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National Investment Policy Guidelines

This section contains the National Investment Policy Guidelines of the IPFSD. Users are invited to provide comments, suggestions, alternative drafting options or best practice experiences by clicking on "comment" at any level, i.e. sections, sub-sections or individual guidelines. You can access the annotations to the National Investment Policy Guidelines by following the link below or download the complete annotations to the IPFSD.
  • 1. Investment and sustainable development strategy
    • 1.1 Strategic investment policy priorities
      • 1.1.1
        Investment policy should be geared towards the realization of national sustainable development goals and grounded in a country’s overall development strategy. It should set out strategic priorities, including: - Investment in specific economic activities, e.g. as an integral part of an industrial development strategy. - Areas for mutual reinforcement of public and private investment (including a framework for public-private partnerships). - Investment that makes a significant development contribution by creating decent work opportunities, enhancing sustainability, and/or by expanding and qualitatively improving productive capacity (see 1.2) and international competitiveness. Investment policy priorities should be based on a thorough analysis of the country's comparative advantages and development challenges and opportunities, and should address key bottlenecks for attracting FDI.
      • 1.1.2
        Strategic investment policy priorities may be effectively formalized in a published document (e.g. investment strategy), making explicit the intended role of private and foreign investment in the country's sustainable development strategy and development priorities, and providing a clear signal to both investors and stakeholders involved in investment policymaking.
    • 1.2 Investment policy coherence for productive capacity building
      • 1.2.1 Human resource development
        The potential for job creation and skills transfer should be one of the criteria for determining investment priorities. Taking into account the mutually reinforcing link between human resource development (HRD) and investment, investment policy should inform HRD policy to prioritize skill building in areas crucial for development priorities, whether technical, vocational, managerial or entrepreneurial skills.
      • 1.2.2 Technology and know-how
        The potential for the transfer of appropriate technologies and the dissemination of know-how should be one of the criteria for determining investment priorities, and should be promoted through adequate investment-related policies, including taxation and intellectual property.
      • 1.2.3 Infrastructure (1)
        The potential for infrastructure development through FDI, in particular under PPPs, should be an integral part of investment policy. Infrastructure development policies should give due consideration to basic infrastructure areas crucial for the building of productive capacities, including utilities, roads, sea- and airports or industrial parks, in line with investment priorities.
      • 1.2.4 Infrastructure (2)
        A specific regulatory framework for PPPs should be in place to ensure that investor-State partnerships serve the public interest (see also section 3.9 below).
      • 1.2.5 Enterprise development
        The potential for FDI to generate business linkages and to stimulate local enterprise development should be a key criterion in defining investment policy and priorities for FDI attraction. Enterprise development and business facilitation policies (including access to finance) should promote entrepreneurial activity where such activity yields particularly significant benefits through linkages and acts as a crucial locational determinant for targeted foreign investments.
  • 2. Investment regulation and promotion
    • 2.1 Entry, establishment and operations of foreign investors
      • 2.1.1 Policy statement on FDI and degree of openness
        Investment policy benefits from a clear message towards the international business community on FDI (e.g. in a country's Investment Strategy or law on foreign investment, where these exist). Attracting high levels of diverse and beneficial FDI calls for a general policy of openness and avoidance of investment protectionism, subject to qualifications and selective restrictions to address country-specific development needs and policy concerns, such as regarding the provision of public goods or the control over strategic sectors and critical infrastructure.
      • 2.1.2 Screening and entry restrictions (1)
        Ownership restrictions or restrictions on the entry of foreign investment, in full accordance with countries' right to regulate, should be justified by legitimate national policy objectives and should not be influenced by special interests. They are best limited to a few explicitly stated aims, including: - protecting the national interest, national security, control over natural resources, critical infrastructure, public health, the environment; or - promoting national development objectives in accordance with a published development strategy or investment strategy. Such restrictions need to be in conformity with international commitments.
      • 2.1.3 Screening and entry restriction (2)
        Restrictions on foreign ownership in specific industries or economic activities should be clearly specified; a list of specific industries where restrictions (e.g. prohibitions, limitations) apply has the advantage of achieving such clarity while preserving a policy of general openness to FDI.
