#1UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific IPA STRUCTURE AND MANAGEMENT Training Course on Promotion, Attraction and Facilitation of Foreign Direct Investment for Inclusive and Sustainable Development for Myanmar, Hpa An, 14-16 June 2017#2THE CHANGING ROLE OF IPAS IN INSTITUTIONAL FRAMEWORKS ■ IPAs are often created through special legislative acts and investment laws which specify exactly their institutional structures and functions vis-à-vis FDI promotion Typically, IPAs are executing agencies of their host country governments and are not normally involved in formulating FDI policies and development goals However, they are playing an increasingly important role in policy advocacy UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#3PRINCIPAL PURPOSE AND ROLE OF IPA To promote and attract sustainable FDI To market and sell the host countries and locations/sites in the host country for FDI To identify and target specific types and sectors of FDI and specific TNCs (immediate level) - - FDI and TNCs that would be realistically interested in the host country/location (location has something to offer investors) FDI and TNCs that would contribute to national development goals To approve investment projects and grant licenses To facilitate the implementation of FDI projects and provide after care (investment facilitation) UNITED NATIONS ( ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#4TO ENABLE IPAS TO PROMOTE SUSTAINABLE FDI GOVERNMENTS NEED TO: ■ Train IPAs to increase awareness of the concept and issues related to sustainable FDI ■ Establish clear procedures for assessing and monitoring sustainable FDI projects ■ Train IPAs in assessing projects from a sustainable perspective Adjust incentive structures to promote sustainable FDI Remove legislative obstacles that inhibit IPAs from tackling sustainable FDI issues ■ Reward IPAs for success in this area UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#5DRIVERS BEHIND IPA EFFECTIVENESS 1. Support 2. Budget 3. Investment and business climate or the country's characteristics 4. Prioritization of functions or activities 5. IPA structure 6. IPA mandate and legal authority 7. Clear vision, mission and goals 8. Client charter 9. Network UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#6DRIVER 1: SUPPORT It is critical that the IPA has political support and the backing of key decision makers in both the public and private sector ▪ This means: adequate funding, staffing, and authority ■ IPA is not profit-making but should generate a national return on its activities ■ Consultation with relevant stakeholders; build consensus Local IPA should have backing of national IPA UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#7DRIVER 2 - BUDGET Mostly from government resources (hence need for support and consensus) Up to a minimum budget of about $64,000 IPAs seem to have no (or even negative) impact on FDI. Between a budget of $64,000 and $2 million - IPAs are effective Between $2 million and $11 million, the estimated elasticity reaches its maximum value On average, a 10% increase in the IPA budget is associated with a 7.5% increase in FDI flows Finally, above a budget of about $11 million, investment promotion expenditures are ineffective Local IPA: budget ranges from $100,000 to $1million Small level of investment: biggest share to investment promotion; high level of investment: biggest share to aftercare UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific Source: World Bank: http://ideas.repec.org/p/wbk/wbrwps/3028.ht ml United Nations Economic and Social Commission for Asia and the Pacific#8DRIVER 3 - INVESTMENT CLIMATE Quality of the investment climate and the level of development have a significant effect on IPA performance Generally, the better the investment climate the greater the IPA effectiveness But.... In countries with less government effectiveness and relatively poorer investment climate, a good IPA can make a difference But also..... investment promotion cannot fully compensate for bad investment climate and policies UNITED NATIONS ( ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#9DRIVER 4 - PRIORITIZE ACTIVITIES The estimated results reveal that aftercare/policy advocacy appears to have the strongest impact on FDI inflows, followed by image-building, investor servicing, and investment lead generation • Information & Sales Packs • Investment plans • Policies and incentives • Procedures and requirements • Progress and achievements • Create awareness Image Building Lead Generation and Targeting • Advertizing and PR • Information & Marketing ⚫ Missions & Events ⚫ Company targeting • Company visits ⚫ Follow-up • Information provision ⚫ Assistance with contacts One-stop-shop services • Assessment of manpower, Infrastructure service needs ⚫ Follow-up Investor Servicing %3 ☐ Aftercare and Policy Advocacy Continued "account executive attention" "Ombudsman" role and trouble-shooting function Follow-up on manpower, infrastructure, service needs Investment Promotion Cycle - by Investment Consulting Associates 2013 UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#10DRIVER 5 - STRUCTURE OPTIONS Integral unit of a major ministry ■ Unit within the prime minister's or president's office Separate ministry ■ Autonomous agency whose chairperson reports to a cabinet minister (preferred option) Provincial/municipal IPAs: independence or branch? UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#11DRIVER 5- STRUCTURE, CONT. PREFERRED OPTION FOR NATIONAL IPA: AUTONOMOUS AGENCY ■ National IPA has its own distinct identity, budget and CEO and board More flexible than a government agency, with autonomy on expenditures ■ Staff from both public and private sector makes it more business-oriented ■ IPA performance more public and open to scrutiny from parliament Required authority and statutory power to coordinate ministries, approve investments and grant concessions Reporting directly to head of state of government UNITED NATIONS “ ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#12DRIVER 5-STRUCTURE, CONT. LOCAL IPAS Local IPAs can be either at provincial or city level: