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2007 ANNUAL REPORTINVESTMENT CLIMATE ADVISORY SERVICE

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FIAS

Photo CreditsPascal Deloche/Corbis front coverGrigory Kubatyan/Shutterstock iZachary Garber/Shutterstock 1Sasha Radosavljevich/Shutterstock 5World Bank 5Isa Ismail/Shutterstock 7Semen Lixodeev/Shutterstock 8Ximagination/Shutterstock 10Yanfei Sun/Shutterstock 11Government of Croatia 12Michael Zysman/Shutterstock 15Paul Cowan/Shutterstock 16Isa Ismail/Shutterstock 18Nathan Holland/Shutterstock 20Bill Gentile/Corbis 21Semen Lixodeev/Shutterstock 23Taro Taylor 26

Pozzo di Borgo Thomas/Shutterstock 28Carlos Sanchez Pereyra/Shutterstock 30PhotoCreate/Shutterstock 31Nathan Holland/Shutterstock 32Mr. Ian 33PhotoCreate/Shutterstock 34Francois Arseneault/Shutterstock 36Socrates/Shutterstock 38Ke Wang/Shutterstock 43Muriel Lasure/Shutterstock 45Mark Atkins/Shutterstock 46Elena Yakusheva/Shutterstock 55World Bank 56Vanessa Co 58Rob Ahrens/Shutterstock 60Matt Richards/Shutterstock 62

Contact FIAS

FIAS: The Investment ClimateAdvisory Service1818 H Street, NWMSN H7-701Washington DC 20433 USA

www.fias.net

T: 202 473 7443 / 202 458 5011F: 202 522 3262 / 202 522 2138

FIAS Regional Offices

Beijingc/o International Finance Corporation (IFC)15th Floor, China World Tower 2China World Trade Center No. 1, Jian Guo Men Wai AvenueBeijing, China 100004

T: 86 10 6605 8686 ext. 8630F: 86 10 6505 9808

Belgradec/o PEP-SE, Bulevar KraljaAleksandra 86-9011000 Belgrade, Serbia

T: 381 11 3023 750F: 381 11 3023 740

Dhakac/o SEDF, United House10 Gulshan Ave, Gulshan 1Dhaka 1212 Bangladesh

T: 880 2 986 1711-20F: 880 2 989 4744

Johannesburgc/o IFC, 14 Fricker RoadIllovo 2196 South Africa

T: 27 11 731 3018F: 27 11 268 00

Moscowc/o IFC, 36/1 BolshayaMolchanovka Street, 3rd Flr, Moscow 121069 Russian Federation

T: 7 095 411 7555F: 7 095 411 7556

SydneyCML Building, Level 1814 Martin PlaceSydney NSW 2000 Australia

T: 61 2 9223 7155F: 61 2 9223 7152

ViennaIIWB OfficeStrauchgasse 3A – 1014 Vienna, AustriaT: 43 1 535 53 82 2115F: 43 1 535 53 82 5115

Please share your opinions on this annual report through our online survey at www.fias.net.

FIAS, the multi-donor investment climate advisory service managed by the International Finance

Corporation (IFC) and supported by the Multilateral Investment Guarantee Agency (MIGA) and the

World Bank (IBRD), is an integrator of services to improve the business-enabling environment of

member countries. In particular, FIAS advises governments of developing and transition countries on

regulatory simplification, investment policy and promotion, and industry-specific investment climate

issues. In its 20 years as a donor-funded operation, FIAS has completed more than 760 projects in

all regions of the world. For more information, visit www.fias.net.

The FY07 FIAS program was made possible through the funding of IFC, MIGA, and IBRD, and co-

financing from many donors. Core donors to FIAS in FY07 included Canada, France, Ireland,

Luxembourg, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. Regional

funding was provided by Australia, Canada, Ireland, New Zealand, Sweden, and Switzerland.

Finally, Australia, Denmark, the European Bank for Reconstruction and Development, the European

Commission, France, the Inter-American Development Bank, the Netherlands, the United Kingdom,

and the United States also provided direct financial assistance to FIAS for selected projects.

Note: MIGA’s technical assistance group joined FIAS in mid-FY07 (February 2007) and was fully integrated as of July 1, 2007.MIGA’s technical assistance projects are not covered in this annual report, but are discussed in MIGA’s annual report for FY07.

All dollar amounts are in current U.S. dollars unless otherwise specified.

ContentsHighlights 1Fiscal 2007 Highlights 2Message from the General Manager 5

Operational Overview 7Collaboration and Leverage 8Regional Focus 10Core Products 23Knowledge Management 32Monitoring and Evaluation 34

Financial Report 38FY07 Results 39FY05-07 Results 39

Appendices 45Advisory and Knowledge Management 46Projects Completed in FY07FIAS Staff and Expertise 55FY05-07 Strategy Cycle in Review 60 Abbreviations 62

HIGHLIGHTS

Program Growth

The FIAS program grew in FY071 as a result of contin-ued strong client demand and donor support. Total proj-ect-related expenditures increased 22 percent to $12.5million from $10.2 million in FY06, although the actualnumber of projects completed was about the same yearto year. The average project size increased by 22 percentto $117,000 as more projects included the solutiondesign and implementation stages. FIAS completed 83projects and had a pipeline of 80 assignments at variousstages of preparation or implementation by the end ofthe fiscal year.

2

2006

2005

2004

2003

2002

After 1 YearNumber of years after project completion

After 2 YearsAfter 3 Years

45%57%

63%

52%66%

77%

58%72%

75%

64%66%

70%

95% ClientSatisfaction

100% DonorSatisfaction

F I G U R E 2

CL IENT AND DONOR SATISFACTION

Clients – In the 2007 IFC Client Survey, 95 percent of FIASclients said they were satisfied with services provided, anincrease from 89 percent in FY06 and almost 10 percent-age points higher than the IFC average.

Donors – All donors said they were satisfied, highly satis-fied, or extremely satisfied with FIAS performance in a sur-vey conducted by FIAS in November 2006. Donorscontinue to provide strong financial support—FIAS received$14 million in new funding for FY07.

Reform Impact – FIAS clients, including those from “frontier”countries,2 continue to implement (fully or partially) most ofFIAS’ recommendations. The rate of implementation is 70 per-cent one year after project completion (compared to 64 per-cent in FY06), and 75 percent three years after projectcompletion.

F I G U R E 1

PROJECT PERFORMANCEAverage Implementation Rate of FIAS Recommendations

1 The FIAS fiscal year is July 1 through June 30.

2 “Frontier” markets are defined by IFC as: (a) all International Development Association (IDA) countries, (b) high risk countries (withan Institutional Investor Country Credit Rating of 30 or less); and (c) frontier regions of other (non-IDA, non-high risk) countries.

T A B L E 1

FY07 FUNDING AND EXPENDITURES

SOURCES OF FUNDSIn $ thousands

World Bank Group Contributions $4,460.4Donor Contributions 9,482.8Direct Client Contributions 373.2Balance Carry-Forward 5,399.2Total Available Funds $19,715.6

USES OF FUNDSIn $ thousands

Staff Costs (incl. consultants) $11,445.8

Operational Travel Costs 3,314.1

Office and Equipment Costs 347.6

Other Operating Costs 508.2

Administrative Fees/Other Costs 843.7

Total Uses of Funds $16,459.4

Note: Excludes MIGA technical assistance, which was fully integratedwith FIAS on July 1, 2007.

Other FY07 Operational Highlights

Knowledge Management – Of 83 total projects com-pleted in FY07, 13 were in knowledge management,including nine publications and policy notes focused onkey aspects of investment climate reform (available atwww.fias.net).

Collaboration – Eighty-three percent of projects com-pleted in FY07 involved collaboration with partnerswithin the World Bank Group. Since 2007, FIAS andthe Business Enabling Environment teams of the IFCFacilities operate under a joint strategy.

Integration of MIGA TA Unit – The technical assistanceunit of MIGA was integrated with FIAS in February2007, with full consolidation of staff, budget, and workprograms on July 1, 2007.

Joint Reporting – FIAS established new joint reportingarrangements with IFC Advisory Services in East Asiaand the Pacific, South East Europe, and Bangladesh.Similar arrangements are being discussed for South Asia,the Middle East, and Latin America.

FY08-11 Strategy – FIAS developed its FY08-11 strategy,reflecting inputs from clients, donors, and colleagues fromacross the World Bank Group and drawing from an inde-pendent external evaluation completed in May 2007.

FY07 Notable Projects and Outcomes

Burkina Faso – As part of an ongoing program aimed atimproving the business environment, FIAS assisted indrafting two decrees issued this year that remove theneed for government approval on overtime and allow fora flexible 40-hour work week.

Caribbean – The regional Doing Business study conductedby FIAS for the Organization of Eastern Caribbean States(OECS) led to a project with IFC’s Access to Financebusiness line to set up a regional credit bureau.

H I G H L I G H T S 3

20%

13%

51%

16%Investment Policyand Promotion

Regulatory Reforms/Administrative BarriersSolutions

InvestmentClimate

Diagnostics

IndustryCompetitiveness

F I G U R E 3

PRODUCT RANGE

FIAS is moving from stand-alone diagnostics to projects thatfocus on solution design and implementation. In FY07, lessthan 20 percent of completed projects were stand-alonediagnostics.

Projects by Product Category: More than half of FIAS advi-sory projects were designed to help clients remove adminis-trative barriers through regulatory reforms and simplification.

“…FIAS has had a positive impact on abroad range of reforms in countriesthroughout the world. The organization hasplayed an important role in identifying theneed for reform, suggesting an appropriatecourse of action, drafting required legisla-tion, eliminating or simplifying regulations,and building the capacity of governmentagencies. These efforts should lower barri-ers to private investment and reduce thecost of doing business in different countries.In one country alone [Latvia], FIAS con-tributed to reform which yielded estimatedcost savings of more than $170 million tobusinesses over a five-year period.”

—NEXUS INDEPENDENT EVALUATION OF F IAS, MAY 2007

China – The efforts of FIAS and IFC’s Advisory Servicesto help China develop a framework for secured lendingled to landmark legislation. As a result of the 2007Property Law, over $2 trillion of movable assets held bysmaller businesses and farmers, formerly dead capital, cannow be put into circulation as collateral for loans.

Jordan – As a component of a broader PEP-MENAinspection reform program, FIAS worked with IFC’sSocial and Environmental Department and theInternational Labour Organization (ILO) to develop atransparent, market-oriented, public-private monitoringand reporting system for the textile and apparel industryin the special economic zones. The system will help leadto decreased inspection burden, improved risk manage-ment and targeting of public inspections, and improvedworker conditions.

FYR Macedonia – The government has moved aggres-sively to implement regulatory reform following FIAS’2005 diagnostic of administrative impediments to busi-ness. In 2007, the time required to register a business wasfurther cut to 15 days (down from 48 in 2005) and totalcosts to register fell by about $150-200. In 2006, 11,000firms registered—4,000 more than in 2005—including anestimated 20 percent increase in firms moving from theinformal to the formal sector. Three thousand new busi-nesses registered in the first quarter of 2007.

Russian Federation – FIAS advised on new legislation(adopted in July 2007) to set more favorable and stimu-lating terms and procedures for land buy-outs during thetransition to liberalized markets for commercially usedland by 2010. The law on acquisition of land plots fromthe state and municipal property provides reduced landpurchase prices to most firms and individuals with priva-tized and privately owned buildings.

Sierra Leone – Parliament approved legislative changeswhich cut the cost of registering a business by nearly 97percent, from $1,500 to $50. The government imple-mented 11 of 15 customs simplification procedures thatFIAS recommended. Legislation was passed establishing anew investment promotion agency.

Vietnam – A multi-year Business Access to Land projectlaunched in FY07 enjoyed early success. The governmentissued a decree that clarified the concept of stable use,thereby increasing the security of tenure for affected busi-nesses. The decree also lengthened lease periods for resi-dential land up to 70 years with a right of renewal, andannounced the broader use of land auctions.

Doing Business Reforms

In FY07, FIAS work helped improveperformance on eight of the ten DoingBusiness (DB) indicators in a group of20 countries. In total, FIAS’ contribu-tions have made possible 27 of the

200 reforms reported in the Doing Business 2008 report.Clients that made impressive gains on a specific indicatorduring the past year include: Egypt and FYR Macedoniain “business start-up”; Niger in “registering property”; andLesotho and Sierra Leone in “paying taxes.”

FIAS has created the Doing Business Rapid Response Unitto address growing worldwide demand among countrygovernments for support in improving their Doing Businessrankings. The Unit, which started operating October 1,2007, will be responsible for expediently handling clientrequests for assistance and for helping governments toimplement reforms that make doing business easier intheir countries.

4

East Asia & Pacific

Europe &Central Asia

Global

Latin America & Caribbean

Middle East &North Africa

South Asia

Sub-SaharanAfrica

18%

8%

7%5%

13%

36%

13%

F I G U R E 4

REGIONAL DISTR IBUT ION

Project Expenditures – In FY07, two thirds of projectspending was for “frontier” countries and regions.

Rarely before has the envi-ronment so favored sustain-able economic growth inthe developing world. Asmarkets open and invest-ments flow, poor countriescan increasingly seize thechance to secure long-termdevelopment. Major trendsshow that more emergingmarkets are participating in

the global economy. South-South investments continueto grow, as well as South-North investments. Throughthe growth of the private sector, more and better jobs arecreated and incomes rise, providing the poor with moreopportunities for upward economic and social mobility.

Yet significant challenges remain. Many countries stillfail to take advantage of these opportunities, partly dueto excessive red tape and burdensome business regula-tions. Much remains to be done to help governmentsattract investment and improve the environment for pri-

vate enterprise. This is particularly the case in frontiercountries, where poor populations most urgently needgrowth and investment. Sub-Saharan Africa, forinstance, still has the most business-unfriendly regulatoryenvironment in the world.3 This is not the time for com-placency, as demand for investment climate advice isstrong, enhanced by the pressures of globalization andthe spread of benchmarking tools such as Doing Business.

This window of opportunity is not everlasting. At FIAS,we need to be responsive, nimble, and close to ourclients to help them sequence and deliver successfulreforms. Timeliness is particularly crucial, as we knowthat nearly 85 percent of reforms take place in the first15 months of a new government.4

As countries integrate into the world markets, reapingeconomy-wide dividends, questions are raised regarding theinequality of their distribution. Issues pertaining to qualityof investment, its environmental impact, and corporatesocial responsibility are becoming increasingly important toinvestors from both northern and southern source markets.

H I G H L I G H T S 5

3 Sub-Saharan Africa’s average ranking on the ease of doing business is 136 out of 178 countries measured; Doing Business 2008, WorldBank and IFC (2007), p. 6.

4 Doing Business 2007—How to Reform, World Bank and IFC (2006), p. 5.

MESSAGE FROM THE GENERAL MANAGER

FIAS aims to help its client governments develop moreeffective business regulations and foster increased privateinvestment. We are proud of the results achieved with ourclients and partners over the past strategy cycle, which arefeatured in this report. The past three years have enabledus to develop and test a variety of products. Building onsuccesses, and learning lessons of experience, we are nowintensifying our focus on core areas of expertise.

As the World Bank Group’s only tripartite operationalentity, FIAS enjoys support from IFC, MIGA, and theWorld Bank. We have used this unique position toexpand our collaboration with Bank Group partners, par-ticularly in the joint delivery of advisory services to clientgovernments. The recent integration of MIGA’s technicalassistance services allowed FIAS to consolidate our prod-uct offering and expertise (around investment promotion)and regional outreach (especially in the Balkans).

In the same spirit, we are moving toward deepened part-nerships in which we join forces (in fragile states espe-cially) with other development partners to focus onpriority issues affecting our client countries’ business

environments. For instance, we have built oneInvestment Climate Team for Africa with IFC’s regionalfacility; with IFC, the European Commission, and theU.K.’s Department for International Development, wehave launched the Bangladesh Investment Climate Fund.Generally, we are working with our donors, not only asfinanciers of advisory programs, but also as partners instrategy and product development and project implemen-tation. France joined the group of FIAS core donors inFY07 and is helping us improve our support for reformsin West Africa in particular.

FY07 was a successful year, marked by continuous growthin service delivery, notable achievements in countriesand regions as diverse as Sierra Leone, Kenya, Mexico,China, and the Balkans, and strong client and partnersatisfaction. At the dawn of a new four-year cycle, we areexcited by the opportunities and aware of the challenges.With renewed support from donors, we are confidentthat we will be adequately equipped to effectivelyrespond to clients. We enter this new period with highexpectations, emboldened by the encouraging supportfrom the G85 and our donor partners.

6

5 See G8 Summit Declaration, Heiligendamm/Germany, June 8, 2007, on Growth and Competitiveness in Africa. Paragraph 28: “The G8[…] will individually and collectively continue to support initiatives which address the investment climate, such as […] the ForeignInvestment Advisory Service of the IFC […].” The G8 (Group of Eight) includes Canada, France, Germany, Italy, Japan, Russia, theUnited Kingdom, and the United States.

OPERATIONAL OVERVIEW

Collaboration and Leverage

Regional Focus

Core Products

Knowledge Management

Monitoring and Evaluation

The integration of MIGA’s investment promotion tech-nical assistance unit in FY07 was a defining event in thedevelopment of FIAS’ product lines and service delivery.It also heightened the opportunity to collaborate thatstems from FIAS’ unique position within the World BankGroup. FIAS operates as the World Bank Group’s onlytripartite entity, financially supported by IFC, MIGA,and the World Bank, in addition to its bilateral and mul-tilateral donor partners. It is managed by IFC andincludes staff from each of the three World Bank Grouporganizations. FIAS’ success is increasingly linked to itsability to collaborate with its World Bank Group part-ners, leveraging the strengths of IFC field-based advisoryservices facilities and World Bank lending programs, andincorporating MIGA technical assistance activities.

The Integration of MIGA’s Technical Assistance

On January 23, 2007, the Multilateral InvestmentGuarantee Agency’s Board of Directors approved theintegration of the Agency’s technical assistance servicesinto FIAS. The move marked an important step towardgreater coherence in the World Bank Group’s delivery oftechnical advisory services. It brought to FIAS deep and

complementary expertise on investment promotion,institutions, sector competitiveness, and knowledge out-reach activities.

MIGA’s mandate encompasses not only the provision ofpolitical risk guarantees, but also technical assistance toimprove investment conditions in member countries.The Agency took a partnership role in FIAS in 1988-1993; however, between 1994 and today, MIGA pursuedits TA program independently. During that period,MIGA TA activities have grown in complexity and dura-tion while FIAS has also expanded, with a steep increasein client demand accounting for much of the growth.

The mandates of MIGA and FIAS in the TA area werefully aligned, the work programs increasingly integrated(in recent years, about 40 percent of MIGA’s TA projectswere already undertaken jointly with FIAS), and strate-gic thinking at all levels of the World Bank Groupfavored pulling the two together. With the recent FIASstrategy cycle ending, the timing was opportune for theintegration.

