Download Presentation about the role of PPD in Investment Climate Reform

The Role of
Public-Private Dialogue in
Investment Climate Reform
Karin Millett, Head, Investment Generation,
Vienna Office
Public-Private Dialogue-Vienna: Global Workshop, April 28-30, 2009
Investment Climate Advisory Services of the World Bank Group, ICAS
World Bank Group’s Role in Investment
Climate Development
Supporting development of the institutional foundations for
effective markets
Promoting open and competitive markets
Supporting a ‘level playing field’ for national and non-national
investors
Ensuring social safety nets
TO CONTRIBUTE TO: Job and wealth creation,
opportunity for all, and better governance
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Why PPD Matters: Private Sector as the Engine of
Growth
‘It is absolutely crucial to recognize that all economic growth
takes place at the level of the productive enterprise – otherwise it
is impossible to have a clear understanding of the growth
process.’ (Arnold Harberger, December 2005)
However, the existence of a vibrant private sector is highly
dependent on whether the policy environment obstructs or
enables private enterprises to form, operate and exit a business.
This is where PPD can play a vital role in helping to improve the
institutional milieu through identifying ‘where the shoe pinches’
for the private sector and seeking solutions together with the
public sector that will help to reduce the ‘friction’ in the economic
machine
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WBG – Providing Input into Reform Discussions
through Benchmarking
Doing Business - annual review of around 180
countries - and selected cities - to assess objective
measures of business regulations and their
enforcement
Doing Business in SEE - covers 22 cities in seven
economies: Albania, Bosnia and Herzegovina,
Croatia, Kosovo, FYROM, Montenegro, and Serbia
FDI Indicators - new instrument to review specific
conditions for cross-border investment
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DB and FDI Indicators: what they measure
DB
vs.
FDI INDICATORS
Starting a business
Employing workers
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
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Dealing with licenses
Foreign ownership restrictions
Getting Information
Starting a Foreign-Owned Business
Access to land
Currency convertibility and
repatriation
Arbitrating Disputes
FDI Indicators: Examples of preliminary results
from pilot tests
(1) Many countries continue to have sectorspecific restrictions on FDI:
closed
open
sectoral openness index (0-100)
Mozambique
100
Nigeria
100
Colombia
100
- No
Can a foreign company establish a subsidiary without an investment
approval?
Yes/No
Median # Days
(if ‘No’)
97
Ghana
95
Peru
Cameroon
14
Ethiopia
10
Ghana
N/A
Mozambique
60
Nigeria
N/A
90
Chile
89
Cameroon
Nicaragua
88
Argentina
88
72
China
62
Russia
60
Ethiopia
(3) The quality of land rights for foreign investors
varies considerably across the world:
w eak
strong
quality of land use rights index (0-100)
C hile
(4) Sub-Saharan African countries vary significantly in
the type of land occupancy rights they offer:
Types of land occupancy rights available for a foreign firm:
90
Right to Buy (Freehold)
85
C o lo m bia
A rge nt ina
Right to Lease
(Leasehold)
81
Private
71
P e ru
67
R us s ia
Cameroon
65
C a m e ro o n
61
N ic a ra gua
N ige ria
50
C hina
38
G ha na
38
35
E t hio pia
M o za m bique
- Yes
(2) Several countries in Sub-Saharan Africa require
an additional approval for foreign investors:
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Ethiopia
Ghana
Mozambique
Nigeria
State
Private
State
Creating a ‘Level Playing Field’ for Domestic
and International Investors
Foreign investment can contribue to overall economic
development goals by bringing capital, new technologies, int‘l
standards, know-how and access to new markets
Important that PPD embrace the needs and interests of both
domestic and international investors, creating a ‘level playing
field‘ in terms of entry, operation and exit
Benchmarking of DB and FDI conditions provides data as input
to PPD on improving investment climate
Current global economic recession has already seen FDI flows
contract by around 21% in 2008, with further contraction of at
least 13-15% expected in 2009 over 2008 levels
This contraction makes it even more important to ensure fair
conditions for cross-border investors, both to attract new ones
and retain existing ones
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The Backdrop against which PPD is currently
taking place…
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The Backdrop against which current PPD is
taking place (2)…
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Source: IMF World Economic Outlook 2009
Challenges posed to PPD by the current crisis…
The serious impact of the crisis--via financial and trade channels-on households and business--may lead to reduced confidence in
the role of the private sector as the engine of growth and thus
lessen the appetite for reforms that make private sector policies
and regulations more business-friendly
Slowing FDI flows and, in some cases, outflows of current
investors, e.g. Finland and Ireland, may result in putting
conditions for cross-border investment on the back burner
Need to resist the temptation to engage in financial, trade and
investment protectionist policies
Challenge will be for governments not to stifle private sector
growth through over regulation
The challenge for those of you in PPD will be to keep the private
sector agenda alive and moving forward…
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PPD Work is more important than ever…
In many countries, PPD has become ‘institutionalized’
in terms of a process, and that forum for dialogue
among key actors in a country is important to
safeguard—not always with the same individuals or
companies at the table but with the same key
constituencies having a voice in identifying, analyzing
and proposing reforms that the public sector can act
upon
Good policies matter and well-functioning institutions
are key to growth and development. PPD plays an
important role in bringing these about
Good luck with your discussions and deliberations
in the coming days!
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