      • 2.1.4 Screening and entry restriction (3)
        A periodic review should take place of any ownership restrictions and of the level of ownership caps to evaluate whether they remain the most appropriate and cost-effective method to ensure these objectives.
      • 2.1.5 Screening and entry restriction (4)
        Screening procedures for investment entry and establishment, where applicable, should be conducted following pre-established objective criteria.
      • 2.1.6 Property registration
        Investors should be able to register ownership of or titles to land and other forms of property securely, effectively and timely, including in order to facilitate access to debt finance, bearing in mind specific development challenges in this regard (see also 3.6).
      • 2.1.7 Freedom of operations
        Governments should avoid direct and indirect intrusions in business management and respect the freedom of operations of private companies, subject to compliance with domestic laws. This includes the freedom of investors to decide whether they want to invest at home or abroad.
      • 2.1.8 Performance requirements
        Performance requirements and related operational constraints should be used sparingly and only to the extent that they are necessary to achieve legitimate public policy purposes. They need to be in compliance with international obligations and would typically be imposed principally as conditions for special privileges, including tax and financial incentives.
    • 2.2 Treatment and protection of investors
      • 2.2.1 Treatment under the rule of law
        Established investors and investments, foreign or domestic, should be granted treatment that is based on the rule of law.
      • 2.2.2 Core standards of treatment (1)
        As a general principle, foreign investors and investments should not be discriminated against vis-à-vis national investors in the post-establishment phase and in the conduct of their business operations. Where development objectives require policies that distinguish between foreign and domestic investment, these should be limited, transparent and periodically reviewed for efficacy against those objectives. They need to be in line with international commitments, including REIOs.
      • 2.2.3 Core standards of treatment (2)
        Countries should guarantee the free convertibility of their currency for current account transactions, including FDI-related earnings and dividends, interests, royalties and others. Any restriction to convertibility for current account transactions should be temporary and in accordance with existing obligations and flexibilities under international law, in particular the IMF Articles of Agreement.
      • 2.2.4 Transfer of funds (1)
        Where the level of development or macro-economic considerations warrant restrictions on the transfer of capital, countries should seek to treat FDI-related transactions differently from other (particularly short-term) capital account transactions. Countries should guarantee the freedom to transfer and repatriate capital related to investments in productive assets, subject to reporting requirements (including to fight money laundering) and prior compliance with tax obligations, and subject to potential temporary restrictions due to balance of payment crises and in compliance with international law. Controls should be periodically reviewed for efficacy.
      • 2.2.5 Transfer of funds (2)
        Countries should guarantee the free convertibility of their currency for current account transactions, including FDI-related earnings and dividends, interests, royalties and others. Any restriction to convertibility for current account transactions should be in accordance with existing international obligations and flexibilities, in particular the IMF Articles of Agreement.
      • 2.2.6 Contract enforcement and dispute settlement
        All investors should be entitled to equal treatment in the enforcement of contracts. Mechanisms and proceedings for the enforcement of contracts should be timely, efficient and effective, and available to all investors so as to duly operate under the rule of law.
      • 2.2.7 Investment contracts
        States should honour their obligations deriving from investment contracts with investors, unless they can invoke a fundamental change of circumstances or other legitimate reasons in accordance with national and international law.
      • 2.2.8 Expropriation
        When warranted for legitimate public policy purposes, expropriations or nationalization should be undertaken in a non-discriminatory manner and conform to the principle of due process of law, and compensation should be provided. Decisions should be open to recourse and reviews to avoid arbitrariness.
      • 2.2.9 International commitments
        Government should assign explicit responsibility and accountability for the implementation and periodic review of measures to ensure effective compliance with commitments under IIAs. Strong alternative dispute resolution (ADR) mechanisms can be effective means to avoid international arbitration of disputes.
    • 2.3 Investor obligations
      • 2.3.1 Responsible investment
        Investors' first and foremost obligation is to comply with a host country's laws and regulations. This obligation should apply and be enforced indiscriminately to national and foreign investors, as should penalties for non-compliance.