The integration in February 2007 of MIGA’s technicalassistance services and team into FIAS is one of the mainhighlights for FY07. The two teams moved into newoffices in April 2007 and jointly developed the new

8

COLLABORATION AND LEVERAGE

FIAS strategy for FY08-11. Staff were cross-deployed injoint teams, and active product development and systemsintegration efforts have incorporated both formerly inde-pendent units. The integration process was completed onJuly 1, 2007 with the launch of the new strategy, and theadoption of a new organization and an integrated budgetand personnel management system.

The FIAS Niche

A strong aspect of FIAS’ comparative advantage is its posi-tioning within the Bank Group, which is expressed byheadquarters staff organized into teams around core prod-ucts (such as business license simplification and invest-ment policy and promotion) to complement the IFCregional facilities’ geographic organization. In this way,FIAS provides technical substance and evidence of inter-national good practice on these core products, workingjointly with Bank Group partners to deliver advisory serv-ices to client governments. The client deals with one inte-grated front-line team that advises from the diagnosticsstage through solution design to implementation support.

Over the years, FIAS’ niche has evolved. In its earlyyears, FIAS was the only unit of the Bank Group fullydedicated to investment climate reform; in more recentyears, the IFC Advisory Services and the World Bankhave become important players in this area.

IFC Advisory Services. FIAS has deep technical expertisearound key investment climate issues, and a limited field

presence. This structure complements that of the IFCAdvisory Services, which has excellent field presenceand is growing its investment climate business.

This compatibility is evidenced in the growing number offully integrated joint-ventures between FIAS and theIFC Facilities in Africa, China, the Balkans, and SouthAsia (including the new Bangladesh Investment ClimateFund – BICF; see box, p. 18), and in the number of jointprojects in the past few years. The integration of thefrontline delivery of services is supported by joint strate-gies and increasingly unified regional management andjoint teams, a trend which will increase in the upcomingstrategy period.

World Bank. FIAS’ quick response business model cou-pled with its specialized investment climate expertisemakes it an attractive partner for many Bank programs.As FIAS clients are mostly governments, FIAS hasalways closely collaborated with Bank colleagues, in par-ticular with the regional Private Sector Development(PSD) teams and increasingly with the PovertyReduction and Economic Management (PREM) net-work. FIAS’ business model is targeted to achieve spe-cific reform results, reinforcing the Bank’s broader PSDpolicy reform agenda.

FIAS interventions typically complement those of ourBank partners, often including upstream advice to clientsduring the preparation of a Bank-funded project, anddownstream implementation of FIAS recommendationsas part of larger Bank-funded projects.

C O L L A B O R A T I O N A N D L E V E R A G E 9

East Asia and the Pacific

Ten years after the 1997 East Asian financial crisis, theregion is far wealthier, and has fewer poor people and alarger global role than ever. Personal incomes are wellbeyond their levels before the crisis; in some countries,such as China, Vietnam, Cambodia, and the Lao People’sDemocratic Republic, incomes are growing at exceptionalrates. Over 100 million people across East Asia have leftthe ranks of the extreme poor since 2000 and poverty con-tinues to fall. The average rate of growth for gross domes-tic product (GDP) for the East Asia and the Pacific regionwas 9.4 percent in 2006, up from 8.8 percent in 2005.

The strong overall regional outcome for 2006 was domi-nated by China, but activity also expanded at energetic 8-10 percent rates in low income economies such asCambodia, Lao PDR, Mongolia, and Vietnam. Whileinherent constraints such as isolation, small market size,and vulnerability to natural disasters mean that thegrowth frontier for most Pacific states lies well inside thatwhich is possible in Asia, several countries posted growthrates in excess of 4 percent in 2006 (the Solomon Islands,Palau, Samoa, Vanuatu, the Marshall Islands). Samoa, inparticular, continues to show impressive growth: real GDPper capita has increased, on average, by over 3 percent per

year for well over a decade, positioning the country tograduate from the status of a least developed country.

In the past year, the East Asia and the Pacific programchanged structurally with further integration of the invest-ment climate teams from FIAS, the IFC Facilities, and theWorld Bank. The decision was taken to appoint an IFCBusiness Enabling Environment Sector Leader for theregion who would also manage the FIAS RegionalProgram. Under this structure, program impact was maxi-mized, with results tracked against common monitoringand evaluation (M&E) indicators. Nearly all FIAS advisorywork in the region was undertaken by joint teams, thusensuring that both local knowledge and best internationalpractices were captured in all investment climate work.

During FY07, FIAS continued to provide advisory serv-ices on a demand-driven basis to countries in the region.Thirteen projects were completed: seven in East Asia,three in the Pacific, and three in China. The combinedbudgets of these projects, co-financed largely withregional contributions received from Australia and NewZealand, amounted to more than $2.5 million.

This year, FIAS re-engaged with Papua New Guinea,the largest frontier country in the Pacific, in a projectconducted jointly with IFC’s regional facility. The project

10

REGIONAL FOCUS

aims to remove administrative barriers to investment,which are critical impediments to formalization. Allongoing and planned work involves collaboration withthe IFC regional facilities or other partners within theWorld Bank Group. In addition, the project has bene-fited from the close working relationship with the AsianDevelopment Bank in the region, including regular con-sultations and increased collaboration at the program-matic and project level.

Over the course of FY07, a number of projects were con-cluded in Indonesia and Cambodia. In Indonesia’s fron-tier region of Aceh, FIAS used a strategic policyplanning approach to assist the leadership team of theAceh Reconstruction Agency. Work targeted strengthen-ing coordination and prioritizing regulatory reform effortsin view of Aceh’s special autonomy, reform initiatives atthe national level, and the need for improvement in theoverall investment climate.

In the Solomon Islands, the processing time for work per-mits for highly skilled international labor, a criticalresource for both domestic and foreign businesses, waslowered from several months to five days. This progresson work permits built on a similarly sharp reduction inprocessing times for the approval of foreign investmentapplications achieved with a new registry. The PacificIslands Forum-mandated Regional Assistance Mission toSolomon Islands (a multi-country response to arrest aslide towards state failure, encompassing aid, police, andmilitary components) has reported a seven-fold increasein FDI since June 2006.

A number of other states in the Pacific continued toexperience political unrest and security issues, whichimpacted the delivery of assistance. In Fiji, a number ofinvestment climate initiatives were stalled by aDecember 2006 coup. In Tonga, the destruction of thecentral business district in November 2006 rioting led tothe redirection of project and staff resources to theprocess of business recovery. The original projectregained traction in January 2007 with new initiatives on

tax and alternative dispute resolution. In June 2007,Tonga’s government amended the Consumption Tax Act,streamlining reporting requirements for business.

An independent, external evaluation of the East Asiaand the Pacific work program during FY07 found thatFIAS’ work in the region was both effective and relevantto country needs.6 The evaluation cited several successfulongoing projects, including the Vietnam Business Accessto Land Program (see p. 29), the sequence of investmentpromotion interventions in the Solomon Islands, and theInformal Economy Project in Papua New Guinea.

FIAS work in China in FY07 included development of asecured lending framework; value chain analyses of theelectronics, pork, and tourism sectors in the westernprovince, Sichuan; the launch of a three-year sub-national Doing Business survey covering 32 cities; and thelaunch of a three-year project to attract investment toChina’s central and western provinces. While over 700million Chinese live in these provinces, the regionattracts less than half the foreign direct investment (as apercentage of GDP) of sub-Saharan Africa.

R E G I O N A L F O C U S 11

6 The East Asia and the Pacific evaluation was a separate report prepared by the same auditor who conducted the overall evaluation ofFIAS. See box on p. 21 for more on the larger report.

In partnership with several private sector and civil soci-ety stakeholders, in particular Business for SocialResponsibility, FIAS conducted a project in Shenzhen oncorporate social responsibility in the information andcommunication technology (ICT) sector. The projectdeveloped a capacity-building strategy to help the indus-try meet international social and environmental require-ments and improve its competitiveness in these areas.

Europe and Central Asia

Europe and Central Asia is a diverse region, with severalactive FIAS initiatives. The Balkan region is at a criticaljuncture as countries in the region continue the transi-tion process. The countries that have not alreadyacceded to the European Union are embarking on theimplementation of critical reforms to improve the invest-ment climate and to further integrate with the rest ofEurope in terms of trade and investment.

FIAS continues to play a catalytic role in the regionthrough its integrated strategy for supporting business-enabling environment (BEE) reform, effectively leveragingits inputs to increase impact through joint programs withIFC Advisory Services, the World Bank, and other donorprograms. FIAS and IFC Advisory Services launched ajoint sub-national competitiveness project designed to

(i) improve the business-enabling environment in 8 locali-ties in Bosnia and Herzegovina and Serbia, and (ii) estab-lish a baseline of doing business indicators for 16municipalities across the Western Balkans. In Russia,access to land and real estate remain the focal point ofFIAS activities. Since most land remains publicly owned,the lack of transparent and defensible property rights forimmovable assets deprived businesses of collateral neededto finance operations and made firms susceptible to extor-tion by municipal authorities. In the Commonwealth ofIndependent States, FIAS and the IFC Facility are work-ing closely together and exploring joint programs. FIASwork is also incorporated into World Bank programs.

In Croatia, the first phase of the fast-track review of theregulations affecting business operations was completedin June 2007 and implementation is ongoing. TheHITROREZ (translated “swift cut”) exercise, designedand implemented with support from IFC and the UnitedStates Agency for International Development (USAID),has produced tangible results:

■ an inventory of 2,863 business-related regulations,accessible to the general public via the Internet;

■ government acceptance of the recommendations toeliminate and/or simplify roughly 55 percent of allinventoried regulations. The government has initiatedimplementation of these recommendations;

12

■ an estimated $250 million in expected savings for busi-nesses from the licensing and other business formalitiessimplification reform; and

■ government commitment to institutionalize a systemicreview of new regulations using regulatory impactassessment (RIA).

Croatia ranks 3 among the top-10 reformers in DoingBusiness 2008, and Croatia’s overall ranking improvedfrom 124 in Doing Business 2007 to 97 in this year’sreport. The HITROREZ exercise had a direct impact onCroatia’s ranking for the “dealing with licenses” indica-tor; Croatia moved from 167 to 162 for this indicator, asreported in Doing Business 2008.

In the former Yugoslav Republic of Macedonia, withassistance from FIAS and the World Bank, the govern-ment has moved aggressively to implement regulatoryreform following FIAS’ 2005 diagnostic of administra-tive impediments to business. In addition, the govern-ment has launched a “guillotine” review of businessregulations with the support of FIAS and the WorldBank Business Environment Reform and InstitutionalStrengthening project, reviewing approximately 2,000business regulations and rapidly implementing the firstround of revisions. These efforts have produced measura-ble results. In Doing Business 2008, FYR Macedoniaranks 4 among the top-10 reformers across all indicators,and ranks 21 for the “starting a business” indicator,showing a dramatic improvement over its ranking of 82for “starting a business” in the 2007 report.

According to the latest amendments of the Law on One-Stop-Shop, the time required for registration of a busi-ness was reduced to 15 days (down from 48 days in 2005,and from 18 days in 2006). Total costs were cut by about$150-200. As a result, 11,000 firms registered in 2006,4,000 more than in 2005, including an estimated 20 per-cent increase in firms moving from the informal to theformal sector. In addition, 3,000 new businesses regis-tered in the first quarter of 2007.

Most of the legal framework for adoption of the newBankruptcy Law was completed and 2007 figures to dateshow an increased dynamism in all segments of closing a

business; the number of pre-bankruptcy procedures,bankruptcy procedures, and liquidations all increased.According to the Central Registry, 739 businesses wereliquidated in the first six months of 2007 compared to453 in all of 2006. These reforms are likely to reduce thetime and costs for closing a business while increasing therecovery rate.

In Bosnia and Herzegovina (BiH), FIAS continues tocollaborate in the design and implementation of envi-sioned business environment reforms, a process initiatedin 2000 with FIAS’ review of the administrative impedi-ments to business. Three Doing Business indicators reflectthe results of this process to date:

■ Starting a business. It now takes 54 days to register acompany, 19 days less than in 2005 and 36 days less thanin 2002. A new electronic business registration systemlaunched in June should speed the process even further.

■ Inspections reform. Inspections reform has alleviated thefinancial and time burden on businesses. A May 2007survey of 215 BiH businesses showed significant reduc-tion in the number of on-site inspection days: an aver-age of 10 days a year, down from 26 days in 2005. InRepublika Srpska, the average is less than 8 days a year,a marked improvement from 34 days two years ago.

■ Closing a business. Enactment of modern bankruptcylaws and extensive training of bankruptcy trustees andjudges considerably improved the efficiency and trans-parency of the mechanisms for business exit. In 2003-04, a typical bankruptcy case lasted over three years,and could last over five years; now the average time isless than two years.

FIAS is undertaking a fast-track review of business regu-lations in the Entity of Republika Srpska (see p. 24). Incollaboration with IFC Advisory Services, FIAS haslaunched a sub-national competitiveness project inBosnia and Herzegovina that aims to improve the busi-ness environment in three pilot municipalities—BanjaLuka, Mostar, and Novo Sarajevo.

FIAS has produced a number of regional reportsdesigned to improve business access to real estate, in

R E G I O N A L F O C U S 13

addition to a large-scale land and real estate survey in 15regions of the Russian Federation. With financial sup-port from the European Union and in cooperation withthe IFC-PEP and the World Bank Institute, FIASlaunched a new regulatory simplification project in thedepressed regions of Russia’s Southern Federal District—the Republics of Northern Ossetia-Alania andKarachayevo-Cherkessia.

While less-developed regions in Russia continue toreceive substantial donor support, many advanced regionsare looking to FIAS as a trustworthy advisor whose coststhey are willing to cover from their own funds, in full orwith minor financial support from external sources. FIASand Tomsk Oblast first started cooperating in 2000 toimprove the business environment. During FY07, FIASstarted its third project in the Tomsk region to oversee asurvey monitoring administrative barriers to investmentand to measure the effect of the regional administration’swork since 2000. In conducting the survey, FIAS will actas advisor and monitor quality, and local consultants willdraft an action plan and carry out public-private dialogue.

Also in Russia, FIAS advised on new legislation (adoptedin July 2007) to set more favorable and stimulating termsand procedures for land buy-outs during the transition toliberalized markets for commercially used land by 2010.The law on acquisition of land plots from the state andmunicipal property provides reduced land purchase pricesto most firms and individuals with privatized and pri-vately owned buildings.

In spring 2007, together with the Doing Business teamand a Russian consulting company, FIAS started a pilotproject in selected Russian regions to measure their per-formance on four Doing Business indicators.

FIAS advised on several projects in the Commonwealthof Independent States. In Tajikistan, with funding supportfrom Switzerland, FIAS and MIGA provided joint assis-tance to enhance the attractiveness of the investmentenvironment and to build the capacity of the institutionsthat deal with investment policy and facilitation. InArmenia, FIAS worked with the World Bank to analyzethe country’s collateral laws and the newly establishedcollateral registry and agreed on an action plan to

enhance access to finance. FIAS also plans to help theArmenian government streamline administrative proce-dures and establish capacities for better regulations. Close cooperation between the Doing Business team,FIAS, IFC, and the World Bank led to solutions toreform the licensing system and improve the regulatoryquality for private sector development in Azerbaijan.Azeri President Ilham Aliyev issued a decree to developentrepreneurship and remove problems in launching abusiness and obtaining a license.

Latin America and the Caribbean

Despite three record years, growth in Latin Americaand the Caribbean lagged behind other emergingregions. Annual growth averaged 5 percent in 2004-06,below the 7 percent of the developing world and the 9percent in East Asia. Inequality is persistent: in the fivelargest countries, the bottom 20 percent of the popula-tion in terms of income earns only 3 percent of thetotal. Inequality is fueled by the high levels of informal-ity. About 56 percent of workers in urban areas areinformal, which negatively impacts firm productivityand workers’ welfare. Lowering the costs of becomingformal—such as excessive regulations and taxes—andincreasing the benefits are necessary to make formalitymore attractive.

FIAS continued to work with local and developmentpartners to reduce the level and complexity of regula-tions in Latin America and the Caribbean. Using thesub-national Doing Business ratings and other innovativeproducts, FIAS worked in FY07 to identify administra-tive bottlenecks at national and local levels of govern-ment and to unleash competition to create a betterbusiness environment among different parts of Mexico,Brazil, and the Caribbean. Both at the sub-national andregional levels, FIAS focused on making sure that thereform energy generated by the Doing Business indicatorsleads to actual reforms.

FIAS is partnering with other World Bank Group unitsand donors to leverage capacity to assist with reformimplementation. In the Organization of Eastern

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Caribbean States, FIAS used Doing Business indicators toshow how these island economies can improve theirbusiness environments by sharing their best practicesand implementing regional solutions. In a direct follow-on to this work, FIAS collaborated with IFC on a proj-ect to set up a regional credit bureau; the World Bankand other donors are assisting individual countries withtheir reforms.

In the area of competition law and policy, FIAS’ activi-ties in Central America have focused on leveraging themomentum created by the DR-CAFTA7 trade pact,

which requires governments within the region to openkey industries to competition. FIAS has piloted a two-year program in Costa Rica, funded jointly with theCanadian International Development Agency, tostrengthen the capacity of the Competition Commission.The project began with an in-depth, sector-specificassessment of the country’s competition framework,which identified specific areas for improvement.Subsequent efforts focused on building the institutionalcapabilities of the Commission. The two initial sectorstudies on telecommunications and agribusiness (rice)have been well received by the government and used inthe policy debate within Costa Rica.

FIAS also focused on addressing obstacles to investmentwithin specific sectors. In Peru, FIAS worked with theNational Competitiveness Council and the Ministry ofTrade to increase the competitiveness of the cotton, tex-tile, and apparel industries. In a project co-funded by theMultilateral Investment Fund of the Inter-AmericanDevelopment Bank, FIAS conducted a value chainanalysis that outlined the main competitive weaknessesand opportunities and addressed ways to improve per-formance based on industry-led, voluntary improvementsin labor standards. The value chain analysis in Peruhighlighted in particular the difficulties in trading acrossborders. Based on these findings, FIAS and the IFCLatin America and Caribbean Facility have started todevelop a program with the Ministry of Trade to addressthese issues.

Middle East and North AfricaIn order to foster job creation and poverty reduction, thecountries of the Middle East and North Africa need toimplement comprehensive reforms to improve the busi-ness environment and generate more domestic and for-eign private investment. These reforms include measuresto promote governance and transparency, adopt moreopen investment policies, restructure the public sector,liberalize services and utilities, tackle labor market

R E G I O N A L F O C U S 15

7 DR-CAFTA is the Central America Free Trade Agreement between the Dominican Republic, Central America (Costa Rica, ElSalvador, Guatemala, Honduras, and Nicaragua), and the United States.

rigidities, remove non-tariff barriers to trade, modernizephysical infrastructure, and invest in education and train-ing. The association agreements that some countries inthe region have concluded with the European Union andthe process of acceding to the World Trade Organizationhave generated momentum to address some of these pol-icy issues, notably in the trade area. But in certain cases,the oil boom has reduced the sense of urgency andappetite for reforms, although the key impediments toprivate sector development remain largely in place andunaffected by oil-generated windfalls.

