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2008/MRT/R/004
Agenda
Item: 4
APEC Investment
Facilitation Action Plan (IFAP)
Purpose: Consideration
Submitted by:
SOM Chair?s
Office
Ministers Responsible for Trade Meeting
–
Retreat Session
Arequipa, Peru
31 May 2008
APEC Investment
Facilitation Action Plan (IFAP)
Introduction
–
the benefits of investment
There is strong international consensus
on the benefits of investment, across the spectrum
of its
activities: from tangible assets
to intellectual property. Such investment drives
economic productivity,
builds jobs,
raises incomes, strengthens trade flows and
spreads international best technologies and
practices. Investment bolsters
economic growth for developed and developing
economies alike.
APEC?s
member e
conomies recognise the
significant economic benefits of investment and
are active
in promoting investment and
facilitating cross-border investment flows.
Facilitating investment
requires work:
a concerted national and international effort to
create and sustain the most conducive
climate for investment
APEC has been instrumental in this
effort in the Asia-Pacific region beginning with
its adoption in
1994 of the non-binding
investment principles. These are designed to
improve and further liberalise
investment regimes and they include
measures on facilitation.
To reinforce
APEC?s work in this area,
in 2007 in
Sydney APEC Leaders agreed to the development of
an Investment Facilitation Action Plan
(IFAP) aimed at further promotion of
investment in APEC member economies. Effective
investment
facilitation can make a
significant contribution to the sort of broader
investment climate reform efforts
widely practiced by APEC member
economies.
What is
investment facilitation?
To
harness the advantages of foreign investment, it
is critical that governments have investment
procedures in place that do not
unnecessarily increase the costs or risk of doing
business, or
constrain business
competition (which individually or collectively
lower productivity and growth).
Investment facilitation refers to
actions taken by governments designed to attract
foreign investment
and maximise the
effectiveness and efficiency of its administration
through all stages of the
investment
cycle.
Investment
facilitation covers a wide range of areas, all
with the ultimate focus on allowing investment
to flow efficiently and for the
greatest benefit. Transparency, simplicity and
predictability are among its
most
important principles. The costs of opacity far
outweigh the costs of enhancing transparency.
Investors look for an investment
environment that is stable, and that offers
international best practice
standards
of protection, including the swift and equitable
resolution of investment disputes.
A sound investment facilitation
strategy ensures that all investment applications
are dealt with
expeditiously, fairly
and equitably. Investment facilitation also
requires creating and maintaining
transparent and sound administrative
procedures that apply for the lifetime of the
investment,
including effective
deterrents to corrupt practices. Finally,
investment facilitation is enhanced by the
availability of quality physical
infrastructure, high-standard business services,
talented and flexible
labour forces,
and the sound protection of property rights.
Multilateral Investment
Facilitation
Several
multilateral organisations have active programs in
support of strengthening facilitation
practices as part of broader investment
promotion policies. The World Bank is at the
forefront of these
efforts, providing
information services and diversified technical
assistance to help governments and
relevant intermediaries involved in
promoting investment enhance their ability to
respond effectively to
investor needs.
UNCTAD analyses trends in
FDI and their impact on development, compiles data
on FDI, provides
advisory services and
training on international investment issues, helps
developing countries improve
policies
and institutions that deal with FDI, and assists
these countries to participate in international
negotiations on investment. The OECD
has developed investment policy instruments, such
as the
Framework for Investment Policy
Transparency
and the
Policy
Framework for Investment,
to assist
governments in developing frameworks
for investment facilitation.
APEC?s IFAP is designed
constructively to complement these
existing international efforts. It is a
consensus plan on investment
facilitation that reflects the specificities and
priorities of APEC
members. While it
is non-binding, t
he IFAP reinforces
APEC?s commitment to significantly
enhance
d
regional economic
integration.
APEC and
investment facilitation
Since its inception in 1989, APEC has
emphasised the importance of investment
facilitation through
practical
activities in its work program. In 1995, APEC
Leaders adopted the Bogor Goals of free and
open trade and investment in the Asia-
Pacific region by 2020. At the same time they
committed to
accelerate APEC?s trade
and inv
estment facilitation programs.
Investment facilitation accordingly is
one of the aims of the 1995 Osaka
Action Agenda (OAA).
