IPA STRUCTURE AND MANAGEMENT - ESCAP · 2017-07-04 · IPA STRUCTURE AND MANAGEMENT Training Course...
Transcript of IPA STRUCTURE AND MANAGEMENT - ESCAP · 2017-07-04 · IPA STRUCTURE AND MANAGEMENT Training Course...
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
THE 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 Economic and Social Commission for Asia and the Pacific
� 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)
PRINCIPAL PURPOSE AND ROLE OF IPA
United Nations Economic and Social Commission for Asia and the Pacific
TO 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 Economic and Social Commission for Asia and the Pacific
DRIVERS 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 Economic and Social Commission for Asia and the Pacific
� 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
DRIVER 1: SUPPORT
United Nations Economic and Social Commission for Asia and the Pacific
DRIVER 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 Economic and Social Commission for Asia and the Pacific
Source: World Bank:
http://ideas.repec.org/p/wbk/wbrwps/3028.ht
ml
DRIVER 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 Economic and Social Commission for Asia and the Pacific
DRIVER 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
United Nations Economic and Social Commission for Asia and the Pacific
• Information & Sales Packs
• Investment plans
• Policies and incentives
• Procedures and requirements
• Progress and achievements
• Create awareness
Image Building
• Advertizing and PR
• Information & Marketing
• Missions & Events
• Company targeting
• Company visits
• Follow-up
Lead Generation and Targeting • Information provision
• Assistance with contacts
• One-stop-shop services
• Assessment of manpower,Infrastructure service needs
• Follow-up
Investor Servicing
• Continued “account executive attention”
• “Ombudsman” role and trouble-shooting function
• Follow-up on manpower, infrastructure, service needs
Aftercare and Policy Advocacy
Investment Promotion Cycle – by Investment Consulting Associates 2013
� 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?
DRIVER 5 – STRUCTURE
OPTIONS
United Nations Economic and Social Commission for Asia and the Pacific
� 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
DRIVER 5- STRUCTURE, CONT.
PREFERRED OPTION FOR NATIONAL IPA:
AUTONOMOUS AGENCY
United Nations Economic and Social Commission for Asia and the Pacific
� 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
DRIVER 5-STRUCTURE, CONT.
LOCAL IPAS
United Nations Economic and Social Commission for Asia and the Pacific
� 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
DRIVER 5-STRUCTURE, CONT.
LOCAL IPAS: PREFERRED OPTION FOR MYANMAR
United Nations Economic and Social Commission for Asia and the Pacific
SAMPLE LOCAL IPA ORGANIGRAM
United Nations Economic and Social Commission for Asia and the Pacific
DRIVER 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 Economic and Social Commission for Asia and the Pacific
DRIVER 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 Economic and Social Commission for Asia and the Pacific
DRIVER 6 – MANDATE AND LEGAL AUTHORITY, CONT.
EXAMPLE PROVISION IN INVESTMENT LAW
Investment Law Regulations for the (new) formation of IPAs:
1. 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
2. The IPA shall be composed of at least seven Commissioners, including the Chairperson and the Vice Chairperson
3. 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
4. The IPA shall submit an annual plan for approval by…..
5. The IPA shall be required to submit an annual report and audited accounts to..…
United Nations Economic and Social Commission for Asia and the Pacific
DRIVER 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 Economic and Social Commission for Asia and the Pacific
FOUNDATION 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 Economic and Social Commission for Asia and the Pacific
� 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
IPAS IN MYANMAR
United Nations Economic and Social Commission for Asia and the Pacific
DRIVER 7
ORGANIZATION PRINCIPLES
United Nations Economic and Social Commission for Asia and the Pacific
Vision
Mission
Goals
Vision: It’s a future oriented, detailed
description of outcomes you want to accomplish.
Mission: This should be a inspiring
statement of why you exist (organization)
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
GOALS
� 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 Economic and Social Commission for Asia and the Pacific
GOALS
� 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 Economic and Social Commission for Asia and the Pacific
DRIVER 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 Economic and Social Commission for Asia and the Pacific
WHY 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 Economic and Social Commission for Asia and the Pacific
EXAMPLE CLIENT CHARTER: UGANDA INVESTMENT
AUTHORITY
United Nations Economic and Social Commission for Asia and the Pacific
� 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.
DRIVER 9 - NETWORKS
United Nations Economic and Social Commission for Asia and the Pacific
� 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
MAJOR STAKEHOLDERS FOR LOCAL IPA
(VCC-MCI)
United Nations Economic and Social Commission for Asia and the Pacific
� 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?
DISCUSSION ISSUES
United Nations Economic and Social Commission for Asia and the Pacific
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
USEFUL RESOURCE
United Nations Economic and Social Commission for Asia and the Pacific
Your questions please?
United Nations Economic and Social Commission for Asia and the Pacific
Economic and Social Commission for Asia and the
Pacific
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W: http://www.unescap.org/contact
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