Nepal ranks at 107 on the World Banks Doing Business 2017 report compared to 99 last year.

The main reasons behind the drop are a decline in Nepals business regulatory environment.
Political and institutional risks are the major concerns of investors interested in Nepal. The
Department of Industries has become the one-window agency for delays and rampant corruption.
Inconsistent policies, information gaps, shifting rules, and constant rotations in civil service
personnel confuse and frustrate investors. An increasingly politicized and militant labor,
corruption, the extortionist attitude of bureaucrats, and a crippling energy shortage have all
affected investment. Besides 23 governments in the past 25 years, has created an uncertain
environment for foreign and private investment. The unclear laws governing the foreign
investment policies, time consuming and complex procedures for approval and registration of
foreign investments to invest in Nepal are other factors for less FDI inflows.

Eg: the $1.5 billion Tama Kosi III in Dolakha would have been the biggest foreign investment
project in Nepal. The Norwegian company Statkraft had been backed out. It cited bureaucratic
hurdles, geo-political instability and fragile political situation (source Nepali times)

The Australian SMEC also pulled out of the export-oriented West Seti hydropower project in
western Nepal four years ago after battling bureaucracies in India and Nepal for two decades

The Federation of Nepali Chambers of Commerce and Industry (FNCCI) estimates that strike,
bandhs and other industrial action cost the Nepalese economy NPR 100 billion. Transparency
Internationals Corruption Perceptions Index (CPI) 2017 ranked Nepal 131th out of 175
countries. .This is a great political threat for the foreign
Investors
The mainstream political parties in the country are not able to deal with the existing
political situation in the country as they voice differently
in Nepal, the level of understanding and trust among the political parties is very low
Nepal, workers in different sectors are organized under different trade unions. The unions
are politically motivated

FNCCI

https://thehimalayantimes.com/opinion/foreign-direct-investment-manifold-challenges/
https://www.state.gov/e/eb/rls/othr/ics/2016/sca/254487.htm
Ease of doing business report world bank
http://www.worldbank.org/en/news/press-release/2016/10/25/Nepal-slips-in-ease-of-doing-
business
http://www.doingbusiness.org/~/media/wbg/doingbusiness/documents/profiles/country/npl.pdf
TI Corruption Perceptions index