APEC
member economies are continuing efforts to enhance
transparency of investment regimes,
improve investment climates and
encourage and facilitate free and open investment
in the region. The
2007 report on
Strengthening Regional Economic
Integration
emphasises the need to
improve further
the investment climate
in APEC member
economies and refocuses
APEC?s investment liberalisation
and facilitation agenda on concrete
initiatives that accelerate regional economic
integration and
reduce behind-the-
border barriers.
Among
APEC?s achievements
that have included
investment facilitation so far are:
–
APEC Non-
Binding Investment Principles (1994);
–
–
–
Options for
Investment Liberalisation and Business
Facilitation to Strengthen APEC Economies
(1997);
Guide to the
Investment Regimes of APEC Member Economies
(6
edition, 2007); and
Study
on
Enhancing Investment Liberalisation
and Facilitation in Economic Development in the
Asia-Pacific Region
, which
examined ways to reduce
?
behind-the-
border
?
barriers to domestic
investment.
th
These initiatives were undertaken in
recognition of the diversity that exists among
APEC member
economies, and they provide
members with a broad range of policy choices
suitable for different
economic
circumstances.
Aims of
APEC’s IFAP
The
main aims of the IFAP are to:
?
strengthen
regional economic integration;
?
strengthen the
competitiveness and sustainability of economic
growth of APEC
?s member
economies;
?
expand
prosperity and employment opportunities in the
APEC region; and
?
make further
progress toward achievement of the Bogor Goals.
APEC’s
investment facilitation p
rinciples
The following principles
are not exhaustive. They provide a guide to the
kind of provisions that would
constitute better practice in
investment facilitation. They will not prejudice
the positions of APEC
members in any of
their current or future unilateral actions or
negotiations with investment provisions.
A working framework
Principles
?
Promote
accessibility and
transparency in
the
formulation
and administration
of investment-
related
policies
Government role
?
Provide full,
clear and up-to-
date picture of
investment
regime, including advance
notice of proposed changes
?
Ensure readily
available
information, including
through
“one
-
stop”
or special enquiry
points
and on-line services
where appropriate
?
Promote
legislative
simplification including
plain
language drafting
?
Publicise
outcomes of periodic
reviews of
investment regime
?
Enhance stability
of
investment
environments,
security of
property and
protection of
investments
?
Provide an
environment which
?
Reduces non-commercial risk
is politically and economically
associated with investment
stable.
?
Links more appropriately effort and
?
Provide secure
property rights
reward increasing
incentive to
covering tangible and
invest.
intangible assets
including
?
Increases business confidence in
land use rights.
the
domestic legal system
?
Provide well-performing court
systems.
?
Facilitate effective contract
enforcement.
?
Limit and review the use of
regulatory expropriation and
guarantee prompt adequate
and effective compensation.
?
Encourage
development of
effective, reasonable
cost
mechanisms for resolving
disputes including private
arbitration services.
?
Consider
membership of
recognised international
arbitration bodies.
?
Provide a
mechanism for the
enforcement of
arbitral
awards.
?
Enhance
predictability and
consistency in
investment-
related
policies
?
Systematise and
institutionalise common
application of investment
regulations.
?
Ensures certainty to encourage
business decisions
?
Simplifies
business transactions
and builds
business confidence
?
Increases ability to raise finance
especially for SMEs
?
Provides
investor guarantee of
compensation for
regulatory
takings.
?
Gives recourse
to impartial channels
of dispute
settlement
?
Gives an additional layer of
protection
in cases of disputes
Business impact
?
Encourages business interest and
enables business decisions
?
Allows business
to include
prospective changes in its
planning
decisions
?
Gives business
confidence that
laws, regulations and
policies are
consistent across
different areas
and levels of
government
?
Promotes a perception in business
that the government aims to
maintain a good investment climate
?
Give equal
treatment in the
?
Reassures investors that they are
operation and application of
being given equal treatment
domestic laws and regulations
?
Reduces cost of
doing business and
on investment.
adds to competitiveness
?
Avoid
discriminatory use of
Principles
Government role
bureaucratic
discretion
?
Establish clear criteria and
transparent procedures for
administrative decisions
including with respect to
investment approval
mechanisms.
Business impact
?
Reduces scope
for corruption
?
Improve the
efficiency and
effectiveness of
investment
procedures
?
Simplify, streamline and
quicken investment regime
and processes .
?
Provide timely, relevant and
prompt advice.
?
Encourage and foster
institutional cooperation and
coordination
?
