1. Christophe Saint-Martin/ Invest in France Agency Euromediterranean Conference / Naples / 8-9 June 2006 Investment in the Mediterranean : Balance and perspectives ANIMA Réseau Euroméditerranéen d’Agences de Promotion des Investissements Euromediterranean Network of Investment Promotion Agencies

2. ANIMA June 2006 © ANIMA-AFII 2006 2 Overview Main MEDA assets Market and growth (320 million inhabitants in 2025) Proximity of EU +Association Agreements +2010 Free Trade Zone Moderate cost of labour (1/5th of EU average) Local resources & niches (from oil to brains…) The 20-35 year generation is a gold mine! A growing interest, but investors still hesitant Fragmented Mediterranean market Mixed image -economy / geopolitics / culture Gaps (but improvements) in law enforcement, business attitude, or technical obstacles (logistics, training…) MEDA often absent of the investor short list Many opportunities do exist now Many ways of investing: JVs, privatisations, stakeholding, overseas branches Local market, exports, off-shoring, services, infrastructure, R&D

3. ANIMA June 2006 © ANIMA-AFII 2006 3 Comparative advantages Internet users(ITU 2002)Industrial annual wages (ILO 1999-2003)

4. ANIMA June 2006 © ANIMA-AFII 2006 4 A wind of change in the Mediterranean in 2005 According to our observatory (MIPO), 686 foreign investment projects announced or started in 2005 Growth trend: 232 projects in 2003 / 343 in 2004 / 686 in 2005 A total capital investment figure of over €40bn in 2005 ! The quality of new investments is promising Some strategic/ high profile/ high tech projects (R&D etc.) Projects coming from 50 different countries : mainly France (152 projects), United States (106) and Emirates (41 projects) Presence of major companies (Intel, BP, Danone, Shell, Coca- Cola…)

5. ANIMA June 2006 © ANIMA-AFII 2006 5 More than 1,000 world companies have recently invested in MEDA Source: MIPO

6. ANIMA June 2006 © ANIMA-AFII 2006 6 MIPO results Encouraging trend Diversification of investors (Gulf, OECD, emerging countries…) The main investors (FDI amounts) in MEDA are : Saudi Arabia (€6.8 bn), United States (€6.3 bn) and the United Kingdom (€6.1 bn) MEDA is becoming increasingly attractive A wind of change The gap between MEDA and Central & Eastern Europe seems to be closing MEDA recovery is an on-going process

7. ANIMA June 2006 © ANIMA-AFII 2006 7 FDI attraction, MEDA region

8. ANIMA June 2006 © ANIMA-AFII 2006 8 A strong take-off in 2005 1 806 6 753 3 493 Algeria 93 projects (2005) Energy, banks & services 477 2 504 8 922 Egypt 101 projects (2005) Energy, chemicals, banks, tourism 16 895 582 2 712 Turkey 73 projects (2005) Telecoms, automobile, banks, agri- food 3 225 4 261 2 430 Morocco 118 projects (2005) Agri-food, industrial sectors & ICT 1 153 131 5 922 Israel 94 projects (2005) Software, electronics, banks 95 217 998 Tunisia 78 projects (2005) Energy, telecom, textile services 111 2 027 1 244 Jordan 46 projects (2005) Tourism, real estate, banks, software 200320042005 FDI amount, €m, MIPO Palestine Auth. 5 projects (2005) Banks, ICT Malta 5 projects (2005) Drugs, logistics, banks Cyprus 7 projects (‘05) Telecoms, services, agri-food 100 434 2 982 Syria 40 projects (‘05) Energy, tourism, banks, agri-food Lebanon 26 projects (‘05) Tourism, ICT real estate 01 408 414 724 731

9. ANIMA June 2006 © ANIMA-AFII 2006 9 Why such an increase ? A number of sizeable investments in the energy sector (Algeria, Egypt, Tunisia, Syria etc.) Big real estate and/or tourism projects Egypt, Jordan, Lebanon, Morocco, Syria… Originating in particular from the Gulf States Several major privatisation operations, e. g. in Turkey 3 deals for Turk Telekom, Telsim & Turkcell = US$ 14 bn The Arab investors (Gulf etc.) are shifting part of their investments from the Americas to MEDA Complete transformation of the banking sector Opening of a number of agencies and takeover of banking networks by large European banks And IPAs’ and ANIMA's efforts…

