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Investment Promotion

Banco Nacional de Comercio


Exterior S.N.C
Mexico City
3rd April 2003
Kevin Moore
Investment Promotion
Driven by Agencies of Government/
chambers of commerce at national and
regional level
• -high level goal to increase economic
activity and employment
Targetting Companies
• To create job opportunities and increase
revenues
Global Drive for new investment
Governments in
• Europe
• Cities and States in USA
• Asia
• South America and
• Africa

• Highly competitive business


Competitive climate

• How can a country differentiate itself?

• What does the investor look for ?

• How can one interest the investor?


Investor Company Needs

• Profitability and competitiveness

• Access to Markets

• Access to Raw Materials or other


resource ( such as educated staff!)
Personal experience
• 30 years background
Number of Locations

• Ireland
• Caribbean
• Southern and Central Africa
• Eastern Europe
2 part Approach
• In country • External markets

Need for How to


• Wide acceptance of • Identify potential
benefits of FDI investors
• Consistency of economic • Interest external
and political policies investors
• Accept need for profit • Attract and deepen
opportunity for investor external investment
Internal Perceptions on Investment
Climate in Country

• Generally very favourable


-Excellent political and Administrative framework ?

• Generally very simplistic


-Lots of opportunity, wonderful potential ?

• Generally very local and limited


- Certainly over optimistic?
External perception on Host
country
Generally

• Don’t Know

• Don’t Care

• Not interested

How can this situation be addressed?


Initial internal steps
• Establish policy on FDI and vision for its
role and contribution to national economic
development framework
• Achieve consistency of policies in financial
practises, labour regulations and
ownership rules to fit with FDI policy
• Achieve national understanding of FDI
policy and achieve buyin by consultation.
FDI policy and Strategy
• Need for investment acknowledged

• Steps to address this need adopted


-realistic assessment of infrastructure and plans to address gaps over
period of development plan
-realistic assessment of changes needed with other legislation eg on
land ownership, labour , work permits
-realistic assessment of educational needs

• Investment promotion Agency ?


• Professional organisation with significant private sector focus and
values
Develop strategic policy options
• Identify the positive and negative factors
that differentiate the country or region
• Clarify the awareness and image of
country in the minds of investors
• Select priority industrial/service sectors
where country/ region can have
competitive advantage
How does the business environment rate?
FDI motivators
• Better access to markets, global , regional
and local
• Competitive costs, reliability and
productivity---low direct labour cost is not
of itself a real competitive measure
• Access to raw materials
• Acceptable risk on political and economic
score
Fiscal incentives
• FDI influenced more by general enabling
environment to do business
• Fiscal incentives, once paraded as the
solution , now regarded as peripheral to
good business environment
• Can be used economically to address
particular shortcomings in specific sectors
for a period
Key internal message
• Setout the role of FDI in national/ regional
economic development
• Achieve acceptance of the importance of FDI in
this context
• Realistically assess competitiveness
• Develop understanding of needs of key sectors
• Be consistent in implementation of policies
• New FDI for Mexico is a winner, a regional hit is
a bonus ( think about that in context that investor
does not know the nuances of Mexico)
Examples of national policy issues
• No 1 Ireland
- In mid 1970’s ranked 2nd worst country in
Western Europe in telecomms infrastructure and
cost, Govt invested and addressed the needs of
industry.
- In education is now seeking to encourage
greater participation in technical subjects to
facilitate IT industry, and is grant aiding industry
and university scientific research.
- now looking at improving regional spread
National Policy issues ( contd)
• Zambia
-Like Chile rich in copper resources , and
had stated national programme of
privatisation in 1993
However delayed sale of the “national
treasure” the Coppermines, failed to grasp
privatisation opportunities and now the
price of copper makes it uninteresting
National Policy issues( contd)
• Russia and China
-Some regions of China have attracted huge
volumes of investment –Government now
trying to address other regions, but
distance from markets etc is key factor
-Russia attracting proportionately
significantly less investment , perceptions
of lack of transparency in many early
stage “privatisation” investments
Policy issues ( negative)

Turkey
Very poor record of FDI in 1990´s
because of economic and political
instability evidenced by chronic
inflation, lack of impetus on
Policy initiatives( positive)
• India and software development

• What did the State of Bangalore do to


attract all the back office operations,
software development.
• Education , Education and Focus
• Addressed skill / communications need at
lower cost
Investment promotion
• Internally • Externally
Build internal capacity • Raise awareness of
for effective the country as a
investment promotion business environment
with opportunities for
investment
Internally
• Develop the policies
• Develop the strategy
• Develop the direction , focus and
prioritisation
NB
Ensure that existing investors are satisfied
with business environment
Externally
• Assess and address the external image

• Identify the key target markets and differentiate


these target markets.
• Customise approach to different markets.

