James Zhan: “We need to work together to create a new narrative on investment promotion”
Zhan is the Director of the UNCTAD Investment and Enterprise Division and was appointed WAIPA Chief Strategic Adviser during WAIPAs Steering Committee Meeting, organized on July 19 on the sidelines of UNCTAD 14 in Nairobi, Kenya. The account below is a summary of his remarks during the Steering Committee Meeting.
As a consequence of the economic crisis of 2009 and ensuing years, we find that the pendulum is swinging from liberalization to regulation.
This, according to James Zhan, has brought back a demand for quality of foreign direct investment. “This is the era of a new narrative” and investment promotion agencies need to take bold and concrete steps towards changing the now dominant narrative and drive for more quality FDI.
We are facing a struggle between the camps that want less government with those that want large governments, while at the same time resources are shrinking. As a result, Zhan stated: “there is less importance on FDI promotion than there was, say, a decade ago”.
For many countries performance alone is a sizeable challenge, Zhan pointed out. “There are few projects out there with a SDG component to them. In the end people are losing out and governments are feeling the pressure”.
To deal with the challenge of new expectations, according to Zhan, WAIPA’s strategy fits right in:
Creating a positive framework
This involves setting concrete SDG goals. This is not to be done in isolation but in collaboration with international organizations, with commitment at the leadership level. This also means creating linkages and best practices, not just in terms of defining them but practicing and implementing them at the IPA level. IPAs need to zero in on those one or two SDG projects that will make a difference. When these are identified, IPAs should introduce them to the ministerial level and ask their governments to back them. IPAs also need to broaden their horizon and think about other organizations that can help. They need to find other organizations to act as partners for their key SDG projects. Governments need to establish SDG villages or incubators. Zhan said WAIPA and UNCTAD will offer their support to IPAs to the extent that they need. Essentially the new narrative is about creating best practices and a new brand image; increase capacity and develop bankable SDG projects.
Build on treaties
When countries embark on trade agreements they need to ensure that it has an investment promotion component in it. They need to follow up on this by creating awareness and to increase the playing field. Promotion itself is not just promotion – it has other important components. Governments need to build a series of model investment zones – zones that are the opposite of sweat shops. These zones should prioritize the wellbeing of the communities they operate in.
Trade facilitation is the other side of investment facilitation, there are enough academic studies to prove this. IPAs must recognize this. There needs to be enough ministerial engagement to put this on the forefront. There need to be creative approaches to expand this, particularly with regard to South-South facilitation and promotion. It is ultimately business links that lead to investment links. While this is pursued, the business community needs to understand that sufficient institutional linkages to government are important. There needs to be a respect for the formal setup and an ability and flexibility to move within it. Governments’ understanding of this helps to safeguard valuable resources for IPAs. As much as possible, the existence of separate silos should be discouraged and there must be a concerted effort to create synergies and linkages. This will ultimately lead to a better social policy. There has to be an inward and outward promotional partnership within and beyond governments. WAIPA is working towards that goal. For UNCTAD one of its aspirations is to bring WAIPA on the G20 agenda so this can be made a reality.