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Criteria for a useful guide Structure of the guide Requirements for ICC endorsement

Criteria for a useful guide Structure of the guide Requirements for ICC endorsement . Investment Guide: gaining a competitive edge . Objective.

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Criteria for a useful guide Structure of the guide Requirements for ICC endorsement

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  1. Criteria for a useful guide Structure of the guide Requirements for ICC endorsement Investment Guide: gaining a competitive edge

  2. Objective To provide first-time investors with basic information about the locational advantages, business climate, regulatory framework, opportunities for FDI and its constraints in a user-friendly way

  3. Current structure of the guide 1. Overview 2. Locational advantages: human and natural resources, markets, infrastructure 3. Business support services: banking,finance,insurance,auditing 4. Business environment: registration, licensing, taxation, convertibility, customs 5. Investment climate: FDI regulations, investor protection, incentives 6. Opportunities under privatization 7. Success stories

  4. Criteria for useful/credible guide • Relevant: meets the needs of users • Objective: reflects the real situation • Accurate • Timely • User friendly • Outside endorsement

  5. Requirements for ICC logo • FDI statistics are accurate; where a different definition is used investment is defined and figure broken down into components • Assessment of business/investment climate is realistic • Survey of investors’ opinions on business/investment climate • Survey of government officials plans for further improvements; their recognition of weaknesses; their view of progress in implementation of business reforms 5. Format conforms in general to UNCTAD/ICC series

  6. Investors’ survey Issues covered: 1. 3 most attractive features 2. 3 things that need improvement 3. Desired institutional changes

  7. What investors said Three most attractive features • Best workers in Central Asia • Large size of internal and regional markets • Abundance of natural resources

  8. What investors said cont’d Three things that need further improvement • Central Bank transparency • Independent judicial system • Consistent application of the law particularly as regards customs administration

  9. What investors said cont’d Desired institutional changes • Independent banks • More powerful chambers of commerce • Investment promotion and protection agency (one stop shop)

  10. Business environment Recent improvements 1. Reductions in red-tape in registration and licensing 2. Decriminalization of business errors 3. Reductions in reporting, inspections, audits 4. Complete revision of the tax system

  11. Tax system Unified Tax Payment General System of Taxation Profits tax Property tax Land tax Water use tax Infrastructure development tax Value Added Tax (VAT) Taxes Paid by Both Groups Withoholding tax (at the source) Excise tax Payroll taxes Subsurface use tax Improvements: taxation

  12. FDI inflows in 2006/2007 • Global inflows were $1.3 trillion in 2006 and $1.5 trillion in 2007 • Most attractive global destinations: China, India, US, Russia and Brazil • CIS attracted $69 billion in ’06 and $98 billion in ‘07—the highest increase of any region—40% vs. only 18% globally

  13. Factors affecting record increase in FDI inflows • Increased corporate profits (from $8b in 2000 to $785b in 2006) • Increased mergers and acquisitions • Resulting higher stock market prices • Favorable financial (lending) conditions

  14. Components of FDI Equity, reinvested earnings and intra-company loans Reinvested earnings were 30 % of FDI overall and 50% of FDI in developing countries

  15. Current challenges • Global economic downturn • Competing in a Flat World • Diversifying investment inflows by source and sector

  16. The World is Flat • Internet • World wide web • Google • Off shoring • Outsourcing • Insourcing

  17. Competing in a Flat World Necessary ingredients • Dynamic local enterprises • Universal broadband infrastructure • Right education: science and engineering • Right tax policy • Collaboration, partnering

  18. Ideal country in a flat world The ideal country is one without natural resources that must look to its population and institutions for progress because often resource-rich countries neglect these to their regret. Ireland succeeded without natural resources. It cut taxes, had the right industrial policy, attracted FDI, and graduated students in science and engineering.

  19. Ideal country in a flat world The ideal country is one without natural resources that must look to its population and institutions for progress. Ireland is an good example. It cut taxes, had the right industrial policy, health care policy, attracted FDI, graduated students in science and engineering and gave science grants.

  20. Image building • One stop-shop • Fair resolution of disputes • Quality FDI statistics • Aftercare services for investors • Attendance at global forums

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