      • 2.3.2 Standards
        Governments should encourage adherence to international standards of responsible investment and codes of conduct by foreign investors. Standards which may serve as reference include the ILO Tri-partite Declaration, the OECD Guidelines for Multinational Enterprises, the Principles for Responsible Investment in Agriculture, the UN Guiding Principles on Business and Human Rights and others. In addition, countries may wish to translate soft rules into national legislation.
    • 2.4 Promotion and facilitation of investment
      • 2.4.1 Investment authority and investment promotion agency (1)
        Explicit responsibility and accountability should be assigned to an investment promotion agency (IPA) to encourage investment and to assist investors in complying with administrative and procedural requirements with a view towards facilitating their establishment, operation and development.
      • 2.4.2 Investment authority and investment promotion agency (2)
        The mission, objectives and structure of the IPA should be grounded in national investment policy objectives and regularly reviewed. The core functions of IPAs should include image building, targeting, facilitation, aftercare and advocacy.
      • 2.4.3 Investment authority and investment promotion agency (3)
        As the prime interface between Government and investors, IPAs should support efforts to improve the general business climate and eliminate red tape.
      • 2.4.4 Investment authority and investment promotion agency (4)
        Where screening or preliminary approval are imposed on foreign investors, responsibility and accountability for such procedures should be clearly separate from investment promotion and facilitation functions in order to avoid potential conflicts of interest.
      • 2.4.5 Investment authority and investment promotion agency (5)
        IPAs should be in a position to resolve cross-ministerial issues through its formal and informal channels of communication, and by reporting at a sufficiently high level of Government. Its governance should be ensured through an operational board that includes members from relevant ministries as well from the private sector.
      • 2.4.6 Investment authority and investment promotion agency (6)
        The effectiveness of the IPA in attracting investment should be periodically reviewed against investment policy objectives. The efficiency of the IPA and its working methods should also be reviewed in light of international best practice.
      • 2.4.7 Investment authority and investment promotion agency (7)
        The work of national and sub-national IPAs, as well as that of authorities promoting investment in special economic zones, should be closely coordinated to ensure maximum efficiency and effectiveness.
      • 2.4.8 Investment authority and investment promotion agency (8)
        Being at the core of Government efforts to promote and facilitate investment, the IPA should establish close working relationships (including through secondment of staff) with regulatory agencies dealing directly with investors. It should seek to promote a client-oriented attitude in public administration. It may enlist the diplomatic service to strengthen overseas promotion efforts.
      • 2.4.9 Investment incentives and guarantees (1)
        Investment incentives, in whatever form (fiscal, financial or other), should be carefully assessed in terms of long-term costs and benefits prior to implementation, giving due consideration to potential distortion effects. The costs and benefits of incentives should be periodically reviewed and their effectiveness in achieving the desired objectives thoroughly evaluated.
      • 2.4.10 Investment incentives and guarantees (2)
        Where investment incentives are granted to support nascent industries, self-sustained viability (i.e. without the need for incentives) should be the ultimate goal so as to avoid subsidizing non-viable industries at the expense of the economy as a whole. A phase-out period built in the incentive structure is good practice, without precluding permanent tax measures to address positive or negative externalities.
      • 2.4.11 Investment incentives and guarantees (3)
        The rationale and justification for investment incentives should be directly and explicitly derived from the country's development strategy. Their effectiveness for achieving the objectives should be fully assessed before adoption, including through international comparability.
      • 2.4.12 Investment incentives and guarantees (4)
        The granting and administration of incentives should be the responsibility of an independent entity or ministry that does not have conflicting objectives or performance targets for investment attraction.
      • 2.4.13 Investment incentives and guarantees (5)
        Environmental, labour and other regulatory standards should not be lowered as a means to attract investment, or to compete for investment in a “regulatory race to the bottom”.
      • 2.4.14 Investment incentives and guarantees (6)
        Investment incentives should be granted on the basis of a set of pre-determined, objective, clear and transparent criteria. They should be offered on a non-discriminatory basis to projects fulfilling these criteria. Compliance with the criteria (performance requirements) should be monitored on a regular basis as a condition to benefit from the incentives.
