April 2012 90758 v2 Investment Climate Global Investment Promotion Best Practices 2012 Investment Climate l World Bank Group In partnership with Global Investment Promotion Best Practices 2012 Investment Climate l World Bank Group In partnership with © 2012 The World Bank Group 1818 H Street, N.W., Washington D.C., 20433 All rights reserved May 2012 Available online at www.wbginvestmentclimate.org The information included in this work, while based on sources that the World Bank Group considers to be reliable, is not guaranteed as to accuracy and does not purport to be complete. The World Bank Group accepts no responsibility for any consequences of the use of such data. The information in this work is not intended to serve as legal advice. The findings, interpretations, and conclusions expressed in this work are those of the authors and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments of the countries which they represent. 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All queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, the World Bank, 1818 H Street, NW, Washington, DC 20433, USA; telephone 202–522–2422; email: pubrights@worldbank.org About the Investment Climate Department of the World Bank Group The Investment Climate Department of the World Bank Group helps governments implement reforms to improve their business environments and encourage and retain investment, thus fostering competitive markets, growth, and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over 15 donor partners working through the multidonor FIAS platform). Acknowledgments The Investment Climate Department wishes to thank ProInvest and the Government of Spain for their support in funding GIPB 2012. GIPB 2012 has been produced by a core team comprising Robert Whyte, Francisco Javier Alvarez Roca, Valeria Di Fiori, Carlos Griffin and Bin Zhai. The Investment Climate Department gratefully acknowledges the contributions of Stephen Fleetwood, DTZ; Douglas Grant, dga Business Development; Rodolfo Guillioli, Development and Planification Director, Real Hotels and Resorts; Steen Holck, Vice President of Controlling Hotels and Resorts, Moevenpick; Mahmud Janmohamed, CEO, Serena Hotels; Andrew McLachlan, Vice President of Business Development, Africa & Indian Ocean Islands, The Rezidor Hotel Group; Angelo Stambules, Senior Vice President, Marriott; Wayne J. Troughton, Chief Executive, HTI Consulting; Trevor Ward, the W Hospitality Group; Reto Wittwer, CEO, Kempinsky Hotels; Carolyn L. Cain, Chief Industry Specialist, IFC; Gabriel España, Senior Investment Officer, IFC; and Shaun Mann, Senior Investment Policy Officer, Tourism, Investment Climate Department, The World Bank Group; during a Tourism focus group held in Washington D.C. in February 2011, which helped develop the tourism project inquiry used in this study. We would also like to acknowledge the valuable contributions of Thais Affonso, Head of Business Intelligence, Syngenta; Bob Maus, Director of Global Business Strategies, Monsanto; Wessel Pretorius, Business Development Manager – International, Pannar Seed (Pty) Ltd; Joachim Schneider, Head of BioScience, Bayer; David Scott, Export Sales Manager, Higgins; Van Yeutter, Vice President International Business Development, Cargill; Grahame Dixie, Agribusiness Unit Team Leader, Agriculture & Rural Department, World Bank; Richard Henry, Chief Industry Specialist, IFC; and Damien Shiels, Global Product Specialist, Industry Specific Investment Climate, Investment Climate Department, The World Bank Group during a subsequent agribusiness focus group held in March 2011 that was critical to the development of the agribusiness project inquiry used in this study. A number of CEOs and senior managers of multinational companies and site selection firms contributed their views on the importance of investor confidentiality during the site selection process, namely Thais Affonso, Head of Business Intelligence, Syngenta; Mahmud Janmohamed, CEO of Serena Hotel Group; Bill Luttrell, Senior Locations Strategist, International Business Development, Werner Enterprises; Amaya Manrique, Senior Manager at Deloitte–Global Location and Facility Services; Joachim Schneider, Head of Growth and Strategy at Bayer; and Douglas van den Berghe, CEO of Investment Consulting Associates (ICA), LocationSelector, and ICAincentives. Several colleagues provided helpful feedback during this report’s peer review process: Virgilio Barco, former CEO of Invest Bogota; Louis T. Wells, Jr., Herbert F. Johnson Professor of International Management, Harvard Business School; Paramita Dasgupta, Investment Climate, South Asia, The World Bank Group; Augusto Lopez Claros, Director, Global Indicators and Analysis, IFC; Hannah R. Messerli, Private Sector Development/Tourism, Africa Region, World Bank; Ivan Anton Nimac, Investment Climate Department, Southeast Europe, The World Bank Group; Vincent Palmade, Lead Economist, Private and Financial Sector Development, Africa Region, World Bank; and Ravi Vish, Director and Chief Economist, MIGA. We would like to thank Pierre Guislain and Cecilia Sager of the Investment Climate Department for their tremendous support throughout the process of preparing GIPB 2012, and Celia Ortega, Economic Affairs Officer, Investment Promotion Section, Division on Investment and Enterprise, United Nations Conference on Trade and Development, for leading GIPB until mid-2011. Special thanks to OCO Global and PA Consulting for managing the field work for this study. As in previous editions of GIPB, we wish to acknowledge the indispensable contribution of MIGA, which pioneered the methodology used for this report in 2006. Acknowledgments 1 Table of Contents Acknowledgments . .............................................................................................................................................1 ...............................................................................................................................................................6 Acronyms. Foreword ...............................................................................................................................................................7 Chapter 1: Overview .............................................................................................................................................9 The need for good investment facilitation in a weak economy.............................................................................9 GIPB 2012 results: Best-practice IPIs emerge in developing countries but global inquiry-handling weakens..............................................................................................................................................................9 ...............................................................................................................10 Best-practice IPIs share common traits. IPIs without regulatory functions do better at investment facilitation..................................................................11 In regional terms, OECD IPIs continue to lead the world. LAC takes over the #2 spot. And MENA is the only ........................................................................................................................12 region to show significant gains. Pockets of excellence everywhere provide insights into the particular challenges and opportunities for each region.......................................................................................................................................................13 ............................................................................15 Great improvements are possible even with limited resources. Chapter 2: Realizing the Potential of Online Investment Promotion........................................................17 Nearly all of the world’s national IPIs now have an online presence....................................................................17 OECD Web sites remain the benchmark for other regions..................................................................................18 The primary deficiency of IPI Web sites is a lack of substantive content..............................................................18 ......................................20 Focusing investment promotion on a few sectors has been proven to attract more FDI. IPIs that master content achieve best practice in GIPB........................................................................................21 Interactive tools can greatly enhance the promotional effectiveness of sector content........................................21 ............................................................24 Summary: How to realize the potential of online investment promotion. Table of Contents Acknowledgments 3 ..................................................27 Chapter 3: Good Inquiry Handling–The Next Level of Competitiveness. Worldwide, the quality of inquiry-handling is the lowest ever measured by GIPB................................................27 Five of six non-OECD regions exhibit weaker performance in inquiry-handling than in 2009..............................28 The largest drop in inquiry-handling performance was among OECD IPIs ..........................................................29 The primary deficiency of IPI inquiry-handling is a lack of substantive responses.................................................29 Summary: How to achieve a new level of competitiveness through good inquiry-handling.................................32 Chapter 4: Focus on Attracting FDI into Agribusiness................................................................................33 Agribusiness is highly valued for its promise of economic development and food security..................................33 IPI Web sites miss the mark on agribusiness.......................................................................................................33 Tailored inquiry responses are easy when you know what is important to the sector in general..........................35 Steps to improve the promotion of investment into agribusiness........................................................................39 Appendices Appendix A: Assessment Methodology for Web Sites and Inquiry-Handling.......................................................41 .................................................................................43 Appendix B: Description of the Inquiries Submitted to IPIs. ........................................................................................47 Appendix C: List of National IPIs Assessed, by Region. Boxes Box 1: How GIPB works.....................................................................................................................................10 ...................................11 Box 2: Mind over money–PRONicaragua shows how a small agency can do great things. Box 3: 14 steps to becoming a best practice investment facilitator.....................................................................12 Box 4: Hong Kong’s InvestHK: Where good is never good enough.....................................................................16 Box 5: IPIs have shown Web site excellence to be possible under very difficult circumstances.............................23 Box 6: Thailand’s Board of Investment used GIPB as a roadmap to best practices . .............................................24 Box 7: PRONicaragua shows us what a best practice inquiry response looks like.................................................31 Box 8: Invest in Greece Agency: Systematically presenting a solid business case ................................................32 Box 9: Rwandan IPI gets top marks for horticulture investment promotion.........................................................35 Box 10: Senegal’s IPI paves a path to land for investors .....................................................................................36 Box 11: Bosnia and Herzegovina’s IPI: Facilitation doesn’t stop after closing the deal .........................................39 Tables Table 1: Top Web Site in Each Region.................................................................................................................18 Table 2: Top 10 IPI Web Sites in the World.........................................................................................................18 ....................................19 Table 3: Best Regional IPI Web Sites for Investor Content and Promotional Effectiveness. Table 4: Examples of Strong Regional Improvement in IPI Web Sites...................................................................21 Table 5: Top 10 IPIs at Inquiry-Handling .............................................................................................................28 ................................................................................28 Table 6: Inquiry-Handling: GIPB Defines Practice Standards. Table 7: The Percent of Online Agribusiness Profiles Meeting Basic Quality Criteria.............................................34 Table 8: How Investment Projects Were Adjusted for Levels of Economic Development......................................43 4 Global Table Investment of Contents Promotion Best Practices 2012 Figures Figure 1: OECD High-Income Economies Retain Investment Facilitation Lead in GIPB 2012.................................12 Figure 2: Changes in Overall Performance, between GIPB 2006 and GIPB 2012, by Region................................13 Figure 3: Best Practice Web Sites Are Emerging in All Regions............................................................................17 Figure 4: A Deeper Look at What is Behind Web Site Performance.....................................................................19 ............................................................................19 Figure 5: Research Steps to Building Good Web Site Content. Figure 6: Everything You Ever Wanted to Know about a Sector in Two Clicks.....................................................20 Figure 7: Is Anybody There? Few IPIs are Ready to Answer When Investors Come Knocking...............................27 Figure 8: Changes in Inquiry-Handling Performance, between GIPB 2006 and GIPB 2012, by Region.................29 Figure 9: A Deeper Look at What is Behind Inquiry-Handling Performance.........................................................30 ........................................................................................33 Figure 10: IPIs Where Agribusiness Is a Priority Sector. Figure 11: Georgia Demonstrates a Strong Agribusiness Profile..........................................................................34 Figure 12: Main Topics in Agribusiness Profiles...................................................................................................35 Figure 13: The Belizean IPI’s Step-by-Step Instructions for Getting Access to Land and Water.............................36 Figure 14: Region- and Sector-Specific Wage Data in the Argentine Inquiry Response........................................37 Figure 15: The Case for Estonia’s Tax Competitiveness at a Glance.....................................................................37 Figure 16: Portuguese Transport Infrastructure in Maps......................................................................................38 ........................................................................38 Figure 17: A Primer on Greek Partnering Opportunities for R&D. Table of Contents Acknowledgments 5 Acronyms CEO chief executive officer EAP East Asia and the Pacific ECA Europe and Central Asia FAQ frequently asked question FDI foreign direct investment FIAS Foreign Investment Advisory Service GDP gross domestic product GIPB Global Investment Promotion Best Practices (formerly, Global Investment Promotion Benchmarking) IPI investment promotion intermediary LAC Latin America and the Caribbean MBA Master of Business Administration MENA Middle East and North Africa OECD Organisation for Economic Co-operation and Development PDF portable document format R&D research and development SA South Asia SSA Sub-Saharan Africa 6 Acronyms Foreword Global flows of foreign direct investment (FDI) declined severely during the recent economic and financial crisis. As the crisis eased, recovery in world economies spurred a resurgence of FDI, and that in turn reignited competition for investments among host countries. Especially in emerging markets, governments long have prized FDI as a source of much-needed capital and jobs. But in the 21st century, governments value FDI as much or more as a source of technology and know-how. Policymakers have witnessed how knowledge brought by foreign investors can spill over to local firms, bolster skills in the local workforce, and thus increase the overall competitiveness of their economies. To foster development of intellectual capital as well as businesses and jobs, governments increasingly recognize the importance of cultivating FDI. To position themselves to compete for FDI, most countries have set up investment promotion intermediaries (IPIs) to provide information on business conditions and opportunities to potential foreign investors. When IPIs develop relevant, accurate and timely information and make it easily available to potential investors, they reduce the risk perceptions and transaction costs of investment projects. The Global Investment Promotion Best Practices (GIPB) project examines how IPIs perform when approached by foreign investors during their short-listing process. The GIPB 2012 report, building on data and analysis from past editions, offers the most complete examination yet of how well IPIs accomplish this crucial task of information provision. Assessing IPIs’ work begs a more fundamental, pragmatic question: Does investment promotion in fact lead to higher FDI? To examine that question, researchers have looked at one practice most IPIs have in common: sector targeting. In their efforts to attract FDI, most IPIs target only specific sectors, reasoning that concentrating more intense efforts on a few priority sectors will lead to larger FDI inflows than less intense efforts across all sectors. Thus, if investment promotion works, we would expect to see countries receive relatively more FDI of the type they actively pursue. Recent research1 examined information on priority sectors, the timing of FDI targeting activities in a large number of countries and the flows of US FDI. The research showed that targeted sectors did receive more FDI than sectors not targeted; in fact, they received more than twice as much FDI as non-targeted sectors. This finding–that investment promotion is an effective way to increase FDI–should be both instructional and encouraging to IPIs. Providing business and investment climate information is a crucial component of IPI activities in all economies. But IPIs can gain particular advantage in those settings where investors find it most difficult to obtain reliable information and meet bureaucratic requirements. Research shows, for example, that investment promotion is more effective in economies where English is not an official language, and in