In this challenging context, FIAS provides the special-ized advisory and technical assistance that client coun-tries need to design and implement these complex,multi-faceted reforms, in close collaboration with theWorld Bank, IFC (through its PEP-MENA Facility), andother donors. During FY07, FIAS continued to scale upits involvement in the region on a demand-driven basis,completing a total of seven advisory projects.

An important feature of the current FIAS strategy for theMiddle East and North Africa is the focus on theRepublic of Yemen, an IFC “frontier” country. FIAS com-pleted three projects during FY07, including: a detailedreview of the corporate tax system and incentivesregimes and a diagnostic of the institutional frameworkfor investment promotion. FIAS, along with the WorldBank, also provided targeted advice to the government inorganizing the investors’ conference held in Sana’a inApril 2007.

FIAS has been very active in recent years in the ArabRepublic of Egypt, advising the government on its freezone policy and the simplification of administrative procedures to investment. In FY07, FIAS completed aproject to help modernize the framework for industrialestates, in partnership with the World Bank. The pre-feasibility study, which was completed for a high-leveltripartite counterpart consisting of the IndustrialDevelopment Authority, the investment promotionagency (GAFI), and the Alexandria Governorate, identi-fied innovative options for tackling the policy, legal, reg-ulatory, and institutional constraints to accessingindustrial land in Egypt.

The pre-feasibility study also emphasized the need toshift away from centrally planned, supply-driven, govern-ment-built and -operated zones that are subsidized,toward a framework that explicitly encourages greaterpublic-private partnerships and a reliance on marketforces. This governance analysis was complemented by amarket-demand analysis to assess the potential for imple-menting a private-sector participation approach in one ortwo specific estates in Alexandria. The study’s timing wasopportune; investor interest is at an all-time high and thegovernment is advancing its first privately developed

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industrial estates as a model for industrial land develop-ment and management throughout the country.

FIAS also launched a project to measure the costs of doingbusiness at the sub-national level in Alexandria, Asyût,and Cairo, using 5 of the 10 Doing Business indicators.

In Jordan, FIAS advised the government on creatingpolicies and incentives to reduce the inspection and pri-vate-buyer auditing burden on garment manufacturersoperating in the qualified industrial zones. The projectalso promoted systemic improvements in labor practicesand continued competitiveness. FIAS surveyed key inter-national buyers and retailers on their perceptions of fac-tors related to Jordan’s competitiveness, and assisted indesigning a monitoring and remediation system—BetterWork Jordan—to be implemented by the InternationalLabor Organization and IFC. This assignment, a jointventure with IFC’s PEP-MENA as part of its broaderinspection and licensing reform program, drew exten-sively on FIAS advisory work around the world in thearea of corporate social responsibility, including recentprojects in Lesotho and Cambodia.

In Lebanon, a review of administrative barriers toinvestment focusing especially on the tourism, ICT, andagro-business sectors was completed, with co-fundingfrom the United States Trade and Development Agency(USTDA) and PEP-MENA. The review identified keyprocedural constraints at entry and during the life of aproject, and also provided concrete recommendations tostreamline these procedures. It complemented a parallelPEP-MENA program of technical assistance to stream-line company registration procedures.

FIAS also contributed to the private sector develop-ment work program of the Middle East and NorthAfrica region of the World Bank through peer reviewof country assistance strategies, lending operations withprivate sector development components, and technicalreports and research papers on investment climate andPSD issues in the region. In addition, FIAS con-tributed to the Organisation for Economic Co-opera-tion and Development (OECD) initiative oninvestment in the region.

South Asia

South Asia’s economic growth and progress in humandevelopment has brought an impressive reduction inpoverty. As a result of domestic reforms and externalassistance, South Asia’s GDP has grown nearly 6 percenta year for the past decade. During the 1990s, India,Bangladesh, and Nepal lowered their poverty rates by 7,9 and 11 percentage points, respectively. Growth in thetwo largest countries, India and Pakistan, has acceleratedto 7 percent in the last two years. In addition to the out-standing human development achievements of Maldives,Sri Lanka, and Indian states such as Kerala, Bangladeshhas already achieved universal primary enrollment andgender parity in secondary education.

Although growth has resulted in poverty reduction,almost 400 million South Asians still live on less than $1a day. South Asia attracts significantly less domestic andforeign investment than any region except Sub-SaharanAfrica. To achieve its growth targets, the region needs toincrease investment from the current 15-20 percent ofGDP to 28-30 percent.

Improving governance and the investment climate areamong South Asia’s most fundamental challenges. Toaccelerate or even sustain growth will require action ontwo fronts: addressing the region’s vast urban and ruralinfrastructure deficits, and improving the climate forinvestment with measures to reduce the red tape requiredto start a business and the costs of hiring workers.

During FY07, FIAS continued to provide advisory serv-ices on a demand-driven basis to countries in the region.Five advisory projects and one knowledge managementproject were completed, amounting to a combined proj-ect budget of more than $600,000. Despite politicalinstability and violence in some countries, FIAS alsodeveloped a major long-term program in Bangladesh andthe beginnings of medium-term programmatic interven-tions in Nepal and Pakistan.

FIAS has helped the government of Bangladesh gain significant momentum towards investment climate

R E G I O N A L F O C U S 17

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Bangladesh must achieve 8 percent annual GDP growthto meet the key Millennium Development Goal of halv-ing the current 42 percent of its population in povertyby 2015. This growth will not be possible without majorprivate sector contribution. Many obstacles to businessare formidable in Bangladesh, including excessive regu-lation, anti-competitive practices, and poor infrastruc-ture. There is also the perception that Bangladesh’ssecurity, corruption, and infrastructure problems make ita poor place to do business.

The Bangladesh Investment Climate Fund (BICF), opera-tional as of January 2007, is a $55 million, eight-yearprogram managed by IFC and funded by the U.K.’sDepartment for International Development (DFID) as wellas the European Commission to support continuedprogress toward major business environment reform.BICF’s objectives are consistent with the government’sstrategic vision for private sector development within itspoverty reduction strategy. Government agencies andBICF—in close collaboration with the Bangladeshi privatesector and civil society—jointly design and implementprograms to institute business-friendly policies, laws andregulations, and to strengthen the institutions that imple-ment them.

BICF targets three reform areas: improving overallbusiness regulations through a Better Business Unitwithin the government; improving the regulatoryframework for private participation and environmen-tal and social compliance practices in economiczones; and, strengthening institutional and civil serv-ice capacity to promote private sector development.BICF supports the Private Sector Development CoreGroup, a network of 40 mid-level officials drawnfrom ministries and agencies involved with the privatesector, which is designed to build ongoing commit-ment and capacity for implementing investment cli-mate reform.

In FY07, BICF worked closely with the government onseveral levels. It supported the Board of Investment indrafting a special economic zones policy. It helped theExport Processing Zones Authority to explore commer-cial financing options and conduct rigorous due dili-gence work for new projects, as well as to introducecommercial principles in all its operations. BICF alsoworked closely with the interim government in establish-ing a significant regulatory reform program, to belaunched in the second semester of 2007.

THE BANGLADESH INVESTMENT CL IMATE FUND

improvement through the Bangladesh InvestmentClimate Fund (BICF), which became operational inJanuary 2007 (see box, opposite page). The eight-yearprogram is the largest in the region and has leveragedmany aspects of FIAS’ expertise and innovation. As ajoint venture with IFC’s Advisory Services portfolio inSouth Asia, BICF has served as a model of integrationwithin the World Bank Group.

In September 2006, FIAS re-engaged in Nepal after sev-eral years of inactivity due to open conflict for nearly adecade. Its first intervention was to provide a detailedreview of the draft act on special economic zones to bepresented by the Ministry of Industries, Commerce andSupplies to the Council of Ministers. FIAS provided thisassistance in collaboration with the IFC South AsiaEnterprise Development Facility’s sponsored tours forNepalese government officials to export processing zones(EPZs) in Bangladesh, which proved successful at a criti-cal juncture in formulating the country’s new zonesregime. FIAS and the facility partnered again inFebruary 2007 to conduct a targeted analysis of the keypolicy, legal, regulatory and institutional barriers to pri-vate investment in Nepal. The analysis recommendedhow the proposed zones regime could help address someof these barriers in the short-to-medium term whilebuilding support for broader national reforms throughdemonstration effects of the zones. The resultingInvestment Climate Mini Diagnostic report was verywell received by government and stakeholders, and ithas provided the basis for a longer-term programmaticintervention in Nepal focusing on areas such as reformcoordination and public-private dialogue, economiczones, secured lending, tax policy and administration,regulatory streamlining, licensing and inspectionsreform, customs administration, and labor regulationflexibility (piloted through the zones).

Despite Pakistan’s strong economic growth, the coun-try still suffers from serious deficiencies in infrastruc-ture and weaknesses in administrative and regulatorypolicies and procedures that raise the cost of doingbusiness. In September 2006, following discussionswith FIAS, the government established an EconomicReform Unit (ERU) to create capacity within theMinistry of Finance for private sector development and

regulatory policy formulation and implementation.During FY07, FIAS worked with the Ministry to designthe unit and to formulate an initial work program,which will be supported by FIAS, donor resources, andsignificant contributions from the government. TheFIAS project will also fund technical assistance consul-tancies for four purposes: the development and imple-mentation of specific private sector development andregulatory reforms; consultations with the private sec-tor; capacity building and training within the ERU andother ministries involved in PSD programs; and thedevelopment of M&E systems.

FIAS assistance in India helped in building the capacityof the country’s Competition Commission (see p. 29).

During FY07, a policy paper documenting recent businessregulation reforms in India was prepared for a regionalmeeting of high-level government officials to discussestablishing a network of regulatory reform practitioners.Although the meeting was postponed until reform pro-grams in India, Pakistan, Bangladesh, and Nepal gain further momentum, FIAS continues to explore ways tosupport regulatory reform efforts in the region and toleverage peer learning between countries.

Sub-Saharan Africa

Sub-Saharan Africa continues to experience strong andwidespread growth. GDP growth per capita was at arobust 3 percent in 2006. FDI and exports are also atrecord levels. This strong performance is not only due torising commodity prices, it is also the result of stablemacroeconomic performance and increased investor con-fidence following the spread of democracy and peace.Improving the microeconomic investment climate is nowthe key challenge for the region; 29 of the lowest 36countries in the Doing Business 2008 rankings are fromSub-Saharan Africa.

In response to the relatively slow pace of investment cli-mate reform in Africa, FIAS’ Africa team and IFC’s PEPAfrica business environment team now operate as a jointteam that collaborated extensively with World Bank pri-vate sector development colleagues across the continent in

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FY07, creating a relatively seamless source of advisorysupport to client governments. Depending on the govern-ment’s request and the country’s needs, this united Africainvestment climate team can provide very short-termtechnical input, a medium-term project focused on specificreforms, or a multi-year program of support with dedicatedin-country staff. The team has adopted as its objective tohelp Sub-Saharan Africa become the world’s fastestreforming region within three years, by the end of FY10.

FIAS continued to expand its programmatic scope inSub-Saharan Africa in FY07. Clients commend the out-comes—rates of implementation of FIAS recommenda-tions are as high in these challenging countries as inother regions. FIAS was singled out for praise for itswork in Liberia by President Ellen Johnson-Sirleaf in anarticle in the International Harvard Review,8 and was rec-ognized at the June 2007 G8 summit for its contribu-tion to investment climate reform in Africa. At theconclusion of the fiscal year, FIAS had completed 29projects in 13 countries, plus 5 regional knowledgemanagement projects. This compares to 27 advisoryprojects in FY06, and also represents a significant scale-up in expenditure from $3.1 million in FY06 to $4.7million in FY07.

Among the noted project successes this year, authoritiesadopted a fast-track licensing simplification approach inKenya, which led to dramatic results (see p. 23); neigh-boring countries have noticed these outcomes and theKenyan authorities together with their business commu-nity will be explaining to their peers how they achievedthese results in a regional workshop. FIAS implementedan innovative survey of informality in Sierra Leone,Liberia, Rwanda, and Madagascar to help these govern-ments prioritize their regulatory reforms aimed at smallentrepreneurs. FIAS advised on the reform of foreignnational land ownership legislation in Sierra Leone, oneof the first countries in Africa to introduce such progres-sive legislation. FIAS also supported the building ofinvestment capacity in Mozambique and Lesotho. InBurkina Faso, a dedicated team helped overcome majorrigidities in the labor market by assisting in the draftingof two government decrees, part of an ambitious, ongoingprogram aimed at systematically improving the businessenvironment. In neighboring Niger, the governmentstreamlined the business registration process in a waythat halves registration costs, and significantly reducedthe costs of property registration.

In Sudan, the government accepted all FIAS recommen-dations on regulatory simplification through a PresidentialDecree in June 2007, and is now in the process of system-atic implementation. This has already resulted inimprovements in the tax administration system, a reduc-tion in the real estate tax rate to 10 percent, and specificinstitutional reforms. Sudan also improved its DoingBusiness ranking in 2007 on the “trading across borders”indicator by cutting export time by 17 days, import timeby 29 days, and reducing the number of export and importdocuments required by 5 and 6, respectively.

In Southern Sudan, FIAS assisted the government ofSouthern Sudan in strengthening the regulatory envi-ronment by reviewing and revising six business laws,including the investment law. If adopted, it will removethe current inequitable treatment of investors and therequirement for the investment promotion agency to vet

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8 Ellen Johnson-Sirleaf, “Underwriting Liberian Rebirth: Political Reform and Economic Progress,” International Harvard Review (Winter2007), p. 26-29.

R E G I O N A L F O C U S 21

In early 2005, FIAS partnered with DFID to conduct adiagnostic study of administrative barriers to investmentin Sierra Leone. The government’s decision to act on theresults of the analysis signaled its commitment to moveSierra Leone from a post-conflict situation toward growthbased on private sector development. The results of thestudy were overwhelmingly endorsed in a public-privatesector workshop that set up working groups to formulateand implement a reform program aimed at creating aworld-class investment climate. Four areas were targetedfor reform: business start-up procedures; locating andland; operating procedures, tax and customs; and insti-tutional reform, including the replacement of a non-func-tional investment promotion/trade facilitation agency.

Results. The Removing Administrative Barriers toInvestment (RABI) project began implementation inJanuary 2006. There have been notable successes inrecent months, with clear indications of both govern-ment and private sector commitment to continuing thereform process. The RABI project’s progress to dateincludes the following recent measures:

Easing business start-up and licensing requirements.The business start-up regime has been overhauled.Parliament approved legislative changes reducing thetime, number of steps, and costs required to set up abusiness in June 2007. The cost of registering a busi-ness was cut by nearly 97 percent, from $1,500 to just$50. New legislation allowing for simultaneous awardof work and residence permits was also approved inJune 2007. An inventory of sectoral licenses and a planfor streamlining municipal licenses are underway.

Speeding the flow of imported goods. The governmenthas implemented 11 of 15 customs simplification proce-dures recommended by FIAS: reduction of documenta-tion, elimination of unnecessary steps, and theintroduction of a risk-based system that eliminates

inspections of every shipment. Two of the remaining rec-ommendations depend on computerization of the taxand customs system, which is a four-year program.

Lessening the tax burden. The government eliminatedthe requirement that new businesses pay a quarter oftheir estimated taxable income before they register ascompanies. An exemption scheme was developed thatallows compliant taxpayers to avoid the 3 percentadvance tax at import. The next steps are simplificationof the tax system, both its policy and implementation,and creation of a small business regime designed toencourage enterprise formalization. FIAS has beenasked by the government to lead this work stream.

Promoting investments and trade. FIAS partnered withthe International Trade Center of Geneva to design andhelp the government establish a new investment andtrade promotion agency that would supply the informa-tion and facilitation services sought by investors. Theagency would also provide a forum for the private sec-tor to discuss investment policy with government. Thelegislation establishing the new agency, the SierraLeone Investment and Export Promotion Agency(SLIEPA), was passed and a top quality board wasappointed. The board is in the process of recruitingSLIEPA senior management.

SPOTL IGHT: AN IMPROVED INVESTMENT CL IMATE IN S IERRA LEONE

all potential new investors. FIAS advised on the draftingof five other bills: one providing a framework for greaterformalization of small and micro enterprises; one provid-ing for the easier establishment of Southern Sudanesecompanies and greater disclosure; one providing for easyclosure of business, allowing investors greater invest-ment mobility; one allowing small and micro enterprisesto become formal businesses and to access services; andone that allows for official filing of documents. In addi-tion, FIAS supported the Ministry of Commerce, Tradeand Supply in strengthening its capacity.

In response to poor Doing Business ratings of Africancountries, FIAS and PEP Africa developed a “SWATteam” to provide rapid technical input on request, eitherfor initial appraisal of reform priorities, or as specializedinput to accelerate implementation of medium-termreform programs targeting more difficult reform areas. Inits first year of operation, the team focused on two princi-pal areas: Doing Business-related regulatory simplification,and investment law, policy, and promotion with projectsin Malawi, Liberia, Senegal, Ghana, Madagascar,Ethiopia and the Democratic Republic of Congo. Resultshave been very encouraging. In Malawi, for example, theteam successfully advised on reforms for five DoingBusiness indicators; in Liberia, the team drafted a newnational investment law. The Africa team will continuedeveloping this SWAT approach next year, to increasegeographic coverage and the spread of reforms.

FIAS continued to expand into frontier countries in theregion, with particular attention paid to conflict-affectedcountries. FIAS has active projects in eight conflict-affected countries (the Democratic Republic of Congo,Guinea, Guinea-Bissau, Liberia, Nigeria, Sierra Leone,Sudan, and Uganda).9 During FY07, FIAS continuedmulti-year advisory programs in Liberia, Sierra Leone,Sudan, and Rwanda and commenced work in theDemocratic Republic of Congo.

FIAS management has agreed to a further 25 percentexpansion of operations in the Africa region in FY08.This is accompanied by maximum collaboration withother providers of technical support, including the newInvestment Climate Facility for Africa (ICF). FollowingIFC’s $30 million contribution to the ICF, FIAS took thelead within the World Bank Group in offering supportduring its start-up phase. This included assistance withthe facility’s M&E framework, operating policies and pro-cedures, as well as participation on the ICF TechnicalAdvisory Committee. When the ICF became fully opera-tional, FIAS began to collaborate on the design andimplementation of priority reforms, such as the reform ofmovable collateral legislation and innovative approachesto business registration aimed at small entrepreneurs whowant to formalize.