Where appropriate, establish
“one
-
stop”
approval autho
rity
–
eg an active investment
promotion agency with
adequate funding
?
Clarify policy
roles and
accountabilities between
different levels of government.
?
Keep the costs
to the investor
of the investment
approval
process to a minimum.
?
More attractive
investment
environment
?
Speeds up
investment processes
?
Avoids duplication and
double-
handling at different levels of
government
?
Lowers the cost of doing business,
especially for small and medium
sized enterprises with higher
barriers to entry
?
Build
constructive
stakeholder
relationships
?
Maintain mechanisms for
regular consultation and
dialogue with interested
parties including investors.
?
Provide
framework to identify
and address
problems
encountered by investors.
?
Promote
improved standards
of corporate
governance.
?
Promote responsible business
conduct.
?
Enables business to help shape
productive investment environment
?
Ensures
problems can be dealt with
expeditiously
?
Strengthens private-public sector
partnerships
?
Enables business to operate in a
more socially responsible manner
?
Utilise new
technology to
improve
investment
environments
?
Apply new
technology to
improve information,
application and approval
processes.
?
Promote the adoption of new
technology, including through
training of officials at all levels
of government in their use.
?
Provide
adequate and
effective protection of
technology and related
intellectual property rights.
?
Develop
strategies to meet the
intellectual
property needs of
SMEs.
?
Increased
accessibility and reduced
business
costs
?
Enhanced
security through
measures such as
passwords and e-
signatures
?
Encourages
business to invest in
research and
development and to
train personnel in
the use of new
technologies
?
Encourages
business to invest in
continuous
improvement for new
technologies and
processes
Principles
Government role
Business
impact
?
Maximises effectiveness of
investment regime, including in line
with current international best
practice
?
Encourages business to be
innovative and forthcoming with
new ideas
?
Promotes international
competitiveness of the economy
?
Increases
predictability of the
investment
environment through
binding treaty
action
?
Especially relevant to companies
with investments in more than one
economy
?
Establish
?
Maintain mechanism for
monitoring and
regular
evaluation of
review
investment regime.
mechanisms for
?
Benchmark and measure
investment policies
performance of institutions
involved in facilitating
investment.
?
Enhance
international
cooperation
?
Consider joining international
instruments promoting
international investment.
?
Encourage
investment
facilitation through
bilateral
agreements, including
free-
trade agreements.
?
Make use of
international and
regional initiatives
aimed at
building investment expertise,
including information sharing.
APEC’s broader business
facilitation a
genda
APEC?s
investment
facilitation work
cannot be considered
in isolation from APEC?s broader
bus
iness
facilitation
activities. APEC continues to be the regional
leader in promoting trade and investment
liberalisation and facilitation, which
remains a cornerstone for strengthening regional
economic growth
and integration.
APEC?s agenda is also increasingly
focused on structural economic reform,
so
-called
?
behind
the border
?
initiatives to
bolster trade and investment in the region. This
includes areas such
as domestic
regulatory reform, corporate and public
governance, critical infrastructure and capacity
building. Ongoing reform in these areas
is integral to underpinning productivity growth,
increasing
economic growth and
stability and boosting trade and investment flows.
APEC also has a growing
human security
agenda in support of stronger trade and investment
environments, such as countering
the
threat of terrorism, food security and emergency
management.
IFAP is
intended to complement and reinforce existing APEC
work on investment facilitation (outlined
at Attachment A). In the same way, it
is intended to work hand in glove with business
and industry
stakeholders. An important
partner in this work is the APEC Business Advisory
Council (ABAC).
Ongoing consultation
with these stakeholders is a feature of the IFAP.
Capacity Building
An important feature of
IFAP is provision for capacity building and
technical cooperation to assist
lesser
developed APEC member economies with
implementation. Such capacity building may include
activities such as
?
?
APEC activities aimed at improving
capacity in developing economies; and
participation in activities
― including training and where
appropriate use of other capacity
building initiatives such as toolboxes
―
offered bilaterally or organised by
multilateral or
regional organisations
such as the World Bank, UNCTAD and OECD.
In the course of developing
Key Performance Indicators (KPIs) for IFAP
actions, sub-fora may
consider to
identify a minimum of one capacity building need
and mechanism to address this. Such
mechanisms may include assistance from
individual APEC member economies, cooperative
activities
in APEC, and, on occasion,
assistance from international and regional
institutions.
Measurement
and Reporting