Module 12 analysing foreign direct investment in the ict sector
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Module 12: Analysing Foreign Direct Investment in the ICT Sector. Dr Tim Kelly, Lead ICT Policy Specialist, infoDev/World Bank Wednesday 11 March 2009. Agenda. The significance of FDI in the ICT Sector What is FDI? Types of FDI (Modes of Trade)

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Module 12: Analysing Foreign Direct Investment in the ICT Sector

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Module 12 analysing foreign direct investment in the ict sector

Module 12: Analysing Foreign Direct Investment in the ICT Sector

Dr Tim Kelly, Lead ICT Policy Specialist, infoDev/World BankWednesday 11 March 2009


Agenda

Agenda

  • The significance of FDI in the ICT Sector

    • What is FDI?

    • Types of FDI (Modes of Trade)

    • Relationship between FDI and ICT Sector Growth

  • Corporate strategies

    • Selected ICT firm investment strategies

  • FDI in Egypt

    • International comparisons

    • Inward investment to Egypt

    • Outward investment from Egypt

  • FDI in ICT study: Progress report

  • Groupwork exercise

    How to calculate proportionate subscribers for international firms


1 what is fdi

1. What is FDI?

Foreign direct investment (FDI) may be defined as a company from one country making an investment in another country. It includes the establishment of an enterprise by a foreigner. Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor.The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a multinational corporation (MNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.

Sources

UNCTAD World Investment Report

OECD Investment Policy Perspectives

IMF Data Mapper


1 modes of trade in services wto

Main mode of FDI

1. Modes of Trade in Services (WTO)

WTO Basic Telecoms Agreement

1998: 69 countries have commitments

2008: 108 countries have commitments of which 99 in basic telecom

Source: ITU, WTO.


1 investment trends in telecoms

1. Investment trends in telecoms

Private Participation in Infrastructure (PPI) in developing countries in telecommunications, 1990-2007

Source: World Bank and PPIAF, PPI Project Database.


1 investment trends in telecoms1

1. Investment trends in telecoms

Private Participation in Infrastructure (PPI) in Middle East and North Africa in telecommunications, 1990-2007

Source: World Bank and PPIAF, PPI Project Database.


1 contribution of fdi to growth

1. Contribution of FDI to growth

Example from Latin America, 1988-2005

Source: OECD.


2 mobile investment in africa

2. Mobile investment in Africa

Major investors in African Mobile, early 2007

Source: ITU African Telecom Indicators 2008.


2 investor strategies 1 zain

2. Investor strategies 1: Zain

Zain (formerly Celtel), early 2007

Source: Ewan Sutherland “The scramble for Africa”

Total


2 investor strategies mtn

2. Investor strategies: MTN

MTN, 31 December 2007

Source: Ewan Sutherland “The scramble for Africa”


3 international comparisons

3. International comparisons

UNCTAD measures inward FDI (see World Investment Report)

  • Total value of inward FDI into Egypt in 2007 was US$12 billion,

  • 15% increase from 2006-07

  • Egypt’s total stock of FDI in 2007 was over US$50bn, over 40% of GDP

    Egypt’s compiles an international index of inward FDI performance:

  • Egypt’s rank in 2007 was 20th.

  • Big improvement since 2005 when Egypt ranked only 67th

  • Egypt ranks 76th worldwide in outward FDI

    Major areas of FDI in Egypt include oil, pharmaceuticals, telecoms and textiles


3 major ict firms in egypt

3. Major ICT firms in Egypt

Source: BMI Egypt Telecoms Report, Q1 2009


3 mobile fdi in egypt

3. Mobile FDI in Egypt


3 outward fdi from egypt

3. Outward FDI from Egypt

Orascom, 1 Q 2007

Update:

January 2009: Orascom acquired CellOne, Nambia2008: 75% Orascom-owned Koryolink begins operations in DPR Korea


4 update on fdi in ict study

4. Update on FDI in ICT Study

  • Deliverable 1: Definition of ICT Sector (draft sent Jan; final on 9 Feb)

    • Drawing upon:

      • The latest international statistical work on the definition of the ICT sector (see Module 2)

      • Relevant international agreements, such as the WSIS texts;

      • Best practices worldwide on the measurement of FDI in ICTs;

      • The realities of the situation in Egypt and its sectoral priorities;

      • Interviews with the leading players in the collection and reporting of FDI data, including GAFI, the Egyptian Central Bank and ITIDA as well as MCIT.

    • This deliverable proposes a systematic approach to the measurement of the ICT sector, at the level of standard industrial classification codes, which could be applied to the measurement of FDI in the Egyptian ICT sector.

    • The deliverable includes:

      • A recommended definition for harmonized data collection;

      • A summary of international best practices;

      • A worked example applying the definition to Egypt (e.g., which companies and which investments to include/exclude).


4 proposed definition of ict sector

4. Proposed definition of ICT Sector

Proposed definition (Part 1)


4 proposed definition of ict sector1

4. Proposed definition of ICT Sector

Proposed definition (Continued)


4 update on fdi in ict study1

4. Update on FDI in ICT study

  • Deliverable 2: Proposed system for data sharing on FDI in ICT (Consultant work from March-May 2009)

    An initial analysis has shown that several different agencies are involved in collecting FDI data but:

    • Several different definitions of the ICT sector are in use;

    • No agency has a comprehensive picture;

    • There are no formal mechanisms for sharing data;

      On the basis of interviews with the leading players, the team will make recommendations on the main features of a system for data sharing among the agencies. The aim would be to identify the main functions of different agencies involved in the process, indicate the main procedural steps to exchange information, indentify the rewuirement to create a common database and central collection system. The ultimate goal will be to create a central repository of FDI data, in which each company has a unique identifier, in order to generate different reports to meet the reporting requirements of the different agencies.

      The report will contain definitions and specifications for the creation of a platform but will leave the creation and delivery of the platform (including any software of IT specifications) to the agencies themselves.


5 group work exercise

5. Group Work Exercise

How to calculate proportionate subscribers for multinational mobile service providers?

  • On the basis on year-end 2008 mobile subscriber numbers in Egypt

  • Based on the percentage foreign/Egyptian ownership in the thee main operators

  • Calculate the level of foreign ownership in the Egyptian mobile sector based on a proportionate subscriber methodology

  • Optional: Calculate level also for year-end 2007 to see change over time


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