unctad.org | Investment, Enterprise and Development Commission: 2nd Session
Statement by Mr. Supachai Panitchpakdi, Secretary-General of UNCTAD
Investment, Enterprise and Development Commission: 2nd Session
Geneva
26 Apr 2010

[AS PREPARED FOR DELIVERY]

Mr. / Ms. Chairperson,
Excellencies,
Distinguished Delegates,
Ladies and Gentlemen,

It is a great pleasure for me to welcome you to the second session of the Investment, Enterprise and Development Commission. Let me begin by congratulating you, Ambassador Kiwanuka, on your election as Chairperson. I also wish to congratulate the other members of the bureau on their election and ensure you that the secretariat is fully committed and ready to support your deliberations.

In accordance with the decision taken at the 47th executive session of the TDB, the second session of the Commission focuses on two substantive agenda items, namely, investment in the agricultural sector, and efficiency in public investment for development. Both items are critical for developing countries as they struggle to overcome the impacts of the recent food crisis and the financial and economic crisis.

There is an urgent need to invest more in agriculture, both to ensure food security and as the basis for long-term economic development. The United Nations High-level Task Force on the Global Food Security Crisis estimates that the global financial requirements for investment in agricultural development range from $25 billion to $40 billion per annum. The bulk of this investment will have to come from domestic sources. However, in many countries domestic investment will not be sufficient, and external funding from private and public sources will be necessary. The G8´s commitment last year to provide over $20 billion to African agriculture is welcome news, and we hope that this can be mobilized quickly. In addition, foreign investment by transnational corporations (TNCs) can also contribute to filling the gap.

Although current worldwide FDI stock in agricultural production is still low ($32 billion in 2007), its potential is enormous. The World Investment Report 2009 showed that global FDI flows in agricultural production have been increasing, driven by the food import needs of populous markets, growing demand for biofuel production, and land and water shortages in emerging economies. These trends are set to continue, despite the impact of the economic crisis last year. There are also indications that South-South investment in agriculture is on the rise, as investment interest by some food-importing countries in staple food production provides new opportunities for expanding agricultural investment in low-income countries.

TNCs increasingly participate in agricultural production via non-equity modes of entry, such as contract farming. Today, they are active in contract farming in over 110 developing and transition economies, spanning a wide range of commodities, and in some cases account for a high share of local agricultural output. TNCs´ contractual relationships with local farmers can help avert some risks and produce major benefits. These companies provide various inputs to a large number of small farmers, including skills transfer, financial and technological assistance, and linkages to global markets. All of this is conducive to promoting sustainable and pro-poor agricultural development. However, one should not expect miracles. We have also to recognize that the actual size of FDI in the sector is still low, and that potential risks, such as land grab, may pose serious threats to developing- country farmers.

Sound policymaking can make a huge difference to the success of TNC involvement in agriculture. At the national level, a comprehensive and coherent policy framework is called for. At the multilateral level, this can be supported through the development of a set of principles for "responsible investment in agriculture". I am proud that UNCTAD, responding to the Declaration of the FAO World Summit of 2009 and General Assembly resolution A/RES/64/192, has been spearheading this development, together with the FAO, the World Bank and IFAD. This afternoon´s session will focus on the issue of responsible investment, which is at the top of the international investment policymaking agenda. Indeed, as we speak, consultations are under way within the framework of the annual Spring Meetings of the World Bank and the IMF on these principles.

Ladies and gentlemen,

Turning now to the second substantive agenda item, efficiency in public investment, the financial crisis has intensified the focus on public investment as a potential countercyclical policy tool. UNCTAD´s research has explored the conditions under which public investment can play a decisive role in realizing government policy goals for growth and poverty reduction. Public investment in administrative efficiency can also yield important gains for developing economies. Investing in the efficiency of public administration is a necessary condition for improving business facilitation, through the removal of unnecessary burdens and disincentives to enterprise activities. It also helps promote domestic and foreign investment.

This issue will be debated on the third day of the Commission, when we will present examples of policies aimed at bolstering administrative efficiency, decreasing the bureaucratic burden for private operators and facilitating business. Some countries, many of which are developing countries, have designed and implemented good solutions to make administrative procedures swift and transparent for creating companies; registering property; obtaining licences, work permits and visas; paying taxes, and so forth. Smart laws and procedures, organizational schemes and e-government tools that have demonstrated their efficiency in one country could be helpful to other countries confronted with the same problems. The UNCTAD i-Portal - an online platform for sharing and disseminating administrative efficiency solutions for business facilitation - will also be presented. International cooperation, and South-South cooperation in particular, on sharing and disseminating business facilitation solutions could considerably accelerate the pace and reduce the costs of administrative reform in developing countries, release productive capacities and boost enterprise development.