This significantly improved approach to maximizing col-laboration has also shown good initial results related tointernal Bank Group arrangements. It has enabled FIASto reinforce important PEP Africa innovations, in partic-ular improving the enabling environment in targetedindustry sectors where the environment is a major block-age to investment. During FY07, PEP Africa’s ongoingsupport to the tourism sector in Madagascar andMozambique incorporated reform of regulatory and pol-icy blockages through the joint Africa team, and thecombined approach is expected to result in improvedinvestment flows in a faster timeframe. The joint teamwill now follow similar approaches with the mining andagribusiness sectors.

The team in the IFC Johannesburg regional office grewrapidly to 14 staff during FY07, but there will be no fur-ther growth. FIAS is now placing additional staff in IFCcountry offices in Dakar, Senegal and in Nairobi, Kenya,to be even closer to clients, but still part of the one jointinvestment climate team for Africa.

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9 These countries are considered “conflict-affected” according to the World Bank’s definition. The World Bank defines conflict-affectedcountries as those that 1) have experienced violent conflict in the past five to ten years, 2) are currently experiencing violent conflict,and 3) are perceived as being at risk of violence. These countries are designated by the Regions. FIAS also is working in Ethiopia,Niger, and Rwanda, which are considered conflict-affected under other definitions.

Regulatory Governance and Licensing

Regulatory risks and costs are key obstacles to doingbusiness, and they discourage domestic and foreigninvestment in most developing countries. During theFY05-07 strategy cycle, FIAS was at the forefront of theWorld Bank Group’s effort to remove the most seriousregulatory constraints to investment and help develop-ing country clients adopt systemic solutions to improveregulatory quality.

FIAS’ continued efforts to help clients in Sub-SaharanAfrica, South Asia, and transition economies to improvetheir regulatory environments rest on the premise thatflawed regulation translates into major constraints ongrowth, productivity, and the formal economy. Thepotential impact of reforms is significant, and mountingevidence confirms that especially poor countries canincrease GDP growth rates significantly by improvingregulatory practices.10

This view is increasingly shared among policymakers andreformers around the globe. International policy trends in

FY07 have witnessed a growing awareness and commit-ment to regulatory reform by many governments, in bothadvanced and developing economies, and by leading inter-national donors as well. In line with these global trends,FIAS has continued to develop cutting-edge conceptualand practical experience and is increasingly recognized as aleading driver of the “applied” regulatory governanceagenda in developing and transition economies.

For example, in FY07 FIAS assisted reformist govern-ments in creating business-enabling environments and inadopting systemic regulatory quality standards inAzerbaijan, Bosnia, Croatia, Kenya, Lesotho, FYRMacedonia, Peru, Serbia, and Zambia. FIAS also wasretained by the government of the Netherlands to reviewits program to reduce the Dutch administrative burden.In May 2007, FIAS launched its program, “BetterRegulation for Growth: Improving the GovernanceFramework for Investment” (see box next page).

Kenya. FIAS’ continued engagement on licensing simplifi-cation in Kenya has led to dramatic results in less than 18months: the first-time identification of 1,325 active busi-ness licenses, the elimination of 315 licenses, and the sim-plification of an additional 379 licenses. The FIAS team’s

C O R E P R O D U C T S 23

CORE PRODUCTS

10 Djankov, McLiesh & Ramalho, Regulation and Growth, World Bank (March 2006).

intensive consultation process with the private sector ledto the identification of the 26 most burdensome licenses inthe country and the government’s commitment to elimi-nate 16 and simplify the remaining 10 by the end of 2007.

FIAS’ licensing review also identified the Single BusinessPermit—affecting more than 400,000 Kenyan busi-nesses—as a critical regulation for the private sector withan estimated administrative burden on businesses equalto 0.11 percent of GDP. The Kenya reform has had adirect positive effect on two Doing Business indicators(“dealing with licenses” and “starting a business”). Forexample, Kenya improved its performance in “dealingwith licenses,” moving from 15 in the Doing Business2007 rankings for that indicator to 9 in the next year’sreport. FIAS also positively influenced the “tradingacross borders” and “paying taxes” indicators, by elimi-nating a number of import and export licenses and sev-eral taxes disguised as business licenses as well. Kenyaranks 72 overall in Doing Business 2008, compared to 83in the 2006 report. The most recent eliminations andsimplifications will be recorded in the Doing Businessreport for 2009.

Bosnia and Herzegovina. FIAS’ sustained efforts toimplement a fast-track simplification of licenses andrelated business formalities in Bosnia also providedencouraging results in FY07. Business permits and licenseshad long been identified as key obstacles for businesses inBosnia and Herzegovina, particularly in the RepublikaSrpska. A World Bank preliminary analysis also called forsimplification of the licensing regime by showing thathundreds of licenses and permits were required in orderfor businesses to start specific operations.

In May 2006, Republika Srpska established a RegulatoryReform Council under the chairmanship of PrimeMinister Milorad Dodik and launched a top-down, fast-track review of business formalities, licenses, and inspec-tion measures. The review was conducted over asix-month period in FY07 and the implementation wasconcluded by a government decision in September 2007.During this process, 332 formalities (including licensesand other business regulations) and 2,500 inspection-related measures were reviewed. Roughly half wereretained and the other half were either removed or

24

“BETTER REGULATION FOR GROWTH:IMPROVING THE FRAMEWORK FORINVESTMENT” PROGRAM – TOWARD ANEW STRATEGIC PARTNERSHIP MODELWITH DONORS

The Better Regulation for Growth (BRG) program is ajoint initiative of FIAS, DFID, and the Dutch Ministry ofForeign Affairs to advance the regulatory governanceagenda in developing and transition economies. Theprogram was launched in May 2007 at the first meet-ing of its Expert Advisory Panel in London, wheremore than 30 reformers, leading academics, andpractitioners from around the world gathered to refinethe program’s research agenda and priority issues.

The BRG program will be jointly implemented over atwo-year period by FIAS and a steering committee ofdonors, with the ongoing engagement and consulta-tion of the Expert Advisory Panel. The overall objec-tive of the program is to improve the regulatorydimensions of the investment climate, thereby stimulat-ing private sector investment, economic growth, andpoverty reduction. To this end, the program willadvance the knowledge frontier, develop policy tools,and promote policy dialogue in three areas: under-standing regulatory governance and building reformcapacities; adapting regulatory quality managementtools to a developing country context; and, measuringregulatory governance.

The program supports FIAS’ strategy to help its clientsadopt more systemic solutions for managing regula-tion. It is innovative in piloting a new type of strategicpartnership with donors; in focusing on understandingthe political economy dynamics of the reform process;and in emphasizing the importance of M&E in sup-porting the regulatory reform agenda. Over time, theBRG program’s efforts are expected to generate prac-tical operational knowledge on adapting regulatorymanagement tools to the developing-country context.

significantly modified. An electronic, Internet-accessibleregistry of reviewed regulations has been established. Apreliminary estimate of the impact of these reforms interms of savings to firms (management time and opportu-nity costs) is about $17 million a year. Steps have beentaken to develop and institutionalize the framework forsystematically reviewing new regulations. In addition,under the FIAS/IFC Advisory Services joint venture, asimilar approach is being applied to help improve thebusiness-enabling environment in three municipalities—Banja Luka, Mostar, and Novo Sarajevo.

Business Taxation

FIAS helps to improve the business-enabling environ-ment by reducing the time and financial cost of comply-ing with tax rules. Tax is a central parameter of theinvestment climate, while progressive fiscal policies pro-vide governments with an effective policy instrument toaddress income redistribution. Yet most technical assis-tance has been aimed at revenue-generating mechanismswith little attention paid to the effects of the system oninvestment and economic growth. The OECD estimatesthat in developing countries, companies representingonly 5 percent of the taxable base comply with fiscalobligations. Often heavy financial and time burdens incomplying with tax obligations provide a strong disincen-tive to investment and formal operation. By streamliningtax systems, FIAS helps governments to:

■ make it easier for firms to formalize; ■ encourage foreign investment; ■ widen the tax base; and ■ set the conditions necessary to lower the per-business

burden.

During the past two years, FIAS conducted a series ofstudies to analyze the effects of tax on business in 11countries across Africa and the Middle East. The studiesexamined the role of the tax system in promoting or dis-couraging investment and growth in African countriesand identified common barriers and issues.

In every study, FIAS provided detailed recommendations toimprove business taxation, and in some of the countriesstudied, these recommendations have already been adopted.For example, Mauritius eliminated many of the discre-tionary incentives and overly generous aspects of its generaltax regime following the release of the FIAS country studyin June 2006. The discretionary, administratively cumber-some, distorted regime was replaced with a simple, transpar-ent system that can be evenly applied to all businesses. Thenew tax regime no longer offers different tax rates for differ-ent sectors; rather, it offers a lower flat corporate tax rateapplicable to all businesses, which will be gradually reducedover three years from 25 percent to 15 percent by 2009.

In February 2007, FIAS, together with DFID, hosted atwo-day workshop on “Tax and the Investment Climate”in Livingstone, Zambia. The conference brought togetherdozens of tax policymakers, practitioners, and imple-menters from 15 countries.11 The teams and outside taxexperts presented the results of the analyses and facili-tated an extensive discussion of possible solutions to thecommon issues raised in the studies. FIAS helped partici-pants establish an informal working group to continuethe dialogue on key tax issues and stay informed ofrelated developments across Africa. Five major taxreform programs have been initiated within participatingcountries since the conference.

FIAS also piloted a new tax compliance cost survey forsmaller businesses in South Africa in fiscal 2007, at therequest of the National Treasury and South AfricaRevenue Service. The survey incorporated three individ-ual surveys, each targeted to a different audience: the firstto tax professionals who provide tax preparation servicesfor small businesses; the second to smaller businesses; andthe third to informal firms about their perceptions of taxcompliance costs. The first survey yielded rich, detaileddata about the compliance costs associated with the fourmain taxes affecting businesses, including registration, taxpreparation and filing, as well as “post-tax” issues such asrefunds, queries, inspections and audits, and appeals. Theother two surveys, which started field work in the firstquarter of FY08, are designed to identify problem areas

C O R E P R O D U C T S 25

11 Ghana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Sierra Leone, South Africa, Tanzania,Uganda, Zambia, and Zimbabwe.

(for instance, where compliance costs appear unnecessar-ily high) and to establish a baseline against which futureprogress can be measured.

Secured Lending

Secured lending laws enable businesses to use their assetsas security to generate capital—from the farmer pledginghis cows as collateral for a tractor loan, to the seller ofgoods or services pledging the cash flow from its cus-tomer accounts as collateral for business expansion. Inmost developed economies, movable assets are a majorsource of business finance; in the United States, forexample, they account for around 70 percent of smallbusiness financing.

Effective secured lending laws help borrowers obtainfinancing and help lenders protect their creditor rights.They provide for a broad scope of assets, particularly mov-able assets, which may be used as security. They also pro-vide clear rules on priority for the secured creditor, cheapand simple registration of security rights, and effectiveenforcement of security upon default. Without effectivesecured lending laws, lending is riskier. Lenders respond byincreasing the cost of credit to cover their risk and by lend-ing less, especially to borrowers perceived to carry more

risk, such as small firms and low-income households. Thosetypes of borrowers benefit the most from good securedtransaction laws, as most of their assets are movable assets.

FIAS, working in coordination with IFC’s regional facili-ties, has been helping countries to design and build col-lateral registries and incorporate international bestpractices into secured lending legislation. The FIASsecured lending product, jointly managed with IFC’sGlobal Financial Markets Department, is complementaryto the Department’s work with credit bureaus. In FY07,FIAS supported secured lending reforms in Armenia,China, Vietnam, and Africa.

Sustained assistance from a joint FIAS and IFC Chinateam over the past three years has helped the Chinesegovernment create a secured lending framework to facili-tate inventory and accounts receivable financing (seebox, next page).

Investment Policy and Promotion

Provision of advisory services on investment law, policyand institutions has been the backbone of FIAS’ opera-tion since its inception over two decades ago. In fact, thefirst two projects FIAS completed in 1986 in China andGhana focused on improving FDI policy and institutionalframework. The independent evaluation of FIAS, com-pleted in May 2007, stated that “the core competenciesof FIAS revolve around laws and regulations that affectbusiness. It has particular expertise in areas related toinvestment law. Expertise comes from extensive knowl-edge of international best practice and years of experi-ence working directly with government officials in theexecutive, legislative and judicial branches.”

FIAS’ Investment Policy and Promotion (IP&P) productis targeted at the creation of an effective legal, policy,and institutional framework for investment. The productoffering ranges from undertaking rapid diagnostics toidentify the key constraints of investment regimes, toproviding technical assistance on investment codes andinvestment policy strategies, to offering implementationservices and hands-on guidance for reforming regulatoryframeworks and institutions.

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C O R E P R O D U C T S 27

SPOTL IGHT: SECURED LENDING IN CHINA

Chinese businesses hold more than $2 trillion in “deadcapital”— assets owned by private firms, small busi-nesses, and farmers that cannot be used as collateral togenerate loans due to poorly functioning secured lendinglaws and registers. The inability to translate valuablemovable assets such as equipment, vehicles, accountsreceivable, and inventories into collateral significantlydiminishes the ability for all businesses to access credit.Small and midsize companies are affected the most,because often their most valuable assets are such mov-ables. In China, 80 percent of firms report that access tocredit is a significant obstacle, more than for any otherbusiness constraint. Small firm access to bank loans isless than half that reported by firms in India, Thailand,or Korea. While more than half of smaller firms’ assetsare held in inventory and receivables, less than 15 per-cent of business credit is secured by movables.

In most developed economies and increasingly in manytransition economies, movable assets are a majorsource of security for business finance. In the UnitedStates, for example, it is estimated that around 70 per-cent of small business financing is secured by movables.Economic analysis suggests that secured lending reformsconsiderably improve lending markets, foster greateraccess to credit, and achieve lower rates of non-performing loans and a lower cost of credit. Therefore,reforming the secured transactions law is critical forChina’s financial market development.

FIAS’ Role. Following a request from China’s Central Bank,FIAS and IFC’s China Facility joined forces in mid-2004 toaddress the challenges China’s credit markets face. Thejoint team assumed the role of an “honest broker,” adopt-ing a balanced approach to analytical work as well as toadvocacy and capacity building.

The initial focus was on creating ownership andmomentum for reform. The team partnered with a highlyrespected, influential, and open-minded reform cham-pion—the Central Bank—to reach out to other stake-holders. Together the team worked to find ways to bringthe interests of policymakers, interest groups, and end

users to the table. The team also focused on raisingawareness about reforming the secured transactionslaw, reaching out to the National People’s Congress,the Small and Medium Enterprise Department of theNational Development and Reform Commission, acade-mia, and the financial sector as well as to the Chinesepeople through the media.

In order to present a strong case on why and how Chinashould reform, the team employed a rigorous analyticalmethodology. This involved carefully studying the legal andinstitutional framework in China, identifying main short-comings, documenting the economic consequences of therestrictive framework through small or medium enterprise(SME) and financial institution surveys, and formulatingrecommendations that would be workable in the Chinesecontext. The team also presented studies and data fromother transitional countries which had successfullyreformed along the lines of international best practice.

Results. The National People’s Congress of Chinaapproved the country’s new Property Law in March2007, including a chapter on secured transactions. TheLaw is internationally acclaimed as a landmark inprogress. The chapter on secured financing significantlyimproves the legal framework for secured financing,potentially putting in circulation over $2 trillion of mov-able assets mostly held by small and midsize enterprisesand farmers in China. The Chinese and internationalfinancial institutions both welcome these changes, as 98percent of banks would like to do bulk-receivablesfinancing, according to a survey conducted by IFC andthe People’s Bank of China in 2005. People’s Bank ofChina launched a new internet-based receivables reg-istry with FIAS support. The system is the first unified,electronic registry in China based on modern securedtransactions principles.

Since March 2007, several Chinese banks have begundesigning their movables financing products and settingup their internal procedures to capitalize on the newopportunities. Over the next few years, IFC’s ChinaFacility and FIAS will continue to support the implemen-tation of the Property Law and, in particular, help todevelop an asset-based lending industry in the country.

Over the last few years, the IP&P product has beenincreasingly structured around collaborative arrange-ments and partnerships with other World Bank Groupunits. This approach was further consolidated inFebruary 2007 through integration with MIGA’s invest-ment promotion technical assistance unit. The newintegrated IP&P product thus expands the traditionalfocus on law and policy by an added, complementarydimension focused on three areas: the development ofthe countries’ capabilities to promote themselves effec-tively for new foreign investment, and to respond to theinvestment needs of both existing and new investors;the development of a capability to advocate for neces-sary reforms on behalf of investors; and the design andimplementation of integrated sector-specific solutions forclient countries.

FIAS completed 16 IP&P projects in FY07, including:

■ In Madagascar, the reforming administration soughtFIAS advice in establishing a new agency, and FIAS isnow providing advice on the establishment phase ofthe new Economic Development Board of Madagascar.The advice focuses on helping the board draft a com-prehensive corporate development plan to guide theestablishment phase.

■ In the Syrian Arab Republic, as a follow-up to a March2006 investment climate diagnostic, FIAS advised thegovernment on the reform of two important pieces oflegislation: the investment act and investment promo-tion agency act, both of which passed the Parliamentat the beginning of 2007.

■ In Indonesia, a joint FIAS/IFC/World Bank team pro-vided input on Indonesia’s new investment law.Assistance ranged from reports on international bestpractice to a series of customized policy memos. Theinvestment law was approved in March 2007 and willbe followed by an implementation phase.

Industry Competitiveness

Micro-level policy issues affecting the product marketcompetition present significant impediments to economicgrowth. In this framework, the objective of the industrycompetitiveness program is to identify the binding policy,regulatory, competition, and institutional BEE issuesthrough the industry lens. This focused approach facili-tates the careful identification and prioritization of invest-ment climate issues. It brings together the regulatorysimplification and investment policy and promotion prac-

28

tices. It also provides the platform to work in partnershipwith IFC investment departments, other IFC technicalassistance business lines such as sustainability, transactions,and value-addition-to-firms, as well as World Bank pro-grams. FIAS’ industry approach—a combination of indus-try knowledge, strong economic policy expertise, and toolssuch as industrial estates—holds the key to jumpstart eco-nomic reform processes and energize private sector activity.

FIAS has leveraged collaboration with expert WorldBank Group sector and regional departments, IFCFacilities, and other stakeholders in client countries toundertake industry-specific projects organized along sev-eral product lines: industry diagnostics, competition pol-icy, corporate social responsibility, special economiczones, and access to land. For the FY08-11 strategy cycle,agribusiness and tourism will be FIAS’ priority industries,as they are critical for most developing countries.

Industry Diagnostics. The industry value chain approachfacilitates the careful identification and prioritized target-ing of issues by examining the costs of doing businessthrough an “industry lens.” In addition to economy-widebusiness environment constraints, the value chainapproach unearths issues that are specific to sectors orindustries, which are often key to jumpstarting economicreform processes. FIAS has applied its value chainmethodology to textiles and apparel, agro-based products,aquaculture and fisheries, and tourism. During FY07,value chain and other industry diagnostic projects wereundertaken in Cambodia, China, Indonesia, Montenegro,Peru, and Senegal. Additionally, FIAS developed atoolkit to provide practitioners with a comprehensiveapproach for conducting value chain analysis.

