When the government introduced new business visa regulations in 1992, there was a great deal of optimism that the new rule would encourage foreign investors to flock to Nepal.

The Foreign Investment and Technology Transfer Act allowed foreigners to have 100 percent share equity in selected sectors and simplified visa procedures for such companies. There is no minimum limit for investors in Nepal, and those approved are eligible for incentives, including the business visa provisioin. For the first few years, the act helped boost foreign investment in hydropower, manufacturing and the tourism in Nepal.

Today, the act and the easier visa processing that went with it have become loopholes for spurious investors and fly-by-night operators to obtain longterm business visas. Even though foreign investment is at an all time low, an investigation of the paperwork at the Department of Industries showed that 50 new foreign investment ventures had been registered in the last eight months and investors had availed themselves of business visas. Most of these are restaurants, but there are also agro-based industries, IT companies, garment industries and language institutes.

However, officials interviewed for this article in various government ministries admitted that business visas are being grossly misused by some foreigners who have no intention of investing in Nepal, but bribe officials to obtain multiple-entry longterm business visas.

The 1994 Immigration Regulation Act forbids investors from starting a business other than the one that they get their visas for, and the Immigration Office has the authority to expel anyone found guilty of being involved in wrong-doing. However, no one in the ministries remembers anyone being deported for investment irregularities even when officials admitted to us that "many" of the investment visas went to questionable foreigners or non-investors.

At the Department of Immigration we were told that the office is just a clearing house, and it is duty-bound to issue a visa if the Department of Industries recommends someone. "We produce all non-tourist visas on the recommendation of the concerned department, we do not investigate every application, only if they are suspicious," says Khum Raj Punjali, director of the Department of Immigration. However, other junior officials admit that many of the business visa applicants are actually "suspicious" and most have no intention of investing in Nepal.

The immigration office issues eight kinds of visas: diplomatic, official, tourist, non-tourist, study, business, residential and non-residential. According to present provisions, a tourist visa can be granted for a maximum of 150 days in a year, whereas a non-tourist visa can be extended for as long as required, provided the person produces plausible reasons for renewal.

A business visa is different from a non-tourist visa because foreign investors or their dependants can get a one year visa during the start-up phase of their venture, and for five years after the investment is set up. It allows multiple entry into Nepal with a fee of only $100 for the first year and $250 for five years.

The reason non-genuine investors opt for business visas is not only because they don't have to worry about it for five years, but also because it turns out to be cheaper than a non-tourist visa which costs $60 a month for the first year and $100 a month after that. "This is obviously why some people prefer business visas," admitted Hirakaji Shrestha at the Department of Immigration.

The fact that there is no minimum investment threshold, and it is relatively cheap to register a foreign investment makes it easy for those who want to side-step the law. And no one really seems to check whether they have actually set up an industry, paid their taxes, or even if they have registered.

To be sure, a business visa is a long and tedious process where the applicant has to go to several ministries for clearance before immigration puts the stamp on the passport. Still, it can all be done for cash paid slyly under the right table, and there are always 'facilitators' who know the process and can be hired for the job. In the end, what happens is that the investors doesn't really invest in Nepal at all.

Our investigations show that out of the 2,456 non-tourist visas issued lat year, 291 were business visas and most of them are not genuine foreign investments. For example, only half of the 850 foreign investment ventures registered with the Department of Industries are still functioning.

One such is a Korean-Nepali joint venture Konep Craft with an authorised capital of Rs 10 million which was supposed to produce 100,000 pieces of readymade garments a year for export. The industry was never opened. The Income Tax Office has record of the company's registration, but there are no balance sheets with profit-loss statements. Yet, the Department of Industry never deemed it necessary to investigate the applicant. Our own efforts to track down the factory in Sitapaila or call the phone number showed it was never established.

Still, Konep Craft's Korean investor got his business visa extended twice by the Foreign Investment Section of the Department of Industries. "It was a difficult case, we knew it was just a trick to get a business visa," one ministry clerk admitted to us on condition of anonymity. After finding out he was talking to a journalist, the clerk added guardedly: "I am only small fry in this office, I don't know much and shouldn't speak about these matters."

There is an unnecessary shroud of secrecy about business visa renewals at concerned government departments, which seems puzzling. But clerks speak in hushed tones of phones calls and secretive meetings after office hours preceding the renewal of visas. When we asked section officer Sushil Dhakal at the Department of Immigration how a foreign investor who had never set up the industry he was given permission for was getting his business visa renewed every year, he appeared at first defensive, and then offensive.

"Our job is to recommend a business visa if the file meets relevant requirements for foreign investors," he said testily. "I don't know anymore. I have told you as much as I know."

(Khoj Patrakarita Kendra)