economies that are more culturally distant from the investors’ corporate homes. Investment promotion also has more impact in countries with less effective governments and in economies that erect more barriers to launching a business (such as more time to obtain a construction permit). In this 2012 edition, GIPB focuses specifically on information provision in two sectors, tourism and agribusiness. This focus should be of particular use to economies that seek or are considering seeking FDI in those sectors. More broadly, the feedback GIPB provides can help IPIs improve their performance across all investment sectors in all economies. And the more IPIs succeed, the more investment-hungry economies, especially in the developing world, may be regarded as viable FDI partners. Beata Javorcik Reader in Economics University of Oxford 1 Torfinn Harding and Beata S. Javorcik, “Roll out the Red Carpet and They Will Come: Investment Promotion and FDI Inflows,” The Economic Journal, vol. 121, issue 557 (December 2011). Foreword 7 Chapter 1: Overview The need for good investment facilitation in a weak However, Global Investment Promotion Best Practices economy (GIPB) 2012 finds that 80 percent of national IPIs fail even to respond to investor requests for information, thereby In the last five years, the global market for foreign direct costing their economies valuable opportunities to win FDI. investment (FDI) shrunk by about 40 percent from an all-time record high of US$1.9 trillion.2 Countries that Increasing the competitiveness of their IPIs is one proactive value FDI as an engine of economic growth, job creation, policy governments can pursue to mitigate the current and industrial development now find themselves decrease in FDI inflows. The GIPB project surveys the competing for a smaller pie, but one that is still worth world’s IPIs triennially to collect examples of best practices more than US$1 trillion nonetheless. In 2010, for the first and provides an objective measure of IPI competitiveness. time ever, the majority of this FDI went to developing It provides 189 national IPIs with confidential, detailed and transition economies, demonstrating their increasing evaluations of their performance in providing information ability to compete globally. and assistance to potential investors. Using GIPB’s rigorous analysis to understand an IPI’s weaknesses will help the An analysis of 30,000 high value-added FDI projects IPI to undertake targeted, systematic, and cost-effective shows that government-provided information and improvements which will have a real impact on its ability assistance significantly influenced investor decisions to to attract FDI. locate in one economy or another.3 Known as investment facilitation, these efforts are typically the responsibility of a public investment promotion intermediary (IPI). A recent GIPB 2012 results: Best-practice IPIs emerge in University of Oxford study has shown that one dollar developing countries but global inquiry-handling spent on investment promotion increases FDI inflows weakens by 189 dollars and that 78 dollars spent on investment This edition of GIPB marks the first time an IPI from a promotion creates an additional job by a foreign affiliate.4 developing economy has demonstrated best practices This estimated effect is of course an average, with the for both its Web site and for each of two investor inquiry largest individual marginal effects occurring where IPIs responses. Indeed, it was the only IPI of the 189 to start with the least funding. demonstrate such a high level of investor facilitation performance this year. PRONicaragua achieved this In a recent survey of executives with site selection distinction after its management took the IPI’s 2009 responsibilities, 47 percent indicated a strong likelihood confidential GIPB report to heart and set about remedying that they would use the IPI Web site, and 83 percent each of the weaknesses identified. said they normally make direct inquiries with IPIs during the site selection process.5 In other words, investors are PRONicaragua’s CEO points to his country’s increased FDI listening and open to persuasion. If IPIs communicate flows as evidence of the impact of these improvements. In effectively, using carefully prepared information and the years from 2002, when PRONicaragua was established, excellent customer service, they have the opportunity to to 2006, the year of the first edition of GIPB, Nicaragua sway some investors that would otherwise not select their averaged US$246 million of FDI per year with little locations. variation. In the four years since then, the annual average has been nearly double at US$488 million. It is of course difficult to attribute such a significant improvement in 2 United Nations Conference on Trade and Development, World investment flows entirely to an IPI’s work. However, it Investment Report 2011: Non-Equity Modes of International Production and Development (July 2011). is clear that good investment facilitation reduces the investor’s cost of market entry, perception of risk, and 3 Kusi Hornberger, Joseph Battat, and Peter Kusek, “Attracting FDI: How Much Does Investment Climate Matter?,” World Bank Group Viewpoint, personal sense of comfort about doing business in no. 327 (August 2011). a location. PRONicaragua believes that this helps to 4 Torfinn Harding and Beata S. Javorcik, “Roll out the Red Carpet and maximize the consideration given by investors to its They Will Come: Investment Promotion and FDI Inflows,” The Economic location. Journal, vol. 121, issue 557 (December 2011). 5 Development Counsellors International, “A View from Corporate Despite the compelling case for governments to America: Winning Strategies in Economic Development Marketing,” (September 2011). strengthen their IPIs, GIPB 2012 finds mixed results. Chapter 1: Overview 9 The average Web site improved marginally from 59 percent in One possible reason for this weakening performance given by 2009 to 61 percent, despite the inclusion of several new IPIs some IPIs is that lower government revenues have reduced IPI with weak or non-existent Web sites. However, the average budgets and, perhaps, staffing. In fact, at least two of GIPB performance for inquiry-handling dropped from an already 2009’s best-practice examples, the IPIs of Hungary and Croatia, weak 28 percent to 22 percent, representing a serious decline were undergoing major restructuring at the time of GIPB in the ability of many IPIs to provide meaningful responses or, in 2012’s assessments. Undoubtedly, reduced resources make it fact, even to acknowledge investor requests for information. harder for IPIs to do well at investment facilitation, but they do not preclude it, as exemplified by PRONicaragua’s impressive performance (see Box 2). Second, it is possible that IPI staff make calculated decisions not to pursue what they perceive as Box 1: How GIPB works low-priority investment leads. However, GIPB 2012 inquiries provided detailed descriptions of large planned projects in Nearly every economy in the world has a national institution, almost agribusiness and tourism, which are priority sectors for many always publicly financed, that is dedicated to promoting its economy IPIs. Unfortunately, neither of these explanations seems to as a destination for FDI. The functions and services provided vary from really account for the persistent structural and operational IPI to IPI, based on circumstances and priorities. However, “investment weaknesses revealed by three editions of GIPB. facilitation,” the task of providing potential investors with the information and assistance needed to make an informed location Some governments may see IPI budgets as politically safe places decision, is the primary function that IPIs must do well to maximize from which to cut spending, but they should be aware of the their economies’ chances of winning investment. significant potential negative effect on FDI inflows this could entail. According to another recent study of 156 countries GIPB 2012 makes rigorous, objective, and quantified assessments by University of Oxford,6 there is a strong positive correlation of two aspects of the investment facilitation performance of 189 between a country’s facilitation performance (as reflected in national-level IPIs: Web sites (50 percent of overall performance) and GIPB) and its FDI inflows. It compares each country’s average handling of investor inquiries (50 percent of overall performance). annual FDI inflows from 2000 to 2010 with the average of its The methodology allows each IPI’s performance to be expressed performance in the three editions of GIPB. The study found as percentage figures thus allowing global and regional aggregate that a 1 percentage point increase in GIPB performance was statistics to be presented. Web sites and inquiry responses are associated with a 1.5 percentage point increase in FDI inflows. categorized as follows in order to allow the identification of good and In other words, an economy whose IPI is assessed at 60 percent best practice examples, which are the subject of this report: on GIPB receives on average 25 percent more FDI than an • Best practice 81-100% economy whose IPI is assessed at 45 percent. This study controls for average level of GDP per capita, GDP growth, population • Good 61-80% size, inflation, political stability, and quality of the business climate. • Average 41-60% Therefore, focusing performance analysis on budget distracts • Weak 21-40% from opportunities that most IPIs can take by implementing simple, low-cost remedies as exemplified by many best-practice • Very weak 0-20% IPIs (see Box 3). The assessment is based on a review of each IPI’s Web site, and its responses to two investor requests for information. These inquiries Best-practice IPIs share common traits are made using a “mystery shopper” approach, whereby a global site selection firm submits GIPB inquiries as the inquiries of a supposed The IPIs offering a best-practice facilitation service to prospective anonymous investor. A small number of IPIs (five) expressed suspicion investors have diverse characteristics and operate under that these inquiries were GIPB assessments, however, all of these diverse circumstances. PRONicaragua, operates on less than responded to the inquiries with varying degrees of quality. US$1 million a year and was the first Latin American IPI to demonstrate best practices in both its Web site and its overall The two inquiries focused on agribusiness and tourism projects, both inquiry-handling. InvestHK of Hong Kong became the first of which are priority sectors for a large majority of IPIs. Inquiry details East Asian IPI to do the same, while ABA–Invest in Austria was were adjusted slightly depending on whether the IPI being assessed the only one to excel at facilitation for two consecutive GIPB was in a developed or developing economy, so as to reinforce editions. relevance to each IPI. ITD Hungary and Invest in Greece Agency both improved greatly At the end of the process each IPI receives a confidential, detailed from 2009. ITD Hungary did so despite the fact that it received summary of its own performance results. Many IPIs have utilized both GIPB inquiries after it had been disbanded and while its this feedback to undertake improvements. Indeed, a number of governments have requested that GIPB assessments be undertaken for their sub-national agencies as well. 6 Beata Javorcik and Torfinn Harding, “Investment Promotion and FDI Inflows: Quality Matters,” World Bank Group (forthcoming). 10 Global Investment Promotion Best Practices 2012 staff was awaiting reassignment. Invest in Greece Agency went from being among the OECD’s weakest performers in 2009 to being among the world’s strongest in 2012. Most impressively, Box 2: Mind over money–PRONicaragua shows how a small at a time of economic turmoil, when many IPIs would be agency can do great things discouraged, Invest in Greece Agency tried harder. Nicaragua was the only IPI in GIPB 2012 to have a best-practice Web site and two best-practice inquiry responses. It has shown Despite the varied circumstances in which these IPIs operate, how the IPI of a small, lower-middle-income economy, one riven by there are two core characteristics shared by all of them: a armed domestic conflict less than a generation ago, can achieve a customer-oriented approach and preparedness. They have performance level that eludes even the world’s most seasoned IPIs. all anticipated the informational needs of their customers (potential investors) and have prepared data on the resources After PRONicaragua was found to be a good–albeit not best and costs of doing business in that economy and its most practice–IPI in 2009, CEO Javier Chamorro gave his staff a important sectors. challenge: to be among the world’s best facilitators by GIPB 2012. If the IPI could achieve that, Chamorro said, “investors would This gives investors the ability to quickly and directly plug data see it as a strong indication of the commitment of Nicaragua’s into their cost-benefit analyses. Online, information is easily government to FDI attraction, and the people in our country will found on the IPIs’ Web sites, using text, maps, databases, see that we are capable of great things.” Since the IPI’s founding in downloadable spreadsheets, and other means that make the 2002, it had helped raised foreign investment dramatically with a information easy to understand and manipulate. It is presented staff of just 25 and an annual budget of US$900,000. with a promotional statement of the business case for investing in that economy and with direct contact information for IPI staff, To achieve a higher level of performance, the agency undertook whom are easily reached, knowledgeable, and ready to serve a complete reassessment of its operations. With the help of a the investor. team of students from a renowned local MBA program, the IPI reviewed and revised its internal systems. It also subjected Offline, country and sector information is kept in electronic form sector personnel to inquiry-handling tests, using its own mystery for easy packaging with branded communications templates shopper methodology. With what it learned from those efforts, and promotional text. Additional sources of public information PRONicaragua created a five-step response protocol designed are already identified, and partnerships with potential private to ensure great customer service and convert investor interest sources are already established. This way IPI staff can quickly into project leads. With good systems in place, says Chamorro, tailor information packets in a way that answers each of every “all you need is creative, capable, committed people,” and at unique investor’s questions. PRONicaragua staff keep this facilitation protocol posted by their desks: For the purpose of regional comparison, GIPB groups IPIs into the categories below. For a complete list of IPIs assessed, please 1. Acknowledge receipt of inquiry by email within 24 hours see Appendix C. 2. Give a full or near-full response within 7 calendar days • EAP: East Asia and the Pacific 3. Provide any missing or more detailed information within • ECA: non-OECD Europe and Central Asia another 7 calendar days, or simply follow up to confirm receipt of response and receive additional questions • LAC: Latin America and the Caribbean • MENA: Middle East and North Africa 4. In another 15 days, try to arrange a conference call to hear project status, answer questions, and propose a country visit • SA: South Asia • SSA: Sub-Saharan Africa 5. In another 30 days, inquire about project status, offering a conference call or country visit • OECD: High-income members of the Organisation for Economic Co-operation and Development. This is the only non-geographic category, which groups together IPIs from developed countries. This includes most of IPIs without regulatory functions do better at investment Europe and North America, as well as Australia, Japan, facilitation New Zealand, the Republic of Korea and Israel. GIPB’s use of this label excludes developing country members Building on GIPB 2009 findings, a second study in 2011 of the OECD, which are included in the six geographic discovered a strong negative correlation between an IPI’s categories. success at investment facilitation and it having responsibility for regulatory duties on top of its promotional ones.7 That is to 7 Robert Whyte, Celia Ortega, and Carlos Griffin, “Investment Regulation and Promotion: Can They Coexist in One Body?” World Bank Group Investment Climate In Practice, no. 16 (March 2011). Chapter 1: Overview 11 say, an IPI that administered incentives, negotiated concessions, processed licenses and permits, or administered government Box 3: 14 steps to becoming a best practice investment assets performed less well than IPIs focused only on promotion. facilitator This was attributed to several factors including: the needs for different knowledge, skills, internal systems, and organizational Following GIPB 2009, a survey-based study of 96 GIPB-evaluated IPIs culture; stronger public encouragement to dedicate time and was done to understand the differences in practices between the resources to regulation; and investor wariness of dealing with best facilitators and weaker ones. It identified 14 steps taken by the regulators that approached them with a promotional agenda. former to instill their organizations with the customer service and These findings are borne out by the results of GIPB 2012. The preparedness needed to excel. 10 IPIs with the best Web sites (See Chapter 2) and the 10 Foster a private sector-minded culture IPIs with the best inquiry-handling (see Chapter 3) list only promotional activities among their top three priority functions. 1. Build a staff with public and private sector experience. In other words, the world’s best facilitators are almost all dedicated investment promoters. 2. Offer salaries and bonuses closer to private sector standards. It is understandable that an IPI dedicated to helping investors 3. Secure operational freedom and high-level reporting channels. navigate a difficult regulatory environment in its country might be tempted to provide a better environment by taking over 4. Establish and concentrate efforts in a few priority sectors. regulatory functions. However, there is a limit to what an IPI 5. Coordinate facilitation with networks and partners subnationally can do, and an IPI’s support to investors is not a substitute for and overseas. regulatory simplification. 6. Maintain English-speaking staff in sufficient numbers and with In regional terms, OECD IPIs continue to lead the world. the full range of facilitation skills. LAC takes over the #2 spot. And MENA is the only region 7. Continually train and develop staff, especially in soft skills. to show significant gains8 Accumulate deep business knowledge As in the first two editions of GIPB, OECD IPIs provided the best service to potential investors in 2012, in terms of both 8. Establish a minimum level of in-house research capacity. their Web sites and their inquiry-handling, as shown in Figure 1. 