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Investment Compact For South East Europe
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Investment Compact For South East Europe

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    • 1. OECD Investment Compact for South East Europe Work Program with Moldova ‘ FDI Vision and Strategy 2006 – 2010’ OECD Investment Compact and cooperation with the Republic of Moldova Project Team Meeting Paris, November 10 th , 2006
    • 2.
      • Background information:
      • The FDI Strategy below is part of the first phase of the OECD Investment Compact programme with Moldova
      • The OECD Investment Compact Strategy has been elaborated between March and May 2006
      • The OECD Investment Compact had two meetings with the Minister of Economy and Commerce in order to coordinate with the Ministry the work on the FDI Strategy:
        • April 2006 – in order to present the outline of the FDI Strategy
        • June 2006 – to present the OECD Investment Compact FDI and Export Promotion Strategy for 2006 – 2010
      • Until July 2007, the OECD Investment Compact will develop the implementation phase of the project
    • 3. The New ‘FDI & Exports Vision/Strategy 2006 – 2010’ Provides a Route Map for Change/Progress with 3 Building Blocks A Strategic Vision, 4 Foundation Platforms (Where)/8 Main Modules of Action (How to Compete)
      • Share and endorse Strategy/Vision/Style
      • Align structure/systems/skills
      • Remove priority barriers to trade/investment
      • Establish/reinforce competitive advantages in priority sectors
      • Assess/improve skills required to compete in priority sectors
      • Implement linkage and integration programs
      • Market/sell Moldova
      • Evaluate/monitor progress in attracting FDI and promoting Exports
      A. Strategic Vision ‘ Moldova today is building a competitive and vibrant market economy that will compete on international markets for investment and trade. To attain that national objective Moldova will maximise the scale and scope of private investment, both international and domestic, and its integration into the economy. Moldova will use its natural resources and human talents to compete in world markets … ’ B. Where to Compete ? C. How to Compete ? 1. Improve overall business environment 2. Focus on 6 priority sectors 3. Build all types of FDI/exports (greenfield, privatizations, M&A, expansion) 4. Focus on priority countries Geography Sector Customer Environment
    • 4. 2. Sector Focus: Follow a T wo-Pronged Approach Moldova Should Invest in Priority Sectors while Remaining Open to Opportunities in all Sectors Why Priority Sectors? Priority Sectors for Moldova 3 Sectors Currently Being Promoted and 2 New Sectors
      • Two-pronged approach
        • Open to international investments for all sectors by creating an attractive investment environment and promotion of Moldova as a whole
        • Focus limited resources on selected sectors and clusters where growth prospects/jobs are good and Moldova has a competitive advantage
      • Selecting priority sectors does not exclude other sectors
      • Strategy and sector focus should be flexible to adapt to changing market conditions
      • Selecting sectors allows to deepen promotion efforts to targeted companies and build competitive advantage with closer company relationships
      • Moldova brand/sales messages can be deepened by adapting to sector requirements
      • The most successful IEPA in the world define priority sectors
      Sustainable Energies Remote Business/ Technical Services Organic Food Wine ICT software E-business Textile and Apparel New sectors of focus Traditional sectors of focus Open to FDI from all Sectors
    • 5. 3. Moldova Will Build all Types of FDI/Exports Segments Each Segment Having Specific Benefits and Requirements to be Considered Investor Segment M&A, JV’s investors Existing investors/exporters Privatization investors Greenfield investors Key Requirements per Segment
      • Quality of existing partner
      • Fairness in evaluation
      • Protection of liabilities
      • Speed in execution
      • Improved infrastructure
      • Better returns on investment
      • Government support
        • Increased incentives
        • Tax benefits
      • Assistance to venture into newer areas
      • Financial and technical support
      • No/limited preferred national treatment
      • Stability of government
      • Alignment of regulations and guidelines
      • Commitment of regulatory agencies
      • Easy to set-up procedures
      • Speed in execution
      • Convenient operations maintenance
      • Co-development support
      Key Benefits to Be Expected
      • M&As are worldwide one of the biggest source of FDI and driven by company business strategies. Joint ventures can emerge from M&As or independently promoted by individual companies and investment promotion agencies
      • Most EU and OECD countries obtain more than 50% of their new investment each year from existing investors, hence importance of working with existing investors
      • New investment can come from expansion of existing plants, other group or sister companies, supplier companies (e.g. common in auto sector)
      • Existing investors can be a powerful lead to other companies, to their home countries, and to helping in policy and promotion
      • Typically transition countries have a first wave of FDI driven by privatisation and Moldova has similarly followed this pattern. Continuation of this policy is important for structural and market economy reform.
      • Significant visibility for potential investors
      • Attracting higher levels of mobile greenfield is crucial for Moldova
      • New greenfield investment will bring new sectors and new companies
    • 6.
