To take full advantage of the opportunity provided by integration with the global economy – reflected partly by membership in the World Trade Organization (WTO) - it is essential that developing countries have built-up appropriate supply capacity to ably meet with the standards of consumers and governments in other countries; this point is especially true in the leading sector of growth for developing economies – the services sector. For attaining the aforementioned goal of strengthening the domestic service industry, it is necessary for attracting foreign investors since their input is felt to provide necessary quality and methods, to ensure that domestic service products are internationally competitive. This can be seen in most countries having given preference to liberalization of foreign direct investment (FDI) in the service sector through commercial presence. A problem, however, is that utilizing the experiences of developed countries to optimize this strategy for attracting investment in the service sector in developing countries, may not be appropriate and practicable. The paper focuses on attracting FDI in the health services, in large part due to its importance to a country’s overall development. Further, the paper endeavors to utilize the lessons from successful developing countries for attracting FDI in the service sector (in particular health) for the Kingdom of Nepal, a least developed country (LDC) located in south Asia.