9. Develop account managers into reservoirs of knowledge on Figure 1: OECD High-Income Economies Retain Investment particular sectors Facilitation Lead in GIPB 20128 10. Ensure the accumulation of knowledge and its relevance. Implement internal systems for consistently good facilitation 11. Make facilitation a priority within the overall strategy, including by training and dedicating an adequate proportion of staff. 12. Maintain the equipment and practices to be easily reached and to quickly return calls and e-mails. 13. Demonstrate professionalism and dynamism through the Web site with frequent news updates of importance to investors. 14. Follow detailed guidelines on the content, style, timeframe, and quality assurance of inquiry responses. Source: Ortega, Celia and Carlos Griffin. 2009. “Investment Promotion Essentials: What Sets the World’s Best Facilitators Apart from the Rest,” Investment Climate IN PRACTICE note, No. 6. Investment Climate Advisory Services, World Bank Group, Washington, D.C. 8 The regional averages for GIPB 2012 reflect the World Bank Group’s 2011 regional classifications. Therefore, a number of economies (namely Estonia, Israel, Poland, and Slovenia) which were previously classified by their geographic regions have now been included in the OECD high-income group. 12 Global Investment Promotion Best Practices 2012 Figure 2: Changes in Overall Performance, between GIPB 2006 and GIPB 2012, by Region These high-performing IPIs have been in existence longer, have other regions. Therefore, most future improvements in the implemented more of the 14 steps to excellent facilitation listed overall competitiveness of IPIs will have to come from better in Box 3, and have more investor-friendly investment climates, inquiry-handling. PRONicaragua illustrates how focus and as evaluated by international studies such as Doing Business 9 good management can matter more to an IPI’s success than and Investing Across Borders.10 its budget or its economy’s level of development. This lesson is confirmed in a review of the very basic practices which weak Of GIPB’s six regional groupings, EAP, ECA, and SA did performers failed to apply. For inquiry-handling, best practice substantially worse in 2012, falling by 3-5 percentage points, standards require ensuring that investors can reach IPI staff, LAC and SSA were essentially flat, and only MENA showed receive prompt, thorough answers to questions, and be given significant progress. excellent overall customer care. In 2009, the ECA region was second only to OECD, but its Pockets of excellence everywhere provide insights into the five percent drop in 2012 allowed LAC to overtake it and particular challenges and opportunities for each region claim the #2 spot for the first time. In 2009, MENA was stronger than SSA only, but its six percent increase in 2012 EAP: East Asia and the Pacific has lifted it to the middle of the ratings and only three percentage points behind ECA. • East Asia and the Pacific Islands comprise two very different subregions. Of 13 East Asian IPIs, 10 have strong Web sites, In fact, the regional average Web site performance for LAC, whereas of the 15 Pacific Island IPIs, only three have strong ECA, and MENA are almost identical. The variation in their Web sites and three have none at all. IPIs without Web performances is due entirely to the quality of their inquiry- sites are found only in the Pacific Islands and Sub-Saharan handling. Except for OECD, which is the only group to have Africa. A performance gap between East Asia, a region that acceptable inquiry-handling, all other groups are quite weak in is known for its dynamic emerging economies, and the this category. Pacific Islands, a region known for its remoteness, might be expected. Therefore, it is surprising that when Hong This poor global performance in inquiry-handling stands in Kong and Singapore–the region’s strongest facilitators–are stark contrast to the strong global performance for Web excluded from the East Asia average, inquiry-handling sites, which are rated best practice for three-fourths of IPIs in performance is almost identical between the two subregions. the OECD and average or better for most IPIs in each of the It seems that East Asian IPIs do very well at understanding and meeting the informational needs of international investors online, but they are very weak at the in-person 9 World Bank and IFC, Doing Business 2011: Making a Difference for marketing and customer service needed to make full use of Entrepreneurs, www.doingbusiness.org their informational advantage. 10 World Bank Group, Investing Across Borders 2010: Indicators of foreign direct investment regulation in 87 economies, http://iab.worldbank.org. Chapter 1: Overview 13 All but a few of the larger Pacific Islands suffer from MENA: Middle East and North Africa remoteness, small size, and consequent obscurity among international investors. This is all the more reason for • This is the only region to see collective improvement since Pacific Islands to focus on achieving strong Web sites which 2009 in both Web sites and inquiry-handling. If the relative can deliver a relatively high marginal impact on investor changes to regional performance in 2012 were repeated awareness at relatively low cost. Despite the very low in the next GIPB edition, MENA could overtake ECA and staffing of Pacific IPIs (many have only 1-2 staff members), see some of its IPIs emerge among the world’s strongest they could greatly improve their performance by doing one facilitators. basic thing: ensuring every investor inquiry gets some kind One driver of MENA’s Web site improvements has been of response. More than half of Pacific IPIs ignored both GIPB new national Web portals in North Africa, designed to inquiries completely, and the rest replied to only one of the promote nontraditional industries through the provision of two. well-researched business information. Improvement in the region’s inquiry-handling was more modest, but interesting in that it was the only region to show improvement despite ECA: non-OECD Europe and Central Asia the region-wide political turmoil ongoing at the time of • As in 2009, GIPB 2012 found that most IPIs in Central Asia the assessment in 2011. Those events of course may have are difficult for investors to contact and very inconsistent in affected some IPIs’ abilities to respond well to inquiries. responding to inquiries. Their scarcity of English-speaking It is unclear what effect new governments and new staff may be understandable in light of the fact that most of priorities will have on MENA IPIs and their pursuit of FDI. their FDI inflows come from within ECA. However, this has Efforts to address intractable problems such as high youth the effect of reducing Central Asian IPIs competitiveness for unemployment could certainly be helped by higher levels of most global FDI, including for targeted activities of higher FDI, which will require IPIs to be more responsive. value-added. Many non-OECD European IPIs, by contrast, are among the SA: South Asia strongest facilitators in the world. IPIs in parts of Eastern Europe, the Baltics, Southeast Europe and the Caucasus • This region consists of eight IPIs. Board of Investment perform at levels as high as OECD average levels. Five of Bangladesh was the only one to have a best practice Web 2012’s best investment facilitators are IPIs from this site. In inquiry-handling, all IPIs were quite weak, with one region–Cyprus, Turkey, Estonia, Serbia and the Slovak IPI failing to reply to the agribusiness inquiry and six IPIs Republic. In or near the European Union, the world’s failing to reply to the tourism inquiry. These results are largest source of FDI outflows, these IPIs are seriously almost identical to those of 2009, showing the surprising under consideration for all types of FDI–efficiency-seeking, intransigence of problems in a region with some of the market-seeking, and resource-seeking. They are in direct longest-serving IPIs. competition for this FDI with the OECD’s own excellent IPIs, Three of this region’s IPIs were established as boards which has apparently spurred them to excel as well. of investment charged with regulating FDI and only subsequently had FDI promotion added to their mandates. Two other IPIs reside within ministerial departments. LAC: Latin America and the Caribbean Interestingly, World Bank Group studies have found that • LAC can be divided into three subregions, Central America regulatory bodies and ministerial subunits face special plus Mexico, the Caribbean, and South America. Although challenges to good investment facilitation.11 these regions have a comparable overall performance, several of Central America’s IPIs are now handling inquiries SSA: Sub-Saharan Africa at OECD levels, consistently providing thorough responses with customized business cases and attentive follow-up. • Since its inception in 2006, GIPB has assessed Sub-Saharan On average, the Caribbean is weak in inquiry-handling, Africa to be the weakest region in terms of overall although it has made significant strides in its online presence investment facilitation, with nearly three-fourths of its 46 since 2009, and 13 of its 15 IPIs now have strong Web sites. IPIs offering a very poor service to investors. These IPIs tend South America as a whole has also been on a path of to focus more on administrative facilitation, such as helping steady facilitation improvement since GIPB 2006, but with investors secure permits and licenses needed for new some significant remaining weaknesses. First, the region’s projects, although even here their effectiveness has been performance in inquiry-handling remains low, close to the Caribbean level. Second, half of the subregion’s Web sites have serious deficiencies in terms of content quality, and 11 Robert Whyte, Celia Ortega, and Carlos Griffin, “Investment Regulation and one-fourth do not provide information in English. Promotion: Can They Coexist in One Body?” World Bank Group Investment Climate In Practice, no. 16 (March 2011); Celia Ortega and Carlos Griffin, “Investment Promotion Essentials,” World Bank Group Investment Climate In Practice, no. 6 (September 2009). 14 Global Investment Promotion Best Practices 2012 questioned in investor surveys. Administrative facilitation requires very different staff skills and knowledge from active FDI promotion. This is evident in the very low GIPB inquiry response rate. APIX Senegal distinguished itself as the only SSA IPI to respond to both inquiries in 2012. Eight IPIs replied to at least one inquiry, but the remaining 37 IPIs ignored both. Within the region there is some variation in performance, as East and Southern African IPIs generally tend to have more developed Web sites. In West and Central Africa, one-fourth of the IPIs still lack Web sites and many are not reliably available by phone or e-mail. Many of these West and Central African countries are among the least-known to the business world, making it all the more essential that the region’s IPIs make the fullest possible use of Web sites. For example, given limited resources, IPIs in this region might consider developing partnerships with chambers of commerce, sector associations and private sector consultants committed to business development. In economies where English is not spoken, the IPI can be even more critical to facilitating FDI by furnishing key data in English, the international language of business. Great improvements are possible even with limited resources Despite the average decline in inquiry-handling between 2009 and 2012, one-fifth of the world’s IPIs made some improvements to their facilitation performance. The most notable improvers were the IPIs of Mali, Morocco, Yemen, and the Dominican Republic. These major strides were achieved on the strength of improvements to inquiry-handling as well as Web sites. Beyond these four, however, all other big improvements were made on the strength of one category or the other. However, improvements need not be large to be impressive, especially as an IPI gets closer to the group of best performers and has less room to grow. InvestHK, for example, made slight improvements to both its Web site and its inquiry-handling, but this was enough to make it one of the world’s most effective facilitators and the strongest facilitator in East Asia in GIPB 2012. InvestHK has also been one of GIPB’s most consistent improvers since the first edition of GIPB in 2006 (see Box 4). That two of the four most improved IPIs represent least developed countries and that one, Yemen, achieved its improved inquiry responses amid the region-wide political turmoil of 2011 is a testament to the fact that any IPI can achieve investment facilitation excellence with the right focus and despite limited resources. Chapter 1: Overview 15 Box 4: Hong Kong’s InvestHK: Where good is never good enough “We’re always a work in progress.” This is the philosophical underpinning of Invest Hong Kong’s kaizen and the driver behind its unique position as GIPB’s most consistent improver. Made famous by Toyota Motor Corporation, kaizen is the practice of continual reflection on and improvement of organizational processes. InvestHK credits the approach with the large, steady strides it has taken from an average facilitator in GIPB 2006 to a good one in GIPB 2009 and finally to one of the world’s best-practice IPIs in GIPB 2012. Andrew Davis, Associate Director-General of Investment Promotion, explains the urgency of this motivation, “We are only as good as our last set of results, so we always strive to find new opportunities and be prepared as an organization to capitalize on them.” InvestHK’s practice of continual self-assessment and improvement is highly inclusive, depending on insights from staff at all levels, stakeholders, and most crucially customers. “We are market-driven rather than product-driven. We have to adapt with the market, catering to the ever-changing needs of our clients,” says Associate Director-General of Investment Promotion, Charles Ng. As large multinationals have the internal resources to enter the Hong Kong market with little trouble, InvestHK’s biggest impact is in supporting foreign SMEs. With fewer resources, SMEs place proportionately higher value on the industry and government connections that InvestHK can provide. These SMEs represent an exceptionally diverse and dynamic market segment, and InvestHK’s process of continual improvement has allowed it to nimbly tailor its services to them, adjusting its priority sectors, reorganizing its sector teams, and hiring specialized staff. “We have to know what we’re talking about. Knowing your product [a particular sector’s value proposition] and believing in it are essential. You can’t sell something if you don’t believe in it,” says Mr. Davis. The companies assisted by InvestHK since its inception in July 2000 have reported important impacts for the city: more than US$7 billion in FDI and more than 25,000 jobs created. This sector-based organization also puts sector teams in the ideal position to understand and keep up with the latest customer trends, for example, adopting LinkedIn, Flickr, and Twitter to better connect with potential clients, media, and multipliers worldwide. As Mr. Ng explains, “At the end of the day this is a people business. People buy people.” So, whatever changes may come, there is always one constant at InvestHK: staff must be the best and the brightest, with specialized knowledge and a client-first mindset. Mssrs. Ng and Davis say they have managed to build such a team by understanding the characteristics of their employees. One particular issue is that their staff is a mix of civil servants, recruited through regular government staffing mechanisms, and non-civil servants, recruited on the open market. This means their staff has a strong mix of knowledge covering, on one hand, the government system and, on the other, private sector practices and specific industries. Industry knowledge allows staff to understand client needs, while government knowledge enables them to better meet client needs through smoother navigation of government procedures. When such resources are Note: Currency converted from Hong Kong dollars at a rate of 1 HKD = 0.128466 USD deployed correctly, this is a powerful combination from an investor’s perspective. 16 Global Investment Promotion Best Practices 2012 Chapter 2: Realizing the Potential of Online Investment Promotion An IPI’s Web site is a golden opportunity to showcase Of the 189 Web sites assessed in GIPB 2012, 62 percent its economy in the best possible light. Whether the IPI were considered best practice (51 IPIs) or good (67 IPIs), represents a developed or developing economy, a big which compares favorably with GIPB 2009 when 59 economy or a small island, the Web provides a level percent of IPIs were included in these categories (50 best playing field to make a strong impression. GIPB 2012 practice and 56 good). However, more than one-fifth of found that although many IPIs have made improvements IPIs have Web sites that are still weak or very weak, often to their Web sites since 2009, many still do not fully with their Web sites being little more than institutional exploit this opportunity. Although their sites are attractive, business cards, far from being true information portals they often lack the business information that investors packed with content that investors need. seek. Figure 3: Best Practice Web Sites Are Emerging in All Regions Nearly all of the world’s national IPIs now have an Nevertheless, as Web development tools become more online presence affordable, even IPIs with limited resources can create With ever broader penetration of the Internet and well-designed Web sites that showcase content and dissemination of Web site development skills, it has services. As noted in GIPB 2009 and reinforced by become commonplace for even low-income and remote GIPB 2012, best-practice IPI Web sites are those that economies to have their own Web sites. Of the 189 IPIs continuously develop more investor-friendly ways to assessed in 201212 only eight did not have an investment present information. They avoid gimmicky features that promotion Web site, six of which are in least developed might confuse or frustrate visitors and use interactive countries. Of the eight, two are Pacific islands and six are features to help investors find desired information quickly in Sub-Saharan Africa. In the 2009 edition of GIPB, the and simply. In this way they keep their locations at the proportion of national IPIs without Web sites was more forefront as investors make project decisions, and they than double, 16 of 181, showing important movement position themselves as sophisticated, creative project toward a universal Web presence for IPIs. partners. Without a credible Web presence, IPIs could be dropped early from the site selection process. Locations for which data are not readily available will fare poorly 12 The GIPB 2012 project assessed IPI Web sites between February and against competitors whose locations might in fact be less early April 2011. Chapter 2: Realizing the Potential of Online Investment Promotion 17 Table 1: Top Web Site in Each Region SElECTED ArEAs OF BEsT IPI LOCATiON REGiON BENEFiTs TO POTENTiAl INVEsTOrs PrACTiCE Core