Competition Policy. In FY07, FIAS responded to requestsin Costa Rica (see p. 15) and India for competition lawand policy support. FIAS piloted a two-year program tostrengthen the capacity of each country’s CompetitionCommission to effectively implement the respectivecompetition law and policy, and to engage in competi-tion advocacy.

FIAS assistance in India, provided with funding supportfrom DFID, helped in building the capacity of theCommission and leading Indian research and academic

institutions to conduct competition and regulatoryimpact assessments of selected sectors. FIAS also sup-ported the Commission’s efforts to build consensus andawareness by focusing on sectors that contribute signifi-cantly to GDP, have strong linkages with other sectors,and have an impact on domestic consumers, especiallythe poor. In addition, these studies have informed thepreparation of a new Competition AssessmentFramework. Further to these efforts, FIAS has con-tributed to the debate on key competition issues witharticles published in journals and magazines and WorldBank research papers.

Corporate Social Responsibility. FIAS has collaboratedwith IFC’s social and environmental department andregional facilities to advise governments on competitive-ness and corporate social responsibility. For example, inJordan a joint FIAS, IFC, and ILO team designed amonitoring and reporting system for the textile andapparel industry (see p. 17). Other projects this yearincluded Peru (cotton, textiles, and apparel – see p. 15),China (ICT), and Sierra Leone (tourism).

Special Economic Zones. SEZs give developing coun-tries a window of opportunity to attract foreign invest-ment by creating pockets of experimentation for policyreform that can offset some aspects of an adverseinvestment climate. SEZs can offer established propertyrights and modern infrastructure, and FIAS is pilotingtheir use in conflict-affected countries as a way to ener-gize the private sector and provide a more predictableenvironment for investors. Projects were undertaken inEgypt, Nepal, and the Gambia in FY07.

Business Access to Land. Unclear or unenforceablerights to land inhibit business growth and investmentacross the developing world. FIAS teams frequentlyencounter land issues in their work on other areas of theinvestment climate, and access to land is a commonaspect of FIAS recommendations. In Vietnam, a multi-year Business Access to Land project, launched in FY07with project co-financing from Australia, enjoyed earlysuccess. The government issued a decree that clarifiedthe concept of stable use, thereby increasing the securityof tenure for affected businesses. The decree also length-ened lease periods for residential land up to 70 years

C O R E P R O D U C T S 29

with a right of renewal, and announced the broader useof land auctions.

Sub-national Doing Business

Publishing comparative data about the ease of doingbusiness in countries inspires their governments toreform. Since their launch in 2003, the Doing Businessindicators have motivated more than 100 reforms world-wide. Performing the Doing Business analysis at the sub-national level helps governors and mayors see that withsuccessful implementation of reforms, they can improvecompetitiveness and create more jobs.

FIAS pioneered the expansion of the Doing Businessmethodology to benchmark sub-national entities inMexico in 2005. The analysis found that while even thebest performers lagged behind international practices,Mexican cities and states showed wide differences in theway they regulated businesses and implemented federallegislation. The Mexican states helped fund the secondannual benchmarking, which covered all 31 states. Thereport found progress in 9 of the 12 states measured forthe second time. In FY08, FIAS will pass on themethodology to the Instituto Mexicano para laCompetitividad, a local partner in Mexico which canannually repeat the benchmarking, with the FIAS teamproviding quality control.

Since the initial project in Mexico, demand for sub-national Doing Business analysis has surged. Sub-nationalDoing Business projects are appropriate for countrieswhere local regulations or local implementation ofnational regulation have an impact on the business envi-ronment. A similar approach can also be successfullyapplied at a regional level when small countries sharesimilar legal and regulatory frameworks, for example, inthe Caribbean or the Balkans.

In FY07, FIAS delivered projects in Brazil, Mexico, andthe Eastern Caribbean, and launched new ones inColombia, Egypt, Nigeria, Russia, the Philippines, China,and South East Europe, often jointly implemented withIFC regional facilities. Governments use the sub-nationalDoing Business report—a project deliverable that is made

available to the public—as an incentive to reform, a toolto identify bottlenecks, and a basis for strategies toreform their investment climates.

FIAS’ approach combines the media appeal of the DoingBusiness benchmarking with activities to engage localgovernments throughout the project. This increases theirownership of the results and the likelihood that they willundertake and monitor reforms in the areas covered bythe analysis. In Mexico, FIAS facilitated the creation ofpeer-to-peer networks to share best practices within thecountry and on an international basis. In Brazil, FIASpartnered with the IFC regional facility to deliver sub-national regulatory simplification in northeast Brazil.

The regional project for the Organization of EasternCaribbean States led to several follow-up activities, includ-ing regional and country-level workshops (see p. 14).

During FY07, FIAS also worked on developing knowl-edge management materials to ensure a standardizedapproach and on building a cadre of expert staff for thesub-national Doing Business team. These efforts will con-tinue in FY08.

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C O R E P R O D U C T S 31

DOING BUSINESS REFORMS

Some FIAS projects include one or more componentsaimed at helping client countries improve their perform-ance in areas covered by the Doing Business Report:12

starting a business, getting a construction permit, employ-ing workers, registering property, getting credit, protect-ing investors, paying taxes, trading across borders,enforcing contracts, and closing a business. The DoingBusiness report includes specific indicators to measurecountries’ progress in each of these areas. FIAS helpsgovernments improve their environments for doing busi-ness by recommending reforms, including suggestions tochange laws and regulations and to simplify procedures,and by organizing workshops on international and localbest practices.

In FY07, FIAS work helped improve performance oneight of the ten Doing Business indicators in a group of20 countries. In total, FIAS’ contributions made possible27 of the 200 reforms reported in the Doing Business2008 report.13 Clients that made impressive gains on aspecific indicator during the past year include: Egyptand FYR Macedonia in “business start-up”; Niger in“registering property”; and Lesotho and Sierra Leone in“paying taxes.” In Burkina Faso, Croatia, and Egypt,FIAS’ assistance in creating or improving one-stopshops14 contributed in making this type of reform themost frequently reported for the “starting a business”indicator in Doing Business 2008. FIAS work in Benin,Burkina Faso, and Niger helped to make decreasingtaxes or fees the most common reform related to the“registering property” indicator.

FIAS’ advisory work and impact go beyond helpingclients improve specific Doing Business indicators. Insome cases, the impact of FIAS efforts is reflected in themechanisms, processes, and discipline that lead to ongo-ing, continuous improvements in Doing Business indica-tors and other reforms. In particular, FIAS assistance insetting up broad regulatory reform programs and M&Esystems to track regulatory simplification efforts, amongothers, has helped to embed systematic reform processesin client countries such as Bosnia and Herzegovina,Croatia, Georgia, Kenya, and Sudan.

FIAS has created the Doing Business Rapid ResponseUnit to address growing worldwide demand amongcountry governments for support in improving their DoingBusiness rankings. The Unit, which started operatingOctober 1, 2007, will be responsible for expedientlyhandling client requests for assistance and for helpinggovernments to implement reforms that make doing busi-ness easier in their countries. The Doing Business ReformUnit will serve as a hub for responding to governmentrequests through collaboration with other FIAS units, theIFC Facilities, and World Bank regional departments.

12 www.doingbusiness.org

13 During the past year, FIAS has changed the way in which it accounts for its contributions to reforms reflected in the Doing Businessreport. The new criteria are: (i) FIAS project documents include objectives or recommendations directly related to the DB indicators;and (ii) task team leaders confirm that FIAS work contributed directly to making possible reforms related to the DB indicators. It isimportant to note that FIAS claims reforms that have been triggered by projects that were completed up to three fiscal years beforethe year in which the reform is reflected in the DB report.

14 The one-stop shop is a single access point for entrepreneurs to apply for business registration (or construction licenses, or constructiondesign approvals). It brings together representatives of various agencies under one roof, and limits the entrepreneur’s contact withthem to one single window.

In FY07, FIAS launched an extensive program todevelop new knowledge resources in support of its coreproducts, including publications, toolkits and best prac-tice resources. These included nine publications and pol-icy notes focused on key aspects of investment climatereform, including collateral laws, competition policy,trade logistics, and land reform (see Appendix 1). A newtoolkit for practitioners addressed approaches for con-ducting value chain analysis in support of sector-specificregulatory reforms.

FIAS continued research and knowledge disseminationaround key business and FDI issues such as South-Southinvestment, enterprise formalization, and ways toincrease Africa’s trade competitiveness. In addition,FIAS disseminated in three venues the results of researchconducted on managing investment climate reforms,published in late 2006 in a book entitled Reforming theInvestment Climate. Several of these projects were under-taken in cooperation with IFC’s Business EnablingEnvironment unit and regional facilities.

FIAS published a discussion paper, Competition Policy andPromotion of Investment, Economic Growth and PovertyAlleviation in Least Developed Countries, which points outthat economies with competitive domestic markets havehigher levels of per capita GDP (and thus lower rates of

poverty). Effective competition law and policy are impor-tant in promoting competition and business competitive-ness. The results extracted from this paper werepresented in various forums, including the InternationalCompetition network, the United Nations Conferenceon Trade and Development, the University of Delhi, andthe Bangladesh Enterprise Institute, among others.

FIAS is also a key contributor to the Finance and PrivateSector Vice-Presidency’s viewpoint note series. All 5 ofFIAS’ analytical notes in this series rank among the top25 (of over 300 published) in terms of downloads by Website visitors.

Country-focused analytical research released during theyear included competitive analysis using value chainmethodologies in Mozambique (tourism), Indonesia (tex-tiles and aquaculture), and Sichuan province in China(pork), and a survey of real estate transactions in Russia.

Staff learning was also a key element of the knowledgemanagement agenda, with 19 FIAS-run learning events,both in Washington and in the field, targeted at currentand evolving product areas, such as SME taxation, regu-latory reform processes, trends in investment promotionand FDI, sub-national Doing Business, industry competi-tiveness, and e-government. The events featured external

32

KNOWLEDGE MANAGEMENT

experts, such as Professor Theodore Moran fromGeorgetown University and investment promotionexpert David Brown, as well as specialists from FIAS andother World Bank Group units. Participant ratings ofthese activities averaged 4.24 out of 5.0, against a targetrating of 4.0.

In terms of client-focused learning resources, the “Taxand the Investment Climate in Africa” conference wasthe major FIAS event of FY07, organized in Zambia inFebruary 2007 (see p. 25).

The integration of MIGA’s technical assistance unit hasresulted in the addition of the FDI Promotion Center(www.fdipromotion.com), a knowledge and learning por-tal for investment promotion practitioners, to FIAS’knowledge management tools. In the new strategy cycle,an increased effort will be made to utilize this and otherWorld Bank Group dissemination channels to moreeffectively deliver FIAS knowledge resources to staff,clients, and donor practitioners.

K N O W L E D G E M A N A G E M E N T 33

In FY07, M&E was used to inform and guide FIASoperations, particularly the development of the FY08-11strategy, providing lessons learned and insights aboutproducts, client selection and service, and projectimplementation. FIAS emphasizes the necessity ofbuilding M&E into projects from the outset and ofmonitoring outcomes and impact after projects havebeen completed. The underlying objective is to ensurethat FIAS’ work is relevant to clients’ immediaterequirements, has a broader and longer-term develop-ment impact, and that FIAS is effective in serving itsclients in a cost-efficient and sustainable manner.

FIAS uses a number of sources to more effectively monitorand evaluate its performance: IFC’s advisory service track-ing system; FIAS’ own Project Implementation MonitoringSystem (PIMS); the IFC-conducted annual client survey;the FIAS-conducted annual donor survey; FDI statisticsand other economic indicators of impact; and periodicindependent evaluations, such as the evaluation completedin May 2007. Using a variety of sources not only allowscross checks of the validity and strength of M&E conclu-sions, but also continuous improvement in FIAS services asthese conclusions are applied to operations.

The Project ImplementationMonitoring System

Once a project is completed, FIAS annually monitorsthe status of the implementation of its key recommenda-tions over a period of three years through the PIMS. Asof FY07, new PIMS data points include all measurableproject outcomes entered into the IFC corporate systemfor tracking advisory projects (for example, reformsenacted to reduce the amount of time required for entre-preneurs to start a new business). The objective is togenerate a steady flow of information at the project levelon the status of implementation of project outcomes,and to assess the effectiveness of FIAS advisory workacross different regions and products. FIAS maintainspanel datasets of PIMS scores, which allow for a compre-hensive analysis of project results across time, countries,project categories, and result types. Impacts, such asincreased savings for businesses, rates of FDI, and domes-tic investment, are tracked at the country level, whichmay include multiple projects. These impacts oftenappear only after a lag.

34

MONITORING AND EVALUATION

Implementation of FIASRecommendations

The PIMS results for FY07 confirm that 75 percent ofFIAS recommendations are fully or partially imple-mented within three years of project completion, animprovement of more than 10 points over four years ago.As shown in Figure 5, 70 percent of recommendationshave been implemented after the first year. In the secondand third years, implementation tends to increase,reflecting the often longer-term nature of many reforms.This pattern underscores the importance of effectiveclient follow-up by FIAS after project completion, aFIAS strength as reported in the 2007 IFC ClientSurvey; 86 percent of respondents said that FIAS wasgood or excellent in this regard (30 percentage pointshigher than the IFC average). Client follow-up afterproject completion will continue to be a priority forFIAS during the next strategy cycle.

F I G U R E 5

AVERAGE IMPLEMENTATION RATE OFF IAS RECOMMENDATIONS

On a regional basis, as illustrated in Figure 6, the PIMSfound that the best implementation rates were achieved inEurope and Central Asia, followed by Sub-Saharan Africa.The lower rates in some regions, particularly South Asiaand Latin America and the Caribbean, are largely consis-tent with trends reported in the Doing Business reports for2004-07 showing that a smaller percentage of countries inthese regions had made at least one positive reform.

F I G U R E 6

AVERAGE IMPLEMENTATION RATE OFF IAS RECOMMENDATIONS BY REGION

The IFC Client Survey

While the PIMS attempts to monitor the outcomes andimpact of FIAS work, FIAS also participates in an inde-pendent assessment of clients’ feedback on its servicedelivery, which is conducted by an outside third party forIFC. FIAS is the only technical assistance program toparticipate in the IFC Client Survey since its inceptionin 2003.

M O N I T O R I N G A N D E V A L U A T I O N 35

2006

2005

2004

2003

2002

After 1 YearNumber of years after project completion

After 2 YearsAfter 3 Years

45%57%

63%

52%66%

77%

58%72%

75%

64%66%

70%

MENA

LAC

SAR

Doing Business — percent of countries that madeat least one positive reformFIAS — percent of fully/partially implementedrecommendations

25%45%

58%54%

61%64%

ECA

SSA

EAP 35%68%

67%76%

89%83%

In the 2007 IFC Client Survey, 95 percent of FIAS clientrespondents reported that they were satisfied with theservices provided, almost 10 percentage points higherthan the average for IFC as whole. No FIAS clientreported dissatisfaction. The level of satisfaction amongFIAS clients was also confirmed by the finding that 95percent (as compared to the IFC average of 83 percent)considered that FIAS project results met or exceededtheir expectations. One hundred percent of FIAS clientrespondents considered that the value of fees paid wasmuch less than the value of the services received, andthat FIAS technical competence is good or excellent(compared to the 84 percent average for IFC overall –see Figure 7.).

FIAS Donor Survey

FIAS has developed an annual survey to obtain feedbackfrom donors. For the survey conducted in November2006, 100 percent of respondents (12 of 12 donors) saidthey were satisfied, very satisfied, or extremely satisfiedwith FIAS performance results. Two thirds reported theywere satisfied or very satisfied with FIAS’ M&E frame-work and instruments (which prompted further enhance-ments in the FY08-11 strategy).

Independent Evaluation of FIAS’FY05-07 Strategy

FIAS subjected its FY05-07 strategy cycle to an independ-ent, external evaluation15 that was completed in May2007. The evaluation work included three in-depth casestudies— in China, Sierra Leone, and Mexico—and inten-sive desk reviews of eight projects across a range of FIASproducts and clients. It also included a review of the entireFIAS portfolio—231 projects (of which 173 were com-pleted) carried out in 80 countries during the three-yearstrategy cycle—and a survey of FIAS clients and IFC andWorld Bank field managers familiar with FIAS projects.

The evaluation concluded that “the activities undertakenby FIAS during FY05-07 were consistent with theapproved strategy” and recognized FIAS’ contributions toimproving the investment climate in client countries andto furthering their development goals. Its recommenda-tions for FIAS, summarized below, helped to shape objec-tives set forth in the FY08-11 strategy:

■ Continue to leverage FIAS’ core competencies inorder to remove legal and regulatory constraints toinvestment;

36

15 The evaluation was conducted by Nexus Associates, Inc.

■ Define the FIAS strategy in full recognition of thecomplementary role played by IFC’s regional facilitiesand the World Bank;

■ Move toward larger, more integrated projects in con-cert with the World Bank and the Facilities, while stillmaintaining a capacity to do small projects;

■ Develop and test a limited number of “standard prod-ucts” through a systematic process;

■ Tailor each project to conditions within each country,recognizing the specific political situation and capacityof existing institutions;

■ Strengthen FIAS’ planning and control system, includ-ing developing new indicators (and associated instru-ments) to complement the relevant Doing Businessindicators, and supplementing the quantitative indica-tors with in-depth case studies of multi-year program-matic interventions.

As part of a special-purpose, client-feedback survey, theevaluation found that over 88 percent of clients were sat-isfied or very satisfied with FIAS work, and 83 percentsaid that FIAS had met or exceeded their expectations.These results are consistent with those of the 2007 IFCClient Survey.

M O N I T O R I N G A N D E V A L U A T I O N 37

F I G U R E 7

2007 IFC CL IENT SURVEY RESULTSAverage Performance Per Category by FIAS Compared to IFC Performance as a Whole

Working effectively withall players involved

int the project

Considering all aspects ofservice provided to you,

how satisfied are youwith the work completed

Effective follow-upafter the project

Global experienceand knowledge

Technical Competence

FIAS 2007FIAS 2006IFC 2007

25% 50% 75% 100%

FINANCIAL REPORT

FY07 Results

FY05-07 Results

F I N A N C I A L R E P O R T 39

F Y 0 7 R E S U L T S

FIAS adheres to IFC standard accounting procedures, asnoted below.16 FY07 financial results are shown with andwithout the inclusion of the MIGA technical assistanceunit, which was operationally integrated into FIAS inFebruary 2007, but only integrated financially effectiveJuly 1, 2007 (see Table 2).