Ladies and gentlemen,

The third important substantive item on your agenda is the review of the work of UNCTAD expert meetings. This includes the multi-year expert meetings reporting to this Commission, including the Expert Meeting on Enterprise Development Policies and Capacity-building in Science, Technology and Innovation, which took place back in January, as well as single-year expert meetings, including last February´s Expert Meeting on Green and Renewable Technologies as Energy Solutions for Rural Development.

As a result of the financial crisis, many developing countries have faced a fall in revenues and a large increase in the number of firms filing for bankruptcy or pushed into the informal economy. For any recovery to be successful, a dynamic, job-creating business sector is vital. January´s Expert Meeting on Enterprise Development concluded that in the current economic climate, even more than usual, special attention should be given to the exemplary role of entrepreneurs, and how to formulate forward-looking policies to enhance enterprise competitiveness and resume job creation after the crisis. In this regard I am very pleased to announce that this afternoon we will be hosting a ceremony for UNCTAD´s second Empretec Women in Business Awards. The 10 finalists have successfully established or expanded their companies in the current economic environment and are outstanding role models for their communities and aspiring women entrepreneurs worldwide.

The Expert Meeting on Green and Renewable Technologies - or RETS - concluded that the role of RETs in meeting future energy demand will be crucial. Renewable energy technologies are poised to be the next generation of revolutionary technologies (that is, after ICTs). Over the past five years, energy supplied from renewable energy technologies has increased in many countries. These technologies play a major role in facilitating both social and economic development, particularly in rural areas, where they can reduce transmission costs. They can also help facilitate the attainment of basic human needs, such as nutrition, heating and lighting, together with access to knowledge and health services, all of which can contribute to the MDGs.

Ladies and gentlemen,

Let me add a few words here on the issue of technology, which, along with trade, investment and finance, is at the core of UNCTAD´s integrated treatment of development issues. UNCTAD has a longstanding mandate on technology, and under paragraph 202 of the Accra Accord, this Commission is mandated to address technology as part of its policy dialogue. In this session, technology is being addressed under the third substantive item, on the reporting of expert meetings. However, I am sure you will have opportunities to address the topic more fully in subsequent Commission meetings.

UNCTAD, through its research, analysis and technical assistance, plays an important role in supporting developing countries to build their science, technology and innovation capabilities. Through policy dialogue, we support national policymakers in developing countries to overcome the obstacles they face in harnessing STI for growth and development. In this regard, the outcome of such dialogue could contribute to the establishment of more effective approaches to local capacity development that is relevant for the transfer and absorption of technology.

UNCTAD has been exploring the role of science and technology in the achievement of the MDGs. The goal of halving the number of people whose income is less than one dollar a day, and halving the number who suffer from hunger, calls, among other things, for modern agriculture and agro-industrial machinery. Developing capacities to produce higher value-added commodities that translate into higher economic returns will also help reduce poverty.

At the country level, achieving the MDGs requires a reorientation of national science, technology and innovation policies to ensure that they serve the needs of development effectively and coherently. In particular, meeting the MDGs will mean building a solid national science and technology base to enable the generation, utilization and diffusion of this knowledge. Public-private partnerships involving all stakeholders are essential in building scientific and technological capabilities. At the international level, access to new and emerging technologies is crucial and requires technology transfer cooperation and scientific and technological capacity-building for effective participation in the development process of both the private and public sectors.

Ladies and gentlemen,

As part of this Commission´s agenda, UNCTAD will tomorrow present the Investment Policy Reviews (IPRs) of Belarus and El Salvador. The IPR of Belarus stresses the role that FDI can play in fostering strong local small and medium-sized enterprises (SMEs), while the IPR of El Salvador provides recommendations on leveraging FDI to build national competitiveness and attract "green and responsible" investment.

As many of you are aware, IPRs are one of UNCTAD´s core technical assistance programmes. Member States continue to place great value on the policy advice and technical assistance provided under our IPR programme, as illustrated in the rising number of requests for such reviews from countries in all regions. The size and level of the delegations participating in IPR presentations in Geneva, such as that for Burundi two weeks ago, illustrates the commitment of member States taking part in the IPR process.

The Commission will also consider the report of the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR). The financial crisis has drawn the attention of high-level government authorities and policymakers to corporate accounting and reporting matters. In this respect, UNCTAD´s Group of Experts has been providing an important forum for understanding the causes of the crisis and identifying lessons learned and their implications for corporate reporting. I draw the Commission´s attention to the growing importance of the consistent implementation and enforcement of global corporate accounting and reporting standards and codes.

Ladies and gentlemen,

In the context of the financial and food crisis, this Commission provides a unique opportunity for member States and investment and development stakeholders to discuss emerging investment issues, their development implications, and possible policy solutions. The Accra Accord prescribed the important role Commissions have to play in the intergovernmental machinery of UNCTAD. To this end, I urge you to make the most of the Commission´s time and use its resources in a productive manner, in order to benefit as much as possible from its outcomes. I very much look forward to your deliberations.



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