major cities could have their own IPA (e.g. Mandalay) Local IPAs can be a division of an economic policy department in the local administration or a larger investment department Ideally, in more developed countries/localities, the local IPA has a high degree of autonomy but coordinates with the national IPA to ensure consistency in investment policy However, autonomy is more expensive and perhaps not yet suitable for Myanmar Budget for local IPA can range from $100,000 (small division) to over $1 million for full autonomous IPA UNITED NATIONS ♠ ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#13DRIVER 5-STRUCTURE, CONT. LOCAL IPAS: PREFERRED OPTION FOR MYANMAR In Myanmar, local IPAs should preferably be branches, subsidiaries of the national IPA They should be staffed by professionals that have profound knowledge of company needs and localities/sites in their province/city and have excellent command of English language (and possibly other languages) They should not compete with each other but coordinate their investment promotion activities They could help the central IPA with promoting the particular characteristics/attractions of their respective localities and develop a local brand image They should essentially serve as investor services centres focusing on investment facilitation: dissemination of information, arranging site visits, aftercare, addressing investor inquiries and helping with business matching There is an obvious need for proper coordination between the national and local IPAS The local IPA is the extension of the central IPA in the locality to help the investor realize his/her investment UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#14SAMPLE LOCAL IPA ORGANIGRAM Head of inward investment Marketing and research manager Investment facilitation manager Investment promotion manager Marketing and Business Investment research facilitation executive executive promotion officer Sources: MCI and VCC. UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#15DRIVER 6 IPA MANDATE AND LEGAL AUTHORITY The IPA mandate and its functions as usually described by the national investment law: ■ Mandate ■ Functions Organizational structure Reporting Budget, and responsibilities of the IPA ■ Guidelines and responsibilities of investors ■ Investment rules ■ Incentive rules ■ Status of subnational IPAS UNITED NATIONS C ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#16DRIVER 6 - MANDATE AND LEGAL AUTHORITY, CONT. For an IPA to be an effective organization it is vital that it has a clear and exclusive mandate ■ The law should clearly define the mandate outlining the agency's specific responsibilities, and define the required powers and legal authority given to the agency to carry out its mandate - Investment promotion only, or in combination with trade? Investment policy, facilitation, approval, etc.? Ideally, the IPA's mandate should be limited to a discrete number of tasks specifically related to increasing the inward flow of FDI and assisting new and existing investors ■ There are common (legal) issues which must be resolved first before the IPA can begin operations effectively UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#17DRIVER 6 - MANDATE AND LEGAL AUTHORITY, CONT. EXAMPLE PROVISION IN INVESTMENT LAW Investment Law Regulations for the (new) formation of IPAS: 1. 2. 3. 4. 5. The national IPA has the mandate, in consultation with the regional IPA's and within the provisions of the investment law, to: Approve investment applications Grant investment licenses and incentives - Coordinate investment plans - - Promote investment and Open branches in their area The IPA shall be composed of at least seven Commissioners, including the Chairperson and the Vice Chairperson The IPA must establish a mechanism to hire or dismiss Commission members in case they do not adhere to the standards and charters of the IPA The IPA shall submit an annual plan for approval by..... The IPA shall be required to submit an annual report and audited accounts to..... UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#18DRIVER 6 - MANDATE AND LEGAL AUTHORITY, CONT. APPROPRIATE ELEMENTS OF A MANDATE FOR A MODEL IPA To increase the contribution made by FDI to the economy by informing new investors of the country's advantages as an investment site and influencing them to invest To facilitate new investment by providing a professional service that enables investors to meet their specific project needs in all specified sectors To nurture the existing investor base by assisting TNCs to overcome any impediments to increasing their existing investment To draw the attention of foreign investors to the availability of any special incentives To bring to the attention of the government any actions that could further improve the enabling environment for foreign investment UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#19FOUNDATION PRINCIPLES: A CLOSER LOOK Attracting Investment is a resource intensive activity (e.g. labor, time and capital). It is also very challenging, requiring a diverse range of skills and above all a high level of professionalism and commitment Defining the organization principles (e.g. vision, mission, goals, etc.) is important to create shared values and to differentiate your IPA from others ■ When investment promotion is done well, the benefits for the local economy can be significant and for staff working in the investment promotion agency it can be satisfying and rewarding, and often opens up excellent career prospects UNITED NATIONS “ ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#20IPAS IN MYANMAR Myanmar Investment Commission (under Ministry of Planning and Finance): investment promotion; investment facilitation; policy advocacy; investment proposal appraisal and approval (covered in new Investment Law) ■ Directorate of Investment and Company Administration (DICA): serves as secretariat to MIC Need for clear division of labour/responsibilities of MIC and DICA UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#21DRIVER 7 ORGANIZATION PRINCIPLES Vision Vision: It's a future oriented, detailed description of outcomes you want to