location data, organizational Provides thorough detail on the location, and how the IPI can Taiwan, China East Asia and the Pacific information assist Easy to find useful information, and the site has features to Turkey Europe and Central Asia Quality of design, navigation hold the investor’s attention Latin America and the Allows the user to review the information easily and circulate Nicaragua Downloadable sector information Caribbean with peers Middle East and North Business focus, international Can be easily used by potential investors from a range of global Tunisia Africa languages economies Sector content, promotional Information is highly relevant to sectors. Case studies Austria OECD high-income effectiveness demonstrate the location’s strong track record Graphic content, data fully Convinces the user that the IPI is seriously focused on business Bangladesh South Asia sourced and dated and that data is credible Straightforward to find information. Clear about whom at the Mauritius Sub-Saharan Africa Contact information, ease of use IPI should be contacted for further assistance appealing but whose information is complete. All regions now for potential investors. Promotional effectiveness follows, host several IPIs with world-class Web sites, as shown in Figure while architecture and design are necessary but relatively less 3 and Table 1. important categories.13 The global averages for the four Web site categories are shown OECD Web sites remain the benchmark for other regions by the heights of the bars in Figure 4. The relative weight of Although there are highly competitive IPI Web sites in all regions each category is represented by the size of the bubble at the of the world, the best from investor perspectives continue to base of each bar. The global average for three of four Web come from OECD countries. Table 2 shows a list of the top 10 site categories is relatively good, but content lags, significantly Web sites, eight of which are from OECD economies. depressing overall performance. The large majority of IPI Web sites, even those that were The primary deficiency of IPI Web sites is a lack of weak overall, had sound information architecture and design substantive content suggesting that IPIs have a good technical grasp of how Web sites were assessed against four categories: information the internet delivers information and an ability to create or architecture, design, content, and promotional effectiveness. purchase good Web site design. However, the content and These are the four components of the global averages given in promotional effectiveness of IPI Web sites were much weaker. Figure 4. Content, which refers to the presence and usefulness This is a worrisome trend because if the information provided to of crucial business information, is obviously the most important investors is not of a high quality, even the best-designed Web site will be ineffectual. Similarly, if information is not packaged Table 2: Top 10 IPI Web Sites in the World 1. ABA–Invest in Austria 6. Invest in Spain 2. CzechInvest (Czech Republic) 7. Investment Support and Promotion Agency of Turkey 3. Austrade (Australia) 8. PRONicaragua (Nicaragua) 4. Germany Trade and Invest 9. Department of Investment Services (Taiwan, China) 5. Invest in Denmark 10. Hungarian Investment and Trade Development Agency 13 The relative weights assigned to each category were discussed and validated in a focus group of site selection consultants. A more detailed description of the weights can be found in Appendix A. 18 Global Investment Promotion Best Practices 2012 Figure 4: A Deeper Look at What Is Behind Web Site Performance appealingly for ease of understanding and maximum impact, information includes an economic and political profile of the the promotional opportunity will be squandered. country, information on government regulations and support, a complete picture of the steps and costs to setting up and With respect specifically to content, OECD IPIs are best practice operating a business, and perhaps, most importantly, detailed on average, while the IPI Web sites of ECA, LAC, and MENA sector profiles. An IPI needs a deep understanding of the each had, on average, good content, meaning that most IPI sector-specific business opportunities and challenges through Web sites in those regions offer satisfactory information to which potential investors see their economies. If they want to investors. On the other hand, IPIs in SA and EAP have weak influence investment decisions, IPIs must have and be able to content on average. In Sub-Saharan Africa, IPI Web sites are convey solid knowledge of markets, value chains, production generally very weak in terms of content. Table 3 lists each processes, cost drivers, industry players, relevant public policy, region’s strongest IPIs in content and promotional effectiveness. innovations, trends, and how all these factors interact with an economy’s unique advantages and disadvantages in each Excellent content requires an initial investment of time to priority sector. An IPI needs this information on its Web site if it gather or research information on the factors affecting wants to be seen as a serious partner by potential investors. This business decisions in a location, and subsequent maintenance will encourage investors to contact the IPI with real investment from a dedicated staff member to keep it up to date. Good projects in hope of getting additional tailored information. Table 3: Best Regional IPI Web Sites for Investor Content and Figure 5: Research Steps to Building Good Web Site Content Promotional Effectiveness RESEARCH STEPS SAMPLE CONTENT PRODUCED PrOMOTiONAl REGION CONTENT EFFECTiVENEss Research investment Country research, information on environment in your country incentives, free zones, BITs/IIAs East Asia and the Pacific Taiwan, China Thailand Testimonials, sector research, Conduct sector research and Europe and Central Asia Turkey Serbia comparative advantages of your identify investment opportunities country, specific opportunities Latin America and the Nicaragua Jamaica Caribbean Learn about facilitation services Investment guides, services, Middle East and North and administrative requirements contact information, related links Tunisia Morocco Africa General monitoring and staying Events, news, press releases OECD high-income Germany Australia abreast of country information South Asia Bangladesh Pakistan Sub-Saharan Africa South Africa Swaziland Chapter 2: Realizing the Potential of Online Investment Promotion 19 Focusing investment promotion on a few sectors has been A primary reason for these failings is a lack of stock information, proven to attract more FDI despite the fact that most public IPIs potentially have institutional access to much of the information needed by Studies have shown that IPIs that target sectors attract more FDI potential investors. Governments generate data and analysis than those that do not. One study found that sector-targeting on labor, infrastructure, transport, taxes, regulation, and other increased the growth rate of FDI inflows into that sector by 41 business-critical factors, which are not generated by the private percent.14 Another found that in developing countries targeted sector, either because they do not have access to the same sectors received 155 percent more FDI than non-targeted sources or because they find it cost-prohibitive. Most public sectors.15 IPIs have only to identify the information needed by potential investors, establish connections (which are usually encouraged IPIs need sector expertise to generate information of high value if not mandated by public policy) with the government sources to investors, but it is difficult for any IPI to be an expert in all of that information, periodically collect up-to-date information, sectors. It is therefore necessary to identify a few sectors of and present it in a way that is comprehensive, accessible with a priority to national development and focus on those. GIPB 2012 minimum of clicking, and promotionally effective. found that most IPIs have ostensibly taken this step, articulating a list of priority sectors, but in practice have done little to For example, from the home page of Singapore’s Economic accumulate sector-specific research and staff expertise, or even Development Board, a single click will take a visitor to a to ensure that all priority inquiries receive replies (see Chapter micro-site for each of EDB’s 20 priority sectors. A typical 3). GIPB collected information on the priority sectors of 182 IPIs micro-site will have a promotional video, a sector profile, and found that 65 percent identified agribusiness as a priority industry news, fact sheets, and testimonials from satisfied sector. Of these only 32 percent responded at all to GIPB’s investors in that sector, as in the aerospace engineering agribusiness inquiry. Similarly, 59 percent of the IPIs identified example shown in Figure 6. The menu on the right-side of the tourism as a priority sector but only 38 percent responded to micro-site ensures that visitors do not get lost navigating this the tourism inquiry. extensive information and can get to the same information in any other priority sector with a single click. Figure 6: Everything You Ever Wanted to Know about a Sector in Two Clicks 14 A. Charlton and N. Davis, “Does Investment Promotion Work?,” London School of Economics, (2006). 15 Torfinn Harding and Beata S. Javorcik, “Roll out the Red Carpet and They Will Come: Investment Promotion and FDI Inflows,” The Economic Journal, vol. 121, issue 557 (December 2011). 20 Global Investment Promotion Best Practices 2012 Table 4: Examples of Strong Regional Improvement in IPI Web Sites REGiON IPI LOCATiON WEb ADDrEss REAsONs FOr IMprOVEMENT Site was available only in Mandarin in 2009. In 2012 East Asia and the Pacific Taiwan, China www.dois.moea.gov.tw has excellent presentation and core information in English Developments in quality of sector information, plus a Europe and Central Asia Turkey www.invest.gov.tr range of interactive, user-friendly design features No Web site in 2009. Now strong level of basic Latin America and the Caribbean St. Kitts and Nevis www.stkittsipa.org information provided within an easy-to-use site Site was not available in English in 2009. High level of Middle East and North Africa Morocco www.invest.gov.ma presentation and quality of core information Significant improvement in core and sector OECD high-income Australia www.austrade.gov.au information, as well as downloads. Now one of the world’s best practice Web sites. This new IPI now has sector information available and South Asia India www.investindia.gov.in good contact information No Web site in 2009. Now strong presentation with Sub-Saharan Africa Sierra Leone www.sliepa.org good basic level of information provided IPIs that master content achieve best practice in GIPB Turkey: Benchmarking tool The importance of substantive, sector-specific content is clear The Web site of the Investment Support and Promotion when analyzing the measures behind the biggest improvements Agency of Turkey (www.invest.gov.tr) offers an interactive by individual IPIs between 2009 and 2012, as summarized in “Benchmark Turkey” tool. Visitors click on metrics Table 4. The largest improvements in each region are largely that interest them and select competitors from a list attributable to two measures: i) adding good content specific of countries provided. The tool then generates charts to each IPI’s economy and priority sectors and ii) ensuring that showing how Turkey compares to those countries on all the basics are taken care of. The basics include, having a those metrics. The easy-to-use tool quickly provides Web site in the first place, displaying clear and current contact visually compelling charts on key location factors. information, and making all information available in English, as the international language of business. Interactive tools can greatly enhance the promotional effectiveness of sector content Promotional effectiveness is not only about marketing language; it is also about clarity and depth. One of the most important things an IPI can do to enhance its promotional effectiveness is take large amounts of information and present it concisely with its implications for investors made clear. Visual aids, such as maps and charts, and interactive Web features, such as databases and report generators, are invaluable for this purpose. GIPB 2012 found more IPI Web sites than ever employing innovative tools to present information. The Web sites of the IPIs of Turkey, Costa Rica, Denmark, and Jordan provide instructive examples: Chapter 2: Realizing the Potential of Online Investment Promotion 21 Costa Rica: Downloads of key location factors The Costa Rican Investment Promotion Agency Web site (www.cinde.org) provides standard sector pages with an effective mixture of data, charts and tables. In addition for each key location factor, it provides downloadable PDF documents offering deeper analysis and comparative data. Separating these more detailed fact sheets from the overall sector profile makes the information more digestible for users and is a relatively inexpensive way to deliver a robust promotional message. Denmark: Location comparison tool This interactive tool on the Invest in Denmark Web site (www.investindk.com) provides data charts that compare the location to key competitors under four headings–business costs and conditions, IT & telecommunications, labor market, and education–as well as subheadings. It identifies important factors for investors, and then highlights the location’s advantages for each. For IPIs not yet ready for features as sophisticated as “Benchmark Turkey,” Invest in Denmark’s approach would be an easy and inexpensive alternative. Jordan: Investment briefcase On the Jordan Investment Board Web site (www.jordaninvestment.com), an application allows users to search, identify, and compile custom investment information and reports, then save and keep the information in a digital “briefcase” for future visits. The tool’s one-stop-shopping approach gives investors access to extensive information organized into three straightforward sections with downloadable files and related links: About the Location, the Investment Environment, and Key Sectors. 22 Global Investment Promotion Best Practices 2012 Box 5: IPIs have shown Web site excellence to be possible under very difficult circumstances Three IPIs in locations difficult to promote–a low income developing country, a post-conflict country, and a small island–demonstrate convincingly that no physical environment should prevent an IPI from having an excellent virtual presence. Despite the country’s fragile economy and difficult political environment, Mali’s national investment authority, API-Mali (www.apimali.gov.ml/api/en/), has made major strides in the last three years, improving its online presence from where it had no investment promotion website in 2009 to a globally strong Web site in 2012. API-Mali has become the world’s top improver in GIPB overall between 2009 and 2012 and this rapid improvement has now put API-Mali’s Web site among the 10 best in sub-Saharan Africa in 2012. This snapshot shows an example of how API-Mali has organized information around key competitive sectors, giving a short succinct profile of each sector and presenting key data. In 2009, Sierra Leone did not have an investment promotion Web site. By 2012 the Sierra Leone IPI, SLIEPA (www.sliepa.org), had developed a good Web site with a wealth of useful information across key sectors. In addition, the Web site provides an easy-to-navigate section called “Why Sierra Leone” that neatly summarizes the location’s advantages. The St. Kitts Investment Promotion Agency (www.stkittsipa.org), representing a small Caribbean island nation, went from having no Web site in 2009 to having one that is very near best practice in 2012. Helpful features on the Web site include an Investors Guide with detailed information on customs, tax incentives, and other location specifics, and a FAQ section listing the IPI’s investor support services. Chapter 2: Realizing the Potential of Online Investment Promotion 23 Box 6: Thailand’s Board of Investment used GIPB as a roadmap to best practices When analyzing the assessment of its Web site in GIPB 2009, the Thailand Board of Investment was surprised to learn that its primary impediment to being considered best-practice was a shortage of content that was meaningful to investors during the site selection process. The reason for their surprise was that they had a great deal of content on hand that they had not made public. They had simply been in the habit of treating it as internal information and had not considered its value to potential investors. Every year Thailand’s BOI commissions studies to understand sector characteristics, trends, opportunities, and challenges as they relate to FDI attraction efforts. Most Thai ministries research similar topics as crucial inputs to public policy, and much of it–on industry, taxes, labor, infrastructure, etc.