Korean investors could reap rewards by helping Nepal develop, the country’s ambassador has said.

Raja Ram Bartaula hopes that the country bordered by China and India can become a trade transit corridor between the two larger economies.

“We are a least-developed country and we are trying to develop our country’s industry in order to develop economically, socially and for the lives of the people. We need development and we need technology,” Nepal Embassy’s charge d’ affaires Raja Ram Bartaula told Korean business people at a Korean Chamber of Commerce and Industry seminar in Seoul.

Nepal’s newly-formed republic aims to boost its economy following years of civil war. The country is still writing its constitution, and suffering problems including power cuts and some civil unrest.

But Bartaula said Nepal had untapped investment potential in the hydropower, tourism and IT sectors, as well as in agriculture and medicinal herbs. He said that low corporation tax rates and government guarantees on foreign investments should help to reassure foreign businesses.

“To most Koreans, Nepal is not so promising, I also admit that, but there are many opportunities too,” said Jay H. Kim, chairman of the Korean Chamber of Commerce in Nepal. “It is very challenging to live there because there can be 13 hours of blackouts a day.

“Despite this, I can’t help but love Nepal. It is in the same condition that Korea was in 30 years ago.”

Kim said he wanted to see Nepali government tenders going to Korean companies rather than the Chinese firms that most often took the work. He said that Korean companies would be given priority on Nepali projects funded by Korean government loans, but that such companies were now absent from the bidding process.

Korea has pledged $2 million in grant assistance to Nepal for the Lumbini World Peace City Preservation and Development master plan. Nepal has been promoting the Buddha’s birthplace of Lumbini, as a tourist destination.

“Nepal overthrew the monarchy just a few years ago and introduced a republic system just recently and the democratic system is not very well-achieved. There are demonstrations and rallies against the government.”

“I saw many Korean businessmen very disappointed after visiting Nepal and going back to Korea. Despite their disappointment there are still many qualities in Nepal.

“If you think outside the box if there are 13 hours of blackout then there are still opportunities for power generation.”

Prioritizing investment in hydropower, the new Nepali government has declared 2012 an investment year and has entered a joint venture with Bangladesh for a new power plant. Korea Hydro and Nuclear Power Company already has a project in Nepal’s Chameliya area.

“In the coming days out government is growing stronger and is supporting the private sector for investment,” Bartaula said.

The country, which has a population of about 27 million, now plans to develop special economic zones near the Chinese and Indian borders.

The country will hold an international trade fair in April, and is inviting Korean companies to participate.

By Kirsty Taylor (kirstyt@heraldcorp.com)