Funding

In FY07, FIAS received $3.3 million in funding from IFC,$1.2 million from the World Bank, and $6.5 million of newcore and programmatic donor funding, as well as $3.0 millionin project-specific donor contributions and client co-financ-ing (see Table 2). Current core donors to FIAS includeCanada, France, Ireland, Luxembourg, the Netherlands,Norway, Sweden, Switzerland, and the United Kingdom;regional funding is provided by Australia, Canada, Ireland,New Zealand, Sweden, and Switzerland. Project-specificdonor contributions were received in FY07 from Australia,Colombia, ComMark, Denmark, EBRD, the EuropeanCommission, France, Mali, Mexico (AMSDE), Mexico(Ministry of Finance), the Netherlands, South Africa,United Kingdom, USAID, and USTDA (see Table 3).

Expenditures

FIAS expenditures in FY07 totaled $16.5 million, repre-senting a 20 percent increase over FY06 (see Table 2).Staff and consultant costs represented 71 percent of totalexpenditures during FY07. Most of the growth in expendi-

tures came from utilization of additional consultants andtravel supporting growing client demand and an increasednumber of projects, especially in Sub-Saharan Africa. Asshown in Table 4, combined FIAS and MIGA technicalassistance expenses in FY07 were $22.3 million.

F Y 0 5 - 0 7 R E S U L T S

Funding

During the FY05-07 strategy cycle, additional fundingwas received from clients and donors: FIAS raised $41.9million in this period in addition to the carry over of$5.1 million from the previous cycle. After the end ofthe FY05-07 cycle, $5.4 million was carried forward tothe FY08-11 cycle, including balances from trust fundsthat had been administered by MIGA (see Table 2).

Expenditures

As shown in Table 5, total expenditures for the FY05-07strategy cycle reached $42.9 million, representing a 26percent increase over the $34 million projected in 2004when the strategy was approved. Project-related expendi-tures increased 37 percent from $9.1 million in FY05 to$12.5 million in FY07, and non-project-related expendi-tures increased 11 percent from $3.6 million in FY05 to$4 million in FY07. Average project budget size increasedsignificantly from $144,000 in FY06 to $199,000 inFY07, as FIAS moved from diagnostics to increasedhands-on support in the implementation of reforms.

16 a) Accounting principles. IFC records funding from donors as Contributions on the income side of the Trust Fund balance sheet. Theonly exception to this is fees recovered from clients which are recorded as an offset to expense. In the case of FIAS, there is a specialcategory of contributions, namely the Client Contributions which are also recorded as Contributions rather than recorded as a fee,given that they are based on the agreement for a client to share in the costs of a project. In the unusual case of ICF, FIAS incurredexpenses related to the establishment of ICF and the associated administrative arrangements, including the interim management of theICF trust fund. The ICF agreed to reimburse these costs. The expenses were recorded in FY07 as expenditure under FIAS, and thereimbursement by ICF was recorded in FY08 as a contribution from an external party. Although the net effect on expenditures waszero, the actual expenditure total for FIAS increased as a result.

b) IFC/FMTAAS annual contribution of $4 million to FIAS is treated in the same manner as core donor funds and co-mingled withother donor funds, where the terms and conditions allow. The IFC BEE Business Line envelope funding is treated separately from theFIAS contribution: it is not held in FIAS Trust funds, nor does it count toward the FIAS funding total as shown in the FinancialReport. Rather, it shows below the funds as additional funds managed by FIAS.

c) Administrative Fees. In FY07, FIAS was charged $421,000 in respect to the FIAS share of central administrative costs incurred by IFC.The amount was far higher than FY06 primarily due to a significant increase in advice and support provided to FIAS during: (i) the transi-tion from the old to the new cycle, and (ii) the FIAS-MIGA technical assistance integration. From the new cycle beginning in FY08,FIAS will be subject to the usual 3.5% administrative fee deductions from donor contributions rather than being charged actual charges.

d) Rental payments to IFC. FIAS is charged occupancy for floor space in the same way as other donor-funded operations managed byIFC, both at headquarters and in the field.

40

T A B L E 2

SOURCES AND USES OF FUNDS 1

I N U S $ T H O U S A N D S

2001 2002 2003 2004 2005 2006 20073 20074

Sources of Funds

Balance Carry-Forward $5,005.4 $5,645.7 $6,308.8 $6,078.1 $5,158.0 $4,563.5 $5,399.2 $9,106.5

World Bank Group Contributions

IFC 1,903.0 1,960.0 2,019.0 2,079.6 3,000.0 3,000.0 3,257.1 3,257.1

IBRD 953.0 1,040.0 1,072.0 1,104.2 1,103.3 1,103.3 1,203.3 1,203.3

MIGA 4,008.0

Other Donor Contributions

Canada 195.8 - - - 910.8 510.4 1,044.3 1,044.3

France - - - - - - 1,334.0 1,334.0

Ireland 50.0 50.0 129.8 155.5 157.6 118.7 165.9 165.9

Italy - 266.5 - - - - - -

Luxembourg 270.9 - - 500.2 - - 257.2 257.2

Netherlands 190.9 264.8 276.0 380.8 380.5 488.2 508.9 508.9

Norway - - 250.0 250.0 250.0 375.0 225.0 225.0

Spain 150.0 - - - - - - -

Sweden 187.5 390.8 - 272.6 700.0 628.5 - -

Switzerland 250.0 - 500.0 - 500.0 500.0 375.0 375.0

United Kingdom 165.6 166.0 182.9 210.4 225.2 637.7 349.2 349.2

Australia (EAPRO)2 132.0 337.9 358.6 430.7 914.9 1,397.2 117.8 117.8

Canada (Africa) - - - - - 340.3 696.2 696.2

New Zealand (EAPRO)2 89.8 127.9 136.2 164.3 216.5 209.7 520.8 520.8

Ireland (Africa) - - - - - 118.7 165.9 165.9

Sweden (Africa) - - - - 340.3 300.0 352.8 352.8

Switzerland (Africa) 236.3 53.9 35.0 99.6 - 240.0 240.0 240.0

Switzerland (Balkans) 90.8 79.4 129.4 75.6 - 160.0 160.0 160.0

Subtotal Donor Contributions $4,865.7 $4,737.2 $5,088.9 $5,723.5 $8,699.1 $10,127.7 $10,973.4 $14,981.4

Project Specific Donor 1,245.1 1,703.4 1,712.0 1,742.0 3,124.0 5,565.0 2,969.8 3,189.9Contributions

Client Contributions 660.0 537.0 476.7 304.4 285.1 130.0 373.2 430.2

Subtotal Project Specific $1,905.1 $2,240.4 $2,188.7 $2,046.4 $3,409.1 $5,695.0 $3,343.0 $3,620.1Contributions

Total Receipts $6,770.8 $6,977.6 $7,277.6 $7,769.9 $12,108.2 $15,822.7 $14,316.4 $18,601.5

Total Available Funds $11,776.2 $12,623.3 $13,586.4 $13,848.1 $17,266.2 $20,386.2 $19,715.6 $27,708.0

F I N A N C I A L R E P O R T 41

T A B L E 2 C O N T I N U E D …

2001 2002 2003 2004 2005 2006 20073 20074

Uses of Funds

Staff Costs

Staff 2,889.8 3,267.2 3,526.3 4,535.0 5,904.2 6,392.9 7,272.0 9,955.0

Consultants and Temporaries 1,343.6 1,304.3 1,531.6 1,485.6 3,187.5 3,707.9 4,173.8 5,528.5

Total Staff Costs $4,233.4 $4,571.5 $5,057.9 $6,020.6 $9,091.7 $10,100.8 $11,445.8 $15,483.5

Travel $1,097.4 $874.1 $1,439.7 $1,698.3 $2,433.5 $2,434.1 $3,314.1 $4,308.7

Indirect Costs

Office Occupancy 170.4 176.7 232.9 288.1 415.0 347.0 322.3 560.3

Office Equipment 98.2 28.3 12.3 53.7 82.5 16.8 25.3 33.2

Other Operating Costs 106.7 137.5 169.7 198.5 33.6 322.7 508.2 789.0

Other Costs 424.4 526.4 595.7 430.8 646.4 516.5 843.7 1,108.3

Total Indirect Costs $799.7 $868.9 $1,010.6 $971.1 $1,177.5 $1,203.0 $1,699.5 $2,490.8

Total Uses of Funds $6,130.5 $6,314.5 $7,508.2 $8,690.1 $12,702.7 $13,737.9 $16,459.4 $22,283.0

Ending Balance $5,645.7 $6,308.8 $6,078.1 $5,158.0 $4,563.5 $6,648.3 $3,256.2 $5,425.0

1 The FIAS Annual Report is prepared as a reporting tool for FIAS donors and management, utilizing management accounting principles.

2 EAPRO is the East Asia Pacific Regional Office formed in Sydney and funded by Australia, New Zealand, and contribution from FIAS’ core trust funds.

3 Excludes MIGA technical assistance, which was fully integrated with FIAS on July 1, 2007.

4 FY07 with MIGA TA included.

42

T A B L E 3

PROJECT-SPECIF IC DONOR CONTRIBUT IONSI N U S $ T H O U S A N D S

DONOR AMOUNT

Project-Specific Donor Contributions (FIAS)

Vietnam Better Land Regulations Australia $327.8

Informality Seminar in Africa Denmark 250.0

Administrative Barriers in Sakhalin Oblast of Russia EBRD 75.5

Administrative Barriers in Southern Federal Oblast of Russia European Commission 330.9

Cambodia Exporters Imports France 80.4

CSR in Lesotho Apparel Sector ComMark1 28.9

Administrative Barriers III in Africa (Sierra Leone) United Kingdom 1,105.7

Competition Commission in India United Kingdom 42.2

Better Regulation for Growth Programme United Kingdom 100.5

Improving Regulatory Performance and Capacities in Kenya United Kingdom 296.9

Administrative Barriers in Croatia USAID 30.4

Senegal Accelerated Growth Strategy USAID 100.0

Doing Business Brazil USAID 150.6

Administrative Barriers Lebanon USTDA 50.0

Subtotal Project-Specific Donor Contributions (FIAS) $2,969.8

Project-Specific Donor Contributions (MIGA TA)

Uganda Investor Outreach Program Austria 220.1

Subtotal Project-Specific Donor Contributions (MIGA TA) $220.1

Client Contributions (FIAS)

Dutch Approach to Reducing Administrative Costs for Business Netherlands 66.1

Doing Business in Mexico Mexico-AMSDE2 161.0

Doing Business in Puebla Panama Mexico-MoF 57.0

South Africa Investment Promotion Strategy South Africa 89.1

Subtotal Client Contributions (FIAS) $373.2

Client Contributions (MIGA TA)

Investment Promotion Agency - Colombia Colombia 24.0

Investment Promotion Agency - Mali Mali 33.0

Subtotal Client Contributions (MIGA TA) $57.0

Total FY07 Project-Specific Contributions $3,620.1

1 ComMark is an African regional development initiative.

2 Mexican Association of Economic Development Secretaries.

F I N A N C I A L R E P O R T 43

T A B L E 4

FY07 BUDGET RESULTS (COMBINED F IAS AND MIGA TECHNICAL ASSISTANCE)I N U S $ T H O U S A N D S

FY07 Revised FY07 Actuals FY07 Expenses as %Budget1 FIAS/MIGA TA Consolidated of Revised Budget

FIAS

Staff Costs 8,090 7,272 90%

Travel 3,000 3,314 110%

Consultants 3,500 4,174 119%

Overhead and Indirects 1,410 1,699 120%

Subtotal FIAS 16,000 16,459 103%

MIGA TA

Staff Costs 2,927 2,683 92%

Travel 1,155 995 86%

Consultants 1,550 1,355 87%

Overhead and Indirects 907 791 87%

Subtotal MIGA TA Funded 6,539 5,824 89%

Total FIAS and MIGA TA2 22,539 22,283 99%

1 As per Supervisory Committee document of March 12, 2007.

2 Includes MIGA TA full FY07 expenditures. Formal integration with FIAS started on February 1, 2007.

44

T A B L E 5

FY05-07 EXPENDITURES BY STANDARD IFC ADVISORY SERVICES EXPENSE CATEGORY(EXCLUDING MIGA TECHNICAL ASSISTANCE)I N U S $

FY05 - FY07 Cycle (Actuals)% Total

Standard TAAS Total Cycle CycleActivity Expenditures FY05 % FY05 FY06 % FY06 FY07 % FY07 FY05-FY07 FY05-FY07

Project Related Expenditures 9,102,446 72% 10,203,956 74% 12,472,049 76% 31,778,451 74%

New Business Development/ 1,750,695 13.8% 1,855,883 13.5% 2,050,178 12.5% 5,656,756 13.2%Project Development

Product Development 20,448 0.2% 88,365 0.6% 43,936 0.3% 152,749 0.4%

Project Implementation 6,861,720 54.0% 8,089,763 58.9% 9,662,843 58.7% 24,614,326 57.4%and Supervision

a) Advisory Projects 5,634,830 44.4% 6,961,205 50.7% 7,886,261 47.9% 20,482,296 47.7%

b) Knowledge 1,226,890 9.7% 1,128,558 8.2% 1,776,582 10.8% 4,132,030 9.6%Management Projects

Program Management 365,769 2.9% 28,198 0.2% 325,138 2.0% 719,105 1.7%and Support

Monitoring & Evaluation 103,814 0.8% 141,746 1.0% 389,954 2.4% 635,514 1.5%

Non Project Related 3,600,259 28% 3,533,907 26% 3,987,397 24% 11,121,563 26%Expenditures

Knowledge Sharing and 344,947 2.7% 276,011 2.0% 210,416 1.3% 831,375 1.9%Staff Development

Fund Raising and 209,424 1.6% 35,738 0.3% 107,746 0.7% 352,907 0.8%Donor Relations

Public Relations 48,017 0.4% 55,116 0.4% 82,029 0.5% 185,161 0.4%

General & Administration 2,997,871 23.6% 3,167,043 23.1% 3,587,206 21.8% 9,752,120 22.7%

a) Overhead 727,913 5.7% 518,250 3.8% 915,012 5.6% 2,161,174 5.0%

b) Non-Overhead related 2,269,959 17.9% 2,648,793 19.3% 2,672,194 16.2% 7,590,946 17.7%G&A expenditures

Total Standard TAAS 12,702,705 100.0% 13,737,863 100.0% 16,459,446 100.0% 42,900,014 100.0%Activity Expenditures

APPENDICES

Advisory and Knowledge Management Projects Completed in FY07

FIAS Staff and Expertise

FY05-07 Strategy Cycle in Review

Abbreviations

EAST ASIA AND THE PACIFICCountry Project Description Description Budget

Cambodia Tourism Sector Study FIAS conducted a tourism sector study at the request of the Ministry $260,000 of Tourism of Cambodia to review the strengths and weaknesses of the country’s tourism sector; identify its contribution to growth andjob creation; identify the key constraints to the sector’s further development; and provide concrete recommendations to address the problems.

Cambodia Duty Suspension Scheme FIAS assisted the government of Cambodia in the design $148,150and construction of a customs duty suspension scheme.

China Access to Business Credit – FIAS, together with the IFC Facility in China and IFC’s SME $231,600Phase II department, advised and conducted implementation activities

promoting the development of China’s new securedtransactions law.

China Tourism Development in FIAS, together with the IFC Facility in China and IFC’s SME $253,500 Sichuan: A Value Chain department, conducted a study of Sichuan’s tourism sector to identify Approach the sector’s market, and policy and regulatory constraints to development.

China Corporate Social FIAS assisted the Shenzhen Provincial Government in developing $220,000 Responsibility and China’s a corporate social responsibility framework for its ICT industry andICT Sector helped local suppliers build capacity to meet new international

social and environmental standards.

Fiji Fiji – Investment Approval FIAS assisted in implementing reform changes within the Fiji $288,855Implementation II government agencies’ administrative processes to deliver

quantitative and qualitative improvements in investment approvals processing time and costs for the private sector investor.

Indonesia Sector Policy Solution Design FIAS conducted a study of Indonesia’s shrimp and textile sectors $190,000 (shrimp and textile sectors) to identify options for addressing policy and institutional impediments

in the investment climate, in particular those that constrain Indonesian exports in these two sectors.

46

APPENDIX 1: ADVISORY AND KNOWLEDGEMANAGEMENT PROJECTS COMPLETED IN FY07

EAST ASIA AND THE PACIFIC, CONTINUEDCountry Project Description Description Budget

Indonesia Desk Review Aceh Investment Working jointly with PEP Aceh/Nias, through the Aceh Agency for $46,773Law under the Global Reconstruction and Rehabilitation, FIAS assisted in preparing a Investment Law and Policy regional investment policy statement and an outline regional Research and Advisory investment law in Aceh.(GILPRA) Project

Indonesia Strategic Economic Planning FIAS assisted the Indonesian Ministry of Trade in finalizing the $127,000implementation of regulations for the new investment law, relevant administrative procedures, and a strategic framework for investor problem solving.

Indonesia Motivating Sustainability: FIAS assisted the Indonesian administration’s national campaign $126,150Innovations in Forest against illegal logging by generating a set of policy Management Incentives to recommendations to encourage increased forest certification.Promote Responsible Forestry

Samoa Review of Foreign FIAS reviewed the Foreign Investment Act in Samoa and its draft $23,687 Investment Act regulations. FIAS developed a "principles" paper, which was used as

the basis for intensive in-country consultations in Samoa. A final paper containing action recommendations was presented to the government.

Solomon Islands Work and Residency Permits As a follow-up to the administrative barriers project completed in $83,167 Legislative Reform March 2006, FIAS developed a policy statement on the employment

and residency of foreign workers in the Solomon Islands, and drafted legislative guidelines reflecting the policy statement.

Vietnam Vietnam Secured FIAS assessed the current shortcomings in the legal and institutional $235,953Transactions FIAS-Mekong framework for movable asset financing (secured transactions) in Private Sector Development Vietnam and provided concrete recommendations for reform that will Facility allow broad use of movable assets as collateral.

EUROPE AND CENTRAL ASIACountry Project Description Description Budget

Armenia Armenia Secured FIAS assisted the government of Armenia in fostering the private $52,480 Transactions Reform sector’s access to credit by addressing shortcomings in its secured

transactions regime.

Azerbaijan Licensing, Regulatory FIAS, together with IFC- PEP and the Doing Business team, assisted $60,000Governance and Doing the Government of Azerbaijan in reviewing and designing a reform Business strategy that will minimize the entry controls imposed on businesses.

Bosnia and Implementation and FIAS assisted the government of Bosnia in moving the reform process $141,050Herzegovina Monitoring II forward by building the capacity of the working group; developing

and implementing monitoring tools; fostering public-private dialogue; and providing expertise in issue-specific areas related to the technical aspects of the reform.

Bulgaria Implementing a Reform FIAS provided solution designs for administrative barriers relating to $117,920Framework & Reforming on-site inspections and construction procedures in Bulgaria, and Administrative Procedures for advice on institutional reform mechanisms.Construction and Inspections

Poland Contract Enforcement and the FIAS identified the key legal and institutional impediments to contract $147,000 Private and Financial Sectors and property rights enforcement in Poland and proposed reform in Poland solutions.

