www.wavteq.com | www.incentivesmonitor .com | www.fdiprofessionals.com| www.fdiaccounting.com company/wavteq @wavteq 1 Masterclass in Investment Promotion and Facilitation “How to Attract FDI from Canada and Similar Countries” Sultan Hotel Jakarta, 9 & 10 November 2016 Workshop facilitated by: In partnership with: TPSA program is executed by Data ¦ T echnology ¦ Consulting
DAY 1: Best Practices in Investment Promotion 08:45 – 09:00 Opening Statements Module 1: Global FDI Trends 09:00 – 09:30 Global and regional FDI trends (with FDI quiz) 09:30 – 10:00 Canadian FDI trends and opportunities for Indonesia Module 2: Key success factors in attracting FDI 10:00 – 10:30 What is investment promotion and why does it work 10:30 – 11:00 Most effective techniques to attract FDI: review of evidence 11:00 – 11:30 Coffee break Module 3: Best practices in Lead Generation 11:30 – 12:45 Group exercises (based on real FDI prospects for Indonesia) 12:45 - 14:00 Lunch 14:00 - 14:45 Best practices in lead generation 14:45 - 15:15 Results of our campaign to target Canadian FDI in Indonesia 15:15 - 15:45 Coffee break Module 4: FDI value propositions & Indonesia’s competitiveness 15:45 – 16:15 Indonesia’s value proposition for FDI (group quiz) 16:15 – 16:30 Best practices in proposition development 16:30 – 17:00 Presentation of materials to attract FDI to Indonesia 2
About WAVTEQ 1 W A V T E Q
About WAVTEQ WAVTEQ is a specialist consulting firm working with economic development agencies to attract FDI and providingcorporate location services to companies. The WAVTEQ Group is the largest FDI team worldwide with the most extensive global presence Over 75 FDI consultants , with lead generation teams in Austria, Canada, China, Germany , Hong Kong, India, Ireland, Japan, Korea, Spain, UK and US We have helped over 1,000 companies establish over $50 billion of greenfield investments covering all industries and types of project, including manufacturing, logistics, HQs, and R&D WAVTEQ develops the world’s WAVTEQ is the technology and consulting partner of leading FDI tracking and fDi Intelligence, Financial Times , with the Canada, Asia and corporate location databases Middle East Franchise 4
WAVTEQ thought leadership in FDI WAVTEQ's team is at the forefront of knowledge on FDI, with over 100 FDI publications. WAVTEQ provides a free publication portal for FDI studies (www.wavteq.com/publications) subscribed to by over 500 EDOs and IPAs. Our most recent publications are shown on this slide. These studies used extensively by EDOs, IPAs and international organizations to inform their investment promotion strategies. 5
W A V T E Q Module 1: FDI Trends and Opportunities Time: 9:00-10:00
Why we are here? The importance of MNEs in the world economy Source: WAVTEQ based on official data sources 9/20/2017
Global FDI trends by type of FDI (2012-2015) $ trillion FDI Flows 2 1.76 1.8 1.62 1.67 1.6 1.51 M&A 1.43 1.4 1.28 1.15 1.2 1.07 1 0.83 0.78 0.8 0.71 0.63 Greenfield 0.6 0.4 0.2 0 2012 2013 2014 2015 Source: FDI flows (UNCT AD), M&A (MergerMarket), 8 Greenfield (fDi Intelligence)
Country ranking – location of greenfield capex 2016 (Jan-Sept) 2015 1. India 1. US 2. US 2. India 3. China 3. UK 4. Indonesia 4. China 5. UK 5. Indonesia 6. Vietnam 6. Mexico 7. Egypt 7. Vietnam 8. Mexico 8. Pakistan 9. Australia 9. Brazil 10. France 10. Australia Source: www.fdimarkets.com 9
The size and growth of FDI is largely determined by which single factor? 80% of global FDI can be explained by one variable: GDP Source: fDi Intelligence/WAVTEQ FDI Forecasting Model 10
GDP also explains the source of FDI: The 6 largest countries by GDP account for over half of global FDI 20% 18% 16% US 14% China 12% 10% 8% Japan Germany 6% UK 4% France 2% 0% 2012 2013 2014 2015 2016 (Jan-July) Source: WAVTEQ based on www.fdimarkets.com 11
Indonesia’s share of global greenfield investment (2003-Sept. 2016) Indonesia’s share of global FDI? 6.00% 5.73% 5.00% 4.95% Indonesia accounts for 1.39% of world GDP 4.00% 3.00% 2.85% 2.71% 2.52% 2.42% 2.19% 2.16% 2.14% 2.00% 1.93% 1.63% 1.59% 1.48% 1.37% 1.00% 0.00% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: WAVTEQ based on www.fdimarkets.com 12
Canadian outward FDI stock (CAD million) 1,200,000 World 1005227 1,000,000 Asia & Oceania 828,812 761,550 800,000 704,335 675,020 637,285 600,000 400,000 200,000 67,665 55,520 55,876 58,476 58,444 0 2010 2011 2012 2013 2014 2015 Source: StatsCanada 13
