ipa structure and management - escap · 2017-07-04 · ipa structure and management training course...

IPA STRUCTURE AND

MANAGEMENT

Training Course on Promotion, Attraction and Facilitation of Foreign Direct

Investment for Inclusive and Sustainable Development for Myanmar,

Hpa An, 14-16 June 2017

THE CHANGING ROLE OF IPAS IN

INSTITUTIONAL FRAMEWORKS

� IPAs are often created through special legislative acts and

investment laws which specify exactly their institutional

structures and functions vis-à-vis FDI promotion

� Typically, IPAs are executing agencies of their host country

governments and are not normally involved in formulating

FDI policies and development goals

� However, they are playing an increasingly important role in

policy advocacy

United Nations Economic and Social Commission for Asia and the Pacific

� To promote and attract sustainable FDI

� To market and sell the host countries and locations/sites in the host country for FDI

� To identify and target specific types and sectors of FDI and specific TNCs (immediate level)– FDI and TNCs that would be realistically interested in the host country/location

(location has something to offer investors)

– FDI and TNCs that would contribute to national development goals

� To approve investment projects and grant licenses

� To facilitate the implementation of FDI projects and provide after care (investment facilitation)

PRINCIPAL PURPOSE AND ROLE OF IPA


TO ENABLE IPAS TO PROMOTE SUSTAINABLE FDI

GOVERNMENTS NEED TO:

� Train IPAs to increase awareness of the concept and issues

related to sustainable FDI

� Establish clear procedures for assessing and monitoring

sustainable FDI projects

� Train IPAs in assessing projects from a sustainable

perspective

� Adjust incentive structures to promote sustainable FDI

� Remove legislative obstacles that inhibit IPAs from tackling

sustainable FDI issues

� Reward IPAs for success in this area


DRIVERS BEHIND IPA EFFECTIVENESS

1. Support

2. Budget

3. Investment and business climate or the country's characteristics

4. Prioritization of functions or activities

5. IPA structure

6. IPA mandate and legal authority

7. Clear vision, mission and goals

8. Client charter

9. Network


� It is critical that the IPA has political support and the backing of key decision makers in both the public and private sector

� This means: adequate funding, staffing, and authority

� IPA is not profit-making but should generate a national return on its activities

� Consultation with relevant stakeholders; build consensus

� Local IPA should have backing of national IPA

DRIVER 1: SUPPORT


DRIVER 2 - BUDGET

� Mostly from government resources (hence need for support and consensus)

� Up to a minimum budget of about $64,000 IPAs seem to have no (or even negative) impact on FDI.

� Between a budget of $64,000 and $2 million - IPAs are effective

� Between $2 million and $11 million, the estimated elasticity reaches its maximum value

� On average, a 10% increase in the IPA budget is associated with a 7.5% increase in FDI flows

� Finally, above a budget of about $11 million, investment promotion expenditures are ineffective

� Local IPA: budget ranges from $100,000 to $1million

� Small level of investment: biggest share to investment promotion; high level of investment: biggest share to aftercare


Source: World Bank:

http://ideas.repec.org/p/wbk/wbrwps/3028.ht

ml

DRIVER 3 – INVESTMENT CLIMATE

� Quality of the investment climate and the level of

development have a significant effect on IPA performance

� Generally, the better the investment climate the greater the

IPA effectiveness

� But…. In countries with less government effectiveness and

relatively poorer investment climate, a good IPA can make a

difference

� But also….. investment promotion cannot fully compensate

for bad investment climate and policies


DRIVER 4 – PRIORITIZE ACTIVITIES

� The estimated results reveal that aftercare/policy advocacy appears to have the

strongest impact on FDI inflows, followed by image-building, investor servicing,

and investment lead generation


• Information & Sales Packs

• Investment plans

• Policies and incentives

• Procedures and requirements

• Progress and achievements

• Create awareness

Image Building

• Advertizing and PR

• Information & Marketing

• Missions & Events

• Company targeting

• Company visits

• Follow-up

Lead Generation and Targeting • Information provision

• Assistance with contacts

• One-stop-shop services

• Assessment of manpower,Infrastructure service needs

• Follow-up

Investor Servicing

• Continued “account executive attention”

• “Ombudsman” role and trouble-shooting function

• Follow-up on manpower, infrastructure, service needs

Aftercare and Policy Advocacy

Investment Promotion Cycle – by Investment Consulting Associates 2013

� Integral unit of a major ministry

� Unit within the prime minister’s or president’s office

� Separate ministry

� Autonomous agency whose chairperson reports to a cabinet minister (preferred option)

� Provincial/municipal IPAs: independence or branch?

