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Geneva, 5 May 2011

Joint Conference PAM & the UN Trade and Productive Capacity Cluster : Recent FDI trends and challenges in investment policy-making in the post crisis. Masataka Fujita Head Investment and Enterprise Division United Nations Conference on Trade and Development. Geneva, 5 May 2011. 0.

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Geneva, 5 May 2011

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  1. Joint Conference PAM & the UN Trade and Productive Capacity Cluster :Recent FDI trends and challenges in investment policy-making in the post crisis Masataka Fujita Head Investment and Enterprise Division United Nations Conference on Trade and Development Geneva, 5 May 2011 0

  2. Recent FDI trends in the world and PAM

  3. Global FDI flows are still some 25% below the pre-crisis level Value of global FDI inflows, various years$ billions Source: UNCTAD 2

  4. For the first time, developing and transition economies received more than half of global FDI inflows Value of global FDI inflows by economy grouping, 1995 - 2010$ billions 2 000 Transition economies 1 600 Developing economies 1 200 53% 800 400 Developed economies 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: UNCTAD 3

  5. The stagnant flows overall mask stark differences by region Change (%) 2009 2010 1 114.1 1 122.0 0.7 565.9 526.6 -6.9 378.4 295.4 -21.9 129.9 186.1 43.3 11.9 2.0 -83.4 478.3 524.8 9.7 58.6 50.1 -14.4 116.6 141.1 21.1 303.2 333.6 10.0 68.3 57.2 -16.2 233.0 274.6 17.8 69.9 70.5 0.8 FDI inflows by region and major economy, 2009 - 2010a$ billions Region / economy World Developed economies Europe United States Japan Developing economies Africa Latin America and the Caribbean Asia and Oceania West Asia South, East and South-East Asia South-East Europe and the CIS a Preliminary estimates by UNCTAD Source: UNCTAD 4

  6. The share of developing and transition economies in world FDI outflows has now reached 28 per cent Value (left axis) FDI outflows from developing and transition economies, value and share of total, 2000 - 2010 Share (right axis) $ billions % 400 30 350 25 300 20 250 200 15 150 10 100 5 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: UNCTAD 5

  7. FDI inflows, global and PAM economies, 1995 - 2010 Billions of dollars Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics)

  8. Distribution of FDI projects in PAM economies, 2005-2010 Billions of dollars aIncluding both cross-border M&As and greenfield FDI projects Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics)

  9. Sectoral distribution of FDI projectsa in the PAM-members, 2003-2010 Per cent aIncluding both cross-border M&As and greenfield FDI projects Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics)

  10. Intra-PAM FDI projects in 2003 – 2010North to SouthNorth PAM countries home to 83% of FDI projects in South PAM By home economy By sector aIncluding both cross-border M&As and greenfield FDI projects Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics)

  11. South to SouthSouth PAM countries are home to 17% of intra-PAM projectsa in South PAM in 2003 - 2007 By home economy By sector aIncluding both cross-border M&As and greenfield FDI projects Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics)

  12. FDI policy development

  13. Governments are sending mixed signals to investors 100% Liberalisation/promotion 80% 60% 40% Regulations/restrictions 20% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 National investment policy measures, by policy directionPer cent of total Note: Data for 2010 are preliminary Source: UNCTAD 12

  14. The international investment policy framework continues to expand mostly through bilateral treaties Annual DTTs Annual BITs Other IIAs Annual International Investment Agreements, by type, 2000- 2010 All IIAs cumulative (right axis) 200 7000 180 6000 160 5000 140 120 4000 100 3000 80 60 2000 40 1000 20 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: Data for 2010 are preliminary Source: UNCTAD 13

  15. Recent FDI Policy development in the PAM countries • In recent years, PAM countries have shown a growing interest in attracting FDI. During July 2009 - April 2011, many of them adopted numerous measures to liberalize and promote FDI, while some countries also introduced measures which restrict or otherwise regulate it. • Investment liberalization and promotion measures • Egypt launched an investment disputes settlement centre. • Jordan facilitated investments in renewable energy projects, and offers tax breaks in ICT sector. • LibyaArab Jamahiriya amended its investment policy regime, offering fiscal incentives to foreign investors and established and/or modernized free economic zones. • Lebanon opened its offshore areas to oil and natural-gas exploration.

  16. Recent FDI Policy development in the PAM countries, (cont’d) • Syrian Arab Republic,inter alia, allowed foreign leasing firms to set up wholly owned branches; and allowed investment banks for the first time. • Tunisia reduced the corporate tax rate from 30% to 20% for firms that list their shares at the stock exchange, and decided to establish one-stop shops to facilitate the setting up of companies. • Turkey improved its incentive mechanism inter alia to encourage renewable energy investment opportunities in the country. • FDI-related regulations and restrictions • Algeria increased the preference margin in favour of domestic firms in awarding public contracts and required foreign companies that are selected in the process to enter into a joint venture with national firms. • Israel introduced reserve requirements for banking corporations relating to foreign exchange derivative transactions by non-residents. • In Italy the state-run lender Cassa Depositi e Prestiti modified its statute to enable it to acquire stakes in companies considered to be of strategic importance to Italy.

  17. International Policy Development • PAM countries are actively engaging in international investment policy making. They: • have concluded 1169 BITs, out of which 287 with other PAM countries • have concluded 516 “other IIAs”, and • are on the defending side in 46 ISDS cases • For the BITs of non-EU countries among PAM countries, North-South BITs (125) exceed South-South BITs (75)

  18. Bilateral Investment Treaties (BITs): Total for PAM Countries France & Egypt are topping the list for EU & non-EU countries respectively Source: UNCTAD IIA database

  19. Non-EU Countries’ BITs with other PAM Countries North-South BITs (125) exceed South-South BITs (75)

  20. Other International Investment Agreements (“Other IIAs”): EU countries are topping the list Source: UNCTAD IIA database

  21. Investor State Dispute Settlement (ISDS) Cases: Egypt is topping the list of defending countries Source: UNCTAD ISDS database

  22. Thank you

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