WITH THE FINANCIAL SUPPORT OF THE

EUROPEAN UNION

Working Group on Investment Policy and Promotion

Sarajevo, Bosnia and Herzegovina21 February 2013

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FDI in the region

Review of Investment Policies and Investment Promotion

Ideas for regional co-operation

FDI inflows from 2000 to 2010 (EUR mn)

3Source: World Bank, 2012. The official OECD conversion rate for 2010 of 1.324 USD/ euro is used.

FDI as a % of GDP (2007 to 2010)

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0%

5%

10%

15%

20%

25%

30%

35%

40%

2007 2008 2009 2010

Albania

Bosnia and Herzegovina

Croatia

Kosovo

FYR Macedonia

Montenegro

Serbia

Source: World Bank, 2012. The official OECD conversion rate for 2010 of 1.324 USD/ euro is used.

FDI by source in 2007

5Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania and Kosovo*.

FDI by source in 2010

6Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania and Kosovo*.

Western Balkan FDI by activity (NACE Rev 1)

7Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania, Montenegro and Kosovo* based on NACE classification.

Western Balkan FDI by manufacturing activity

8Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania, Montenegro and Kosovo* based on NACE classification.

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FDI in the region

Review of Investment Policies and Investment Promotion

Ideas for regional co-operation

Investment Reform Index (IRI)

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Dimensions Sub-dimensions

1 Investment Policy and Promotion

-

1.1 FDI Policy

1.2 Investment Promotion and Facilitation

5.3 ACAAs

Sub-Dimensions Indicators

1.1 FDI Policy

1.1.8 Intellectual Property Rights

Indicators Level of Reform

1 2 3 4 5

Investment Reform Index 2010

Covering priority dimensions related

to the Regional Framework for Investment:

1. Investment Policy and Promotion

2. Human Capital Development

3. Trade Policy and Facilitation

4. Access to Finance

5. Regulatory Reform and Parliamentary Processes

6. Tax Policy Analysis

7. Infrastructure for Investment

8. SME Policy

Development of IP Laws

IRI Monitoring framework

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Investment Policy and Promotion

IRI assessment methodology – tripartite structure

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Private Sector Independent experts

Government self-assessment

Results of Investment Policy and Promotion assessment in IRI 2010

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Results of Investment Policy and Promotion assessment in IRI 2010

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Albania• Simplifying administrative procedures

related to licenses• Reforming the tax administration and

enforcement of tax laws

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Bosnia and Herzegovina• Improving liquidation procedures• Clarify urban planning and construction laws

and transfers of construction permits between investors

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Croatia• Accelerate approval of business visas

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Kosovo*• Increase transparency and

fairness of public procurement activities

• Better organised and transparent tenders

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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FYR Macedonia• Improving administrative

capacity to implement reforms• Removing unnecessary

administrative procedures

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Montenegro• Contract enforcement and

easing property registration • Improve the transparency and

delivery of construction permits localities

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Serbia• Better regulation of

monopolies• Encourage bankrupt

entrepreneurs to initiate bankruptcy proceedings and enacting amendments to the Insolvency Law

Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI 2010

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Common points for improvement• Accurate land title registration and cadastres• Transparency in policy design and implementation, especially at sub-national level• Accelerating administrative procedures• IP enforcement• Monitoring and evaluation of investment promotion• Expanding role of IPAs to act as one-stop shops

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FDI in the region

Review of Investment Policies and Investment Promotion

Ideas for regional co-operation

Investment Policy

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Peer learning exercises on several topics, for example:•Experiences with investor-state arbitration•Restitution processes and procedures•Digitisation of cadastres and land registers•Experiences with FDI incentive programmes and their evaluation

Enhance the transparency of investment policy design. For example, upcoming laws, regulations or administrative procedures could be presented and discussed at the SEEIC or WGIPP. This would allow policy makers to receive comments from investment policy experts from the region prior to enacting legislation.

Development of regional best practice guidelines for specific areas of policy, such as updating land registries or even evaluating the costs and benefits of investment attraction programmes.

Investment Promotion

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Regional investment promotion strategy – a tailored regional strategy/approach targeting international investors in sectors or niches who could fit into Western Balkan value chains .

A regional exhibition – a touring exhibition which would visit foreign markets and highlight a specific sector or niche area in each of the seven Western Balkan economies.

Organisation of visits to Western Balkan – Western Balkan IPAs could organise joint visits of foreign investors to the region ,with a stop in each economy. This would save time and money for the foreign investor.

Co-location in foreign markets – Western Balkan IPAs could identify cities where they could save money and build on information synergies (e.g., the Scandinavian Tourist Board in Asia-Pacific has joint offices in Tokyo and Beijing).

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Thank you for your attention

Milan Konopek

Project Manager - Regional Competitiveness Initiative

OECD Investment Compact for South East EuropePrivate Sector Development Division

Organisation for Economic Co-operation and Development (OECD)

Milan.konopek@oecd.org

Annex

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FDI Policy

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National Treatment – national treatment restrictions on entry and operation of FDI

Admittance of personnel – limitations on entry of specialised personnel to support FDI Transfers – restrictions on capital transfers in and outside of host economy FDI incentives – transparent application of incentives with monitoring and evaluation

Performance requirements – requirements, such as local-content, on investments

Land ownership – ability of investors to own land (urban and rural)

Titling, cadastre and restitution – up to date cadastres and land registers, restitution process completed

Intellectual Property Rights – enforcement of IP laws Expropriation – clear rules for expropriation and efficient legal process

International Investment Agreements – what is contained in bilateral investment treaties

International Arbitration – signatories to New York Convention and ICSID Convention

Investment Promotion and Facilitation

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Strategy – contents of an investment promotion strategy

Institutional Support – level of support provided by the investment promotion agency

Monitoring and Evaluation – whether the investment promotion strategy is evaluated

FDI-SME linkages – programmes to support commercial linkages between FDI and local firms

One stop shop – whether investors can submit and receive approval for all administrative procedures in one place

Client Relationship Management - the degree to which investment promotion agencies keep track and follow up with foreign investors

Policy Advocacy - whether the investment promotion agency advocates on behalf of investors

Aftercare services – whether investment promotion agencies provide support to foreign investors after their establishment

Transparency

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Publication avenues and tools – whether laws and administrative procedures are

codified and published

Prior notification and stakeholder consultations - whether investors are notified in advance of changes to laws and

procedures

Procedural transparency - whether legal procedures are transparent, are their opportunities for appeals

Privatisation and Public Private Partnerships

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Privatisation strategy - existence of a privatisation strategy

Privatisation consultations – are stakeholders prior to a privatisation

Restrictions on foreign investor participation in privatisation – restrictions on foreign investors

PPP units – is there a unit in government to lead PPP development

PPP legislation - is there legislation covering PPPs, not just concessions

PPP consultations - are stakeholders consulted prior to PPP being launched

PPP cost benefit analysis - is there an assessment of a PPP

PPP monitoring - is the PPP monitored and evaluated?