DRIVER 5 – STRUCTURE

OPTIONS


� National IPA has its own distinct identity, budget and CEO

and board

� More flexible than a government agency, with autonomy on

expenditures

� Staff from both public and private sector makes it more

business-oriented

� IPA performance more public and open to scrutiny from

parliament

� Required authority and statutory power to coordinate

ministries, approve investments and grant concessions

� Reporting directly to head of state of government

DRIVER 5- STRUCTURE, CONT.

PREFERRED OPTION FOR NATIONAL IPA:

AUTONOMOUS AGENCY


� Local IPAs can be either at provincial or city level: major cities could have their own IPA (e.g. Mandalay)

� Local IPAs can be a division of an economic policy department in the local administration or a larger investment department

� Ideally, in more developed countries/localities, the local IPA has a high degree of autonomy but coordinates with the national IPA to ensure consistency in investment policy

� However, autonomy is more expensive and perhaps not yet suitable for Myanmar

� Budget for local IPA can range from $100,000 (small division) to over $1 million for full autonomous IPA

DRIVER 5-STRUCTURE, CONT.

LOCAL IPAS


� In Myanmar, local IPAs should preferably be branches, subsidiaries of the national IPA

� They should be staffed by professionals that have profound knowledge of company needs and localities/sites in their province/city and have excellent command of English language (and possibly other languages)

� They should not compete with each other but coordinate their investment promotion activities

� They could help the central IPA with promoting the particular characteristics/attractions of their respective localities and develop a local brand image

� They should essentially serve as investor services centres focusing on investment facilitation: dissemination of information, arranging site visits, aftercare, addressing investor inquiries and helping with business matching

� There is an obvious need for proper coordination between the national and local IPAs

� The local IPA is the extension of the central IPA in the locality to help the investor realize his/her investment

DRIVER 5-STRUCTURE, CONT.

LOCAL IPAS: PREFERRED OPTION FOR MYANMAR


SAMPLE LOCAL IPA ORGANIGRAM


DRIVER 6

IPA MANDATE AND LEGAL AUTHORITY

The IPA mandate and its functions as usually described by the national investment law:

� Mandate

� Functions

� Organizational structure

� Reporting

� Budget, and responsibilities of the IPA

� Guidelines and responsibilities of investors

� Investment rules

� Incentive rules

� Status of subnational IPAs


DRIVER 6 – MANDATE AND LEGAL AUTHORITY, CONT.

� For an IPA to be an effective organization it is vital that it has a clear and exclusive mandate

� The law should clearly define the mandate outlining the agency’s specific responsibilities, and define the required powers and legal authority given to the agency to carry out its mandate

– Investment promotion only, or in combination with trade?

– Investment policy, facilitation, approval, etc.?

– Ideally, the IPA’s mandate should be limited to a discrete number of tasks specifically related to increasing the inward flow of FDI and assisting new and existing investors

� There are common (legal) issues which must be resolved first before the IPA can begin operations effectively



EXAMPLE PROVISION IN INVESTMENT LAW

Investment Law Regulations for the (new) formation of IPAs:

1. The national IPA has the mandate, in consultation with the regional IPA’s and within the provisions of the investment law, to:– Approve investment applications

– Grant investment licenses and incentives

– Coordinate investment plans

– Promote investment and

– Open branches in their area

2. The IPA shall be composed of at least seven Commissioners, including the Chairperson and the Vice Chairperson

3. The IPA must establish a mechanism to hire or dismiss Commission members in case they do not adhere to the standards and charters of the IPA

4. The IPA shall submit an annual plan for approval by…..

5. The IPA shall be required to submit an annual report and audited accounts to..…



APPROPRIATE ELEMENTS OF A MANDATE FOR A MODEL IPA

� To increase the contribution made by FDI to the economy by

informing new investors of the country's advantages as an

investment site and influencing them to invest

� To facilitate new investment by providing a professional service

that enables investors to meet their specific project needs in all

specified sectors

� To nurture the existing investor base by assisting TNCs to

overcome any impediments to increasing their existing investment

� To draw the attention of foreign investors to the availability of any

special incentives

� To bring to the attention of the government any actions that could

further improve the enabling environment for foreign investment


FOUNDATION PRINCIPLES: A CLOSER LOOK

� Attracting Investment is a resource intensive activity (e.g.