Canada’s share of global greenfield investment (2003-Sept. 2016) Canada’s share of global FDI 7.00% 6.90% 6.00% Canada accounts for 2.5% of world GDP and a similar share of world greenfield FDI 5.00% 4.41% 4.00% 3.81% 3.31% 3.38% 3.13% 3.00% 3.12% 2.58% 2.48% 2.46% 2.00% 1.81% 2.18% 1.65% Canada’s decline in market share related to decline in commodities 1.00% prices where Canadian firms are major foreign investors 0.00% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source : WAVTEQ based on www.fdimarkets.com 14
W A V T E Q Module 2: Key success factors in attracting FDI Time: 10:00-11:00
The corporate perspective W A V T E Q
Why do companies invest overseas? 17
Four main reasons companies invest overseas ➢ Market ➢ Resource ➢ Efficiency ➢ Asset Seeking Seeking Seeking seeking Motives Motives Motives motives China Horticulture Medical devices Genetics Many FDI decisions are based on a combination of different strategies e.g. to lower costs and access new markets 18
The government perspective W A V T E Q
Framework for investment promotion 2. Sales & Marketing 1. Organisational Strategy •Competitive positioning •National policy context •Image building/breaking •Objectives •Awareness creation •Sector/market strategy •Lead Generation •Organisation structure Investment promotion •Product development •Account management •Approvals •Supplier attraction •Incentives •Monitoring & evaluation •Investor handling 3. Investment Facilitation 4. Post-Investment Services Source: Loewendahl, ‘A Framework for Investment Promotion’ TNCs, UNCTAD ( April 2001) 9/20/2017
Does investment promotion work? ₊ The net present value of pro-active investment promotion to be almost $4 for every $1 expended ₊ A 10% increase in investment promotion budget leads to a 2.5% increase in FDI flows or in other words $60,000 of promotion leads to a $5 million increase in FDI ₊ There a 2-5 year lag for the impact of increased promotion to feed through to increased FDI, which shows that investment promotion activities need to take place as part of a 2-3 year strategy and evaluation cycle. Source: World Bank studies 9/20/2017
Why does it work? Correcting for imperfect information ₊ Image, brand awareness, and perceptions are major factors influencing the location of FDI. Companies make investment location decisions on the basis of their information pool and understanding of an area’s location “offer” . ₊ When making a decision on where to locate the information base of MNEs is far from perfect, and the decision-making process can be subjective and biased. It is often a bureaucratic process, which may be affected by imperfect competition, distorted risk perceptions and political rivalry between affiliates of MNEs. ₊ The implication, as the International Finance Corporation (IFC) argues, is that: “Most companies consider only a small range of potential investment locations. Many other countries are not even on their map. ” 22
Why does it work? Promotion & facilitation of FDI ₊ Investment promotion is most effective when it: 1. Overcomes information asymmetries 2. Compensated for the imperfect functioning of international markets, which makes parent companies (and their corporate location advisors) reluctant to consider new production sites; and 3. Led to product differentiation of the host country as a location for targeted activities. ₊ A DCI survey of 356 corporate location decision makers found that articles in newspapers & magazines and meetings with EDOs were 3 of the 4 most important factors influencing executives perceptions of an area’s business climate for inward investment ₊ The EIU survey of 155 MNEs concluded that: “Governmental support for corporate overseas expansion plays a crucial role across all key areas” 23
What is the economic impact? Impact on the economy Studies have shown that typically: ₊ $1 in FDI leads to $1 in domestic investment ₊ 1 manufacturing FDI job creates 3 indirect jobs in the local economy ₊ IFC studies have also shown that companies that focus on outsourcing have a bigger multiplier impact on the economy But the impact is company, project and location specific and also depends on government policies to help foreign investors do more in the country 24
Most effective techniques to attract FDI: review of evidence W A V T E Q
Recommend
More recommend