10. ANIMA June 2006 © ANIMA-AFII 2006 10 Donor & recipient countries in 2005 Further diversification in the origin of investors Europe still the major share of FDI input into MEDA (50% in projects, 40% in capex) -North America stable at 18% Gulf States and other MENA countries on the rise (15% against 11% in 2004 and a mere 6.5% in 2003) Asia (6%) and intra-MEDA (5%) also growing Recipient countries in 2005 Turkey takes the lead due to large deals in the telecom field Egypt – large projects in energy, banking and real estate Israel – remarkable number of technological investments Syria, Algeria, Morocco (€2 to 3 bn each, but different profiles) Small countries (Tunisia, Jordan, Lebanon) perform relatively well

11. ANIMA June 2006 © ANIMA-AFII 2006 11 Announced FDI into MEDA Main cumulated flows, 2003 to 2005 Source: MIPO O-D flows over €0.5bn Algeria Cyprus Egypt Tunisia Malta Morocco 0.5bn   2.6bn 1.7bn  8.9 bn  8.1 bn  1.2 bn  5.5 bn  2.7bn  7.1bn   3.5bn  6.7bn  2.1bn  5.4bn  1.0bn 2.5 bn  2.1bn  Europe 37.2bn Gulf & MENA 23.8bn Americas 14.7bn  4.1bn Jordan Asia & emerg. 11.6bn Israel Syria  1.4bn  3.9bn Turkey  0.7bn  0.9bn Lebanon 11.9bn  Palest. Auth.  1.6bn  1.8bn Intra-MEDA

12. ANIMA June 2006 © ANIMA-AFII 2006 12 Why is Europe concerned? The Euro-Med challenge: an increasing divide! The southern rim (‘MEDA’, 10 countries, 240 m pop.) needs to create 4 million jobs per year just to maintain its current unemployment rate No jobs equals major risks This challenge may be transformed into an opportunity: A boost for local and regional development (40 million jobs mean 40 million consumers) A new burst of growth for EU companies and societies looking for markets and growth An obligation to develop reforms towards an investor-friendly environment EU-15: US$22,689 US$ 22,689 MEDA-10: 2,360 US$ New members-10: US$5,373 GDP per capita 2002, World Bank The biggest economic divide in the world!

13. ANIMA June 2006 © ANIMA-AFII 2006 13 EU companies looking at MEDA as a growth destination Eastern Europe and China are becoming less attractive (costs, capacity saturation etc.) Big companies are better aware of the MEDA opportunities MEDA is closing its gap vs. Eastern Europe (46% of projects in 2005, vs. 28% in 2002) Quotes from les Echos, 24/5/2006: "Though tempting, the Chinese market remains complicated and expensive" "I very highly disadvise China to SMEs without a real know-how and robust shoulders" "Settling here has a price. You have to integrate the language, distance, culture, the relative value of contracts, regulations… " "Start-ups have difficulties with Chinese wages in new technologies"

14. ANIMA June 2006 © ANIMA-AFII 2006 14 Example of MedValley Potential innovation hubs at the very gates of Europe Thousands of engineers & researchers ! 100 clusters, technoparks, R&D centres detected by ANIMA in the South

15. ANIMA June 2006 © ANIMA-AFII 2006 15 A growing number of very large scale investments Top capital investments announced in 2005 1.Oger (Saudi Arabia), telecomm. network, Turkey, $6.55 bn 2.Vodafone (UK), telecomm. network, Turkey, $4.55 bn 3.Shell (Netherlands), energy, Turkey, $4.14 bn 4.Intel (United States), electronic components, Israel, $4 bn 5.Emaar Properties (UAE), real est./ public works, Egypt, $4 bn 6.Aref Investment (Kuwait), real est./ public works, Syria, $4 bn 7.Emaar Properties (UAE), real est./ public works, Syria, $3.9 bn 8.Telia Sonera (Sweden), telecomm. network, Turkey, $3.1 bn 9.Credit Line (Russia), energy, Syria, $2.7 bn 10. Apachi (United States), energy, Egypt, $2 bn

