This document summarizes an assessment of investment policies in MENA countries conducted by the MENA-OECD Investment Programme. It finds that while MENA countries have established investment laws and promotion agencies, their investment regimes remain relatively restrictive with ownership requirements, sectoral restrictions, and complex incentive systems. The assessment recommends that MENA countries streamline restrictions and incentives to increase transparency, lift some restrictions where alternative measures exist, simplify and evaluate incentives, and establish clear approval procedures and protections against expropriation to improve their investment policies and competitiveness.

1. Working Group on Investment Policies and Promotion:
Mitigating Risks and Seeking New Opportunities
19pm-20 March 2013
Assessment of investment policies in the MENA region
Marie-Estelle Rey
Senior Policy Analyst, MENA-OECD Investment Programme

2. MENA-OECD background paper:
Assessment of MENA countries investment policies
• On-going monitoring exercise
• Based on available information, data and comments provided by
countries and analytical carried out in co-operation with
countries. Based on the PFI and BCDS methodologies
• Covers 18 countries
• Topics:
 Investment regimes
 Restrictions
 Approval procedures
 Admittance of foreign personnel
 Transfer of capital
 Incentives
 Land ownership
 Guarantee against expropriation
 International investment agreements
 Investment dispute settlement 2

3. Investment legal regime
• All MENA countries have an investment law (except
Bahrain and UAE (at the federal level)
• Three are currently under revision
• Several recent amendments (e.g. Algeria – 2009-
2010, Egypt – 2012)
 Complexity reduction and increase of protection and
predictability
 Harmonisation of strategies and rules at the national
and regional levels
3

4. Investment Promotion Agencies
• All MENA countries have an IPA (or an office for
economic development - Gulf)
• Mandate extensions over the years
• Most deal with local and foreign investors (except
Tunisia and Kuwait)
• Different degrees of performance and different services
 Improvement of services: one-stop shop, after-
care, innovative tools
 Public-private dialogue and policy advocacy
4

5. FDI restrictions
• Relatively restrictive countries but trends towards more
openness
• Ownership requirements, minimum capital requirements, local
agent requirements, Arab preference, monopolies
• Common restrictions (e.g. security
(weapons), oil&hydrocarbons, transport, media, insurance…)
vs. uncommon restrictions (e.g. business
services, construction, real estate, commercial activities such
as retail trade…)
 FDI restrictions streamlining (list)
 Reviewing and lifting some restrictions, when alternative, non-
discriminatory measures are available to meet legitimate
public policy objectives 5

6. Incentives
• Numerous incentives – often complex, can create distorsion
effects, lack of clarity and consistency, risk of discretionary
power, difficult to manage and control, no impact evaluation
• Debate on impact in the aftermath of the ‘Arab awakening’
and in times of budgetary constraints
 Clarify responsibilities of the authorities
 Review, assess and report
 Simplification, transparency and non-discrimination
 Part of the broader agenda on corporate tax policy reforms
 Avoid harmful regional tax competition 6

7. Other issues
• Approval procedures: unclear rules and
procedures, delays, but streamlining efforts
• Access to land: restrictions, titling and cadastre, lengthy
procedures, collaterals, free zones practices
• Expropriation: legal protection, but recent issue?
• Investor-State dispute: 10 cases since early 2011, rising
concern?
7

8. Conclusions
• Policy and legal reforms to ensure
transparency, predictability and non-
discrimination – addressing systemic issues
• Contract stability and enforcement
• Instruments for risk mitigation
• Pro-active measures in investment promotion
• Mechanisms to handle disputes with investors
8