A P P E N D I C E S 47

EUROPE AND CENTRAL ASIA, CONTINUEDCountry Project Description Description Budget

Russian Federation Removal of Administrative FIAS conducted a study of administrative barriers to investment and $133,335Barriers in Magadan City business development in Magadan City in Russia, which included the

Administrative and Regulatory Cost Survey (ARCS), business procedure templates, a baseline for monitoring, facilitation of dialogue between the public and private sectors, and specialized expertise.

Russian Federation Irkutsk Oblast: Study of FIAS conducted a study of administrative barriers to investment and $182,800Administrative Barriers to business development in Irkutsk Oblast in Russia, which included Investment and Business business procedure templates and ARCS, and developed specialized Development recommendations for improvements, focusing on land issues.

Russian Federation Removal of Administrative As follow-up to the previous project in Leningrad Oblast in 2000-01, $179,100Barriers in Leningrad Oblast FIAS carried out administrative barriers reform in Russia by assisting

in the implementation of the recommendations of the first series of the administrative barriers studies. The project included business procedure templates and ARCS, and developed specialized recommendations for improvements, focusing on land issues.

Russian Federation Rostov Oblast: Study of FIAS conducted a study of administrative barriers to investment and $182,800Administrative Barriers to business development in Rostov Oblast in Russia, which included Investment and Business business procedure templates and ARCS, and developed specialized Development recommendations for improvements, focusing on land issues.

Russian Federation Pilot Business Intermediaries’ FIAS piloted a survey of administrative barriers to investment and $314,000Survey in the Russian business development in four regions in Russia, using primarily Federation business intermediaries as respondents who accumulate information

about business procedures serving many businesses.

Tajikistan Phase 1 of Joint FIAS/MIGA At the request of the government of Tajikistan, FIAS, and MIGA $503,650Program to Strengthen provided technical assistance to the government by addressing the Investment Climate and shortcomings in Tajikistan’s investment climate and by developing a Investment Facilitation Capacity more effective institutional framework for investment facilitation.

LATIN AMERICA AND THE CARIBBEANCountry Project Description Description Budget

Brazil Elimination of Administrative This is the first phase of a multi-phased project, jointly with the $332,247 Barriers at the Sub-national Doing Business team. FIAS created momentum for reform in Level (Phase I) eliminating administrative barriers to investment at the sub-national

level in Brazil by benchmarking and making public fiveDoing Business indicators.

Caribbean Elimination of Administrative This is the first phase of a project designed to improve business $85,883Regional Barriers in the Organization regulations in six members of the OECS. The project follows the

of Eastern Caribbean States approach of ongoing FIAS projects in Mexico and Brazil, which used the Doing Business indicators to raise awareness on the need to improve business regulation, generate competition among governments to improve their rankings, and build dialogue between the government and the private sector.

Caribbean OECS Linkages to Tourism FIAS assisted the OECS countries in strengthening the backward $45,000Regional linkages between the tourism industry and the rest of their economies.

Mexico Administrative Barriers This is a multi-phased project wherein FIAS, together with the $247,000Solution Design at the Doing Business team, assisted in eliminating administrative Sub-national Level (Phase II) barriers to investment at the sub-national level in Mexico.

48

LATIN AMERICA AND THE CARIBBEAN, CONTINUEDCountry Project Description Description Budget

Peru Value Chain Analysis with FIAS conducted a value-chain analysis with a corporate social $176,550Corporate Social responsibility component of the Peruvian textile and apparel industry. Responsibility Component The analysis was intended to provide in-depth understanding of the of the Peruvian Textile and inefficiencies along the entire supply chain, with a focus toward Apparel Industry prioritizing specific impediments and identifying policy interventions

to further improve competitiveness.

MIDDLE EAST AND NORTH AFRICACountry Project Description Description Budget

Egypt, Arab Free Zone Strategy FIAS reviewed the Free Zone Strategy in light of international trends $66,702Republic of and reforms that were adopted in Egypt (part of the Global

Investment Law and Policy Research and Advisory Project, GILPRA).

Egypt, Arab Model Industrial Estates In preparation for the World Bank’s Alexandria Development Project $309,089Republic of and the Alexandria City Development Strategy, FIAS reviewed the

policy, legal, regulatory, and institutional frameworks for accessing industrial land in Egypt and examined opportunities at two specific sites for private involvement in developing and managing pilot industrial estates, with a view toward nationwide reforms. The project emphasized greater harmonization of the industrial land regimes, clearer delineation of roles and responsibilities of the institutions involved, and the need to shift away from centrally planned, supply-driven, government-built and operated zones functioning on a subsidized basis to a framework that explicitly facilitates greater public-private partnerships and a reliance on market forces in order to remain competitive.

Jordan Labor and Corporate FIAS, together with IFC-PEP MENA, designed a transparent, market- $140,000Social Responsibility for oriented, public-private monitoring and reporting system that will help Qualified Industrial Zones lead to decreased inspection burden; improved risk-management and

targeting of public inspections; improved worker conditions; and sustained investment and export levels.

Lebanon Administrative Barriers, FIAS, together with World Bank’s MENA department and IFC-PEP $192,115Sectoral Procedures, Lebanon MENA, conducted a study to streamline administrative barriers to

investment in Lebanon.

Syrian Arab Review of the Draft and FIAS conducted a diagnostic study and provided an overview of the $151,500Republic Investment Promotion legal, policy, and institutional framework for attracting FDI in Syria.

Agency Laws

Yemen, Republic of Investment Climate (Tax This project is the first phase of a multi-year program. FIAS in $138,819Review) – Phase I collaboration with other parts of the World Bank Group and IMF,

conducted a study on tax policy and administration to assist the government of Yemen in reforming the business environment.

Yemen, Republic of Rapid Advice on Investment FIAS prepared three policy notes on (i) the role of investment climate $15,000 Climate Reform Strategy reform and investors conference; (ii) role of industrial estates; (iii)

international experience on merging the IPA with the economic zones authority in Yemen.

A P P E N D I C E S 49

SOUTH ASIACountry Project Description Description Budget

Bangladesh Facilitation of Private Sector FIAS together with IFC-SEDF, identified key private sector $80,000Development Vision and development indicators to facilitate PSD vision and initiate the Private Sector Development institutionalization of a monitoring and evaluation system of the Support Project Monitoring PSD reform process in Bangladesh.& Evaluation System

Bangladesh Assessing and Addressing FIAS conducted a stakeholder analysis and designed a $126,250Stakeholder Interests in communications strategy to act as an example of how to PSD Reform institutionalize the PSD regulatory reform process in Bangladesh.

India Competition Policy FIAS, in collaboration with the World Bank South Asia country $315,837Advocacy – Competition department, assisted the Competition Commission of India in Commission India – providing technical assistance and in building in-house capacity for Phase I & Phase II CCI by conducting competition and regulatory impact assessments

of selected key sectors of the Indian economy.

Nepal Investment Climate Through the use of the investment climate mini-diagnostic, a quick- $95,000Mini Diagnostic response tool developed by FIAS, FIAS identified critical regulatory

constraints to private investment; proposed reform options; gauged whether conditions exist for sustainable implementation of proposed solutions; and assessed the scope of and helped frame subsequent technical assistance in Nepal.

Nepal Nepal Special Economic FIAS, together with IFC-SEDF, supported a detailed review of the $26,000Zone Regulations Project Special Economic Zone Act and recommended reforms based on

international good practice, including private sector participation in development and operations; removing export obligations; permitting a wider range of activities; removing fiscal incentives; creating a stable and efficient regulatory environment; introducing labor regulation flexibility while upholding labor rights; adopting a clear institutional structure; and enforcing market-based site location and pricing. A short exposure visit to Bangladesh’s EPZs was also undertaken for key officials from the Nepal SEZ Project Office.

SUB-SAHARAN AFRICACountry Project Description Description Budget

Africa Regional ICF/NEPAD Baseline FIAS, in response to the Investment Climate Facility/NEPAD $160,310 business plan, reviewed existing investment climate databases and evaluated investment climate indicators to develop a monitoring system for the ICF.

Burkina Faso Doing Business Better in FIAS, together with PEP-Africa, developed a program that $555,565 Burkina Faso – incorporated Doing Business indicators to improve the business Phase 2: Implementation climate in Burkina Faso.

Gambia, The Free Zone Strategy FIAS conducted a study of regulatory and legal framework for $200,000investment incentives and free zone management in The Gambia. The report included detailed recommendations for reform and a timeline for implementation.

Kenya Improving Regulatory FIAS assisted in improving the investment climate in Kenya by $600,000Performance and reducing regulatory costs and risks for businesses and by building Capacities – Phase I capacities in the public and private sectors for improved regulatory

quality.

50

SUB-SAHARAN AFRICA, CONTINUEDCountry Project Description Description Budget

Kenya Licensing Reform II; Phase II: FIAS assisted the government of Kenya in developing and $400,000Comprehensive Identification implementing a comprehensive business license reform, which and Review of All Business consisted of a critical evaluation and reform of the existing stock of

licenses and the design of a regulatory impact assessment unit/process for all future licenses.

Lesotho Corporate Social FIAS assisted the government and the apparel industry in preparing $206,400 Responsibility and the for the expiration of AGOA’s third country fabric provision and in Apparel Industry (IFC utilizing good social and environmental standards to retain and and ILO) attract international buyers.

Lesotho Implementation of Business FIAS provided technical assistance to the government of Lesotho to $112,000Registration and Licensing elaborate the reform design and to assist in the implementation of Reforms: Phase II the proposed reform of the business registry in Lesotho and the

general manufacturing and trade licensing system.

Liberia Liberia Private Sector Drawing from the February 2006 mini-diagnostic report, and in $635,016Development in Post-Conflict consultation with the Ministries of Commerce, Finance, and the Program: Phase 1 National Investment Commission of Liberia, FIAS conducted three

workstreams to assist in reshaping the country’s business climate. This project focused on reducing barriers to formalization to allow for investors to operate in Liberia.

Liberia Private Sector This is the second workstream in which FIAS focused on improving Development in Post-Conflict the public-private dialogue in Liberia to underpin the country’s PSD Program: Public Private reform process.Dialogue

Liberia Private Sector This is the third workstream undertaken by FIAS in Liberia that Development in Post-Conflict focused on improving the country’s investment policy framework, Program: Investment Code/ legislation, and institutions.Legal Reform

Madagascar Investment Law Review FIAS reviewed draft legislation and prepared a set of comments, $8,000including specific recommendations on how to improve the draft based on international best practice.

Madagascar Informality Survey and At the request of the Ministry of Commerce in Madagascar, FIAS $200,000 Study in Growth Poles conducted a study of the root causes of informal economic behavior in

Madagascar. FIAS identified the procedural barriers to formalizing (including the legal framework, start-up procedures, tax and customs regimes, land, gender and sectoral issues), and determined concrete policy recommendations on how to shift economic activity from the informal to the formal economy.

Mozambique Impact of Tax on Business Although this project is the sixth in the series of studies on the $151,000 and Administrative Barriers impact of tax on firms by sector done in Mozambique in conjunction

with DFID, this project studied the licensing and fee requirements for businesses (usually done in administrative barriers), affecting the cost of doing business in Mozambique.

Namibia Reform of Investment FIAS, together with PEP-Africa and MIGA, conducted a study of the $255,500Incentives and Legislation marginal effective tax rates on the key sectors of the Namibian in Namibia economy and benchmarked these against tax rates in several other

African countries, including neighboring South Africa, and provided recommendations to embed incentives in the Tax Code.

A P P E N D I C E S 51

SUB-SAHARAN AFRICA, CONTINUEDCountry Project Description Description Budget

Niger Niger Administrative Barriers, FIAS developed a three-component approach: (i) the design $662,656Doing Business Solutions and oversight of the implementation of “registering a business” and Marginal Effective Tax Doing Business indicator; (ii) the Administrative Barriers Review; Rate Study and (iii) the Marginal Effective Tax Rate study - to improve the

investment climate in Niger.

Administrative Barriers Study This is the Administrative Barriers Review component conducted to improve the investment climate in Niger.

Marginal Effective Tax This is the METR component to improve the investment climate Rate Component in Niger.

Nigeria NGIA Subnational FIAS assisted the Nigerian government in identifying sub-national- $1,937,069 Investment Climate Program level reform priorities for improving the investment climate by

effectively implementing the sub-national Doing Business diagnostics and the public-private policy dialogue among key stakeholders.

Rwanda Study on Informal Economic FIAS conducted a study of the informal sector in Rwanda by $235,627Activity in Rwanda surveying the characteristics of informality, and by identifying the

root causes, and thereby proposed concrete policy recommendations on how to shift economic activity from the informal to the formal economy.

Sierra Leone Customs and Tax Sub- FIAS conducted a specific sub-component project on customs and $447,992component Implementation tax, which provided analysis and recommended reforms to make the

compliance costs for both taxation and customs less onerous and to improve the operating environment for businesses in Sierra Leone.

Sierra Leone Tax Sub-component This is the sub-component on tax. FIAS analyzed and recommended $134,291Implementation reforms to the tax system in Sierra Leone.

Sierra Leone Administrative Barriers This project is the first of three implementation sub-projects to be $251,055Implementation 1-Sub-project undertaken by FIAS in Sierra Leone during the first stage of the PSD 1-Business Start-up – Phase 2 implementation program co-financed by DFID. This component

emphasized streamlining the business registration and licensing process in Sierra Leone.

Sierra Leone Administrative Barriers FIAS in collaboration with MIGA and PEP-Africa, designed and $300,185Implementation. Project 2: assisted in the implementation of the institutional foundation of land Land – Phase 2 holding in Sierra Leone.

Sierra Leone Corporate Social FIAS identified public policies and instruments that affect investment $304,900Responsibility/Tourism – decisions and designed solutions for the tourism sector in Start-up – Phase II Sierra Leone.

South Africa Administrative Barriers Review FIAS, together with MIGA, conducted an analysis of the investment $199,210climate and investment promotion process in South Africa.

Sudan Solution Design for FIAS assisted the government of the Republic of Sudan in improving $1,807,625 Administrative Barriers the country’s investment climate through a prioritized reform program

subsequent to the Administrative Barriers Review concluded in March 2006.

Sudan Removing Barriers to FIAS, together with PEP-Africa and MIGA, assisted the government $2,501,584 Investment in Southern Sudan of Southern Sudan in developing and implementing an investment

climate reform program in priority areas.

52

SUB-SAHARAN AFRICA, CONTINUEDCountry Project Description Description Budget

Sudan Review of Administrative FIAS supported the government of Sudan in implementing agreed $261,845Barriers to Investment – upon reforms identified in the Administrative Barriers Review Phase 2 conducted in the first phase of the project.

Zambia Administrative Barriers to At the request of the government of Zambia, FIAS provided a $66,417Update the Investor Roadmap descriptive report to the government that outlined the design and

implementation of a reform program for administrative barriers.

KNOWLEDGE MANAGEMENTCountry Project Description Description Budget

Africa Regional Can Sub-Saharan Africa FIAS released a Policy Research Paper that examines the $20,000Leap into Global Network opportunities for Sub-Saharan African countries to effectively Trade? participate in globalization.

Africa Regional Informality FIAS released a Policy Research Paper that emphasizes the $20,000coordination and credibility issues involved in promoting formalization and discusses possible institutional solutions.

Africa Regional Study of the Effects of FIAS conducted a study of the effects of tax administration on the $191,000Tax Administration investment and business climate for poverty reduction. Results of the

study were discussed at a conference in Zambia.

China China’s Outward FDI This project reviewed the drivers behind the growing outward FDI $180,080from China, and of the regulatory and business operations conditions under which it is taking place. The outcome of this project will feed into IFC’s Mumbai conference on South-South FDI and FIAS’ South-South FDI advisory product development.

India Review of Business FIAS published a policy paper documenting recent business $15,000Regulation Reform in India regulation reforms in India. The paper provided analysis of the

institutions and processes (both at the national and state levels) that provide the framework within which regulations are set, evaluated, monitored, and changed; and suggested the value offer of a comprehensive and explicit regulatory reform policy for India.

Latvia Case Study of FIAS FIAS conducted a case study of the impact of FIAS work in Latvia. $56,000Impact in Latvia The report discussed both the possibilities and the limits of efforts to

measure the impact of FIAS work from outputs (i.e., FIAS recommendations) to outcomes (e.g., new legislation) to impact at various levels (investment climate, investment flows, economic growth and employment, and poverty alleviation).

Russian Federation Analysis and Workshop FIAS wrote a summary paper describing the similarities and $148,475on “Lessons of Experience in differences across regions in Russia regarding administrative barriers Removal of Administrative and efforts to remove them, focusing on areas of notable successes Barriers to Investment in the and failures, and attempting to glean lessons of experience and Russian Federation” policy implications.

World Follow-up on the Investment FIAS disseminated the results from the research on managing $30,000Climate Reform Project investment climate reforms published at the end of FY06. The

dissemination efforts included a workshop in Washington, D.C., and presentations in Bangkok to the Donor Committee for Enterprise Development and to the Russian government in St. Petersburg.

A P P E N D I C E S 53

KNOWLEDGE MANAGEMENT, CONTINUEDCountry Project Description Description Budget

World Regulatory Reform Case This case study shows how the South African government $157,200Study: South Africa successfully reformed customs using change management techniques

such as bringing in new leadership, setting targets, and leveraging IT systems to remove discretion and ensure accountability.

World Enterprise Formalization FIAS documented attempted formalization programs in developing $330,000countries and sought to understand which forms of intervention work to improve regulatory compliance among enterprises and which do not work. FIAS held a conference on enterprise formalization in Ghana and published research papers supporting the results of the study.

World Value Chain Toolkit – FIAS delivered a policy-oriented value chain manual that included $105,000Tradeable Products and the following components: (i) definitions and key elements of a value Tourism chain analysis for both product and service sectors; (ii) value chain

mapping, activity measurement, metric computation and modalities for benchmarking performance; (iii) approaches for identifying performance gaps and binding constraints to value addition and competitiveness drawing on a list of important policy and institutional issues to be addressed within a product value chain; and (iv) tips for implementation of a value chain analysis and solution design.

World KM on Reforms to the FIAS released a best practice paper that highlighted the key issues $100,000Conflict-affected Environment surrounding PSD-oriented reform as well as the areas PSD reform can

target to facilitate reconstruction.

World IDA Competition Review FIAS published a paper that reviewed the major impediments to $104,432Paper competition and the role of an effective competition law-policy in

alleviating these impediments.

54

A P P E N D I C E S 55

APPENDIX 2: FIAS STAFF AND EXPERTISE

Staff Growth and Location

The total number of FIAS staff as of June 30, 2007 was77, including 27 of the former MIGA technical assistancegroup. This includes 60 staff and 17 long-term consult-

ants. Of this total, 53 (69 percent) were based at head-quarters. In FY07, field presence increased almost three-fold—from 9 field-based staff in FY06 to 24 in FY07 (seeTable 2-1, below). Leverage of FIAS senior staff withjunior professionals also showed an increase in FY07.