16. ANIMA June 2006 © ANIMA-AFII 2006 16 Work in progress… Legal integration of the Mediterranean markets (Standards, Customs) Via Euromed Market and Euromed Quality Physical integration Via Euromed Transport Creation of a legal framework (e.g. IP rights) Via ANIMA Investment Charter And other efforts - Doing Business (World Bank), OECD Networking and information sharing on potential markets and investors SMILE and MIPO bases, UNIDO opportunities exchange, business forums, ANIMA web site Improvement of the Mediterranean image for investors E. g. annual ANIMA business summit with The Economist –or this event…  Boost Investments into the Mediterranean

17. ANIMA June 2006 © ANIMA-AFII 2006 17 Methodology : how to measure FDI performance? Macro-economic approach: financial records (past) Method: national financial accounts (Central Bank) Why? worldwide coverage; long series; ‘objective’ data Limits: mixes portfolio and physical investment; not fitted for regional/local agencies; only financial; only registered with official disbursement Micro-economic approach: announcements (past + anticipation) Method: detection of individual projects via IPA registration or economic intelligence (media, newsletters, internet) Why? knowledge of projects; may include jobs Limits: estimation by default (depending on the net size); based on declarations; mixes various types of info/ projects

18. ANIMA June 2006 © ANIMA-AFII 2006 18 MIPO process FDI projects Prospects Small projects (franchise, rep. office) Internet Webwatcher / Monitoring of companies Others sources Newsletters, events, listings Direct information ANIMA team Records IPAs & other partners Factiva economic newsflow (>15,000 news per day) Reuters -Dow Jones etc. Open databases e. g. Kompass, Google, etc. Semantic analysis Selection of ± 1,000 news and alerts per year for MEDA MIPO Mediterranean Investment Project Observatory Vigie Invest in France FDI data base on 30 European countries Benchmarking e. g. with East. Europe

19. ANIMA June 2006 © ANIMA-AFII 2006 19 About MIPO: data collected on each project Date of the news Origin country Host country Company or investor Sector (23 sectors) Summary of the project (in Engl. & French) Type of project (greenfield, brownfield, JV etc.) Type of company (Transnational, major co., SME) FDI amount in €m (known for 46% of projects) Jobs created (known for 16% of projects) Detailed news One or several articles, source, web site, informations on the company etc.

20. ANIMA June 2006 © ANIMA-AFII 2006 20 Examples of MIPO outputs

21. ANIMA June 2006 © ANIMA-AFII 2006 21 Thank you / Contact us Coordination (French desk) : Bénédict de Saint-Laurent, (AFII), France T : + 33 4 96 11 67 62 Mailto : bdsl@afii.frbdsl@afii.fr Italian desk: Raffaela Di Emidio, (ICE), Italie T : + 39 06 59 92 68 89 Mailto : r.diemidio@ice.it Moroccan desk: Laïla Sbiti, Direction des Investissements, Ministère des Affaires Générales, des Affaires Economiques et de la Mise à Niveau de l’Economie, Maroc T : + 212 37 67 35 06 Mailto : lailas@invest.gov.ma lailas@invest.gov.ma EuropeAid Co-operation Office : Fabian Verhoeven Mailto : fabian.verhoeven@cec.eu.int@cec.eu.int

22. ANIMA June 2006 © ANIMA-AFII 2006 22 References The MEDA region covers: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Authority, Syria, Tunisia and Turkey ANIMA - Euromed Network of Investment Promotion Agencies Is a European-funded project devoted to helping MEDA acquire the tools and the strategies to attract foreign direct investment The Invest in France Agency (AFII), assisted by ICE (Italy) and the Direction des Investissements (Morocco), runs the project The MEDA Investment Agencies, the City of Marseille, the Euroméditerranée Agency and the Provence-Alpes-Côte d’Azur region also contribute The Mediterranean Investment Project Observatory (MIPO) is a tool developed by ANIMA to monitor investment into the MEDA region and is available on line via the ANIMA website www.animaweb.org