–is exactly the type of information that can reduce investor uncertainty about the Thai business environment and earn it greater consideration in the site selection process. Thanks to an e-business law passed in 2010, which is intended in part to promote transparency, BOI now makes all this information publicly and easily available through its Web site. BOI may freely collect and share information without first obtaining approval from the ministries that generated it. BOI’s Web site, found to be best practice by GIPB 2012, has also benefited from improved navigability, more promotional value added, and greater accessibility through its presentation in seven languages. It has managed to do this with the equivalent of less than five dedicated staff members in addition to an annual budget for the hiring of marketing and ICT experts that can continue to improve the Web site. According to Ajarin Pattanapanchai, BOI’s Deputy Secretary-General and Chief Information Officer, the agency is always looking to take its Web site to the next level. As GIPB 2012 goes to print, it is launching yet another Web site version that is expected to offer a sleeker appearance and e-services such as import duty exemptions. Further features, already under discussion, may include online investment license approvals and social media marketing. Summary: How to realize the potential of online Commit resources to Web site maintenance. An IPI investment promotion Web site is not a one-off effort that can be outsourced to consultants. Fashioning business and promotional In a competitive landscape with an uncertain global economic information into an appealing sales proposition, and outlook, more IPIs are chasing fewer investment projects. tailoring and updating it as necessary, requires dedicated The IPIs that most spark the interest of investors who would work by experienced staff. otherwise not have looked at their economies are the IPIs that most effectively market their locations online with Anticipate investors’ information needs. Provide detail well-presented, carefully-researched, and relevant on the crucial factors of cost and quality in your major information. To reach that level of competency, IPIs should sectors. Offer information that sells your location relative take the following steps: to those of your competitors. Make the Web site the primary promotional and Showcase the location online. Give a promotional edge facilitation tool. It is better to reach many investors to up-to-date and well-sourced statistics, testimonials, simultaneously at one low cost than to approach each one news stories, and images to convince investors that your individually and incur the high costs of foreign travel. This location deserves a second, deeper look. is what an IPI achieves by effectively presenting crucial information on the Web site. By the same token, a weak Use appropriate information architecture and design Web site can permanently turn off an investor without the to make your Web site easy for investors to use and IPI ever knowing about the lost opportunity. A Web site visit manageable for IPI personnel to maintain. is often a foreign investor’s first interaction with an IPI, and if the site is weak it could also be their last. 24 Global Investment Promotion Best Practices 2012 Use the individualized GIPB report as a checklist of best practices to follow, including: WEb SiTE AspECT BEsT PrACTiCE Sector Information Research relevant information, and present it through a compelling mix of charts, tables and text Provide lists and case studies of past investors. Where possible, segment by sector, include a testimonial from the Promotional Effectiveness company, and say why the location was selected Core Information Develop data on key aspects of the location: macro data, the labor market, infrastructure, etc. Contact Information Provide email addresses and telephone numbers in international format, with sector contacts if possible Clarity of Purpose Post only content related to investment promotion; focus text, graphics on the location’s business potential Navigation Ease An IPI site should be simple to use: Adopt simple top bar or side bar menus Reading Ease Use a conventional and professional font at medium size ( e.g. Arial, Verdana ) so text is easy to read Credibility of Information All data should include references and be from a reliable source Currency of Information Data should be kept up to date, and sources should include these dates Web sites should be easy to find through common search engines such as Google, either by organic search (preferred) Web Prominence or by pay-per-click ads. Corporate Roles & Support Information should be included that specifies what forms of assistance IPI staff can offer to investors Use of Graphics Graphics should be relevant to content, attractive but not excessive, and should enhance the user experience Downloads Providing pdf downloads of information allows users to more easily print and distribute Web site information Chapter 2: Realizing the Potential of Online Investment Promotion 25 Chapter 3: Good Inquiry Handling– The Next Level of Competitiveness GIPB’s project inquiry-handling assessments are designed Unlike Web site performance which was relatively strong to measure an IPI’s ability to respond to specific direct in most regions, the inquiry-handling capacity of IPIs has requests for information related to a potential investment diminished globally from an already weak 28 percent in project. The inquiry-handling assessment focused on four 2009 to 22 percent this year. Furthermore, a small group categories: availability and contactability, responsiveness of very high performers in this category lifted the 2012 and handling, the quality of the inquiry response, and average. The median was a very weak 12 percent. customer care. Using a mystery shopper approach, GIPB 2012 assessed each IPI twice–once with an agribusiness In fact, GIPB 2012 found that 80 percent of IPIs did not inquiry and once with a tourism inquiry. The surveys provide any response at all for one or both of the inquiries assessed each IPI’s ability to respond to requests for made by GIPB (see Figure 7). Sadly, this reflects the overall information in a thorough and professional manner. real-life experience reported by investors and site selection Inquiry-handling is not only about how an IPI interacts companies in the focus groups which informed GIPB with an investor. It also reflects the extent to which an IPI methodology. This was even the case for the 118 IPIs that understands its market and researches its own location. It claim to prioritize agribusiness investments and the 107 requires that its staff has sufficient knowledge, training, IPIs that said the same for tourism investments. Those and marketing savvy. that did respond often provided only generic information and made little effort to answer all of the questions of the potential investor. Table 5 lists the 10 IPIs that responded Worldwide, the quality of inquiry-handling is the most strongly to the two project inquiries. lowest ever measured by GIPB Inquiry-handling is at the core of investment promotion. More than four in five IPIs handled inquiries very poorly, It is one of the most important opportunities for an providing limited or no information at all to the potential IPI to influence perceptions about a location and win investor who had approached them with a specific investment projects. Unfortunately, for the majority of IPIs information request. Many of these IPIs are in locations basic competency at inquiry-handling seems elusive. with investment climates that are burdened by a lack of transparency and unpredictability. A recent study shows Figure 7: Is Anybody There? Few IPIs are Ready to Answer When Investors Come Knocking Chapter 3: Good Inquiry Handling–The Next Level of Competitiveness 27 • Discouraging external speculation by minority shareholders Table 5: Top 10 IPIs at Inquiry-Handling and prospective buyers. Some companies require 1. PRONicaragua (Nicaragua) non-disclosure agreements at the beginning of the site research process. 2. Hungarian Investment and Trade Development Agency • Minimizing internal disruption to avoid speculation and 3. Invest in Greece Agency unrest at the work place particularly if the prospective 4. Invest in Finland project could lead to job losses in the home country of the firm. 5. Cyprus Investment Promotion Agency • Keeping pricing fair– Local asking prices for real estate, for 6. InvestHK (Hong Kong, China) example, tend to go up once the landlords understand they 7. ABA–Invest in Austria are dealing with a well-known international enterprise. 8. Invest in Sweden Agency • Keeping competitors in the dark– Location decisions reflect corporate strategy and companies don’t want their peers to 9. aicep Portugal Global become aware of their intentions lest they lose the strategic 10. Invest in Denmark advantage too quickly. that IPIs have the greatest impact precisely in such economies Five of six non-OECD regions exhibit weaker performance where the IPIs can provide potential investors with a degree of in inquiry-handling than in 2009 the transparency and predictability they need. An IPI that spends scarce resources to promote its location and stimulate investor The MENA region showed a very slight improvement in interest but then fails to respond when an investor shows its inquiry-handling performance, but all other regions interest is wasting a precious opportunity at further expense to experienced significant decreases. For three regions–SSA, LAC, the economy.16 and ECA–the 2012 inquiry-handling average represents the second consecutive drop since the first GIPB edition in 2006, A small number of IPIs refused to reply to the inquiry, which although GIPB 2006 only covered 96 IPIs and excluded much of was submitted by a real site selection firm claiming to be SSA. As GIPB coverage expanded to include more IPIs, the ones acting on behalf of an anonymous investor. Nine IPIs said they added in SSA tended to be weaker and have tended to pull preferred not to provide any assistance without knowing the down the regional averages in both 2009 and 2012. However, site selection client’s identity. However, in interviews with CEOs this has certainly not been the case for the other two regions and senior managers of a number of multinational companies experiencing successive declines. LAC and ECA have both been and site selection firms, GIPB has confirmed that confidentiality among the strongest performing regions in 2009 and 2012. is a common and valid practice used by potential investors. It is motivated by the following factors: Table 6: Inquiry-Handling: GIPB Defines Practice Standards CATEGOrY WHAT iT MEANs IPI provided a well-presented, thorough response. Attempted to go beyond answering the questions to Best Practice advocate for the location’s selection, then diligently followed up on the project’s progress. Maximizes the (81-100%) chance of staying at the top of the investor’s list. Answered all questions in good detail and made a partial business case, but could have been more Good thorough in document development and follow-up. Chances of staying on investor’s list depend on the (61-80%) level of service and diligence of competitors with similar profiles. Provided a reasonable response that attempted to answer all of the investor’s questions but lacked depth Average and had several gaps. Did not try to present a business case. Chances of staying on the list are seriously (41-60%) diminished, with some opportunities probably lost. Provided a very limited response, answering few of the investor’s questions or merely referring questioner Weak to the Web site. Given the minimal level of assistance and information on which to base a decision, the (21-40%) location will most likely be dropped from consideration. Did not provide a response. Performance assessed at below 10 percent indicate that little or no contact Very Weak could be made via email or telephone. IPI will not be regarded as a viable business partner, leaving a very (0-20%) poor impression of the location. 16 Ibid. 28 Global Investment Promotion Best Practices 2012 Figure 8: Changes in Inquiry-Handling Performance, between GIPB 2006 and GIPB 2012, by Region The largest drop in inquiry-handling performance was follow-up with investors, was second most important.17 The among OECD IPIs global averages for the four inquiry-handling categories are shown by the heights of the bars in Figure 9. The relative weight Perhaps surprisingly given their strong performances on average of each category is represented by the size of the bubble at the in the past GIPB surveys, the largest drop in inquiry-handling base of each bar. performance was among OECD IPIs. The reasons for this drop are not absolutely clear but may have to do with a range of If an investor contacts an IPI with a real investment project, the factors, including high staff turnover, a shift of expertise from IPI must be ready to provide tailored responses to requests for national promotion to sub-national promotion in many ECA information and assistance. If an IPI can provide this service and LAC countries, and decreased budgets with more emphasis promptly, accurately, and with an eye to getting the investor being given to Web sites and less to direct interaction with to visit, it has the best chance of winning FDI for its country. In investors. Whatever the reasons, OECD economies today are fact, however, this response is nonexistent or very poor in most only about two percentage points from an average weak cases. 80 percent of IPIs assessed by GIPB 2012 did not even status in inquiry-handling. This unfortunate state of investment respond to one or both of the inquiries. Those that did respond promotion also presents an opportunity to individual IPIs often provided generic information with little effort to answer that improve their service and distinguish themselves from all of the questions the potential investor had actually asked and competitor IPIs. missing the opportunity to present the investor with a business case for that location. This is reflected in the very weak global In their enthusiasm to improve their Web sites, many IPIs seem average for “response” in Figure 9. to have forgotten the fundamentals of working directly with investors to facilitate their investments. PRONicaragua illustrates Considering these weak efforts at responding to investors, it is that determination and good management can matter more not surprising that the inquiry-handling aspect with the lowest to an IPI’s success than an economy’s level of development or area of performance was the next step, “customer care,” an IPI’s budget. From average inquiry-handling performance which counted follow-up offers of additional assistance and in 2006 and 2009, PRONicaragua rose to become the GIPB attempts at securing a visit by the investor. The strongest 2012 top performer in this category. The best IPIs ensure that aspect of global inquiry-handling in 2012 was “availability and investors can reach IPI staff, receive prompt, thorough answers contactability,” which simply assessed inclusion on the Web site to questions, and are given excellent customer care. of e-mail addresses and telephone numbers for a main line and sector managers. Availability and contactability improved The primary deficiency of IPI inquiry-handling is a lack of from 2009, but the fact that such an essential, simple, and substantive responses cost-free step has a global average of only 64 percent is reason for concern that many IPIs are not prepared to make more Inquiry-handling assessments focused on the four categories difficult improvements. of contactability, responsiveness and handling, quality of the inquiry response, and customer care. Here the quality of the 17 The relative weights assigned to each category were discussed and validated in response was assumed to be the most important aspect. a focus group of site selection consultants. A more detailed description of the Customer care, which corresponded primarily to the extent of weights can be found in Appendix A. Chapter 3: Good Inquiry Handling–The Next Level of Competitiveness 29 Figure 9: A Deeper Look at What Is Behind Inquiry-Handling Performance The global results for the four categories are presented below, Investors that did not receive a prompt and enthusiastic together with some examples of IPIs that performed well in response at the pre-investment stage could reasonably expect each: that IPIs would not be any more supportive in setting up the business or in supporting its long-term operations. Availability and contactability: In most regions IPIs do reasonably well in terms of contactability meaning that they Response: The quality of the response was very poor across have live Web sites that provide working contact details all regions with no region averaging above 50 percent. The for staff and sometimes for sector specialists. It also means global average for the quality of the response was a mere seven that once reached by phone or e-mail, IPI staff listens to the percent for tourism and an almost nonexistent four percent investor’s needs and expresses an intention to help. This was for agribusiness. Generally speaking, IPIs did not undertake the case with only 50 percent of agribusiness inquiries and with qualitative project-specific research, instead offering only only 32 percent of tourism inquiries. Invest in Finland’s Web information which was already on hand. Few IPIs included site, which was easily found using Google and Yahoo search benchmarked data which could be used by investors to engines, provides excellent contact information, including e-mail compare investment locations. ITD Hungary provided high addresses and telephone numbers in international format for quality, well-researched, information in a branded format. Its general and, importantly, sector-specific project managers. responses answered the investors’ questions using a variety of data and summaries of the case for Hungary as an ideal project Responsiveness and handling: For each of the two inquiries, location. less than half of all IPIs provided any response. Even the average for OECD IPIs was assessed at less than 60 percent on Customer care: Following up with potential investors average while Sub-Saharan African and South Asian IPIs were demonstrates an IPI’s enthusiasm for a project and a on average below 20 percent. In the business world, a quick government commitment to encouraging FDI in a sector. turnaround is important and 48-hour deadlines are common. OECD economies had the highest average performance InvestHK was one of only 10 IPIs that acknowledged the inquiry with 28 percent, but this is poor in absolute terms and the e-mail in both inquiries within two working days, and in fact global average was 12 percent for tourism and 14 percent for surpassed that standard by doing it within 24 hours. Interaction agribusiness. An important part of PRONicaragua’s success with InvestHK was highly professional. Calls were directed was its diligence in following up on inquiries. Managers made to a knowledgeable manager, and staffers were helpful even contact to verify that the information had been received, to ask after noting that the location probably could not meet the about project progress, and to offer to organize site visits and agribusiness project’s land requirement. meetings with third parties. 