The three expected areas of agreements are the $250 million Line of Credit (soft loan), Double Taxation Avoidance Agreement (DTAA) and Bilateral Investment Promotion and Protection Agreement (BIPPA), Nepal’s Industry Minister Anil Kumar Jha who is accompanying PM Bhattarai on the latter’s four-day official visit that began today, said.
Nepal is seeking soft loan to fund projects of critical importance and establish Special Economic Zone (SEZ). Jha said yesterday’s cabinet meeting had okayed these agreements.
DTAA, if signed, will enable investors of both countries to avoid taxes on their investment earning once they pay tax in one country. BIPPA is expected to instill sense of security with regard to investment and will be an incentive for prospective investors in Nepal.
Jha said there was misconception about BIPPA, which the cabinet clarified yesterday by defining non-commercial losses and compensation issues. He further said the cabinet decision was not to treat workers’ short-time strikes or short general strikes as causes of non-commercial losses. “The clause of non-commercial losses will apply only when a company’s work is stalled indefinitely, for years and or when a company suffers loss because of widespread violence,” he said and added that minor things would not be considered causes of non-commercial loses.
On the evaluation of compensation issue, Jha said the cabinet had decided to form a joint Nepal-India industrial committee, which would decide on compensation in case a company suffers loss due to non-commercial causes.
Nepal’s Minister for Physical Planning and Construction Hridyesh Tripathi the need to sign BIPPA with India was felt because India and China had already signed such agreements and bilateral talks on the issue had been going on for the last ten years and all provisions had been discussed and resolved.
The Indian side had agreed to provide $ 250 million line of credit. Jha said the PM would request the Indian government to increase the amount to $ 1 billion.
Besides these, the Nepali side is likely to seek India’s assistance and investment in hydro power projects, power trade, road and connectivity projects, technical education, education and health.
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