• Present the facts in the context of strategic


national priority
• This is where we are now, this is what we want
to achieve
Key questions
What sectors to target ?

Which companies in these sectors ?

Who are key decision makers in these


companies ?
Which companies ?
• Growing companies

• Companies with experience of international


investment

• Companies with international markets

• Sub-Supplier companies whose markets are


moving overseas
Sources of information
• Trade Directories
• Industry magazines
• Existing investors
• Focussed web research
• Personal contacts
- Chambers of commerce and industry
- Key nationals in sector / company
- Cold calling
How
• Embassies and promotional offices
• High Level Investment missions

• Focussed marketing
-Focussed advertising/ mailing lists
-Friends of country / Key nationals in target
markets

• Be Proactive , Make that contact!


Measurement of Performance
• Vital for external representatives
• Vital for all marketing initiatives

• Target and objective setting in agreement with HQ.

For example

-number and quality of contacts made


-number of site visits achieved
-number of investments actually achieved
Site visits
• Progress achieved if site visit made
--Could arise from follow up and contact with target
company over a number of years

--Key professional hosting , reality must address


the marketing message

--Satisfied existing investors are key

--Promise what can be delivered


Review and reposition
• Listen to the potential investor’s needs

• Address and reposition approach

• Feedback and publicise progress


Remember investor needs
• Profit

• Access to markets

• Consistency of policies –keep the


messages clear and transparent
Investor

• Existing investor is a client

• Potential investor is a target customer

• Don’t ever forget the target market


What sectors ?
• Derived from assessment of key
competitive factors in these industry
sectors and potential comparative
advantage

• What sub sectors within these broad


industry groupings are appropriate and
offer growth prospects
Remember Investor Needs
• Profit –projections should should
profitability in short / medium term

• Access to market

• Consistency of policies
Competitive Business

• Success addresses National and


Regional Needs

• Success is a 2 way win -win situation


Marketing a country
• Stress the positives
-Rule of Law
-Common currency
-Common financial regulations
-Company laws on company regulation
-membership of international and regional
Bodies
Clusters of excellence
Different labour costs
Different levels of education
Different quality of land
Different climate
More accessible transportation
Summary of strategic guidelines on
investment promotion(oecd 1 / 2)
• Establish Govt policy on FDI and the vision and its role and contribution to
national economic development
• Articulate and advocate national policy on FDI among social partners and
civil soiety in order to create a better awareness and consensus on the aims
of policy
• Establish an Investment Promotion Agency (IPA) and determine the
objectives and legislative and governance structures
• Inculcate within the IPA a professional management and service culture,
results oriented ethos and an innovative marketing approach
• Define strategic policy options and setout the corporate strategy and
marketing plan to build competitive strength and achieve selected policy
options
• Decide on incentives policy and ensure objective and regular evaluation of
costs and benefits ( special cases make bad law –Kmoore)
Strategic guidelines on investment
promotion ( 2 /2)

• Undertake a review of skills available versus skills required by


investors.Develop and implement policies to address identified skill gaps
• Ensure the provision of essential infrastructure required by industry –
industrial estates, factory and office buildings, utilities ,telecomms,transport
• Identify administrative barriers to FDI and establish a programme with
clearly defined responsibilities and timeframe to remove such obstacles
• Promote FDI by undetaking a professional marketing programme aimed at
new and existing investors and by building the Promotion agency as a
credible and competent partner for investors
• Facilitate investment and sevice new and existing investors at all stages
from startup through to post investment and expansion stages
• Encourage greater integration of foreign businesses into the economy and
the establishment of linkages and deepening of roots within the economy
Thank You

Kevin J Moore
17 Lynwood
Dublin 16
Ireland

Moorekj@eircom.net

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