1 SESSION 4: WHAT’S NEW IN INVESTMENT PROMOTION? 13:30-14:15 www.wavteq.com
Group brainstorm – BKPM FDI attraction activities? 2 WHAT’S NEW IN INVESTMENT PROMOTION What activities does BKPM conduct to attract FDI? 1. Investment seminars with social media 2. Trade shows / exhibitions 3. 1:1 meetings 4. Networking events 5. Site visit programs 6. High level events 7. Regional investment forum 8. Advertising in international media 9. Social media accounts 10. Film about investing in Indonesia 11. Representative offices overseas 12. Video conference with potential investors Are there any new FDI attraction initiatives by BKPM? 1. Xx 2. x www.wavteq.com
Economic development options and the role of FDI 3 WHAT’S NEW IN INVESTMENT PROMOTION o While most countries have an IPA to attract inward investment, IPAs increasingly see FDI as a tool to grow indigenous businesses and increase business start-ups Development objectives Development options Increase business start-ups Investment Jobs Retain/grow indigenous Value-added businesses Industry ‘ fit ’ Exports Sustainability Attract inward investment Source: WAVTEQ 3 3 www.wavteq.com
The changing IPA model 4 WHAT’S NEW IN INVESTMENT PROMOTION o IPAs are becoming more customer-focused and are offering a wider range of services to help MNEs (and also start-ups) invest in their location through different types of FDI o IPAs are involving the private sector more than ever before in the attraction and facilitation of FDI and in provision of aftercare services Traditional IPA model New IPA model ▪ ▪ Remit for greenfield/expansion Remit for all forms of investment ▪ ▪ Property portfolio Access to inventory of skills and ▪ Grants and incentives expertise technologies in region ▪ ▪ Project facilitation Relationships with clusters (science ▪ Planning/permitting parks, academics, companies) ▪ ▪ Enquiry handling Project and account management ▪ ▪ Mass marketing at events and Involvement of private sector experts in advertising sales process ▪ ▪ Geographical focus of sales Highly focused proactive marketing to ▪ Public sector/administrative skills specific sub-sectors ▪ ▪ Tourism feel to marketing materials Outsourced lead generation/qualification ▪ Key accounts/strategic companies ▪ Business advisory skills ▪ Customized business propositions for investors www.wavteq.com
Evolution of IPAs to broader functions & private sector practice 5 WHAT’S NEW IN INVESTMENT PROMOTION Private sector practices 2 nd generation 1 st generation 3 rd generation 4 th generation Government Government ‘ reactive ’ ‘ proactive ’ Ireland Singapore US IPAs Czech Hong Costa Rica Republic Kong Dubai Malaysia Chile Turkey Vietnam Thailand Indonesia? Haiti Time Investment Image building Proactive Cluster Facilitation Targeting development Source: WAVTEQ www.wavteq.com
Promoting “specific opportunities” vs. “location features” 6 WHAT’S NEW IN INVESTMENT PROMOTION Examples from other IPAs Jordan Investment List of 100 “projects” with investment cases for Gulf and Chinese Commission equity investors List of projects companies can invest in Sri Lanka Board of www.investsrilanka.com/images/publications/pdf/Structured_Pr Investment ojects_Proposals.pdf The major states are going down the M&A, JVAP and PPP route Brazilian States to attract FDI – they present the opportunities to investors as a key pillar of their promotion activities Prepared a list of 100 “projects” Chinese and other investors can Scotland invest in, prioritized to 20 key projects, with focus on financing and investing in projects and JVAP M&A program to help M&A and JVAP with Czech companies, Czech Invest with online database to match investors “Not in the kitchen but on the menu” – Will support M&A on a Invest in France very selective basis Source: WAVTEQ www.wavteq.com
Best IPAs in the world 7 WHAT’S NEW IN INVESTMENT PROMOTION Best IPAs in the world Source: DCI (2017a) survey based on 331 US – based corporate executives www.wavteq.com
Role of FDI in high performing FDI locations 8 WHAT’S NEW IN INVESTMENT PROMOTION 88.1 FDI as a % of gross fixed capital formation (average 2014-16) 27.4 27 20.1 17.3 Singapore Costa Rica Ireland* Rwanda South East Asia Source: Based on UNCTAD *2016 only (average for 2014-16 was 138%) 8 www.wavteq.com
