Dubai: Corporate governance along with protection of intellectual property rights are the biggest challenges for attracting foreign direct investments, industry participants said at the annual investment meeting.
The fifth Annual Investment Meeting was attended by thousands of delegates, from 144 countries. Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy was present, along with participants including 100 different experts from investment promotion agencies, and professors from various universities sharing their views and experiences on foreign direct investments.
The discussions were around sticky points in attracting FDI, along with strategies that urge governments to move ahead of being just a one-stop shop for approvals, and focus on the ecosystem for a congenial environment for companies to operate in.
“Today governments are increasingly concerned with the quality of investments, not quantity, paying more attention to competing objectives, especially national interests, essential security, the promotion of national champions and the protection of certain national industries,” said Karl P. Sauvant, a resident senior fellow at Columbia Centre on Sustainable Investment.
“Managing conflicts between foreign investors and host countries has become a key challenge in the international investment filed,” he said. Sauvant said the great majority of countries have supplemented and enhanced their regulatory frameworks with strong international investment agreements.
Providing the suitable business environment is also critical.
“Business regulation and climate is very critical and secondly business facilities and infrastructure for attracting FDI and ensure that foreign companies stay in your country,” Emmanuel Essis Esmel, general manager at CEPICI (Centre de promotion des investissements en Côte d’Ivoire), an investment promotion agency in republic of Côte d’Ivoire told Gulf News.
Small scale FDI
Countries who seek to create job opportunities should focus on attracting FDI from small and medium scale industries.
Governments should put in place policies that create a conducive climate for SME operations otherwise companies could face obstacles in getting finance, said Ann M. Low, deputy director of investments affairs, US Department of State. Authorities should maintain easy processes for registration and even paying of taxes for smooth functioning of businesses, Low said, adding that specific policies for small and medium enterprises are also good for attracting foreign direct investment.
“If there is a start-up and [the owner] wants to register his business and if all of that is too complicated and he chooses not to register his business and that is one of the biggest challenges in the developing world where there is an enormous problem of informality. And if these businesses don’t register they can’t get bank accounts, they won’t be able to get loans from banks, or government would be deprived of tax revenues,” Low said.
Drivers for FDI
“As more and more companies find research and development budgets under pressure there may also be cost reasons to move the centre to a lower cost location. There are some prerequisites, one needs to have a skilled workforce in the location which you are looking at. The ecosystem should be also right, where there should be an innovation encouraging regime, research centers and technology parks,” said Ian Gomes, partner, head of advisory at KPMG UAE.
There is a need to understand the investor’s motivation for the investment promotion agency to tailor the offerings according to the customer’s need, he said.
The agencies have a counter management approach and ability to be empowered to offer incentives, Gomes said.
