look at the real world. NO ONE WILL INVEST IN NEPAL, and if you have not figured it out then you better go back to primary school rather than preach economics on the world wide web.

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  25. It is funny to read this half a month later – One of the reasons stated for investing in Nepal is that the country has sufficient power – and here we are three weeks later with 16 hours of Load Shedding in Kathmandu and no solution in sight

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  26. People….this is called VISION! Really, what is wrong with what Bhups has penned? U dream and then u work towards making that a reality. At least he dares to have a vision , nothing wrong in that. All of mankinds greatest achivements was started with just a simple thought, a dream and a hope. The pyramids, Taj Mahal, Sears Tower, Effiel Tower, Aeroplanes, telephone, electricity are just a few to name.

    Aptly, I’d like to share this quote by Anatole France:

    “To accomplish great things, we must not only act but also dream, not only dream but also believe.”

    My take on all of your comments regrading planning and all…who are you really kidding? By the time Nepal starts planning and pulling up its socks, the opportunity would long have been gone. We’re in the middle of or rather was in the middle of an accelerated growth of our neighbours. This economic spur ought to be tapped, ready or not.Once on the journey, things will adjust by itself. This is it for Nepal to lift it;s wing and take flight or forever remain silent.

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  27. The author shows ‘desh bhakti’ and I am very impressed but I cannot accept this as a piece of scholarly article since it lacks depth.

    As other comments have pointed out, Nepal does not have a favorable environment for investment. If you still cannot get out of your clouded thinking to realize the facts then, maybe you should go out of Nepal and stay in some other nation for few months to see how Nepal is perceived from outside.

    Nepal cannot even compete against investment friendly China or techno-friendly India. The problem with Nepal is not its tilt or love for communism since China despite being a communist country adopted capitalist economic policies and opened up to encourage foreign investment.

    The problem is leadership. Our leaders do not have the vision to see this coming, all they can want to see is more UN trucks being added in the nation or more foreign aid coming in. How can we expect progress and development when our Prime Minister spends more time abroad begging for more aid from each country? It’s a shame.

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  28. Even though current environment seems like the worst time to be thinking of investing in Nepal, this is the greatest need of the hour for the country. We all know how bad the situation is, but working towards making a positive change will definitely bear fruit in the long term. We will not see results right away, but if we don’t try our best, who will? We Nepalis have to pull ourselves out of this mess. It doesn’t matter whether you live in Nepal or outside, always think of some ways to contribute for your beloved country, and make sure you ACT on it… just thinking about it doesn’t make it happen 🙂

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  29. i was happened to be there in dharan few years back for a 2 years assignment in prestigious BPKIHS.i found the place and people were so charming and still carry that good memmories all along. i am also from a country having the same troubles,but still proggressive.i think there is no difference in people of india and nepal though it has got different histories.optimsm and discipline are two qualities i think both of us should keep always.i have found many competent workers(especially nurses) ,very dedicative,knowledjable there.but, i wonder i cannot find any of them in dubai where i presently working.same the case of accountants,manegers etc…

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  30. i aprreciate your article bhupen but the main concern is the law n order in nepal but still the private sector should not give up n push their potentiality of better prospect in nepal so that individual like us can access for investment

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  31. you r rite but, if u do not mind let me know the major sector that needs to uplift or where i can put my effort,in simple way where i can invest.

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  32. What a day dreaming??????????? A world of Hypothesis. Hey Bhupendra,come out of your computer, your fairy essay then you will come to face the reality of Nepal. Forget about investing billions and trillions in hydro power…..calculate the time needed…….. calculate the money……….forget about finding the areas for investment……….Please Start from the root not from the leaves. The only thing that can solve all problem of Nepal is Political Stability, Throw out the corrupt politicians. Once there is stability people will themeselves start new investments in new areas. I don;t think Nepalese people need any ideas how and where to invest.They just need good government. People will do rest of the things whatever they need to do.

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  33. NEPAL IS ONE OF THE BEST DESTION FOR INVESTORS FROM ALL OVER THE WORLD BECAUSE EVERY INVESTERS CAN BE BENIFITED DUE TO THE GOVERNMENT POLICY AND NEPAL’S POTENTIAL.

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  34. When some tries to show why investing with them is good , they don’t tell you why it is not so good. It is perfectly normal and done by everybody. The investors will not be dumb enough to read one blog and go for it, which is fine by me if they do. EVERYBODY knows the situation in Nepal esp. if they want to invest here. The risks are high but the rewards can be higher. Thats how investment works. So if you think you are so smart and will direct the investors where to put in their money, don’t bother whining here. You could be earning millions for your service teaching the likes of Bill Gates.

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  35. i don’t complain. I simply start. I am change.
    I am Nepali and I am the messenger of change.
    so stop complaining and worrying about what you don’t have, but rather be focused on how to utilize what you have.

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  36. Reading all this comments criticizing the writing i still believe Nepal is a very good destination for investment just because the good companies in Nepal are issuing much higher dividends to their share holders compare to very successful big companies globally.if u thinking about investing billions or just working for somebody and getting salary, you choosing the worse place but if you can be in between anybody will be fine in that place and do well financially.risk in investment is natural. Americans lost trillions in wall street and make whole world part of it.surya Nepal close one factory not a big deal, they will start other next month.so don’t cry all the time in everything make investment first.

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  37. Despite of India and China being border of Nepal why is nt Nepal moving according to their GDP as even Nepal have gt potential to some extent???

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  38. Please let me know if you’re looking for a author for your blog.
    You have some really great posts and I feel I would be a good asset.

    If you ever want to take some of the load off, I’d really like
    to write some content for your blog in exchange for
    a link back to mine. Please send me an e-mail if interested.
    Thanks!

    Like

  39. Nepal need foreign investor & tourist of course many country need same things. but where is the basic needs for those investor & tourist corruption & strike always government most act effectively provide safety of tourist plane road accident. also government most guaranty protection for capital investor. every government department worker corruption with out Ghus no work, too many people army police all government workers are involved in dirty polotics ghunda dun system disgustings poor human right. not easy need to improve manythings for good future of Nepal. Nepal never become Singapore swizerland if everyone work hard to build Nepal without selfish Nepal become better then today. jaya nepal

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