20 Apr 10 - Country-specific data on global investment policy trends
Investment policy trends continue pointing towards greater openness, but increased State ownership and policy slippage in the trade area create potential challenges, says UNCTAD's Investment Policy Monitor for the first quarter of 2010.
UNCTAD's quarterly Investment Policy Monitor offers the latest country-specific data on global investment policies.
The Monitor finds that during the period under review (December 2009 - March 2010) 62 countries or economies introduced new national policy measures affecting their policy framework for foreign investment.
Twenty-eight economies adopted investment-specific measures, most of which aimed at liberalizing the entry of foreign investment into previously closed sectors. Amongst these entry-related measures are those taken by:
- Australia and Canada, with respect to air transportation services
- Cameroon, Malaysia and the Syrian Arab Republic, with respect to banking or residential property
- India, with respect to mobile television services
- Qatar, with respect to consultancy and distribution services, information technology, and services related to sports, culture and entertainment
Nine countries enacted investment-specific policies aimed at promoting and facilitating foreign investment. Among them:
- Costa Rica, the Libyan Arab Jamahiriya and the Russian Federation establishing or revising free economic zones
- Jordan, encouraging renewable energy projects
- Mexico and Peru, implementing tax incentives for film production and investments in high altitude areas respectively
Ten investment-specific measures were undertaken with regard to the operations of foreign investors. These include South Africa's moves to remove restrictions on inward and outward capital transfers.
Only a few countries tightened their policy frameworks for foreign investment, resulting in some instances of nationalizations. Examples include:
- the Bolivarian Republic of Venezuela, nationalizing companies in the retailing, banking and power generation sectors
- Colombia, amending its mining law
- Kazakhstan, introducing a local content requirement
Several countries introduced measures aimed at promoting outward investment. These include Madagascar, South Africa and Thailand, which relaxed foreign exchange regulations or related approval requirements.
Forty-three economies enacted measures related to foreign investment. Most of these measures (undertaken by at least 23 economies) involved the adoption of new, or the prolongation of existing State aids and stimulus packages implemented to counter the continuing financial and economic crisis. At the same time, some economies have started to terminate existing stimulus programmes. While such exit strategies could have a potentially dampening effect on investment flows (as some TNCs are still struggling with the effects of the economic crisis), they could also create opportunities for firms to acquire shares released by governments.
Seventy-three economies took investment measures at the international level, continuing the trend of concluding new investment agreements at a rapid pace. The 37 new international investment agreements (IIAs) signed between December 2009 and March 2010 include:
- Seven Bilateral Investment Treaties (BITs)
- Twenty-three Double Taxation Treaties (DTTs)
- Seven IIAs other than BITs and DTTs
Overall, the general direction of global investment policies is towards more openness for and facilitation of investment. However potential challenges remain, including:
- Increased State ownership and control of numerous companies as a result of rescue packages, which continue to create the risk of non-transparent or discriminatory measures affecting foreign investment flows.
- Policy slippage in the trade area, which is beginning to leave its mark on the internationally integrated production systems of transnational corporations (TNCs) and their global value chains.
International policy monitoring and analysis can play an important role in ensuring that current endeavours to combat investment protectionism do not remain one-off initiatives. In that vein, UNCTAD regularly offers information on:
- National and international investment policies, through its regular Investment Policy Monitors (http://www.unctad.org/en/docs/webdiaeia200911_en.pdf); and
- Global FDI flows, through its regular Global FDI Trends Monitors (http://www.unctad.org/en/docs/webdiaeia20101_en.pdf).