ipa structure and management - un escap

IPA STRUCTURE AND MANAGEMENT

Workshop on Promotion and Facilitation of Foreign Direct Investment for Sustainable Development in the Islamic Republic of Iran,

Tehran, 9-11 October 2018

OUTLINE OF PRESENTATION

▪ Role and purpose of IPAs

▪ Drivers of IPA effectiveness– Support

– Budget

– Investment climate

– Prioritization of activities

– Structure

– Mandate and legal authority

▪ Foundation Principles: a closer look (vision, mission, goals)

▪ Organizational structure

▪ Resources and funding

▪ Management of IPA

▪ Recommendations

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


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


TO ENABLE IPAS TO PROMOTE SUSTAINABLE FDIGOVERNMENTS 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


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


▪ 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

DRIVER 1: SUPPORT


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


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


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


• 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

Some 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

▪ Provincial/municipal IPAs: independence or branch?

DRIVER 5 – STRUCTURE


▪ 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.

OPTION: AUTONOMOUS AGENCY


DRIVER 6IPA 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


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



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..…



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


ORGANIZATION PRINCIPLES


Vision

Mission

Goals

Vision: It’s a future oriented, detaileddescription 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

▪ 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


GOALS

▪ Examples of goals:– Develop and Maintain a high quality Website by YY, including

information on availability and and cost of key input items (labour, ICT, energy, etc)

– Develop promotional material and/or parts of the website targeting NN sectors, with business cases and costs

– Organize X no of (web)events and Investment Seminars for NN within YY

– Track and trace Investor inquiries (new and existing investors), responding within X days

– Assist in X site visits

– Ensure good aftercare (as measured by regular customer satisfaction surveys)


DRIVER 8CLIENT 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”


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


EXAMPLE CLIENT CHARTER: UGANDA INVESTMENT AUTHORITY


▪ 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


▪ Organization for Investment, Economic and Technical Assistance of Iran (OIETA) – long name

▪ Under Ministry of Economic Affairs and Finance▪ Short name: Invest in Iran▪ President of OIETA is ex-officio the Deputy Minister for Investments and

International Affairs of the Ministry▪ President also chairs Foreign Investment Board: approval of investment

licenses▪ Broad mandate:

– Provide legal protection and security to investors– Screen all investment applications and issue licenses– Undertake investment promotion– Provide investment facilitation through Foreign Investment

Services Centre– Transfers and repatriation of funds from foreign investments– Negotiation of IIAs/BITs

IPA IN IRAN


Objectives of ENIA:▪ Reflecting the issues and concerns of investors to the relevant

government agencies through the Iranian Chamber of Commerce Industries and Mines and the Organization for Investment, Economic and Technical Assistance of Iran

▪ Improving the general atmosphere for foreign investment by creating the facilities and motivation for global investors that are extant everywhere major investments are made

▪ Offering free of charge consultation, advisory services and guidance to potential joint venture foreign investors in accordance with national Iranian laws and regulations

▪ Cataloguing and introducing investment opportunities to foreign investors.

▪ Providing data and information on foreign investment issues in Iran

PRIVATE SECTOR ENGAGEMENT IN INVESTMENT PROMOTION: IRANIAN AND FOREIGN JOINT VENTURES INVESTMENT

ASSOCIATION (ENIA)HTTP://WWW.IRAN-INVESTMENT.ORG/INDEX.HTML


ORGANIGRAM OF KOREA TRADE AND INVESTMENT PROMOTION AGENCY (KOTRA)


OIETA ORGANIGRAM: FUNCTIONAL STRUCTURE?WHAT IS MISSING?


CONCLUSIONS1. IPA structure, mandate and legal authority matters for its performance.

2. High-level support is critical, and sufficient budget.

3. Mission, vision, goals, key performance indicators (KPIs) and client charter/ service committments should guide the work.

4. Business mentality important: recruit staff with both private and public sector experience.

5. Networks with stakeholders critical (chambers, ministries, embassies, foreign investors, statistical offices, academia, NGOs, etc)

6. Develop realistic and ambitious evaluation criteria.

7. Ensure IPA activities closely link to national (sustainable) development plans, and support achievement of the Sustainable Development Goals (e.g. by promoting low carbon investment).


Discussion issues


▪ What are key areas to address for your IPA? – E.g. High-level support, resources, clear goals and KPI; Client mindset /

staff with operational private sector experience; private sector involvement; a good website; client charter/committments to rapid response times.

▪ Whar role should investment promotion / OIETA play in achieving the Sustainable Development Goals?

– How?

Presentation available at:

https://www.unescap.org/events/training-workshop-promotion-and-facilitation-foreign-direct-investment-islamic-republic-iran

Your questions please?

https://www.unescap.org/events/training-workshop-promotion-and-facilitation-foreign-direct-investment-islamic-republic-iran

UNITED NATIONS BUILDING

RAJDAMNERN NOK

BANGKOK 10200, THAILAND

TEL: +662-2881234

FAX: +662-2881000

http://www.unescap.org

HANDBOOK ON POLICIES, PROMOTION

AND FACILITATION OF FDI FOR SUSTAINABLE DEVELOPMENT:

http://www.unescap.org/resources/handbook-policies-

promotion-and-facilitation-foreign-direct-investment-sustainable-0


CONTACT DETAILS UNESCAP

http://www.unescap.org/resources/handbook-policies-

ipa structure and management - un escap

Documents