accomplish. Mission Mission: This should be a inspiring statement of why you exist (organization) Goals Goals: Significant steps towards accomplishing your mission and vision Defining the organization principles (e.g. vision, mission, goals, etc.) is important to create shared values and to differentiate your location from competitors UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#22GOALS Examples of typical goals: - Deliver high quality investor services - - - - - Develop Marketing and Promotion Material of your Province Perform Research and gather Data and follow up on Investor inquiries Organize (web)events and Investment Seminars · Develop and Maintain a high quality Website Track and trace Investor inquiries and assist in site visits UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#23GOALS The major outcome of strategic planning, after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement Goals form the basis of the activities of your IPA and its departments Goals should be SMART to be effective: - - - Specific: precise about what has to be achieved Measurable: clear on how to quantify the realization of the objective Agreed or achievable: realistic expectations - Relevant: to the organization and to whom they are assigned Time-based: clear indication of start or finish date UNITED NATIONS “ ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#24DRIVER 8 CLIENT CHARTER The Client Charter informs potential investors about standards and the delivery of products and services The Charter sets out: - - - What we will do for you How we propose to do it In what timescale ■ It also indicates what you, in turn, expect from your clients to enable you to meet your commitments to them Thus, the Charter can be seen as a "letter of engagement" UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#25WHY DO YOU NEED A CLIENT CHARTER? ■ The Charter is a way of ensuring that: - - - - You create and maintain a client focus You communicate effectively with clients You maintain levels of service above pre-determined service expectations Your programme and service portfolio is tailored and appropriate to client needs ■ The Client Charter sets targets for service delivery by the IPA UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#26EXAMPLE CLIENT CHARTER: UGANDA INVESTMENT AUTHORITY The Uganda Investment Authority (UIA) is known to be one of the most successful IPAs in Africa. The Authority attributes part of its success to its client charter. UIA's mission is to "make a significant and measurable contribution on Uganda's economic development by stimulating local and foreign investments, promoting exports and creating sustainable employment in all regions of Uganda." The Authority has translated this mission in its client charter by setting specific targets for its services. Part of this charter deals with investment promotion and targets set for service delivery by UIA officials: Services Investment promotion Time Cost (a) Response to investor inquiries (i) Email inquiries (ii) Fax and letters (iii) Walk in (iv) Meetings (v) Business appointment (b) Provision of information (i) Electronic (ii) Printed (iii) Website update (c) Preparation and confirmation of Itinerary for potential investors UNITED NATIONS ♠ ESCAP Economic and Social Commission for Asia and the Pacific 15 minutes Free 1 day Free 10 minutes Free Instant Free One day Free Immediate Free Immediate Free Monthly Free Three days Free United Nations Economic and Social Commission for Asia and the Pacific#27DRIVER 9 - NETWORKS ■ National IPA needs networks with stakeholders: chambers, ministries, government agencies, statistical offices, embassies, overseas diplomatic missions and chambers etc. ■ Local IPAs need networks with national IPA and local government offices, EPZ administrations, other provinces, city administrations, existing investors and national/local chambers etc. UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#28MAJOR STAKEHOLDERS FOR LOCAL IPA (VCC-MCI) National IPA and its network Provincial/city administration and government departments responsible for permits and approvals that investors need; electricity, water, gas, telecommunications, transportation, land and property, environment, and employment departments are particularly important ■ Private/public sector providers of utilities, ports, airports, ICT logistics, property, and sites, including industrial zones and EPZs Professional organizations, especially lawyers, accountants and consultants Industry bodies and associations, chambers of commerce ■ Leading existing foreign and domestic investors and suppliers Newspapers and journalists UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#29DISCUSSION ISSUES ■ What set up for an IPA can serve the provinces best? What budget would be available for local IPAs? ■ which provinces/cities would benefit most from having their own IPA? ■ What is the vision, mission, goal and client charter of your local IPA? UNITED NATIONS ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#30USEFUL RESOURCE Handbook for Promoting Foreign Direct Investment in Medium-Size, Low-Budget Cities in Emerging Markets Millennium Cities Initiative, Earth Institute, Columbia University http://mci.ei.columbia.edu/files/2012/12/MCI-City- Investment-Promotion-Handbook2.pdf UNITED NATIONS _ ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#31Your questions please? UNITED NATIONS * ESCAP Economic and Social Commission for Asia and the Pacific United Nations Economic and Social Commission for Asia and the Pacific#32CONTACT DETAILS - UNESCAP UNESCAP The United Nations Building Rajadamnern Nok Avenue. Bangkok 10200 Thailand T: (66-2) 288-1234 F: (66-2) 288-1000 W: http://www.unescap.org/contact UNITED NATIONS “ESCAP Economic and Social Commission for Asia and the Pacific ft You Tube Consulting Partner Investment Consulting Associates (ICA) H.J.E Wenckebachweg 210 1086 AS Amsterdam The Netherlands UNITED NATIONS T: +31 20 217 0115 F: +31 20 462 3535 E: [email protected] W: www.ic-associates.com ESCAP Economic and Social Commission for Asia and the Economic and Social Commission for Asia and the Pacific Pacific