      • 2.4.15 Investment incentives and guarantees (7)
        Investment incentives over and above pre-defined incentives must be shown to make an exceptional contribution to development objectives, and additional requirements should be attached, including with a view to avoiding a “race to the top of incentives”.
      • 2.4.16 Investment incentives and guarantees (8)
        Investment incentives offered by sub-national entities which have the discretion to grant incentives over and above the pre-defined limits, should be coordinated by a central investment authority to avoid investors “shopping around”.
      • 2.4.17 Promotion of business linkages and spillovers (1)
        As business linkages between foreign investors and national companies do not always develop naturally, Governments and IPAs should actively nurture and facilitate them. Undue intrusion in business partnerships should be avoided as mutually beneficial and sustainable linkages cannot be mandated.
      • 2.4.18 Promotion of business linkages and spillovers (2)
        Measures that Governments should consider to promote linkages include: (1) direct intermediation between national and foreign investors to close information gaps; (2) support (financial and other) to national companies for process or technology upgrading; (3) selective FDI targeting; (4) the establishment of national norms and standards, along the lines of international ones (e.g ISO standards); and (5) incentives for foreign investors to assist in upgrading of local SMEs and promotion of entrepreneurship.
      • 2.4.19 Promotion of business linkages and spillovers (3)
        Mandatory practices to promote linkages, such as joint-venture requirements, should be used sparingly and carefully considered to avoid unintended adverse effects.
      • 2.4.20 Promotion of business linkages and spillovers (4)
        Explicit responsibility and accountability should be assigned to the investment authority or IPA to nurture and promote business linkages established by foreign investors as part of its aftercare mandate.
      • 2.4.21 Promotion of business linkages and spillovers (5)
        Specific policies should encourage businesses to offer training to employees in skill areas deemed crucial in the country's policy on human resource development, including through performance requirements linked to investment incentives.
  • 3. Investment-related policies
    • 3.1 Trade policy
      • 3.1.1 International trade agreements
        Access to global markets is essential for resource- and efficiency-seeking foreign investors, and the size of local/regional markets is equally important for market-seeking investors. Active participation in international trade agreements (in particular the WTO) and enhanced integration at the regional level should be considered an integral part of development strategy and a key factor in promoting investment.
      • 3.1.2 Trade restriction and promotion
        Trade policies, including tariffs and non-tariff barriers, and trade promotion/facilitation measures (e.g. export finance, import insurance schemes, support to obtain compliance with international standards and norms) can selectively promote or discourage investment in specific industries. They should be defined in line with (industrial) development objectives and investment policy.
      • 3.1.3 Customs and border procedures
        Compliance costs and efficiency of border procedures should be periodically benchmarked against international best practice and should avoid as much as possible forming an obstacle to the attraction of export-oriented investment or investment that relies on imports of intermediate goods.
    • 3.2 Tax policy
      • 3.2.1 Corporate taxation (1)
        A periodic review, including international benchmarking, of corporate taxation (and fiscal incentives) for effectiveness, costs and benefits should be an integral part of investment policy. Reviews should consider costs linked to the structure of the tax regime, including (1) administrative and compliance costs for investors, (2) administrative and monitoring costs for the tax authorities, and (3) forgone revenue linked to tax evasion and/or tax engineering.
      • 3.2.2 Corporate taxation (2)
        Undue complexity of income tax law and regulations should be avoided and they should be accompanied by clear guidelines, as transparency, predictability and impartiality of the tax regime are essential for all investors, foreign and national alike.
      • 3.2.3 Corporate taxation (3)
        The tax system should tend to neutrality in the treatment of domestic and foreign investors.
      • 3.2.4 Fiscal incentives (1)
        In line with a country’s development strategy, incentives can be used for the encouragement of investment in specific industries or in order to achieve specific objectives (e.g. regional development, job creation, skills upgrading, technology dissemination). Fiscal incentives for investors should not by nature seek to compensate for an unattractive or inappropriate general tax regime.
