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1. In accordance with its agenda, the Expert Meeting on Good Governance in
Investment Promotion discussed what constitutes good governance in investment promotion,
and examined the efforts that countries are making to increase transparency and
accountability in the public sector, particularly with respect to investment-related policies,
administrative procedures and practices, as well as to promote high standards of corporate
governance. The Meeting also examined how these efforts can be further strengthened.
Special attention was given to the role of the different stakeholders, including business
groups and civil society, in the process of improving governance in the area of investment.
The Investment Policy Review (IPR) of Benin [PDF, available in French only], in which good governance issues were
prominent among the recommendations, was considered at the Meeting.
Good governance in investment promotion
2. The Meeting agreed that good governance in investment promotion (GGIP) is
underpinned by four values, namely predictability, accountability, transparency and
participation.
3. The keynote speaker, the Investment Ombudsman of the Republic of Korea, stressed
the importance of having effective, speedy and transparent dispute resolution mechanisms to
help address problems between investors and the host country. The Ombudsman, who is
directly appointed by the President, is mandated to address and resolve difficulties
experienced by foreign investors and to help improve the overall investment environment.
This task includes providing assistance to foreign companies in resolving grievances related
to bureaucratic red tape and administrative procedures.
4. It was recognized by many speakers that while some developing countries were able
to put in place legislation intended to reform the investment climate, problems frequently
persisted in relation to implementation, often owing to resource constraints. In other cases,
corruption and the abuse of discretionary authority undermined the rule of law and reduced
the credibility of the host country. In this regard, one speaker discussed corruption indices as
a benchmark for investors.
5. Various means by which Governments have sought to improve public-sector service
standards were examined. The role of client charters as a reference point and a tool to
benchmark staff performance was highlighted, and reference was made to UNCTAD’s
technical cooperation in providing least developed countries (LDCs) with assistance in the
elaboration of client charters for their investment promotion agencies. There is, however, a
need to train public officials with a view to changing attitudes and behaviours so as to better
deliver the services promised under the client charters and to create for officials of investment
promotion agencies (IPAs) the capacity to carry out GGIP reviews in respect of
administrative policies, procedures and practices on a regular basis.
6. The procedural clarity with which decisions affecting investors are taken is also
related to the issue of transparency. Some speakers emphasized the importance of delineating
clearly the functions of the various actors with whom investors must deal when setting up and
operating in host countries. A number of countries reported difficulties, for example, when
the body regulating foreign investments also discharged investment promotion functions.
7. Broad consultation with all stakeholders is needed on issues that affect them in order
to increase public support for foreign investment and to ensure a balanced distribution of
benefits and costs related to the investment. For example, consultations with labour will serve
to ensure that efforts to improve the investment environment are in compliance with
recognized international labour standards. One delegate noted that there was no clear
evidence of a causal link between liberalization of the foreign investment environment and
relaxation of the quality of labour standards.
8. Host countries also need to be able to provide a forum for investors to make known
their experiences and observations, and the obstacles facing them, regarding issues of concern
to them. In this connection, a considerable number of IPAs are mandated to undertake policy
advocacy functions in order to improve the investment climate. The various means of
organizing an IPA to best undertake advocacy and improving the policy advocacy role of
IPAs were examined. The Meeting was informed that capacity building for developing
country IPAs in policy advocacy would be undertaken by UNCTAD through a technical
cooperation project financed by the United Nations Development Account.
9. Information technology (IT) can often be deployed to improve efficiency in
investment promotion and facilitation functions. A recent UNCTAD survey of over 100
IPAs showed that most agencies have a web presence, but that very few have made full use of
the IT potential and provide integrated on-line services (single windows). IT helps integrate
government processes, which are otherwise scattered and overlapping, for the ultimate goal
of simplification of procedures.
10. Good corporate governance and management practices can help to ensure that
accurate and truthful information and data are provided to host Governments, and help
administrators in applying local laws and regulations in as efficient a manner as possible.
IPAs have an important role to play in this regard. It was suggested that principles of
corporate governance and corporate social responsibility should be encouraged by the IPAs in
their discussions with investors. Self-regulatory measures and a proper mindset at the firmmanagement
level can often help to reduce the enforcement burden on government. Integrity
can work only when it exists in both the private and the public sector. In this sense, good
corporate governance and good public governance are complementary.
11. A number of experts made suggestions, including the following:
- International organizations should assist developing countries in implementing
measures to improve good governance in investment promotion. UNCTAD should
continue to support host country Governments, through its GGIP programme,
including through capacity building in IPAs, and in evaluating the impact of its
technical cooperation activities on host countries’ investment environment and on
actual changes in foreign direct investment. It should also include many more
interested and committed developing countries in its programme, particularly the
LDCs. This would warrant an enlargement of the donor base to support the
programme.
- Further examination and exchange of experiences in dispute and grievance resolution
between foreign investors and host country administrative bodies, including the
ombudsperson model, should be undertaken.
- Since IPAs play a unique role in advancing participation and advocating policy
change to reflect the concerns of investors on matters that affect them, host
Governments should be encouraged to strengthen their mandate in the field of policy
advocacy. UNCTAD should further strengthen its programme for building the
capacities of IPAs to discharge this function effectively. The policy advocacy role of
IPAs was suggested as a topic for possible consideration by a future Expert Meeting.
- International agencies should continue to support the further development of
corporate governance frameworks in developing countries. IPAs are uniquely suited
to encourage corporate governance in their respective countries.
- IPAs should be encouraged to integrate and supply web-enabled on-line client
services to create transparent and predictable “single window systems”. UNCTAD
and other international organizations should provide technical assistance through
programmes such as the Investment Gateway.
- To the extent possible, use should be made in UNCTAD’s capacity-building activities
of synergies between its GGIP programme and its work on investment policies,
especially the IPRs. This will help to ensure that the impact of such programmes is
sustainable.
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