30 Global Investment Promotion Best Practices 2012 Box 7: PRONicaragua shows us what a best practice inquiry response looks like PRONicaragua’s agribusiness response best met all the investor’s needs: Branding and Format–The pdf document was designed in Organization–The document was well organized, using a an attractive and consistent manner, and was fully table of contents to clearly indicate where answers to each formatted with the IPI’s branding. of the investor’s questions could be found. Answer Credibility–Comparative data showcased the Answer Quality–Each question was answered fully and location against its major competitors. Information was presented in an engaging manner with a mix of text, charts, sourced and dated to assure the investor. tables, and maps. Business Case–After answering the investor’s questions, the response went a step further to give specific reasons why the investor should select the location. It sold not just the location but the services of the IPI, expressing its enthusiasm for the project. Chapter 3: Good Inquiry Handling–The Next Level of Competitiveness 31 Box 8: Invest in Greece Agency: Systematically presenting a solid business case Invest in Greece Agency seeks to operate according to the standards of the private sector, making world-class inquiry responses a matter of course. The agency stood out from others in GIPB, because both of its inquiry responses presented strong business cases for the investors to select Greece. While good agencies will answer every investor question, great agencies go further. They distil that information and apply a cost-benefit analysis based on the client’s interests to create a strong business case, which is then presented concisely but with high promotional value added. Invest in Greece Agency manages to do this because, despite being a public agency, it is run according to private-sector principles. This includes applying cost-benefit analysis to investor-targeting and having ISO-certified processes. Invest in Greece Agency leapt from being an average facilitator in 2009 to one of the world’s best practice agencies in 2012, in no small part because of the comprehensive and effective inquiry-handling processes that recently earned it an ISO certification. Incoming inquiries are routed to sector specialists in the Investment Promotion Department, who must then respond within 48 hours. From that moment forward, fixed project management processes ensure that all necessary information is collected from other departments, such as Research and Analysis, and database subscriptions, such as fDi Markets. According to CEO Christos Alexakis, every step is taken with one motto in mind: “The international investor is our boss.” However, maintaining a high level of performance requires the right staff skills and motivation. Most Invest in Greece Agency personnel have Master’s degrees in business, economics, or a related field and, according to Mr. Alexakis, would be competitive candidates for more lucrative jobs in the private sector and/or abroad. They stay at the IPI with its small budget of US$3 million and 35 staff because of their desire to see Greece succeed. If the agency performs well and has a real impact on inward investment and job creation, the staff is encouraged and motivated to perform even better. Summary: How to achieve a new level of competitiveness Be prepared. Have basic material available on key features through good inquiry-handling and advantages of the location such as labor costs for key staff, employment regulations, common business costs for the sector As an IPI gets better at using its Web site to market its location and subsector, and names of existing investors. Provide this and its own services, more and more investors will take the next basic information quickly to the investor while researching a step of contacting the IPI for personalized information. With more customized response. the majority of IPIs now operating good or best practice Web sites, an IPI wishing to distinguish itself from its competitors Establish and enforce a project inquiry-handling system. must be ready to help a potential investor at the next stage of Ensure that every project inquiry is logged into a central system the research process, the inquiry. To reach excellence in inquiry- and assigned to a staff member for handling and follow-up. handling, IPIs should take the following steps: Acknowledge receipt of all inquiries and respond appropriately by the investor’s deadline. Ensure the investor can easily contact the IPI. Complete contact information on the IPI Web site, preferably including Respond to investor inquiries in a way that not only sector-specific contacts for project managers. Assigning a liaison informs about the location, but also shows that your IPI is is particularly important for priority sectors. a valuable business partner. Organize the response around the company’s specific questions. Provide relevant, accurate, Be professional. Be cordial but businesslike in e-mail and and comparative data, case studies about existing FDI in the phone interactions with the potential investor. Provide an location, and testimonials from well-known companies doing informative response to all project inquiries and, where possible, business there. Be prepared to provide some information even a business case that makes your location stand out from on non-priority sectors and to connect investors to entities with others. If you need additional expertise to provide such services, more information. Follow up in 1-2 weeks to ask how else the consider recruiting staff from the private sector. IPI might support the project. 32 Global Investment Promotion Best Practices 2012 Chapter 4: Focus on Attracting FDI into Agribusiness The preceding chapters have emphasized the importance By 2050, the world’s population is projected to reach nine of focusing investment promotion efforts on priority billion and the United Nations estimates that the world sectors in order to maximize an IPI’s competitiveness. will need to double its food output in order to meet this They have also introduced the fact that the two higher demand. The need for agribusiness investment is inquiry-handling assessments in GIPB 2012 were done great and the upward trend is only expected to intensify. using investor inquiries in agribusiness and tourism. As institutional investors increasingly focus on agriculture These sectors were chosen because they are generally and its products continue to bring good prices, firms considered to be areas in which developing countries all along the value chain will seek opportunities to have competitive niches and opportunities to move expand. From the high technology of seed production incrementally into more lucrative activities and markets. and agro-chemicals to the logistics involved in getting The importance of these two sectors to IPIs was confirmed products to market and all points between, investors are by a review of their Web sites, where 62 percent of IPIs eager to undertake new agribusiness ventures. cited agribusiness as a priority and 59 percent did so for tourism. IPI Web sites miss the mark on agribusiness This chapter takes a deeper look at whether these IPIs Interest in agribusiness spans the globe. Of the 189 are effectively converting their agribusiness priority into IPIs assessed in GIPB 2012, 118 regard agribusiness as meaningful investor information on their Web sites and a priority sector, representing more than half the IPIs in through responses to investor inquiries. The same will be each of six GIPB regions (all but OECD). However, of the done for tourism in a separate publication to be released 118 that claim to prioritize agribusiness, only 104 provide later in 2012. information in English on their Web sites and only 91 present sector profiles. Agribusiness is highly valued for its promise of economic development and food security In many developing countries, temperate climates, good Figure 10: IPIs Where Agribusiness Is a Priority Sector soil, and strong farming traditions provide the ideal environment for agribusiness growth, and the sector provides more greenfield investment opportunities than any other. Moreover, agribusiness can have a powerful impact on employment and raise the incomes of the poor. On average, overall GDP growth originating in agriculture has proven to be two to four times as effective in raising incomes of the poor as growth generated in nonagricultural sectors.18 Some developed countries also prioritize the sector because of the high value-added potential of some investment projects, particularly research and development investments (the type of investment described in the agribusiness inquiry) or processed products. 18 World Bank, World Development Report 2008: Agriculture for Development, http://siteresources.worldbank.org/INTWDR2008/ Resources/WDR_00_book.pdf. Chapter 4: Focus on Attracting FDI into Agribusiness 33 Unfortunately, even those IPIs offering agribusiness profiles The Georgian National Investment Agency generally lack the most critical pieces of information that (www.investingeorgia.org) has maintained an excellent Web agribusiness investors need: costs and availability of land and site as reviewed in both GIPB 2009 and GIPB 2012. It also labor, incentives, the local supply chain, and government provides a good example of a strong sector profile from a regulations and procedures.19 Even if an IPI possesses the sector developing economy. The profile describes Georgia’s advantages expertise to act as a valuable partner to potential investors, the in the agribusiness sector, identifies subsectors with particular lack of detailed information online is likely to give the opposite strengths, and summarizes its incentive structure. It also includes impression. a supplier database, a business directory with contact details for sector players, and well-developed examples of available agribusiness investment opportunities. Table 7: The Percent of Online Agribusiness Profiles Meeting Basic Quality Criteria INFOrMATiON SpECiFiC INFOrMATiON CONTACT DATA SOUrCED REGiON prOViDED ON STATisTiCs ON REGUlArlY INFOrMATiON FOr AND DATED KEY STrENGTHs THE SECTOr UpDATED SpECiAliZED STAFF East Asia and the Pacific 69 69 23 31 8 Europe and Central Asia 100 85 62 13 0 Latin America and the 89 79 53 21 16 Caribbean Middle East and North Africa 88 75 38 13 13 OECD high-income 100 86 71 43 29 South Asia 100 75 75 25 0 Sub-Saharan Africa 92 63 13 8 17 World 90 71 38 19 12 In addition to this information, a sector profile should present Figure 11: Georgia Demonstrates a Strong Agribusiness Profile a location’s advantages in that sector with supporting statistics which are sourced, dated, and regularly updated and contact information for IPI staff specializing in that sector. Table 7 shows that while most IPIs with online sector profiles do make the case for their locations’ strengths, the majority did not consistently provide detailed or sourced sector data. Moreover, only about one in five appeared to be regularly updating content and only one in nine have dedicated agribusiness staff. The lack of dedicated staff with specialized knowledge is particularly problematic. Often the same individual or team has to handle sectors as diverse as agriculture, fisheries, forestry, and horticulture, making it difficult to develop the expertise needed for effective investment facilitation. A second set of problems revolves around the issue of land use. In developing countries in particular, land use, transfers, and titling tend to be contentious issues. If IPIs feel unprepared for the challenges that could arise, they may hesitate to promote the sector as fully as possible, viewing it as controversial. 19 See Appendix B for a description of the agribusiness inquiry submitted to IPIs by the GIPB project. 34 Global Investment Promotion Best Practices 2012 Figure 12: Main Topics in Agribusiness Profiles Box 9: Rwandan IPI gets top marks for horticulture investment promotion The Rwandan Development Board made large improvements in its Web site between 2006 and 2012, going from a weak site to a good one and developing strong expertise in the agribusiness sector along the way. In line with this sector focus, in 2010 the Agribusiness Investor Forum in Kigali attracted more than 100 investors. The RDB and the Ministry of Agriculture’s Rwanda Horticulture Development Authority organized the event and developed subsector-specific information packages in horticulture and tea, emphasizing Rwanda’s unique opportunities. The information included comparative data with other destinations in East Africa competing for horticulture investments. Following the conference, a horticulture taskforce comprising key stakeholders actively pursued investor leads generated during the conference. In addition, the taskforce has worked to remove critical barriers in the areas of land availability, logistics, and standards. The taskforce meets every other week to review the investor pipeline (the status of investor interests) and to collaborate on facilitating Figure 12 shows that nearly half of the 91 agribusiness profiles investment decisions. The taskforce monitors the pipeline using a provided information on taxes, incentives, and grants. However, simple but effective excel spreadsheet to track project information, a third or fewer IPIs included information on the crucial issues including communications between taskforce members and investors. of land, infrastructure, and costs. The focus on taxes, incentives, and grants may be because such information is more readily Overall, the dedicated taskforce helps greatly in overcoming the available and thus easier to provide. But, it may also reflect an classic problems of investment promotion, inadequate information assumption that the best way to win an investment project is and uncoordinated public support. One year on, the taskforce is by offering funding. While companies may consider incentives managing a pipeline of about 25 investment prospects, of which a deal sweetener or a tie-breaker between two similar locations, eight are in an advanced stage of decision-making. Additionally, three research has shown that incentives alone will not secure an international companies have registered their businesses with the investment.20 The likelihood of profitability with a minimum RDB and plan to invest approximately US$2 million which will directly of risk can be sufficient to attract investment. An IPI that create more than 600 jobs and could potentially provide a market to provides detailed, comparative data on the factors that drive as many as 2,000 local contract farmers. the profitability of a particular agribusiness project is helping to make the case for profitability and, by virtue of its reliable support, reducing the risks of doing business in that economy. Tailored inquiry responses are easy when you know what In economies where several institutions are involved in is important to the sector in general agribusiness promotion, such as ministries of agriculture or land, governments may be tempted to have IPIs simply refer investors Of 189 IPIs assessed by GIPB 2012 only 33 percent responded to other relevant bodies. However, experience globally shows to the agribusiness inquiry which sought land to grow and that this is a risky strategy as investors want IPIs to present test new varieties of root and tuber crops. This percentage them with sector opportunities and be their guide through a was almost the same (32 percent) among IPIs that called complicated institutional landscape. Therefore, if IPIs simply agribusiness a priority sector, indicating that “prioritization” forward inquiries, they risk frustrating investors. They also has little practical meaning for many IPIs. The agribusiness surrender control over the quality of response that the investor inquiries sought project-specific information on five areas receives, if any. Instead, the IPI should aim to be the investor’s crucial to the success of agribusiness enterprises: land, labor, chief source of information, reducing his need to deal with incentives, the local supply chain, and government procedures. other institutions and acting as an adviser when he does. The IPIs that were best able to provide information tailored to the projects were those that had already assembled the most relevant details for the sector in general. Most responses to the agribusiness inquiry were stronger in the areas of labor costs and government procedures but offered little in the areas of possible land and local production partners. 20 Sebastian James, “Providing Incentives for Investment,” World Bank Group Investment Climate In Practice, no. 7 (January 2010), https://www. wbginvestmentclimate.org/uploads/Providing%20Incentives%20For%20 Investment.pdf. Chapter 4: Focus on Attracting FDI into Agribusiness 35 Box 10: Senegal’s IPI paves a path to land for investors APIX, Senegal’s national IPI, has played a vital role in helping companies acquire land and bring FDI into agribusiness. Assisting the investor during the site selection stage and the subsequent negotiations with all stakeholders has helped Senegal attract a number of foreign companies. Van Oers, an agricultural production company, contacted APIX about a potential investment in the production of green beans. APIX facilitated meetings between Van Oers and leaders in the rural community and participated in these negotiations. The facilitation role played by APIX helped to build trust between the community and the investor and to ensure that all parties would respect their commitments. Van Oers has thrived in Senegal, expanding its workforce from 250 employees in 2007 to 2,000 employees in 2010, while more than doubling its production of green beans in that period. Other companies benefitting from APIX’s facilitation include: Versen, an agricultural production company that acquired a 100-hectare site; B&A, a fruit and vegetable producer that received help from APIX for site selection and settlement support on 100 hectares; and Société de Cultures Légumières, a vegetable-growing company which, with APIX’s support, obtained a land lease and has increased its output six-fold since 2007, with estimated sales of US$7 million in 2010. Land leases and water access Reliable data on water access and costs are also vital, especially in production-focused agribusiness projects that require a large Land lease information is crucial for foreign investors, volume of uninterrupted water supply. The Belizean IPI provides particularly in developing economies where laws may limit a good example of an inquiry response that well satisfied both where foreigners can locate, or where unclear laws on property types of information. It thoroughly described procedures for ownership and leasehold regulations may raise a project’s risk. land acquisition, lease transfer, mortgaging, subdividing, and Clear and detailed information from the IPI can help clarify the other land-related issues. It also provided abundant detail on laws and regulations and thus save a potential investor time water costs and access, all organized into an easy-to-read table. and effort, heading off potential problems later in the process. Figure 13: The Belizean IPI’s Step-by-Step Instructions for Getting Access to Land and Water PROCESS OF SECURING LAND Land Acquisition Kindly refer to the attached “investor’s manual”: Kindly refer to the attached “investor’s manual”: PAGE 53 (Land Acquisition) PAGE 53 (Land Acquisition) • Procedures for Leasing Land • Procedures for Transferring a Lease • Procedures for Purchasing a Lease Land • Procedure for Sub-Dividing Land • Purchasing land through a Real State Agent AVAILABILITY AND AVERAGE COST OF WATER Per US Gallons Areas of Supply Rates and Conditions Belize City & 2.(a) In any one month for less than 1,001 gallons a fee Belmopan - of ………………………..… $10.34 Water & Sewer (b) Proportionate fee for every gallon thereafter up to Zones 2,000 gallons inclusive at the rate per 1,000 gallons of ………………..$17.81 (c) Proportionate fee for every gallon above 2,000 gallons and up to 3,000 gallons inclusive at the rate per 1,000 gallons of .………..$19.54 (d) Proportionate fee for every gallon above 3,000 gallons and up to 4,000 gallons inclusive at the rate per 1,000 gallons of .………..$20.68 (e) Proportionate fee for every gallon above 4,000 gallons and up to 5,000 gallons inclusive at the rate per 1,000 gallons of .………..$21.83 (f) Proportionate fee for every gallon above 5,000 gallons and up to 6,000 gallons inclusive at the rate per 1,000 gallons of .………..$22.98 (g) Proportionate fee for every gallon above 6,000 gallons and up to 7,000 gallons inclusive at the rate per 1,000 gallons of .………..$23.55 (h) Proportionate fee for every gallon above 7,000 gallons and up to 8,000 gallons inclusive at the rate per 1,000 gallons of .………..$24.13 (i) Proportionate fee for every gallon above 8,000 at the rate per 1,000 gallons of ...