Invest Promotion

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 • Wide acceptance of benefits of FDI • Consistency of economic and political policies • Accept need for profit opportunity for investor

How to • Identify potential investors • Interest external investors • Attract and deepen 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 Build internal capacity for effective investment promotion

• Externally • Raise awareness of the country as a 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) • •

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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) • • • •

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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 [email protected]