China has committed the largest share of Foreign Direct Investment (FDI) received by Nepal with investment pledges of 22.5 billion Nepali rupees (188 million U.S. dollars) in the 2020-21 fiscal year that ended in mid-July, according to the latest data released by Nepal’s Department of Investment.

The Belt & Road Initiative has also emerged as a driving force behind China’s growing investments in Nepal.

It was the sixth year in a row that China has topped the chart in terms of FDI pledges.

According to the department, Nepal received FDI pledges of 32 billion Nepali rupees (268 million U.S. dollars) in the last fiscal year, with China accounting for around 71 percent of the total.

“Over the last few years, China has emerged as a very important investor in Nepal,” Jiblal Bhusal, the Department’s Director General. “Initially the Chinese investments were largely focused on small restaurants. Now, their investments have diversified to hydropower and other sectors. We want large-scale Chinese investments coming into diverse sectors of the economy.”

Bhusal described the amount of FDI pledges for the last fiscal year amid the COVID-19 pandemic as “good,” given the fact that it was close to the total of 37.8 billion Nepali rupees (317 million U.S. dollars) pledged in the fiscal year before.

In efforts to contain the coronavirus, Nepal first imposed a lockdown in March 2020 which lasted for nearly four months, and another lockdown was slapped in late April this year to bring the second wave of the pandemic under control.

The largest share of the Chinese FDI commitments went to Nepal’s tourism sector, which stood at 125 million U.S. dollars, followed by other services and the information technology sector.

“I think the Chinese investors want to prepare tourism infrastructure in Nepal for the post-COVID-19 scenario when the arrival of more foreign tourists can be expected,” said Bhusal.

Gandhi Pandit, Senior Corporate Lawyer, said that the Chinese Government’s Policy of encouraging Chinese companies to invest abroad could be one of the reasons behind the growing investments in Nepal in the last few years.