$24.70 Source: www.bws.bz/rates-metering/ 36 Global Investment Promotion Best Practices 2012 Figure 14: Region- and Sector-Specific Wage Data in the Argentine Inquiry Response Labor provided a high-quality response on this topic, giving recently updated information on salaries for managers, skilled workers, Investors need accurate and up-to-date workforce wage data and unskilled workers in various locations. It also included across sectors. For any investment where more than a handful details on the most relevant laws, including those on social of staff are employed, the cost and quality of labor is arguably security and procedures for employing foreign workers. one of the most important location factors. An abundance of suitable workers drives a project’s success over time, while a Taxes and incentives perceived shortage of suitable workers inclines an investor to look elsewhere. IPIs should be able to clearly explain their economy’s tax system, the governance behind it, and how the location’s legal While most IPIs have some labor force data available, such as framework can help, rather than hinder, investors. The response average salaries for all industries, a good inquiry response will from Estonia’s IPI covered the gamut of issues including property, contain thorough and reliable data on various levels of skilled land, and corporate taxes. It broke issues down into easily labor in the specific sector. For GIPB 2012, Argentina’s IPI digestible points, and offered comparative data so investors could benchmark the location against others. Figure 15: The Case for Estonia’s Tax Competitiveness at a Glance Chapter 4: Focus on Attracting FDI into Agribusiness 37 Figure 16: Portuguese Transport Infrastructure in Maps Supply chain the IPIs of Portugal and Greece each illustrate strong aspects. Portugal gave particularly helpful information on transport Agribusiness depends heavily on foreign trade and logistics for infrastructure, as shown in the pictured slides for airports, the import of raw materials and the export of final products. As seaports, roads and railways. many of these are perishable, investors need reliable suppliers and logistics infrastructure. On the whole, this was a particularly Greece provided a response that went beyond stating the weak point of the agribusiness inquiry responses, perhaps presence of suppliers, by detailing potential research centers because few ministries or private firms have a need to collect or that the investor could partner with. The IPI also provided disseminate it. a supplementary spreadsheet of farmers that could act as suppliers, and included their names, e-mail addresses and However, a new investor’s potential demand for local supplies telephone numbers. and logistics services represents a highly sought economic development impact of FDI and should be actively encouraged Information on export procedures and the supply chain clearly through an IPI’s preparation of the information needed to identified investors’ best points of contact and a wide range establish such links. The inquiry responses on this topic from of potential suppliers. The IPIs’ response at this stage did not attempt to provide exhaustive information, but rather to give the investor enough to pique interest and encourage follow-up. Figure 17: A Primer on Greek Partnering Opportunities for R&D 38 Global Investment Promotion Best Practices 2012 Identify and gather key information to illustrate and promote for investment Box 11: Bosnia and Herzegovina’s IPI: Facilitation doesn’t stop after closing the deal • Assess internal staff capacity, identify weaknesses in agribusiness knowledge, and train or recruit staff with sector The Foreign Investment Promotion Agency (FIPA) of Bosnia expertise. and Herzegovina was an early convert to the idea of providing • Gather and analyze information on relevant topics, such as facilitation services to agribusiness investors as a way to maximize land availability (ownership, transfer, titling, and leasing), the positive impact of agriculture on the economy. In 2007, for labor force, infrastructure, power, and so on. Consult example, FIPA assisted a Dutch food processing company establish a external data sources such as the United Nations’ Food US$1.6 million production facility to process unused milk ingredients and Agriculture Organization for help understanding the into value-added products in Sarajevo to sell to markets in Eastern social and environmental issues that must be factored into Europe and the Middle East. As part of its aftercare program, land decisions. Partner with national, regional, and local FIPA assisted the company with its expansion plans. Among governments and communities to find appropriate land other things, the agency helped facilitate veterinary permissions, and ensure that proper procedures are followed for land navigate various bureaucratic hurdles and played an important role transfers or leases. in securing funding for the company’s expansion. It also helped develop a network of local suppliers and customers. As a result • Conduct a similar analysis for water rights and usage. of these efforts, the Dutch investor developed stronger links with Because water is not as localized an issue as land, IPIs the Bosnian economy, thus increasing the positive spillover effects should apply even more effort to understanding how on the local economy. Currently a new investment to establish a investment-related water use in one part of the economy drying facility for milk powder is under way. This will further expand may affect water availability in other parts. the processing facilities of unused milk ingredients. This additional • Ensure that you have partnerships in place, in both planned investment is worth approximately US$2.8 million, thus government and the private sector, to get investors the nearly trebling the company’s original investment in the country. information and contacts they need. Implement best practice investment facilitation • Apply general best practice standards to every aspect of Steps to improve the promotion of investment into promotion. Any promotion activity deemed critical for the agribusiness IPI’s work overall must be implemented with the highest standards. Consider adapting what worked for GIPB 2012’s GIPB 2012 highlighted a number of the challenges faced by best practice IPIs to your own operations. A good example IPIs trying to promote investment in agribusiness. The following of this is the Rwandan horticulture taskforce (see Box 9). It recommendations should help IPIs overcome these challenges put in place a simple mechanism to track communications and attain a strong competency in promoting agribusiness: with interested investors and record the next steps required to move the project forward. This mechanism helps the task Understanding competitiveness and capacity to attract force manage the pipeline of investment prospects more agribusiness investment effectively and maximize efforts to convert some of these • Understand in detail in which sectors and sub-sectors your leads into actual investments. location is competitive for investment. Gather relevant • Look for ways to increase the linkages between foreign benchmarked data to illustrate the sector’s competitiveness investment projects and local producers and service vis-à-vis other competing locations. For example, perhaps providers in order to maximize the project’s positive impact undertake a SWOT analysis of the agribusiness sector on local development and further anchor the investor in the to determine promising subsectors. Narrow the list of location. Foreign companies need to know that agribusiness subsectors to no more than 10, and focus on the most investments are valued as highly as investments in high-tech promising three. External specialist expertise may help the IPI sectors. Enthusiastic promotion will encourage investors to staff understand these subsectors and the key factors that deepen their ties to the country by expanding production investors need during site selection. and employment over time. Chapter 4: Focus on Attracting FDI into Agribusiness 39 Appendices AppENDiX A: AssEssMENT METHODOlOGY FOr WEb SiTEs AND INQUirY-HANDliNG The assessments of IPI Web sites and of IPI responses to inquiries were conducted by a professional site selection company on behalf of the Foreign Investment Advisory Service. Both the Web sites and the inquiry responses were evaluated, in English, against a fixed list of objective, best practice features. These features fall under various themes, which are weighted for relative importance and combined to produce a single Web site assessment and a single inquiry-handling assessment for each IPI. Web sites were judged for their technical strength, design quality, promotional effectiveness, and supply of information needed by investors when they are first compiling a long list of possible investment locations. The assessment methodology is unchanged from GIPB 2009. While GIPB 2006 did employ a slightly different methodology, GIPB 2006 results cited in this edition have been adjusted according to the current weighting. The assessment themes are listed below with their share of the total assessments noted in parentheses: WEb siTE AssEssMENT THEMEs Information architecture (10%)–the layout and organization of information in a Web site and the extent to which the site was designed 1 using a consistent and logical structure that allows users to quickly identify key pieces of information 1a Web friendly structure (1%)–home page setup and appearance on standard PC screens and whether extensive scrolling is required to see information 1b Navigation ease (7%)–whether the site uses navigation bars or prompts and whether it is easy to move from page to page 1c Web site functionality (2%)–whether the site signposted key topics, is downloadable in a standard time, and whether its graphics and links worked 2 Design (10%)–the general appearance and readability of a site. 2a Look and feel (1%)–industry terminology for the visual appeal and visual consistency of pages 2b Use of graphics (3%)–whether the site uses graphics that enhance the IPI’s image for business, and the use of maps to showcase key infrastructure in the location 2c Reading ease (6%)–whether the choice of color or text support readability, whether font sizes are consistent, headings short and “web friendly” Content (50%)–the extent to which the site contains content that is relevant, accurate, current, and easily accessible to potential 3 investors 3a Clarity of purpose (7.5%)–whether the Web site sets out its location as a destination for foreign investment as well as the IPI’s services for investors on the home page 3b Core information provision (10%)–provision of key information for foreign businesses that is both relevant and useful 3c Sector information provision (17.5%)–provision of sector information online and whether this information is consistent in terms of its depth and quality across multiple target sectors 3d Credibility of information (5%)–use of statistics to support claims and whether these statistics are well sourced, dated, and from credible origins 3e Currency of information (5%)–use of up-to-date information on business events and investor-related news 3f Downloads (2.5%)–ability to download investor reports or presentations from the site and the comprehensiveness of this information for inward investors 3g International accessibility (2.5%)–use of English and other frequently used (relevant) business language options that are accurate and consistent in terms of the level of information provided in each language option Appendices 41 Promotional effectiveness (30%)–refers to the extent to which the Web site is effective in its primary aim of selling the location and IPI 4 services to inward investors 4a Web prominence (4.5%)–whether the Web site was easy to identify from an Internet search 4b Corporate roles and support (4.5%)–whether the Web site clearly sets out the role of the organization and the services provided including clear methods for accessing further information and advice 4c Contact information (7.5%)–whether the Web site clearly sets out a good range of detailed contact options for site visitors 4d Promotional effectiveness (13.5%)–the effectiveness of the Web site at selling the location to business, and use of comparative data Inquiry-handling was judged for IPI contactability, responsiveness and handling of communications, information quality, and follow-up, with each theme representing a part of the typical experience that an investor goes through when contacting an IPI for more information to assist their more detailed short-listing evaluations. Each component is sequenced to reflect the chronological order of the steps to contact an IPI. Because of the sequenced nature of the inquiry-handling assessment themes, an IPI being assessed as zero for a particular stage would normally be assessed as zero for every stage thereafter. For example, an IPI that is not contactable cannot handle communications, provide a response, or follow-up. The assessment themes are listed below with their share of the total assessment noted in parentheses: INQUirY-HANDliNG THEMEs Availability and contactability (10%)–defined as the extent to which an investor can identify the IPI and officers within the IPI that they 1 can contact in their search for information and also whether the IPI was easy to contact from a client perspective. 1a Web availability (3%)–whether the IPI had a Web site and the ease of finding that Web site 1b Quality of contact details (7%)–the level of contact details available to a potential inward investor from the Web site including whether they were clearly set out, easy to identify, and accurate Responsiveness and handling (15%)–defined as the ease with which an investor can communicate with an IPI and the IPI’s ability to 2 engage with the investor in a professional and informed manner 2a E-mail and phone responsiveness (6%)–whether the IPI had good internal systems at first contact level for dealing with investor inquiries from the Web site and whether it was effective at handling clients who contacted the organization directly 2b E-mail handling (1.5%)–the way in which the IPI responded to initial e-mail inquiries to the Web site and whether e-mail correspondence was well linked to the original client project inquiry and projected a clear and professional image of the IPI for the client 2c Call handling (1.5%)–whether the IPI demonstrated that their first-level communication channels and project officers were competent and thorough at taking client inquiries 2d Inquiry-handling competence and responsiveness (6%)–whether the IPI showed that their project officers were aware of the original client e-mail inquiry and were willing and able to provide a timely inquiry response. Also, whether they provided good coordinated management of the inquiry and completed work to deadline 3 Response (55%)–refers to the actual response that the IPI provided to the investment inquiry 3a Response format (2.75%)–whether the IPI provided a final response that was presented in a clear manner, preferably as one document in an appropriate business software package 3b Response branding (2.75%)–whether the response was well branded, ensured good consistency, and projected a strong image to the client 3c Response organization (2.75%)–whether the response included a cover letter as well as a contents page, introduction, and other relevant headings relating to the project and whether the IPI addressed each of the client’s issues that were raised 3d Answer quality (30.25%)–whether the IPI addressed each client issue in turn and customized their response to the client’s particular needs, thereby providing information that has real value in the long listing process 3e Answer credibility (5.5%)–whether the response made good use of comparative data, relevant and well-referenced case studies, and testimonials. Also whether the IPI response was accurate in terms of grammar and spelling 3f Business case (11%)–whether the IPI set out why their location was good for the client project Customer care (20%)–the extent to which the IPI took action to follow up on the information sent to the client as well as to establish 4 whether they could offer more help or arrange to move the project on 42 Global Investment Promotion Best Practices 2012 AppENDiX B: DEsCripTiON OF THE INQUiriEs SUbMiTTED TO IPIs GIPB created typical investor inquiries for an agribusiness investment and a tourism investment, each with a description of the project size and purpose and a list of information requested. To ensure the realism of the inquiry and its response, the inquiries were designed with the help of sector-expert focus groups. The agribusiness focus group included Syngenta, Monsanto, Pannar, Higgins and Bayer, while the tourism focus group included The Rezidor Hotel Group, HTI Consulting, KnightConsult, dga Business Development, W Hospitality Group, Marriott Hotels, Mövenpick, Serena Hotels, and DTZ. Each IPI was presented with the two inquiries by e-mail, using different site selection consultant names and organized differently to avoid suspicion that the same party was behind both. Inquiries needed to reflect high-end projects to pique the interest of IPIs, but they also needed to seem attainable for the level of development in each IPI’s country. Therefore, two versions of each inquiry were developed, one for OECD high-income economies and the other for all other economies. Although the sophistication of the investment project varied, the information requested of IPIs was exactly the same in all cases. Table 8: How Investment Projects Were Adjusted for Levels of Economic Development IPI TOUrisM AGribUsiNEss OECD high-income Luxury resort hotel development R&D center, with small plot of land for testing Land for growing / production with small facility for scientific All other IPIs Four star business hotel testing The initial inquiries were submitted by e-mail and then, if no response was received after 48 hours, followed up by telephone. It was requested that complete responses be submitted within 12 days of the initial e-mail. Information requested included a sector profile, labor skills and availability, employment regulations, and potential sites. When there was no reaction to the initial e-mail or the initial follow-up call, two final call attempts were made to allow for any temporary staff shortages or system failures. In those cases where an IPI indicated that the mandate for tourism or agribusiness was with another organization, the consultant sent the project inquiry to that alternative organization. GIPB methodology favors IPIs that are proactive in coordinating a dialogue between the contacting consultant and the third party. Below are examples of the two project inquiries. Tourism Inquiry (OECD high-income version) Project Details The client is an investor from an emerging economy, who is currently in discussion with various hotel operators, all of which have in place a significant portfolio of international hotel developments, which include several high profile luxury resorts. It is estimated that the new ultra luxury resort hotel will be around 120,000 - 200,000 square feet in size, providing approximately 300 - 400 deluxe rooms and suites, and offer a full range of leisure activities, amenities and services. The hotel will generate a capital investment of US$100-150 million. The market strategy of the hotel chain that will manage the property will focus on high-end, trend-conscious leisure travelers, while also providing business meeting and conference facilities. Appendices 43 Required Information 1. Background Macro Data. Provide data on the economy, demography, and the hospitality/hotel market in the city. Information should include, but not be limited to, GDP, FDI flows, tourism-related statistics (such as passenger volumes through local airports and average length of stay), and any recent infrastructural developments or any new drivers of demand that may have occurred in that city/region. In addition, provide a list of major local hotels and available information on new entrants to the local market that are either under construction, or planned. 