      • 3.2.5 Fiscal incentives (2)
        The general corporate income tax regime should be the norm and not the exception and proliferation of tax incentives should be avoided as they quickly lead to distortions, generate unintended tax avoidance opportunities, become difficult to monitor, create administrative costs and may end up protecting special interests at the expense of the general public.
      • 3.2.6 Transfer pricing and international cooperation
        Well-established and clearly defined transfer pricing rules are essential to minimize tax engineering and tax evasion. Developing countries can build on international best practices. International cooperation between tax authorities is key to fight manipulative transfer pricing practices.
      • 3.2.7 Double taxation treaties (1)
        Double taxation treaties are an effective tool to promote inward and outward FDI. Developing countries should carefully negotiate such treaties to ensure that the principle of “taxation at the source” prevails.
      • 3.2.8 Double taxation treaties (2)
        A country's international tax treaty network should focus on major countries of origin for the types of investment prioritized in its investment policy.
    • 3.3 Intellectual property
      • 3.3.1
        Laws and regulations for the protection of intellectual property rights and mechanisms for their enforcement should meet the need of prospective investors (especially where investment policy aims to attract investment in IP-sensitive industries) and encourage innovation and investment by domestic and foreign firms, while providing for sanctions against the abuse by IPR holders of IP rights (e.g. the exercise of IP rights in a manner that prevents the emergence of legitimate competing designs or technologies) and allowing for the pursuit of the public good. As national investors are frequently less aware of their IP rights they should be sensitized on the issue.
      • 3.3.2
        Developing countries are encouraged to integrate the flexibilities in IP protection granted under international treaties, including the WTO's TRIPS agreement, into national legislation and consider the extent to which these flexibilities can create opportunities for investment attraction (e.g. in the production of pharmaceuticals).
    • 3.4 Competition policy
      • 3.4.1 Competition laws and regulations
        Competition laws and regulations, covering practices in restraint of competition, abuse of market power and economic concentration (mergers and acquisitions), together with effective monitoring and enforcement mechanisms, are essential to reap the benefits from investment and should provide fair rules and a level playing field for all investors, foreign and domestic.
      • 3.4.2 Coordination of investment and competition authorities (1)
        Investment policy makers should cooperate closely with competition authorities with a view to addressing any anti-competitive practices by incumbent enterprises that may inhibit investment. Particular attention should be paid to priority industries and investment types.
      • 3.4.3 Coordination of investment and competition authorities (2)
        Where investment policy pursues objectives for sectors that may be considered to fall under a public services obligation or for regulated sectors (e.g. public transport, utilities, telecommunications), competition authorities should be actively involved in the shaping of relevant policies and measures, coordinating closely with sectoral regulators.
      • 3.4.4 M&As and privatizations (1)
        Competition laws and decisions related to M&As, as well as the policy framework for privatizations, should support development strategy and investment policy objectives, and should ensure continued attractiveness of the relevant sector for further investment by avoiding market exclusivity and preventing abuse of dominant market power.
      • 3.4.5 M&As and privatizations (2)
        Close coordination between competition authorities in neighbouring countries should be pursued in case of cross-border M&As, particularly in small economies.
    • 3.5 Labour market regulation
      • 3.5.1 Balancing labour market flexibility and protection of employees
        Labour market regulations should support job creation objectives in investment policy, including through an appropriate degree of labour market flexibility. At the same time, employees should be protected from abusive labour practices.
      • 3.5.2 Core labour standards
        Countries need to guarantee internationally recognized core labour standards, in particular regarding child labour, the right for collective representation and other core protections as guaranteed by the ILO conventions the country is a party to. Effective mechanisms to promote core labour standards should be put in place and applied equally to foreign and domestic firms.
      • 3.5.3 Adjustment costs of investment policy
        Adjustment costs or friction caused by shifting productive capacity and employment to priority investment areas, industries or activities as per investment policy should be addressed both in labour market policies (e.g. re-training, social support) and in investment policy (e.g. encouraging investors to help ease transition costs).
