Working Group on Investment Policy and Promotion

1. Working Group on Investment Policy and Promotion Sarajevo, Bosnia and Herzegovina 21 February 2013

2. FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

3. FDI inflows from 2000 to 2010 (EUR mn) Source: World Bank, 2012. The official OECD conversion rate for 2010 of 1.324 USD/ euro is used.

4. FDI as a % of GDP (2007 to 2010) Source: World Bank, 2012. The official OECD conversion rate for 2010 of 1.324 USD/ euro is used.

5. FDI by source in 2007 Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania and Kosovo*.

6. FDI by source in 2010 Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania and Kosovo*.

7. Western Balkan FDI by activity (NACE Rev 1) Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania, Montenegro and Kosovo* based on NACE classification.

8. Western Balkan FDI by manufacturing activity Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May 2012. No data available for Albania, Montenegro and Kosovo* based on NACE classification.

9. FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

10. Investment Reform Index (IRI) Dimensions Sub-dimensions Investment Reform Index 2010 1 Investment Policy and Promotion 1.1 FDI Policy Covering priority dimensions related to the Regional Framework for Investment : 1.2 Investment Promotion and Facilitation - 1. Investment Policy and Promotion Sub - Dimensions Indicators Human Capital Development 2. 1.1 FDI Policy 5.3 ACAAs 3. Trade Policy and Facilitation 1.1.8 Intellectual Property Rights 4. Access to Finance Indicators Level of Reform 5. Regulatory Reform and Parliamentary Processes 1 2 3 4 5 6. Tax Policy Analysis 7. Infrastructure for Investment 8. SME Policy 1 Development of IP Laws

11. IRI Monitoring framework Investment Policy and Promotion

12. IRI assessment methodology – tripartite structure Government self-assessment Private Sector Independent experts

13. Results of Investment Policy and Promotion assessment in IRI 2010

14. Results of Investment Policy and Promotion assessment in IRI 2010 • Albania • Simplifying administrative procedures related to licenses • Reforming the tax administration and enforcement of tax laws Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

15. Results of Investment Policy and Promotion assessment in IRI 2010 • Bosnia and Herzegovina • Improving liquidation procedures • Clarify urban planning and construction laws and transfers of construction permits between investors Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

16. Results of Investment Policy and Promotion assessment in IRI 2010 • Croatia • Accelerate approval of business visas Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

17. Results of Investment Policy and Promotion assessment in IRI 2010 • Kosovo* • Increase transparency and fairness of public procurement activities • Better organised and transparent tenders Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

18. Results of Investment Policy and Promotion assessment in IRI 2010 • FYR Macedonia • Improving administrative capacity to implement reforms • Removing unnecessary administrative procedures Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

19. Results of Investment Policy and Promotion assessment in IRI 2010 • Montenegro • Contract enforcement and easing property registration • Improve the transparency and delivery of construction permits localities Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

20. Results of Investment Policy and Promotion assessment in IRI 2010 • Serbia • Better regulation of monopolies • Encourage bankrupt entrepreneurs to initiate bankruptcy proceedings and enacting amendments to the Insolvency Law Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

21. Results of Investment Policy and Promotion assessment in IRI 2010 • Common points for improvement • Accurate land title registration and cadastres • Transparency in policy design and implementation, especially at sub-national level • Accelerating administrative procedures • IP enforcement • Monitoring and evaluation of investment promotion • Expanding role of IPAs to act as one-stop shops

22. FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

23. Investment Policy • Peer learningexercises on several topics, for example: • Experiences with investor-state arbitration • Restitution processes and procedures • Digitisation of cadastres and land registers • Experiences with FDI incentive programmes and their evaluation • Enhance the transparency of investment policy design. For example, upcoming laws, regulations or administrative procedures could be presented and discussed at the SEEIC or WGIPP. This would allow policy makers to receive comments from investment policy experts from the region prior to enacting legislation. • Development of regional best practice guidelines for specific areas of policy, such as updating land registries or even evaluating the costs and benefits of investment attraction programmes.

24. Investment Promotion Regional investment promotion strategy – a tailored regional strategy/approach targeting international investors in sectors or niches who could fit into Western Balkan value chains . A regional exhibition – a touring exhibition which would visit foreign markets and highlight a specific sector or niche area in each of the seven Western Balkan economies. Organisation of visits to Western Balkan – Western Balkan IPAs could organise joint visits of foreign investors to the region ,with a stop in each economy. This would save time and money for the foreign investor. Co-location in foreign markets – Western Balkan IPAs could identify cities where they could save money and build on information synergies (e.g., the Scandinavian Tourist Board in Asia-Pacific has joint offices in Tokyo and Beijing).

25. Thank you for your attention Milan Konopek Project Manager - Regional Competitiveness Initiative OECD Investment Compact for South East EuropePrivate Sector Development DivisionOrganisation for Economic Co-operation and Development (OECD) Milan.konopek@oecd.org

26. Annex

27. FDI Policy National Treatment – national treatment restrictions on entry and operation of FDI Admittance of personnel – limitations on entry of specialised personnel to support FDI Transfers – restrictions on capital transfers in and outside of host economy FDI incentives – transparent application of incentives with monitoring and evaluation Performance requirements – requirements, such as local-content, on investments Land ownership – ability of investors to own land (urban and rural) Titling, cadastre and restitution – up to date cadastres and land registers, restitution process completed Intellectual Property Rights – enforcement of IP laws Expropriation – clear rules for expropriation and efficient legal process International Investment Agreements – what is contained in bilateral investment treaties International Arbitration – signatories to New York Convention and ICSID Convention

28. Investment Promotion and Facilitation Strategy – contents of an investment promotion strategy Institutional Support – level of support provided by the investment promotion agency Monitoring and Evaluation – whether the investment promotion strategy is evaluated FDI-SME linkages – programmes to support commercial linkages between FDI and local firms One stop shop – whether investors can submit and receive approval for all administrative procedures in one place Client Relationship Management - the degree to which investment promotion agencies keep track and follow up with foreign investors Policy Advocacy - whether the investment promotion agency advocates on behalf of investors Aftercare services – whether investment promotion agencies provide support to foreign investors after their establishment

29. Transparency Publication avenues and tools – whether laws and administrative procedures are codified and published Prior notification and stakeholder consultations - whether investors are notified in advance of changes to laws and procedures Procedural transparency - whether legal procedures are transparent, are their opportunities for appeals

30. Privatisation and Public Private Partnerships • Privatisation strategy - existence of a privatisation strategy • Privatisation consultations – are stakeholders prior to a privatisation • Restrictions on foreign investor participation in privatisation – restrictions on foreign investors • PPP units – is there a unit in government to lead PPP development • PPP legislation - is there legislation covering PPPs, not just concessions • PPP consultations - are stakeholders consulted prior to PPP being launched • PPP cost benefit analysis - is there an assessment of a PPP • PPP monitoring - is the PPP monitored and evaluated?