2. Potential Sites. Provide information on sites (greenfield, vacant, semi-vacant or distressed properties) that may be suitable for this project. In all cases these sites should be either close to a business demand generator or a tourist attraction. Indicate if there are any sites with associated development incentives including loan guarantees, tax incentives, waiving of import duties, and grants that might be available for training from the local/regional or national authorities. If your organization does not have information on sites, provide a profile on the best areas of your location to look for sites, based on current growth and urban development patterns, as well as contacts to other organizations including brokers that could provide site information. 3. Costs/Operating Environment. Provide an indication of the cost of labor for the hospitality sector and utilities (especially electricity). Indicate if there are special regulations or quotas for expatriate workers. Information on locally available training programs for the sector would be useful. In addition, provide a concise description of all the taxes that apply to the hospitality sector and a hotel project of these characteristics, as well as any fiscal incentives available. 4. Construction. Provide information on specialized local construction companies for the developer, including their availability and whether materials are readily available or need to be imported. Provide detail on construction regulations and the process for obtaining permits, as well as the support that your organization can provide in working through these processes with our client. Agribusiness Inquiry (non-OECD high-income version) Project Details The client is a specialized agribusiness client interested in acquiring an area of arable land which would be complemented by a small research and development facility. The company wishes to develop a land facility for the growing and testing of new varieties of various non-genetically-modified root and tuber crops, with a view to examining their potential to produce higher-than-average yields, adapt to different climatic conditions, resist disease, and their suitability for markets in either an unprocessed or processed form.  As part of this, there should be some laboratory space for further testing and possibly developing of these new varieties. It is estimated that the land area required would total approximately 80 acres, including a small storage space, with an annexed laboratory of up to 1,000 square feet. Our client is currently in the process of defining the staffing strategy for the investment, but they have initially estimated up to 50 seasonal workers to work on the land, plus up to 10 science staff focusing on the properties of each new variety grown, such that the client can understand those that have greatest commercial potential. Required Information This stage of the process will focus on developing a list of potential locations with reference to a suitable cost profile, labor and land availability, and the permits and other legal procedures necessary for product development and export. Soil conditions will be evaluated in detail once a shortlist of sites has been identified, hence only general information on the quality of land is required at this stage. 1. List of Potential Locations. A list of potential locations for the project (space for a laboratory and suitable land for growing), including the average cost of land. It would be helpful to understand the process for securing the land (purchase, rent, concessions or other customary means, etc). Also include information on the availability and average cost of water for direct use on the land. 2. Information on Labor. In terms of the labor needs, we would be grateful for information on the availability and approximate salaries of technical staff (either local or foreign) and manual workers. It would also be helpful to know if there are any limits to extended stays for high-skilled foreign labor. 44 Global Investment Promotion Best Practices 2012 3. Legal Framework. Regarding the legal framework for a project with these characteristics, our client is especially interested in having an overview of the intellectual property rights legislation in your location. If there are any restrictions to the import of seeds, provide a brief description of these. Does your government provide any incentives for this type of project? 4. Future Production. As our client is a relatively small company, in order to better commercialize the new varieties for export and regional consumption, the company would like to work with local farmers and cooperatives. Therefore, provide a list of cooperatives and contract farmers close to the location that could work with our client as potential future production partners, and to understand the export procedures for unprocessed crops. Appendices 45 AppENDiX C: LisT OF NATiONAl IPIs AssEssED, bY REGiON The number of national IPIs included in the 2012 assessment was 189, up from 181 in 2009. East Asia and the Pacific (EAP) ECONOMY IPI WEb siTE Brunei Darussalam The Brunei Economic Development Board www.bedb.com.bn Cambodia Council for the Development of Cambodia www.cambodiainvestment.gov.kh China Investment Promotion Agency (Invest China www.fdi.gov.cn in China) Cook Islands Business Trade Investment Board www.btib.gov.ck Fiji Fiji Islands Trade & Investment Bureau www.ftib.org.fj Hong Kong SAR, China InvestHK www.investhk.gov.hk Indonesia Indonesia Investment Coordinating Board www.bkpm.go.id Foreign Investment Promotion Division - Kiribati Ministry of Commerce, Industry and www.mcic.gov.ki Cooperatives Laos Department of Domestic and Foreign Lao PDR www.invest.laopdr.org Investment Malaysia Malaysian Industrial Development Authority www.mida.gov.my Marshall Islands Ministry of Resources and Development www.rmirnd.net Micronesia, Federated States of Department of Resources and Development www.fsminvest.fm Mongolia Foreign Investment and Foreign Trade Agency www.investmongolia.com Commerce & Business Development Division Nauru - Department of Commerce, Industry and NO WEB SITE Environment Niue InvestNiue www.investniue.com Palau Palau Foreign Investment Board NO WEB SITE Papua New Guinea Investment Promotion Authority www.ipa.gov.pg Philippines Philippine Board of Investments www.boi.gov.ph Ministry of Commerce, Industry & Labour - Samoa Industry Development and Investment www.mcil.gov.ws Promotion Division Singapore Singapore Economic Development Board www.sedb.com Solomon Islands Foreign Investment Division www.investsolomons.gov.sb Taiwan, China Department of Investment Services www.dois.moea.gov.tw Thailand Thailand Board of Investment www.boi.go.th Timor-Leste TradeInvest Timor-Leste http://timor-leste.gov.tl Tonga Ministry of Labour, Commerce and Industry www.mic.gov.to Ministry of Finance and Economic Tuvalu NO WEB SITE Development Vanuatu Vanuatu Investment Promotion Authority www.investinvanuatu.com Ministry of Planning and Investment - Foreign Viet Nam http://fia.mpi.gov.vn Investment Agency Appendices 47 Europe and Central Asia (ECA) ECONOMY IPI WEb siTE Armenia Armenian Development Agency www.ada.am Azerbaijani Export & Investment Promotion Azerbaijan www.azpromo.org Foundation Belarus National Investment Agency www.invest.belarus.by Foreign Investment Promotion Agency of Bosnia and Herzegovina www.fipa.gov.ba Bosnia and Herzegovina Bulgaria Invest Bulgaria Agency www.investbg.government.bg Croatia Investment Promotion and Export Directorate www.mingorp.hr Cyprus Cyprus Investment Promotion Agency www.cipa.org.cy Georgia National Investment Agency (Invest Georgia www.investingeorgia.org in Georgia) Kazakhstan Kazakhstan Investment Promotion Center www.kazinvest.kz Kosovo Investment Promotion Agency of Kosovo www.invest-ks.org Kyrgyz Republic The Investment Council www.investmentcouncil.kg Investment and Development Agency of Latvia www.liaa.gov.lv Latvia Lithuania Invest Lithuania www.businesslithuania.com Macedonia, FYR Invest Macedonia www.investinmacedonia.com Moldovan Investment and Export Promotion Moldova www.miepo.md Organisation Montenegro Montenegrin Investment Promotion Agency www.mipa.co.me Romania Romanian Agency for Foreign Investment www.arisinvest.ro Ministry of Economic Development and Trade/ Russian Federation The Department for Investment Policy and www.economy.gov.ru Development of Private/Public Partnership Serbia Investment and Export Promotion Serbia www.siepa.gov.rs Agency State Committee on Investments and State Tajikistan www.tajinvest.tj Property Management Turkey Investment Support and Promotion Agency www.invest.gov.tr Ukraine Invest Ukraine www.investukraine.org Uzbekistan UZINFOINVEST www.uzinfoinvest.uz Latin America and the Caribbean (LAC) ECONOMY IPI WEb siTE Antigua and Barbuda Antigua and Barbuda Investment Authority www.investantiguabarbuda.org Argentina Undersecretary for Investment Development www.prosperar.gov.ar Bahamas, The Bahamas Investment Authority www.bahamas.gov.bs Barbados Invest Barbados www.investbarbados.org Belize Trade and Investment Development Belize www.belizeinvest.org.bz Service Ministerio de Desarrollo Productivo y Bolivia www.produccion.gob.bo Economía Plural Brazilian Trade and Investment Promotion Brazil www.apexbrasil.com.br Agency (ApexBrasil) Chile Foreign Investment Committee www.foreigninvestment.cl 48 Global Investment Promotion Best Practices 2012 Colombia Proexport Colombia www.investincolombia.com.co Costa Rican Investment Promotion Agency Costa Rica www.cinde.org (CINDE) Curacao Chamber of Commerce & Industry www.curacao-chamber.an Dominica Invest Dominica www.investdominica.dm Dominican Republic Export and Investment Dominican Republic www.cei-rd.gov.do Center Ecuador Invest Ecuador www.investecuador.ec Comisión Nacional de Promoción de El Salvador www.proesa.com.sv Inversiones Grenada Grenada Industrial Development Corporation www.grenadaworld.com Guatemala Invest in Guatemala www.investinguatemala.org Guyana Guyana Office for Investment www.goinvest.gov.gy Centre de Facilitation des Investissements en Haiti www.cfihaiti.net Haiti Honduras FIDE, Investment and Exports www.hondurasinfo.hn Jamaica Jamaica Promotions Corporation www.jamaicatradeandinvest.org Mexico ProMexico www.promexico.gob.mx Nicaragua PRONicaragua www.pronicaragua.org Panama Panama Trade and Investment Agency http://proinvex.mici.gob.pa Paraguay Red de Inversiones y Exportaciones www.rediex.gov.py Peru ProInversión www.proinversion.gob.pe Government Development Bank for Puerto Puerto Rico www.gdb-pur.com Rico St. Kitts and Nevis St. Kitts Investment Promotion Agency www.stkittsipa.org St. Lucia Invest Saint Lucia www.investstlucia.com St. Vincent and the Grenadines Invest SVG www.investsvg.com Suriname Ministry of Trade and Industry www.minhi.gov.sr Evolving TecKnologies and Enterprise Trinidad and Tobago www.investtnt.com Development Company Limited Uruguay XXI Investment and Export Uruguay www.uruguayxxi.gub.uy Promotion Institute Venezuela, R. B. De Venezuelan Council for Investment Promotion www.conapri.org Middle East and North Africa (MENA) ECONOMY IPI WEb siTE Algeria National Agency for Investment Development www.andi.dz Bahrain Bahrain Economic Development Board www.bahrainedb.com Djibouti National Investment Promotion Agency www.djiboutinvest.dj Egypt General Authority for Investment www.gafinet.org Iran, Islamic Organization for Investment Economic and Technical Assistance www.investiniran.ir Republic of of Iran Iraq National Investment Commission www.investpromo.gov.iq Jordan Jordan Investment Board www.jordaninvestment.com Kuwait Kuwait Foreign Investment Bureau www.kfib.com.kw Lebanon Investment Development Authority of Lebanon www.idal.com.lb Appendices 49 Libya Libyan Investment Board www.investinlibya.ly Morocco Moroccan Investment and Development Agency (MIDA) www.invest.gov.ma The Omani Centre for Investment Promotion and Export Oman www.ociped.com Development Qatar Ministry of Business and Trade www.mbt.gov.qa Saudi Arabia Saudi Arabian General Investment Authority www.sagia.gov.sa Syrian Arab Syrian Investment Agency www.investinsyria.org Republic Tunisia Foreign Investment Promotion Agency www.investintunisia.tn United Arab Dubai Development and Investment Authority www.emiratesfreezone.com Emirates West Bank and Palestinian Investment Promotion Agency www.pipa.gov.ps Gaza Yemen General Investment Authority www.giay.gov.ye OECD high-income ECONOMY IPI WEb siTE Australia Austrade www.austrade.gov.au Austria ABA-Invest in Austria www.aba.gv.at Belgium, Invest in Brussels www.investinbrussels.com Brussels* Canada Invest in Canada www.investincanada.gc.ca Czech Republic Czech Invest www.czechinvest.org Denmark Invest in Denmark www.investindk.com Estonia Estonian Investment and Trade Agency www.investinestonia.com Finland Invest in Finland www.investinfinland.fi France Invest in France Agency www.invest-in-france.org Germany Germany Trade & Invest www.invest-in-germany.de Greece Invest in Greece Agency www.elke.gr Hungary Hungarian Investment and Trade Development Agency www.itdh.hu Iceland Invest in Iceland www.invest.is Ireland Industrial Development Agency of Ireland www.idaireland.com Israel Invest in Israel www.investinisrael.gov.il Italy Invitalia www.invitalia.it Japan Japan External Trade Organization www.investjapan.org Korea Invest Korea www.investkorea.org Luxembourg Luxembourg for Business www.investinluxembourg.lu Netherlands Netherlands Foreign Investment Agency www.nfia.nl New Zealand New Zealand Trade and Enterprise www.investmentnz.govt.nz Norway, Oslo* Osloteknopol www.osloteknopol.com Poland Polish Information and Foreign Investment Agency www.paiz.gov.pl Portugal aicep Portugal Global www.investinportugal.pt Slovak Republic Slovak Investment and Trade Development Agency www.sario.sk 50 Global Investment Promotion Best Practices 2012 Public Agency of the Republic of Slovenia for Entrepreneurship Slovenia www.investslovenia.org and Foreign Investments Spain Invest in Spain www.investinspain.org Sweden Invest in Sweden www.isa.se Switzerland OSEC Business Network Switzerland www.osec.ch United Kingdom UK Trade & Investment www.uktradeinvest.gov.uk United States Invest in America www.investamerica.gov NB: *denotes subnational IPI evaluated in absence of a national IPI South Asia (SA) ECONOMY IPI WEb siTE Afghanistan Afghanistan Investment Support Agency www.aisa.org.af Bangladesh Board of Investment www.boi.gov.bd Bhutan Ministry of Economic Affairs www.mti.gov.bt India Invest India www.investindia.gov.in Maldives Invest Maldives www.investmaldives.org Nepal Department of Industries - Foreign Investment Division www.ip.np.wipo.net Pakistan Board of Investment www.pakboi.gov.pk Sri Lanka Board of Investment of Sri Lanka www.boi.lk Sub-Saharan Africa (SSA) COUNTrY IPI WEb siTE Angola National Private Investment Agency www.anip.co.ao Benin Centre de Promotion des Investissements www.cpibenin.com Botswana Botswana Export Development and Investment Authority www.bedia.co.bw Burkina Faso La Maison de l’Entreprise du Burkina Faso www.me.bf Burundi Agence Burundaise de Promotion des Investisssements www.burundi-investment.com Cameroon Agence de Promotion des Investissements NO WEB SITE Cape Verde Cabo Verde Investimentos www.ci.cv Central African Ministry of Industry, Commerce and Promotion of Small and NO WEB SITE Republic Medium Sized Business and Industries Chad Office de Promotion Industrielle du Tchad NO WEB SITE Comoros Agence Nationale de Promotion des Investissements NO WEB SITE Congo, Dem. National Agency for Investment Promotion www.anapi.org Rep. Ministere de l’Economie, des Finances et du Budget/Commission Congo, Rep. of www.mefb-cg.org Nationale des Investissements Côte d’Ivoire Centre de Promotion des Investissements en Côte d’Ivoire www.cepici.ci Equatorial Ministry of Industry, Commerce and Promotion of Small and www.ceiba-guinea-ecuatorial.org Guinea Medium Companies Eritrea Eritrea Investment Center NO WEB SITE Ethiopia Ethiopian Investment Agency www.ethioinvest.org Gabon Agence de Promotion des Investissements Privés www.apip.ga Gambia Gambia Investment & Export Promotion Agency www.gipfza.gm Appendices 51 Ghana Ghana Investment Promotion Centre www.gipc.org.gh Guinea Agence pour la Promotion des Investissements en Guinée www.apiguinee.org Guinea-Bissau Direcçao de Promoçao de Investimento Privado NO WEB SITE Kenya Kenya Investment Authority www.investmentkenya.com Lesotho Lesotho National Development Corporation www.lndc.org.ls Liberia National Investment Commission www.nic.gov.lr Madagascar Economic Development Board of Madagascar www.edbm.gov.mg Malawi Malawi Investment Promotion Agency www.malawi-invest.net Mali Investment Promotion Agency of Mali (API-Mali) www.apimali.gov.ml Mauritania Commissariat of the Investment Promotion www.investinmauritania.gov.mr Mauritius Board of Investment of Mauritius www.investmauritius.com Mozambique Investment Promotion Centre www.cpi.co.mz Namibia Namibia Investment Centre, Ministry of Trade and Industry www.mti.gov.na Niger Centre de Promotion des Investissements www.investir-au-niger.org Nigeria Nigerian Investment Promotion Commission www.nipc.gov.ng Rwanda Rwanda Development Board www.rwandainvest.com São Tomé and Ministério dos Negócios Estrangeiros, Cooperação e www.mnecc.gov.st Principe Comunidades National Agency for the Promotion of Investment and Major Senegal www.investinsenegal.com Projects (Apix) Seychelles Seychelles Investment Bureau www.sib.gov.sc Sierra Leone Sierra Leone Investment and Export Promotion Agency www.sliepa.org South Africa Department of Trade and Industry (the dti) www.thedti.gov.za Sudan Ministry of Investment www.sudaninvest.org Swaziland Swaziland Investment Promotion Authority www.sipa.org.sz Tanzania Tanzania Investment Centre www.tic.co.tz Togo Société d’Administration des Zones Franches www.zonefranchetogo.tg Uganda Uganda Investment Authority www.ugandainvest.com Zambia Zambia Development Agency www.zda.org.zm Zimbabwe Zimbabwe Investment Authority www.zia.co.zw 52 Global Investment Promotion Best Practices 2012 Investment Climate Department of the World Bank Group The Investment Climate Department of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over fifteen donor partners working through the multi-donor FIAS platform. In partnership with