      • 3.5.4 Hiring of international staff (1)
        Expatriate staff can at times be critical to the success of individual investment projects. Labour policy and/or immigration policy should avoid unduly restricting or delaying the employment of foreign personnel, including in skilled trades/artisan jobs, by investors in order not to hinder the build-up of productive capacity. At the same time, employment opportunities for nationals in jobs they can adequately fill should be promoted.
      • 3.5.5 Hiring of international staff (2)
        Transfer of skills from expatriate staff to nationals should be actively encouraged, including through technical and vocational training requirements at the company level whenever expatriates are employed. The use of foreign employees in skilled trades/artisan jobs may be time-bound in order to encourage foreign invested firms to establish local linkages.
    • 3.6 Access to land
      • 3.6.1 Titles (1)
        More than the nature of land titles (full ownership, long-term lease, land-use rights or other), predictability and security are paramount for investors. Governments should aim to ease access to land titles, adequately register and protect them, and guarantee stability. Developing and properly administering a national cadastre system can be an effective tool to encourage investment
      • 3.6.2 Titles (2)
        Full ownership of land or tradable land titles can help companies secure financing for investment, as land can be used as collateral. Transferable titles should be encouraged where specific country circumstances do not prevent this option.
      • 3.6.3 Agricultural land
        Foreign ownership or user titles over agricultural land is particularly sensitive in most countries, in particular those with large rural populations and where food security is an issue. Governments should pay particular care in putting in place and enforcing regulations to protect the long-term national interest and not compromise it for short-term gains by special interest groups. Adherence to the UNCTAD, FAO, IFAD, and World Bank Principles for Responsible Agricultural Investment should be encouraged.
      • 3.6.4 Industrial land and industrial parks
        The development of industrial, technology or services parks as public-private partnerships has worked well in a number of countries and can be an effective tool to facilitate access to fully-serviced land by (foreign) investors.
    • 3.7 Corporate responsibility and governance
      • 3.7.1 CSR standards
        Governments should encourage compliance with high standards of responsible investment and corporate behaviour, including through: (1) capacity building and technical assistance to local industry to improve their ability to access markets or work with investors that prefer or require certified products; (2) public procurement criteria; (3) incorporating existing standards into regulatory initiatives, and/or turning voluntary standards (soft law) into regulation (hard law).
      • 3.7.2 Corporate governance
        Countries should aim to adopt international standards of corporate governance for large formal businesses under their company law or commercial code, in particular: (1) protection of minority shareholders; (2) transparency and disclosure on a timely, reliable and relevant basis; (3) external auditing of accounts; and (4) adoption of high standards and codes of good practices on corruption, health, environment, and safety issues. The OECD Principles of Corporate Governance and UNCTAD Guidance on Good Practices in Corporate Governance Disclosure may serve as guidance.
      • 3.7.3 Reporting standards
        Corporate reporting standards should provide for disclosure by foreign-controlled firms on local ownership and control structures, finances and operations, and health, safety, social and environmental impacts, following international best practice (recommendations by the UNCTAD Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) may serve as guidance).
    • 3.8 Environmental policy
      • 3.8.1 Environmental impact of investment (1)
        Environmental impact assessments (EIA) should be part of investment policies; it is useful to classify projects based on a number of pre-defined criteria, including sector, nature, size and location to place more stringent or less stringent requirements on preliminary environmental impact assessments (or absence thereof).
      • 3.8.2 Environmental impact of investment (2)
        Environmental norms, including EIA requirements, should be transparent, non-discriminatory vis-à-vis foreign investors, predictable and stable; Governments should ensure that environmental licensing procedures are conducted without undue delay and in full technical objectivity.
      • 3.8.3 Environmental dumping
        Foreign investors should be encouraged to adhere to international standards of environmental protection and committed not to engage in environmental dumping; in specific cases (e.g. mining or oil extraction), Governments may wish to legally require international best practices (including the use of technologies) to be strictly adhered to.
    • 3.9 Infrastructure, concessioning and PPP policies
      • 3.9.1 Opening infrastructure sectors to investors (1)
        Given the potential contribution of private investment to building high-quality infrastructure, countries should consider the extent to which basic infrastructure sectors can be opened to domestic and foreign private investment, and under what conditions.
