Kosovo FDI strategy andpolicies supporting FDI objectives

Six Core Steps in Effective Policy Advocacy

Prishtina, 7 April 2009

WORKSHOP

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CONTENTS

• Definition

• Investment Promotion Cycle

• Regulatory Governance v Investment Promotion

• 6 steps

• CzechInvest case study

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Policy Advocacy - Defined

Institutionalized process of pursuing sustained improvements in the business environment and

competitiveness

Policy Advocacy - Defined

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Investment Promotion Cycle

Policy Input

Investment Climate

Systematic Feedback

Aftercare / investor

Development

Investor facilitation /

servicing

Formulating Development

Package

Lead / Investment Generation

Image building & branding

Investment Climate + product

development

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• Investment Policy Advocacy – can be seen as subset of regulatory governance

• In addition – policy advocacy can be a more integral part of the investment promotion and facilitation process – for example, a policy decision to build the Kosovo brand

• Within the latter context – policy advocacy capitalizes on the interface the IPI has with clients and linkages with stakeholders – moreover, it builds on international market intelligence and knowledge of the competitiveness of the current investment climate

Context

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Policy Advocacy - 6 Core Steps

1. Data collection;

2. Analysis;

3. Communication and stakeholder management

4. Decision;

5. Implementation

6. Monitoring and evaluation

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• Includes:

• Establishing and/or improving the process that leads to the formulation of a reform agenda and manages to institutionalize an ongoing reform process

• Identifying pressing investment environment issues and forwarding them to the Government for action, and

• Pro-actively advocating a new direction for Government policy in order to make the country or region a more attractive location for FDI (usually in the case of new sectors)

Objective

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• The IPI should become a key advocate for change of the investment & policy environments affecting its clients, the investors

• IPI does not have the power or the mandate to change many of the policies that will affect the investors

• Must work in harmony with Government Institutions, not against them

• Must establish and follow a formal process in order to maintain neutrality and independence

• However, results build credibility and status

Pitfalls/Confusion - Advocate vs. Primary Actor

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•In 1997 CzechInvest fulfilled a policy advocacy role to introduce incentives

•CzechInvest presented the Czech Government with a complete solution – not just recommendations

•The ‘package’ from CzechInvest included a draft law; endorsement from the European Commission that incentives were EU compliant; an incentive manual and the design of an administrative and monitoring process

Policy Advocacy – CzechInvest Case Study

CzechInvest: by January 2009 had attracted over $24 billion;

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• Drafting, enacting and implementing laws and regulations:

• Investment Legislation

• Liberalization to open restricted areas of the economy

• Special Economic Zone/Free Zone legislation

• Tax law and Investment Incentives

• Business Establishment procedures

• Enhancing Human Resource education and training required by the target industries and segments

• Altering University Curriculum to produce skilled laborers for new FDI sectors

• Enhancing Infrastructure:

• Transportation:• Roads, Sea Ports, Airports, Railroad• Service Providers

• Telecommunications & Utilities

• Financial Institutions

• Vision, future opportunities, emerging segments

Types of PA issues/tasks

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• External Organization:

• High-level Steering Committee

• Inter-institutional issue-solving Implementation Task Force

• Inter-institutional bridges/network to start productive relationships

• Partners:

• President, Prime Minister

• Ministers of Finance, Economy, Education, Public Works

• Department Heads

• Universities, Think Tanks

• Foreign Investor Councils (FICs)

• Chambers, Associations

• NGO, Unions, Media

Key Elements for Policy Advocacy

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• Opinions, complaints and praise regarding the investment environment will pass through IPI on a constant basis

• Reactively and pro-actively collect those pressing issues that hold further investment

• In General

• Of a particular sector, industry, segment

• Many will include small, insignificant, individual problems

Step 1: Systematic Gathering of Information about the Investment Environment

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• Sources of Input• The most important and obvious sources:

• Established Investor surveys• Investor Perception surveys• Benchmarking• Lost investment opportunities reports:

Why not invested Why disinvesting

• Feedback obtained during IPI’s operations: • Desktop research• Telemarketing• Meetings with target investors• Site visits, briefings and debriefings• Investor Servicing • Aftercare

Step 1: Systematic Gathering of Information about the Investment Environment

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• Sources of Input

• Public-Private Dialogue (PPD) • Chambers, Associations, etc.• Think Tanks, Universities• Public Consultation

• International rating agencies:• Corruption (Transparency International) • Political/Economic environment (Heritage Foundation)• Doing Business (World Bank)• Investment Climate Assessments (World Bank)• Economic Competitiveness (WEF, UNCTAD)• OECD Investment Framework Review• Human Development Index (UNDP) • Credit (S&P, Moodys)

Step 1: Systematic Gathering of Information about the Investment Environment

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• Set prioritization criteria:

• Rigorous, replicable and transparent

• The origin of the information:

• Surveys, existing and potential investors, exit/loss opportunity reports take priority

• Importance expressed by investors

• Relevant patterns, recurring issues, investors taken actions

• PA Officer/Task Force assigns priority based on pre-established criteria

• List of priority issues

• Clear list with IPI Management

Step 2 – Systematic Prioritization of Pressing Issues - Researching/Analyzing

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• Research each priority issue: • Interview the person who input the issue in the ITS to get a more detailed

perspective on context and content.

• Coordinate with Aftercare Officer for recurring issues/problems.

• Undertake an internet and document search to get further background information.

• Interviews with parties outside the agency that could provide a better understanding of the issue.

• PA Officer/Task Force works on possible solutions

• Integrated approach with implementing agencies or ministries as an in-depth knowledge of the way that the particular policies work is required

• Problem/Issue/solution Matrix vs. involved institutions

• Revise list and recommendations as needed

Step 2: Researching/Analyzing Priority Issues

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• Prepare a one-page Memorandum on the issue: • Describe the issue

• Highlight its origin• Provide details as needed

• List consequences

• Provide possible solutions:• Required change in policy/regulation• Involved institutions, implementing agencies or ministries• Provide references of success in other countries, if available

• Measures of success

• Provide annexes with supporting statistics, verbatim, etc.

• Management Review: • Weekly, biweekly or monthly

• Management and PA Officer review the memos

Step 3: Preparation of PA Memorandum

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• Management and PA Officer make presentation of Memo/s to the Board/Committee

• IPI must partner via the Board/Executive Director with relevant government ministries and agencies:

• These institutions have the authority

• IPI has little power to change the investment environment

• It should not seek to assume this power

• The role of parceling out tasks to external actors for resolution is not within the responsibilities of most of the Board of Directors/Executive Director – unless Chairperson is the Prime Minister

Step 3: Presentation of Memos to Board/Committee

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• Board/Committee takes over the issue/s

• Board/Committee meetings are forum to:

• Approve the recommendations and forward to appropriate Government institution

• When vested, make a firm political decision on how to resolve each issue and the reasonable timeframe.

• Several Board/Committee members should be in key Government positions from which they can implement the required changes or the Executive Director can pass it to the Relevant Ministry or directly to Cabinet.

• Spur the implementing agencies and ministries into action.

Step 4: Board/Committee Decision, Action & Follow-up

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• Attention of top level of government is a key ingredient

• Ensure the financial and technical resources to help line administrations implement advocated reforms

• PA Officer helps in implementation as needed, via his/her participation in Task Force as needed

• Track progress and report to top level of Government and key stakeholders

Step 5 & 6: Implementation, Results Communication and M&E

Thank you!