labor, time and capital). It is also very challenging, requiring

a diverse range of skills and above all a high level of

professionalism and commitment

� Defining the organization principles (e.g. vision, mission,

goals, etc.) is important to create shared values and to

differentiate your IPA from others

� When investment promotion is done well, the benefits for

the local economy can be significant and for staff working in

the investment promotion agency it can be satisfying and

rewarding, and often opens up excellent career prospects


� Myanmar Investment Commission (under Ministry of

Planning and Finance): investment promotion; investment

facilitation; policy advocacy; investment proposal appraisal

and approval (covered in new Investment Law)

� Directorate of Investment and Company Administration

(DICA): serves as secretariat to MIC

� Need for clear division of labour/responsibilities of MIC and

DICA

IPAS IN MYANMAR


DRIVER 7

ORGANIZATION PRINCIPLES


Vision

Mission

Goals

Vision: It’s a future oriented, detailed

description of outcomes you want to accomplish.

Mission: This should be a inspiring

statement of why you exist (organization)

Goals: Significant steps towards

accomplishing your mission and

vision

Defining the organization principles (e.g. vision, mission, goals, etc.) is important to create

shared values and to differentiate your location from competitors

GOALS

� Examples of typical goals:

– Deliver high quality investor services

– Develop Marketing and Promotion Material of your

Province

– Perform Research and gather Data and follow up on

Investor inquiries

– Organize (web)events and Investment Seminars

– Develop and Maintain a high quality Website

– Track and trace Investor inquiries and assist in site visits


GOALS

� The major outcome of strategic planning, after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement

� Goals form the basis of the activities of your IPA and its departments

� Goals should be SMART to be effective:

– Specific: precise about what has to be achieved

– Measurable: clear on how to quantify the realization of the objective

– Agreed or achievable: realistic expectations

– Relevant: to the organization and to whom they are assigned

– Time-based: clear indication of start or finish date


DRIVER 8

CLIENT CHARTER

� The Client Charter informs potential investors about

standards and the delivery of products and services

� The Charter sets out:

– What we will do for you

– How we propose to do it

– In what timescale

� It also indicates what you, in turn, expect from your clients

to enable you to meet your commitments to them

� Thus, the Charter can be seen as a “letter of engagement”


WHY DO YOU NEED A CLIENT CHARTER?

� The Charter is a way of ensuring that:

– You create and maintain a client focus

– You communicate effectively with clients

– You maintain levels of service above pre-determined service

expectations

– Your programme and service portfolio is tailored and appropriate to

client needs

� The Client Charter sets targets for service delivery by the IPA


EXAMPLE CLIENT CHARTER: UGANDA INVESTMENT

AUTHORITY


� National IPA needs networks with stakeholders: chambers,

ministries, government agencies, statistical offices,

embassies, overseas diplomatic missions and chambers etc.

� Local IPAs need networks with national IPA and local

government offices, EPZ administrations, other provinces,

city administrations, existing investors and national/local

chambers etc.

DRIVER 9 - NETWORKS


� National IPA and its network

� Provincial/city administration and government departments responsible for permits and approvals that investors need; electricity, water, gas, telecommunications, transportation, land and property, environment, and employment departments are particularly important

� Private/public sector providers of utilities, ports, airports, ICT logistics, property, and sites, including industrial zones and EPZs

� Professional organizations, especially lawyers, accountants and consultants

� Industry bodies and associations, chambers of commerce

� Leading existing foreign and domestic investors and suppliers

� Newspapers and journalists

MAJOR STAKEHOLDERS FOR LOCAL IPA

(VCC-MCI)


� What set up for an IPA can serve the provinces best?

� What budget would be available for local IPAs?

� Which provinces/cities would benefit most from having their

own IPA?

� What is the vision, mission, goal and client charter of your

local IPA?

DISCUSSION ISSUES


Handbook for Promoting Foreign Direct Investment in

Medium-Size, Low-Budget Cities in Emerging Markets

Millennium Cities Initiative, Earth Institute, Columbia

University

http://mci.ei.columbia.edu/files/2012/12/MCI-City-

Investment-Promotion-Handbook2.pdf

USEFUL RESOURCE


Your questions please?


Economic and Social Commission for Asia and the

Pacific

CONTACT DETAILS – UNESCAP

UNESCAPThe United Nations Building

Rajadamnern Nok Avenue

Bangkok 10200

Thailand

T: (66-2) 288-1234

F: (66-2) 288-1000

W: http://www.unescap.org/contact

Consulting Partner

Investment Consulting Associates (ICA)

H.J.E Wenckebachweg 210

1086 AS Amsterdam

The Netherlands

T: +31 20 217 0115

F: +31 20 462 3535

E: [email protected]

W: www.ic-associates.com

ipa structure and management - escap · 2017-07-04 · ipa structure and management training course...

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