      • 3.9.2 Opening infrastructure sectors to investors (2)
        In sectors opened to private investment, careful efforts should go into identifying specific projects to be taken up by private investors. Shortlists of projects for concessioning are a useful tool, and Governments should initially focus on projects of moderate complexity, where commercial gains are easier to realize for investors, and where the socio-economic gains are clearly measurable.
      • 3.9.3 Concessioning rules and regulations (1)
        Following strategic decisions on which sectors to open to private investment, Governments should put in place a carefully crafted legal framework for concession contracts and public-private partnerships. Given the long-term nature of concession agreements in infrastructure, the legal framework should provide significant assurances to investors, including regarding contractual terms and their enforcement, and property rights.
      • 3.9.4 Concessioning rules and regulations (2)
        The legal framework for concession contracts needs to adequately protect the long-term national interest and consumers, ensuring adequate sharing of risks between the private and public partners.
      • 3.9.5 Competitive outcomes
        Wherever possible, concessioning to private investors should aim to introduce competition so as not to replace a public monopoly with a private one. Placing natural monopolies under private concession should be limited to cases where it increases efficiency and the delivery of services. Putting in place appropriate competition and sectoral regulations should be considered a pre-requisite for the successful concessioning of infrastructure services.
      • 3.9.6 Institutional framework for concessioning and PPPs
        Given the complexity of contractual terms involved in large infrastructure concessions, strong institutions need to be put in place first in order to achieve desirable outcomes; in addition to strengthening sectoral regulators, countries should consider the establishment of a dedicated PPP unit.
  • 4. Investment policy effectiveness
    • 4.1 Public governance and institutions
      • 4.1.1 From framework to implementation
        In the implementation of investment policies Governments should strive to achieve: (1) integrity and impartiality across Government and independence in regulatory institutions, subject to clear reporting lines and accountability to elected officials; (2) transparency and predictability for investors; (3) a service-orientation towards investors, where warranted.
      • 4.1.2 Inter-agency cooperation
        Close cooperation and formal communication channels should be in place between institutions and agencies dealing with investors. The IPA should play a coordinating role given its comprehensive perspective on issues confronting investors.
      • 4.1.3 Anti-corruption efforts
        Governments should adopt effective anti-corruption legislation and fight corruption with appropriate administrative, institutional and judicial means, for which international best practices should serve as guidance. Investors should be held to adhere to good corporate governance principles, which include refraining from paying bribes and denouncing corrupt practices.
    • 4.2 Dynamic policy development
      • 4.2.1
        Policy design and implementation is a continuous process of fine-tuning and adaptation to changing needs and circumstances. Periodic review (every 3-4 years) of performance against objectives should take place, with a view to: - verifying continued coherence of investment policy with overall development strategy - assessing investment policy effectiveness against objectives through a focused set of indicators - identifying and addressing underlying causes of underperformance - evaluating “return on investment” of the more costly investment policy measures (e.g. incentives).
    • 4.3 Measuring investment policy effectiveness
      • 4.3.1
        Objectives for investment policy should be the yard stick for measurement of policy effectiveness. (Where countries have a formal investment strategy it should set out such objectives, see 1.1 above.) They should break down objectives for investment attraction and development impact, and set clear priorities. Performance (especially in terms of investment attraction) should be benchmarked against peers.
      • 4.3.2
        Indicators for objectives related to the attraction of investment may include: - investment inflows (total, by industry, activity,…), - investment flows as a share of gross output and capital formation (idem), - greenfield investment as a share of total investment, - positioning on UNCTAD's "investment potential/performance matrix".
      • 4.3.3
        Indicators for objectives related to the impact of investment may include: - value added of investment activity, - value of capital formation, - export generation, - contribution to the creation of formal business entities, - fiscal revenues, - employment generation and wage contribution, - technology and skills contribution (e.g. as measured through the skill-types of jobs created), - social and environmental measures, - positioning on UNCTAD's "investment contribution matrix".