WITH THE FINANCIAL SUPPORT OF THE EUROPEAN UNION Working Group on Investment Policy and Promotion Sarajevo, Bosnia and Herzegovina 21 February

2 FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

FDI inflows from 2000 to 2010 (EUR mn) 3 Source: World Bank, The official OECD conversion rate for 2010 of USD/ euro is used.

FDI as a % of GDP (2007 to 2010) 4 Source: World Bank, The official OECD conversion rate for 2010 of USD/ euro is used.

FDI by source in Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May No data available for Albania and Kosovo*.

FDI by source in Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May No data available for Albania and Kosovo*.

Western Balkan FDI by activity (NACE Rev 1) 7 Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May No data available for Albania, Montenegro and Kosovo* based on NACE classification.

Western Balkan FDI by manufacturing activity 8 Source: Vienna Institute for International Economic Studies, based on data from central banks. Update as of May No data available for Albania, Montenegro and Kosovo* based on NACE classification.

9 FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

Investment Reform Index (IRI) 10 Development of IP Laws

IRI Monitoring framework 11 Investment Policy and Promotion FDI Policy National Treatment Admittance of personnel Transfers FDI incentives Performance requirements Land ownership Titling, cadastre and restitution Intellectual Property Rights Expropriation International Investment Agreements International Arbitration Investment Promotion and Facilitation Strategy Institutional Support Monitoring and Evaluation FDI-SME linkages One stop shop Client Relationship Management Policy Advocacy ? Aftercare services Transparency Publication avenues and tools Prior notification and stakeholder consultations Procedural transparency Privatisation and PPPs Privatisation strategy Privatisation consultations Restrictions on foreign investor participation in privatisation PPP units PPP legislation PPP consultations PPP cost benefit analysis PPP monitoring

IRI assessment methodology – tripartite structure 12 Private Sector Independent experts Government self- assessment

Results of Investment Policy and Promotion assessment in IRI

Results of Investment Policy and Promotion assessment in IRI Albania Simplifying administrative procedures related to licenses Reforming the tax administration and enforcement of tax laws Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Bosnia and Herzegovina Improving liquidation procedures Clarify urban planning and construction laws and transfers of construction permits between investors Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Croatia Accelerate approval of business visas Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Kosovo* Increase transparency and fairness of public procurement activities Better organised and transparent tenders Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI FYR Macedonia Improving administrative capacity to implement reforms Removing unnecessary administrative procedures Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Montenegro Contract enforcement and easing property registration Improve the transparency and delivery of construction permits localities Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Serbia Better regulation of monopolies Encourage bankrupt entrepreneurs to initiate bankruptcy proceedings and enacting amendments to the Insolvency Law Source: Foreign investor council white paper; chambers of commerce, other international organisations monitoring investment climate reforms in the Western Balkans; US State Department Reports.

Results of Investment Policy and Promotion assessment in IRI Common points for improvement Accurate land title registration and cadastres Transparency in policy design and implementation, especially at sub-national level Accelerating administrative procedures IP enforcement Monitoring and evaluation of investment promotion Expanding role of IPAs to act as one-stop shops

22 FDI in the region Review of Investment Policies and Investment Promotion Ideas for regional co-operation

Investment Policy 23 Peer learning exercises on several topics, for example: Experiences with investor-state arbitration Restitution processes and procedures Digitisation of cadastres and land registers Experiences with FDI incentive programmes and their evaluation Enhance the transparency of investment policy design. For example, upcoming laws, regulations or administrative procedures could be presented and discussed at the SEEIC or WGIPP. This would allow policy makers to receive comments from investment policy experts from the region prior to enacting legislation. Development of regional best practice guidelines for specific areas of policy, such as updating land registries or even evaluating the costs and benefits of investment attraction programmes.

Investment Promotion 24 Regional investment promotion strategy – a tailored regional strategy/approach targeting international investors in sectors or niches who could fit into Western Balkan value chains. A regional exhibition – a touring exhibition which would visit foreign markets and highlight a specific sector or niche area in each of the seven Western Balkan economies. Organisation of visits to Western Balkan – Western Balkan IPAs could organise joint visits of foreign investors to the region,with a stop in each economy. This would save time and money for the foreign investor. Co-location in foreign markets – Western Balkan IPAs could identify cities where they could save money and build on information synergies (e.g., the Scandinavian Tourist Board in Asia-Pacific has joint offices in Tokyo and Beijing).

25 Thank you for your attention Milan Konopek Project Manager - Regional Competitiveness Initiative OECD Investment Compact for South East Europe Private Sector Development Division Organisation for Economic Co-operation and Development (OECD)

Annex 26

FDI Policy 27 National Treatment – national treatment restrictions on entry and operation of FDI Admittance of personnel – limitations on entry of specialised personnel to support FDI Transfers – restrictions on capital transfers in and outside of host economy FDI incentives – transparent application of incentives with monitoring and evaluation Performance requirements – requirements, such as local-content, on investments Land ownership – ability of investors to own land (urban and rural) Titling, cadastre and restitution – up to date cadastres and land registers, restitution process completed Intellectual Property Rights – enforcement of IP laws Expropriation – clear rules for expropriation and efficient legal process International Investment Agreements – what is contained in bilateral investment treaties International Arbitration – signatories to New York Convention and ICSID Convention

Investment Promotion and Facilitation 28 Strategy – contents of an investment promotion strategy Institutional Support – level of support provided by the investment promotion agency Monitoring and Evaluation – whether the investment promotion strategy is evaluated FDI-SME linkages – programmes to support commercial linkages between FDI and local firms One stop shop – whether investors can submit and receive approval for all administrative procedures in one place Client Relationship Management - the degree to which investment promotion agencies keep track and follow up with foreign investors Policy Advocacy - whether the investment promotion agency advocates on behalf of investors Aftercare services – whether investment promotion agencies provide support to foreign investors after their establishment

Transparency 29 Publication avenues and tools – whether laws and administrative procedures are codified and published Prior notification and stakeholder consultations - whether investors are notified in advance of changes to laws and procedures Procedural transparency - whether legal procedures are transparent, are their opportunities for appeals

Privatisation and Public Private Partnerships 30 Privatisation strategy - existence of a privatisation strategy Privatisation consultations – are stakeholders prior to a privatisation Restrictions on foreign investor participation in privatisation – restrictions on foreign investors PPP units – is there a unit in government to lead PPP development PPP legislation - is there legislation covering PPPs, not just concessions PPP consultations - are stakeholders consulted prior to PPP being launched PPP cost benefit analysis - is there an assessment of a PPP PPP monitoring - is the PPP monitored and evaluated?