T A B L E 2 - 1

STAFF ING AT HEADQUARTERS AND IN THE F IELD

Staff by Grade 30-Jun-04 30-Jun-05 30-Jun-06 30-Jun-071

Administrative Support Staff 8 10 9 15

Operational and KM Staff 21 31 34 57

Management2 2 2 4 5

Total Staff 31 43 47 77

Staff in Washington DC HQ 24 77% 34 79% 38 81% 53 69%

Staff in Field 7 23% 9 21% 9 19% 24 31%

Total Staff 31 43 47 77

Regular IFC Staff 18 58% 26 60% 23 49% 27 35%

Regular IBRD Staff 12 39% 12 28% 14 30% 33 43%

Extended Term Consultants (IBRD) 1 3% 5 12% 10 21% 17 22%

Total Staff 31 43 47 77

1 Including MIGA technical assistance staff.

2 Does not include FIAS General Manager, who is also IFC Director.

The FIAS Management Team

PIERRE GUISLAINGeneral Manager, FIAS and Director, Investment Climate,

World Bank Group Business Line Leader, Business Enabling Environment, IFC

Pierre Guislain, a Belgian national, is Director, InvestmentClimate, in the joint Bank-IFC Finance and Private SectorDevelopment Vice Presidency. Pierre is also GeneralManager of FIAS, as well as IFC's Business Line Leaderfor Business Enabling Environment advisory services.

Pierre joined the World Bank in 1983 and worked suc-cessively in the West Africa Projects Department, theLegal Department, the Asia Technical Department, andthe Private Sector Advisory Services Department, beforemoving to Brussels to manage a joint program betweenthe World Bank and the European Commission onPrivate Sector Participation in Infrastructure in theSouthern Mediterranean region (1997-2001). From 2001to 2005, Pierre managed the Bank’s Information andCommunication Technologies division.

Pierre is author and editor of several publications on infor-mation and communication technology, foreign directinvestment, infrastructure sector reform, and privatization.

Pierre holds an MPA in Economics and Public Policyfrom Princeton University and a graduate law degreefrom the University of Louvain.

THOMAS DAVENPORTSenior Manager, FIAS

Thomas Davenport is a Senior Manager at FIAS. Priorto joining FIAS in early 2004, Tom was a Manager in theSmall and Medium Enterprises Department, responsiblefor the overall oversight of IFC’s Project DevelopmentFacilities. Previously, he established and was the firstGeneral Manager of the Mekong Project DevelopmentFacility operating in Indochina; prior to that he ran anIFC facility operation in West Africa.

Before joining IFC, Tom worked on a number of privatesector advisory assignments in developing countries,ranging from privatization to export development andcompetitiveness. He has also worked in the Canadian

56

T A B L E 2 - 2

STAFF BY LOCATION, FY07

Number of Staff Percent

Washington, D.C. 53 69%

Belgrade 8 10%

Sydney 5 6%

Vienna 4 5%

Johannesburg 4 5%

Beijing 2 3%

Moscow 1 1%

Total 77 100%

The FIAS Management Team: (clockwise frombottom left) Pierre Guislain, Nigel Twose,Vincent Palmade, Tom Davenport, RussellMuir and Ceci Sager

Foreign Service and has served as an export consultant toa number of Canadian companies in the high tech sector.

Tom received a MSc. in Development Studies from theLondon School of Economics in 1984.

RUSSELL MUIRManager, East Asia and the Pacific Program, FIAS

Business Line Manager, Business Enabling Environment East Asia and the Pacific

Russell Muir is IFC’s Business Enabling Environment SectorLeader for East Asia and the Pacific, as well as the RegionalManager of FIAS. He is responsible for ensuring the coordi-nated delivery of the investment climate work in East Asiaand the Pacific. He joined the World Bank Group in 1992where he has worked in over 40 countries on state-ownedenterprise reform, privatization, and the public-private pro-vision of infrastructure. He has been based in Sydney since2004. Prior to joining the Bank Group, he was a Partnerin the Economics Group of Coopers & Lybrand, UnitedKingdom and led the firm’s privatization and investmentadvisory work in Eastern Europe, Africa and the Caribbean.

VINCENT PALMADELead Economist, FIAS

Vincent Palmade is Lead Economist for FIAS. Sincejoining FIAS in January 2004, Vincent has been respon-sible for knowledge management activities within FIAS.Vincent has also played a leading role in the develop-ment of FIAS’ program in francophone Africa. Vincenthas specific expertise in broad economic diagnostics,industry level analysis and change management tech-niques for implementing broad economic reform agenda.

Prior to joining the World Bank, Vincent worked for 12years with McKinsey and Company where he was one ofthe two Partners of its internal economic research group:the McKinsey Global Institute. Vincent has also adviseda broad range of developing country governments oneconomic development issues.

Before working at McKinsey, Vincent graduated from theKellogg Graduate School of Management and the EcoleNationale des Ponts et Chaussées.

CECIL IA SAGERManager, Investment Generation, FIAS

Ceci Sager manages FIAS’ Investment Generation prac-tice area. A specialist in the design and implementationof investment promotion projects, she oversees a staffand work program encompassing investment policy andpromotion, industry competitiveness, and SEZs, amongother areas.

During more than 20 years of experience, Ceci hasworked in some 30 developing countries and emergingeconomies worldwide, managing a range of assignments,including: project design efforts; industrial analyses andfeasibility studies; strategic and operational assessments ofinvestment promotion intermediaries; legal and regulatoryanalyses of investment and export promotion schemes;and international promotional campaigns.Geographically, her work has focused on East Asia(China), Central America, and East and Southern Africa.

Before joining the World Bank Group in 1996, Ceci wasa partner in The Services Group, an international eco-nomic consulting firm. She holds an MA in PoliticalScience and has undertaken post-graduate studies at theNational Autonomous University of Mexico.

NIGEL TWOSESenior Manager, FIAS

Business Line Manager, Business Enabling Environment Africa

Nigel Twose is a Senior Manger at FIAS and the BusinessLine Manager for the Business Enabling Environmentunit in Africa. Nigel joined the World Bank Group in1997, as an advisor in the office of the Vice President forPrivate Sector Development. He worked primarily oncorporate social responsibility issues, including theBusiness Partners for Development. In 2003, he becameManager of FIAS.

Before joining the Bank Group, Nigel had a 21-yearcareer with non-profit organizations, including Oxfamand ActionAid.

57A P P E N D I C E S

The FIAS Team by Practice Area17

General Manager’s OfficePierre Guislain (General Manager)

Ruth KariukiBartol Letica

East Asia and the Pacific Russell Muir (Manager)18

Alan MoodyIvan NimacGeoffrey WaltonSusan WinningZhuo Xin

Sub-Saharan AfricaNigel Twose (Senior Manager)19

David BridgmanJackie Coolidge

Paramita DasguptaDomagoj IlicOsongo LengaJulien LevisCatherine MasindeCourtney Roberts (since September 24, 2007)

Adama Sow

Regulatory SimplificationThomas Davenport (Senior Manager)20

Laurent CorthayAlberto CriscuoloZai FanaiSebastian James (since August 15, 2007)

Peter Ladegaard (Product Leader, Regulatory Governance

& Licensing)

Jan LoeprickNora MangalindanRina OberaiAlice OuedraogoRoy PepperTatyana PonomarevaAminur RahmanTarik SahovicSevi Simavi (Product Leader, Secured Lending)

Richard Stern (Product Leader, Tax)

Uma Subramanian (Product Leader, Trade Logistics)

Xiaolun Sun

Donor RelationsBeat HeggliMadan GeraMarita Liebegut

CommunicationsChristine BowersVanessa Co

58

17 Staff information as of October 2007. BICF staff not listed in this report.

18 Also manages IFC BEE advisory services for EAP; IFC regional staff on the team are not listed in this report.

19 Also manages IFC BEE advisory services for SSA; IFC regional staff on the team are not listed in this report.

20 Also Manager for Europe, LAC, MENA, and South Asia.

FIAS Product Leaders: (from left) Peter Ladegaard,Mierta Capaul, Gokhan Akinci, Uma Subramanian,Robert Whyte, and Sevi Simavi. Not pictured: Richard Stern.

Investment GenerationCecilia Sager (Manager)

Gokhan Akinci (Product Leader, Industry Competitiveness)

Betty AsikoVesna BakicJoseph BattatSajana BjelobrkNenad BozanicNessa BusjeetDermot Coffey (Program Manager, IIWB)

Wim DouwMaja GedosevHarald JedlickaBiljana JoncicIgor KecmanDusan KovacevicPeter KusekNatalie LarionovSumit ManchandaDjordje MancicMargit MishchkulnigMaiko MiyakeCelia OrtegaAnja Robakowski-Van StralenFatima Shah (until September 19, 2007)

Xiaofang ShenHrvojka SkokovicConnor SprengKristina SvenssonRobert Whyte (Product Leader, Investment Policy & Promotion)

Finance TeamIgor TutnjevicSocorro Cruz-AbalosMarita LiebegutLoretta MatthewsCecilia Najera

Doing Business ReformMarialisa Motta (Manager, as of October 1, 2007)

Fernanda AlmeidaDiego Borrero MaganaMierta Capaul (Product Leader, DB Sub-national)

Claudia ContrerasManuel Enrique Garcia-Huitron (since August 14, 2007)

Penelope Demetra Fidas (since October 1, 2007)

Zenaida HernandezJana Malinska (since August 27, 2007)

Luis Aldo Sanchez Ortega

Knowledge Management and M&EVincent Palmade (Lead Economist)

Nathalie DavidEduardo HernandezThomas Kenyon (until September 28, 2007)

Robert KrechJohn Wille

Regional Program CoordinatorsIgor Artemiev (ECA except PEP-SE)

Matilde Bordon (SAR/BICF; since August 1, 2007)

Xavier Forneris (MENA)

Margo Thomas (PEP-SE)

Damien Shiels (LAC)

59A P P E N D I C E S

FIAS embarked on a new three-year strategy cycle at thebeginning of fiscal 2005. Building on its successful trackrecord, FIAS planned to increase the impact of its advi-sory work and expand services by 50 percent. From a baseof 60 projects in FY04, the goal was to complete 90 peryear by FY07. The FY05-07 strategy also set forth objec-tives to:

■ Conduct fewer diagnostics and work more on solutiondesign and reform management projects; 21

■ Develop multi-year country programs, spanning product lines;

■ Collaborate on operations within the World BankGroup, and with donors and other stakeholders;

■ Differentiate between clients, and tailor advisory services;

■ Develop new product lines in critical areas; and

■ Spend more time with clients.

Several key trends in terms of performance and activitiesillustrate how FIAS’ products and service deliveryevolved during the three-year period:

Project growth. FIAS completed 60 projects in FY04, 74in FY05, 84 in FY06, and 83 in FY07. Although thenominal target of 90 projects in FY07 was not met, theaverage project size grew significantly from $87,000 inFY05 to $117,000 in FY07. Project growth is alsoreflected in the sizeable financial growth from $8.6 mil-lion in expenditures in FY04 to $16.5 million in FY07.

Focus on implementation. Just two years ago in FY05,every fourth FIAS project was a diagnostic study. Nowonly 17 percent of projects are stand-alone diagnostics.In FY07, 69 percent of FIAS’ advisory projects included asolution design component and 14 percent were focusedexclusively on implementation assistance.

Deeper and longer interventions. FIAS increased thenumber of countries where it serves as a strategic partnerto clients, acting as an investment climate advisor over aperiod of several years. In FY04, there were no programsof this sort. At the close of FY07, FIAS was engaged innine multi-year country programs: Bangladesh, BurkinaFaso, Fiji, Kenya, Liberia, Madagascar, Nigeria, SierraLeone, and Sudan.

60

APPENDIX 3: 2005-07 STRATEGY CYCLE IN REVIEW

21 A simplified depiction of a reform process includes three basic phases: diagnostic (what are the problems); solution design (how shouldthey be remedied); and implementation (getting it done).

Closer partnerships. FIAS strengthened partnerships onspecific themes and countries both internally within theWorld Bank Group and externally with donor partners.This collaboration is evidenced in many ways: involve-ment of Bank Group units in nearly all advisory projects;joint appointments of FIAS staff to IFC regional facili-ties; joint projects with bilateral aid agencies; and otherforms of partnership. In early February 2007, FIASstrengthened its capacity in the area of investment pro-motion by integrating MIGA’s technical assistance unit.In FY07, six out of seven advisory projects were under-taken in collaboration with the World Bank Groupand/or other partners.22

New products. FIAS expanded its traditional productofferings (focused on administrative barriers and invest-ment law, policy and promotion) by developing expertisein particular areas that affect the quality of the invest-ment climate and the competitiveness of economies.These products include regulatory governance, securedlending, access to land, sub-national investment climate

reforms, industry competitiveness, value chain analysis,corporate social responsibility, post-conflict private sectordevelopment, business taxation, special economic zones,and informality. FIAS continued to innovate, testingproducts in middle-income countries and adapting themto frontier countries.

Client focus. FIAS continued to decentralize its staff toincrease proximity to clients and strengthen ties to otherWorld Bank Group entities. In FY07, about one third ofall staff worked in six FIAS field offices in Africa, Asiaand Europe. Closer contact with clients has increasedtheir satisfaction with FIAS’ work. The 2006 IFC ClientSurvey showed an 89 percent satisfaction rate amongFIAS’ clients; this number rose to 95 percent in the 2007survey. Uptake and implementation of FIAS’ recommen-dations has also improved. In FY04, 58 percent of FIASrecommendations were partially or fully completedwithin a year of their presentation to the client; by FY06,this figure had increased to 70 percent. (For more aboutthe IFC Client Survey, see p. 35.)

61A P P E N D I C E S

22 This annual report does not consolidate the work of the team that transferred from MIGA in February 2007.

AGOA African Growth and Opportunity Act (United States)

ARCS Administrative and Regulatory Cost Survey

BICF Bangladesh Investment Climate Fund

BEE business-enabling environment

BiH Bosnia and Herzegovina

BRG Better Regulation for Growth program

CAFTA Central America Free Trade Agreement

CCI Competition Commission of India

DB Doing Business report

DFID Department for International Development (United Kingdom)

EAP East Asia and the Pacific Region

ECA Europe and Central Asia Region

EPZ Export Processing Zone

ERU Economic Reform Unit (Pakistan)

ETC extended-term consultant

FDI foreign direct investment

FIAS Foreign Investment Advisory Service

FMTAAS Funding Mechanism for Technical Assistance and

Advisory Services (IFC)

GAFI General Authority for Investment and Free Zones (Egypt)

GDP gross domestic product

G8 Group of Eight

IBRD International Bank for Reconstruction and Development

ICF Investment Climate Facility for Africa

ICT information and communication technology

IDA International Development Association

IFC International Finance Corporation

ILO International Labour Organization

IMF International Monetary Fund

IPA investment promotion agency

IP&P investment policy and promotion

KM knowledge management

LAC Latin America and the Caribbean Region

MENA Middle East and North Africa Region

METR marginal effective tax rate

MIGA Multilateral Investment Guarantee Agency

M&E monitoring and evaluation

NEPAD New Partnership for Africa’s Development

OECD Organisation for Economic Co-operation and Development

OECS Organization of East Caribbean States

PDF Project Development Facility (IFC)

PEP Private Enterprise Partnership (IFC)

PIMS Project Implementation Monitoring System

PREM Poverty Reduction and Economic Management (World Bank)

PSD private sector development

RABI Removing Administrative Barriers to Investment project

(Sierra Leone)

RIA Regulatory Impact Assessment

SAR South Asia Region

SEDF South Asia Enterprise Development Facility

SEZ Special Economic Zone

SLIEPA Sierra Leone Investment and Export Promotion Agency

SMEs small and medium enterprises

SSA Sub-Saharan Africa Region

TA technical assistance

USAID United States Agency for International Development

USTDA United States Trade and Development Agency

62

APPENDIX 4: ABBREVIATIONS

FIAS

Photo CreditsPascal Deloche/Corbis front coverGrigory Kubatyan/Shutterstock iZachary Garber/Shutterstock 1Sasha Radosavljevich/Shutterstock 5World Bank 5Isa Ismail/Shutterstock 7Semen Lixodeev/Shutterstock 8Ximagination/Shutterstock 10Yanfei Sun/Shutterstock 11Government of Croatia 12Michael Zysman/Shutterstock 15Paul Cowan/Shutterstock 16Isa Ismail/Shutterstock 18Nathan Holland/Shutterstock 20Bill Gentile/Corbis 21Semen Lixodeev/Shutterstock 23Taro Taylor 26

Pozzo di Borgo Thomas/Shutterstock 28Carlos Sanchez Pereyra/Shutterstock 30PhotoCreate/Shutterstock 31Nathan Holland/Shutterstock 32Mr. Ian 33PhotoCreate/Shutterstock 34Francois Arseneault/Shutterstock 36Socrates/Shutterstock 38Ke Wang/Shutterstock 43Muriel Lasure/Shutterstock 45Mark Atkins/Shutterstock 46Elena Yakusheva/Shutterstock 55World Bank 56Vanessa Co 58Rob Ahrens/Shutterstock 60Matt Richards/Shutterstock 62

Contact FIAS

FIAS: The Investment ClimateAdvisory Service1818 H Street, NWMSN H7-701Washington DC 20433 USA

www.fias.net

T: 202 473 7443 / 202 458 5011F: 202 522 3262 / 202 522 2138

FIAS Regional Offices

Beijingc/o International Finance Corporation (IFC)15th Floor, China World Tower 2China World Trade Center No. 1, Jian Guo Men Wai AvenueBeijing, China 100004

T: 86 10 6605 8686 ext. 8630F: 86 10 6505 9808

Belgradec/o PEP-SE, Bulevar KraljaAleksandra 86-9011000 Belgrade, Serbia

T: 381 11 3023 750F: 381 11 3023 740

Dhakac/o SEDF, United House10 Gulshan Ave, Gulshan 1Dhaka 1212 Bangladesh

T: 880 2 986 1711-20F: 880 2 989 4744

Johannesburgc/o IFC, 14 Fricker RoadIllovo 2196 South Africa

T: 27 11 731 3018F: 27 11 268 00

Moscowc/o IFC, 36/1 BolshayaMolchanovka Street, 3rd Flr, Moscow 121069 Russian Federation

T: 7 095 411 7555F: 7 095 411 7556

SydneyCML Building, Level 1814 Martin PlaceSydney NSW 2000 Australia

T: 61 2 9223 7155F: 61 2 9223 7152

ViennaIIWB OfficeStrauchgasse 3A – 1014 Vienna, AustriaT: 43 1 535 53 82 2115F: 43 1 535 53 82 5115

Please share your opinions on this annual report through our online survey at www.fias.net.

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2007 ANNUAL REPORTINVESTMENT CLIMATE ADVISORY SERVICE