      • Main mandates
        • To undertake an audit of existing skill needed by investors
        • To determine the current output (e.g. number of computer scientists, financial accountants, pharmacists, toolmakers, electricians or animators graduating each year) and
        • To seek to project future demand and needs
      • The Task Force should ideally be jointly led by the Ministry of Education and Ministry of Economy
        • So that education and training can be coordinated better with investment policies and strategies and
        • It should consist of industry representatives from all the priority sectors for Moldova
      • Existing work by groups such as the Swiss Agency for Development and Cooperation on job profiles should be considered by this Task Force to gain from coordination and expert inputs
      • The audit should provide the basis for planning future skills development and supply
      • In conjunction with the audit referred to above, existing companies, both international and domestic should provide feedback on existing training (national schemes or in-house training) so that a picture of how adequate present programs are and what new initiatives may be desirable
      • Existing recruitment agencies (as well as international recruitment agencies) should be encouraged to build databases of Moldovan people both in Moldova and outside
        • This may also assist in attracting back skilled Moldovan people now resident outside Moldova
        • Some OECD countries have successfully used such data to attract back skilled emigrants and to assist in their FDI & Exports promotion
      The Ministry of Economy Should Launch a Task Force on People Development and Skills Assess/improve skills required to compete in priority sectors
    • 7. Actions to Implement a Linkage Program between FDI and Local Enterprises 1. Flesh out the Linkage strategy 3. Launch dialogue with international companies 4. Develop domestic companies and monitor results 2. Create training program to strengthen SMEs with high potential Implement an integration and linkage program
      • The Investment & Exports Promotion Strategy within its corporate plan, should set out its strategy and action plan to promote better integration of FDI & exports and linkage between international investors and domestic companies/institutions
      • International companies in Moldova have signalled their interest in increased linkage
        • This willingness should be pursued by the IEPA in order to maximise the benefits of investment for both investors and Moldova
      • A first step should be to establish a series of databases on
        • (a) existing purchases and potential for increased domestic supply
        • (b) existing suppliers or potential suppliers and their capability to meet, for example, quality and logistical standards demanded by international companies
      • Get International investors to have a key role in organising workshops or seminars on their procurement policies and procedures, on introducing companies to group procurement personnel
      • Form Technical/Business training seminars on specific issues such as manufacturing methods or linking into IT systems of major international companies
      • Ensure the IEPA undertake a regular dialogue with international companies to explore the prospect of expanding existing operations by introducing new business functions
        • by encouraging links with universities or research institutions and
        • by seeking to build dialogue on the expansion of domestic-based operations into regional export operations
      • Such work may also form part of the promotion and selling work of the IEPA, for example meeting group senior executives to present the Moldovan case for enhanced development in Moldova
      • Encourage Universities and research institutions to seek greater contact and linkage with existing international companies in providing technical evaluation, testing or research support
      • Link into the linkage policy the Programs to enhance domestic company development so as to ensure good knowledge of international company requirements and standards applied to suppliers
      • This subject should also form part of the sectoral strategies being pursued by the IEPA
      Main Actions Required
    • 8. Moldova Will Undertake a New Proactive Marketing/Selling Approach to International Investors Based Upon the New Branding Strategy For Moldova
        • Press and media visits
          • IEPA should seek to encourage 4-5 representatives of the international media to visit Moldova each month and highlight successful investment and trade case experiences
          • Such visits need to be carefully planned, organised and handled efficiently
          • The should regularly inform international and domestic media of investments and maintain a media file of news reports
        • Promotional events
          • A list of all promotional events, both in Moldova and outside should be published and circulated monthly to key players (all FDI companies in Moldova, key target companies, embassies, etc.) to invite interest
        • PR and press releases on all new investments (inc. expansions) in Moldova should issue from the Minister of Economy (or other senior government representative)
        • Advertising and publicity material
          • A full range of general, sectoral and website instruments (brochures, newsletters, investment guides, presentations), reflecting the new Moldova ‘brand’ should evolve
        • Investor award schemes reflecting practice in many OECD countries
          • IEPA should work with industry sponsors to promote annual awards to investors (biggest investment, best employment creator, biggest exporter, etc.) in order to highlight the benefits of new investment and new trade developed
      Market: The IEPA Needs to Set out Comprehensive Marketing Actions Sell: Moldova Should Adopt a Proactive Approach to Seeking Investment and Trade
        • The work of MEPO to date has undertaken such approaches but needs to move to new and more continuous high levels of activity
        • ‘ Selling’ involves identifying target companies and presenting the ‘unique selling proposition’ of Moldova to that company. It involves
          • Building relationships with a company, sometimes over years
          • Encouraging them to include Moldova in their investment location assessments, and
          • Seeking exploratory visits to Moldova (‘site visits’)
        • The most successful investment & export promotion agencies worldwide have developed successful practices and techniques
          • Special and individual company/industry presentations (taking into account the determinants of FDI decisions)
          • Understanding strategic business pressures in certain sectors and offering solutions to these in their sales proposition or message to companies
          • Building the cluster image of Moldova having competitive advantages in certain sectors
          • Working with company management (e.g. those based in Moldova) to ensure Moldova is presented to key decision makers at corporate H.Q. or associated companies
      Market/sell Moldova
    • 9. Next Steps
      • A strategy implementation plan needs to be completed after the endorsement of the vision and strategy
      • The Ministry of Economy and MIEPO will take the lead role in this process
      • The OECD Investment Compact will closely work with the Ministry of Economy and Commerce in the implementation phase of the project
      • The main goals of the OECD Investment Compact for the upcoming nine months are:
        • Build and FDI Database
        • Launch five foreign investors events:
        • - Three outward missions in: Great Britain, France Switzerland
        • - Two inward missions in: Germany, Sweden
        • Define and establish a SME Linkage Programme
        • Conduct a skill gap assessment

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