October 22, 2021
Introduction
Most regional economic cooperation organisations consider Foreign Direct Investment (FDI) an important pillar of sustainable economic development and regional integration. Some regional organisations and cooperation frameworks have been more active than others in rolling out collective initiatives in support of a conducive investment environment and/or in joint investment promotion, and results vary.
The session had high level representatives of various regional economic cooperation organisations discussing the latest developments in the area of FDI. The Panellists sought to find out how regional investment policy approaches have evolved in recent years and shared experiences in investment promotion in support of regional integration. They outlined their views on prospects for further future regional investment cooperation.
Session Highlights
Panellists stressed that although the pandemic has lowered Foreign Direct Investment (FDI) across all sectors, there is still hope as the regional investment landscape is bright. They emphasised the important role regional integration agreements and treaties play in fostering FDIs for development. The Panellists mentioned about 350 critical integration agreements enforced and highlighted recent regional agreements such as regional comprehensive economic partnership which make up to 15 percent of global FDI stocks.
Thus, there is the need for regional integration institutions to harmonise existing and new bilateral trade and investment treaties and laws on specific sectors to attract FDIs at the regional level. The Panellists discussed that in 2020 FDI flows to ASEAN fell by 35 percent but investment within ASEAN countries increased by 5 percent, pushing up the internal ASEAN share of FDI in the region from 12 percent to 17 percent. Various countries ought to shift the narrative from what their country can offer to building synergies with other countries to what the region can offer. A seamless regional integration system has a lot to offer in this regard.
They emphasised the importance of regional integration institutions to build upon new or existing digital technologies and e-commerce infrastructure as the digital space is the new future of investment. In Africa for example, Panellists stressed that the continent has to address the issue of disconnection between countries at the national, sub-regional and continental levels. They added that the AfCFTA presents the continent with a perfect opportunity, under the second phase of negotiation on Investment, Intellectual Property and Competition to address the disconnections between African countries and unify the continent to rake in FDIs for sustainable development.
The Panellists also discussed the impact of COVID-19 on the ASEAN region. During the pandemic ASEAN members signed the Regional Comprehensive Economic Partnership (RCEP) to create an open marketplace for trading and investment. It was highlighted that the Asia-pacific region has emerged as a key player in global and intra-regional FDI flow. This region alone accounts for 54 percent of global FDI inflow, also the main source of FDI globally. Greenfield FDI increased tremendously to US$200 billion in 2018.
Panellists also discussed Gulf countries, in 2019 the Arab region exported nearly US$1 trillion which was 5 percent of total world export, and imported nearly US$848 billion which was about 4 percent of total world imports. The region saw FDI inflows decline to US$40 billion which was an almost 45 percent decline from the estimated peak of US$88 billion in 2020. The bulk of FDI was injected into energy, real estate, financial services, and consumer services/sectors but was not invested in value adding services and job creating sectors which affected the prospect of FDI investment.
Investment Promotion Agencies (IPAs) must take steps to liberalise existing investment facilitation and promotions policies, institute fiscal risk management policies and trade facilitation reforms to attract quality and sustainable investment for development. They also called on Investment Promotion Agencies (IPAs) and regional integration institutions to partner with United Nation (UN) supporting organisations like UNCTAD, World Economic Forum, among others, to develop a platform to share ideas on best practices, FDI strategies, investment facilitation tools and courses, and incorporate SDGs into Foreign Direct Investment treaties and agreements.
Opening
- Mr. James Zhan, Director, Division on Investment and Enterprise, United Nations Conference on Trade and Development
On the panel were:
- H.E. Mr. Henry Puna, Secretary General, Pacific Islands Forum Secretariat
- Dr. Jorge Hernando Pedraza, Secretary General, Andean Community
- Mr.Satvinder Singh, Deputy Secretary General, ASEAN Economic Community
- Mr.MounirTabet, Deputy Executive Secretary, United Nations Economic and Social Commission for Western Asia (ESCWA)
- Ms. Desire Garcia, Executive Director, Secretariat for Central American Economic Integration (SIECA)
- Mr. Emir Djikic, Director, Central European Free Trade Agreement Secretariat (CEFTA)
- Ms.Rupa Chanda, Director, Trade, Investment and Innovation Division, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
- Mr. Stephen N. Karingi, Director, Regional Integration and Trade Division, United Nations Economic Commission for Africa
- Ms. Elisabeth Tuerk, Director, Economic Cooperation and Trade, United Nations Economic Commission for Europe
- Mr. Mario Castillo Astudillo, Director, International Trade and Integration Division, Economic Commission for Latin America and the Caribbean (ECLAC)
Moderator
- Mr. Richard Bolwijn, Head, Investment Research Branch, UNCTAD
- Mr.AstritSulstarova, Chief, Investment Trends and Data Section, UNCTAD