Bishnu Prasad Dhakal, undersecretary of state at the Industrial Promotion Department of the Ministry of Industry, said the project sent to China was similar to the one signed with India. “The bippa signed with India being the most recent, it was made the standard document of the agreement with China. We changed some of the contents of the draft sent by China before the minister`s approval,” Dhakaal said. The overall objective of GDPPA is to increase FDI flows. In this regard, recent studies show that investment protection agreements such as BIPPA do indeed have positive effects on foreign direct investment, especially when they move from relatively high-income and exporting countries to low-income countries. The impact is greater in countries where national institutions are weak, with investors feeling relatively more confident in investing in the country under investment protection agreements. With regard to employment, there is some evidence that foreign investors on average pay relatively higher wages and employ more labour than their domestic counterparts in certain sectors, particularly in manufacturing. We have already seen that the same is true in our case. The Nepali-India BIPPA will remain in force for ten years and will be automatically renewed thereafter, unless one of the countries intends to terminate it. That said, just because we sang bippa with India doesn`t mean investors are going to flock to Nepal. BIPPA has definitively given Indian investors greater confidence in investment protection and protected them from losses due to arbitrary political changes. However, BIPPA is not a panacea for all industrial dysfunctions and a substitute for genuine domestic policy reforms that can increase foreign and domestic investment. For investment to increase significantly, Nepal needs to address restrictions such as lack of electricity supply, inadequate infrastructure, labour disputes, rising raw material costs, political inconsistencies and high interest rates for loans to key sectors.
BiPPA is a legal instrument that defines specific rights and obligations to fulfil the main objective of protecting foreign investments against discriminatory measures (i.e. political contradictions) by the host State. In order to ensure the protection and promotion of investments and to encourage capital flows and commitment to a credible liberal economic policy, countries generally conclude investment protection agreements such as bippa. In principle, it guarantees the reciprocal promotion, promotion and protection of investments, the result of increasing investors` investments. Meanwhile, the two countries also agreed to begin preparatory work for the construction of air links between Saidpur in Bangladesh and Bhadrapur or Biratnagar in Nepal, due to the growth of trade relations between trading communities in the eastern part of Nepal and the northern part of Bangladesh. Dhakal said Bippa with China will play a decisive role in attracting a lot of investment from its northern neighbor and conveying a message to the world that Nepal has a favorable business environment. The fourth Nepal-Bangladesh Trade Minister`s level meeting on trade, transit and economic cooperation concluded today with the commitment to seal the bilateral investment promotion and protection agreement (BIPPA) between the two nations as soon as possible. As for compensation, if investors earn one, it corresponds to the “fair value of the expropriated investment, just before the expropriation or before the imminent expropriation is made public, whichever is earlier”.
Based on the laws of the host country, investors may request a review of the compensation offered….