IDA Ireland 9 WHAT’S NEW IN INVESTMENT PROMOTION International Financial Services Centre (IFSC) o IDA Ireland was established in 1949 o In 1994 the IDA was reorganized to focus exclusively on the promotion and development of FDI o IDA is ranked the best IPA in the world by US investors o Ireland is the one of the world’s economic success stories, becoming the 3 rd richest country in the world by 2007 on the back of export-oriented FDI in IT, pharma and other sectors o Key attributes of the IDA model include: + Dedicated focus on attracting FDI over several decades + Autonomous agency with strong budget + Recruitment of skilled teams + Very strong focus on business development & hitting targets Google offices in Ireland + Overseas representatives to engage with investors + Strategic targeting and long term relationship building + Focus on intermediaries as well as MNEs + World class investment facilitation, helped by ownership of business parks + Proactive aftercare services + ”Product development” of the Ireland with continuous up - skilling, catalyst projects (like IFSC), and competitive taxes o Latest initiatives are around R&D attraction and upgrading (including co-funding research centers), attracting FDI from emerging markets, and encouraging sustainable investments Source: WAVTEQ www.wavteq.com
CINDE Costa Rica 10 WHAT’S NEW IN INVESTMENT PROMOTION o CINDE was established in 1982 as a private, non profit export and FDI attraction agency mandated by the Government and with USAID funding for nearly a decade o CINDE is recognized as one of the most successful economic development agencies in the world and instrumental in Costa Rica’s economic success (4% GDP growth per annum for last 18 years) o In 2017, CINDE was rated the 2 nd best IPA in the world by US investors o Key attributes of the CINDE model include: + Autonomous agency with several decades of experience + Highly focused for many years on 3 key sectors + US market + Recruitment of skilled teams with low staff attrition + Strategic targeting and long term relationship building + Focus on intermediaries as well as MNEs + Strong partnership and co-funding with business parks + One the most successful ”Policy Advocacy” with a clear Investment Climate Services leading to path-breaking policies + Excellent aftercare to retain, grow and expand companies o The success of CINDE is underpinned, like Ireland, on creating a highly skilled, educated workforce with skills & education policy and FDI policy closely integrated Source: WAVTEQ www.wavteq.com
EDB Singapore 11 WHAT’S NEW IN INVESTMENT PROMOTION o The Economic Development Board (EDB) of Singapore was established in 1961. The EDB is the most successful model of an integrated FDI and economic development agency o EDB started off in the 1960s providing infrastructure development of industrial parks and attracting export-oriented FDI o EDB’s mandate expanded in the 1970s to include skill and training development and the establishing of overseas offices to attract FDI o In the 1980s, EDB shifted its FDI strategy to focus on knowledge-based industries and services and developed its famous Local Industry Upgrading Program to support SMEs. Specialist sector-specific programs were also set-up o In the 1990s, EDB Investments was established to provide Venture Capital for targeted sectors and developed a clear cluster development strategy around 9 industries. EDB also developed a regional program to help other governments in Asia Pacific attract FDI especially as low cost operations migrated from Singapore o The current strategy of EDB is focused on innovation, knowledge & R&D o To foster innovation and entrepreneurship, EDB launched the co- financing scheme, Start-up Enterprise Development Scheme and The Business Angel Scheme o As with Ireland & Costa Rica, Singapore is focusing more on sustainable investments with the Energy Innovation Program Office and the Clean Energy Program Office Source: WAVTEQ www.wavteq.com
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