Chairman’s Report of the IEG Meeting

21-22 May 2003, Khon Kaen, Thailand

Introduction

1.  The Investment Experts Group (IEG) held its 2nd meeting 2003 on 21-22 May in Khon Kaen, Thailand.

2.  The meeting was attended by representatives from Australia; Brunei Darussalam; Canada; Chile; China; Indonesia; Japan; Korea; Malaysia; Mexico; New Zealand, Papua New Guinea; Peru; Philippines; Singapore; Chinese Taipei; Thailand; United States; Vietnam, PECC and the APEC Secretariat.

3.  The meeting was chaired by Mr. Juan Orduña, Deputy Director, Foreign Investment Division, Ministry of Economy, from Mexico.

Welcoming/Opening Remarks

4.  The Chair welcomed all IEG members and thanked Thailand for the hospitality and the arrangements done for this meeting.

Business Arrangement

5.  Thailand expressed its welcome to all delegates visiting Khon Kaen and briefed them on the business arrangements for the meeting.

Adoption of Agenda

6.  The Agenda was adopted with the inclusion of PECC’s publication “An Assessment of Impediments to Foreign Direct Investment in APEC Member Economies” circulated to IEG members.

Report on the activities and developments since the 1st IEG meeting in Chiang Rai.

7.  The Chair reported on the main activities and new developments in the IEG since the last meeting held in Chiang Rai in February 2003.

8.  APEC Secretariat submitted a Report on APEC Developments and highlighted the following areas:

-  Counterterrorism activities held after SOM I.

-  The SOM endorsement of the ECOTECH four priorities over the next few years:

a.  Integration into the Global Economy

b.  Counter – Terrorism Capacity Building

c.  Promoting the Development of Knowledge-based economies

d.  Addressing the Social Dimension of Globalization

-  APEC response to SARS.

-  Gender Integration. The Secretariat reminded SOM’s decision to establish the Gender Focal Point Network with representatives from all APEC economies and fora.

-  Budget and Management Committee meeting in July 2003.

-  Project Evaluation and Progress Report.

9.  Thailand suggested to APEC Secretariat to add in future reports information on the APEC Investment Mart 2003.

10.  Canada suggested to include in the agenda an item related to measure the impact of SARS in the investment flows in the APEC region.

11.  China informed that there are some APEC funded projects that have been suspended due to the SARS outbreak and expressed their concern for those 2002 projects that will expire in December 2003, asking the Secretariat if the BMC has any contingency plan on this matter.

Seminar on Trade and Investment

12.  Japan reported on the outcomes of the Seminar on WTO “Trade and Investment” (CTI 12/03T) held on May 19 in Bangkok. Japan informed that the Seminar was fruitful, with active discussions by 34 participants from 13 economies, and surely contributed to build better understanding of the issue among members. Japan also made a presentation on current situation of the work at WTO WG on “Trade and Investment”.

13.  The Group thanked both Japan and Thailand and welcomed the outcomes. China expressed that due to the SARS outbreak they have postponed the APEC Trade and Investment Forum which was supposed to be held in April and they are now closely working with Japan, the co-organizer of the event, to fix a new date when the SARS situation improves in the region.

Investment Environment

(i) Investment Promotion

(a) APEC Investment Symposium and Investment Mart

14.  Russia was not present at the meeting and the Group agreed that APEC Secretariat should keep reminding Russia to submit the project evaluation report of the “APEC Seventh Investment Symposium” held in Vladivostok in September 2002”. The IEG Chair will submit to the APEC Secretariat the electronic version of the “Proceedings. APEC Seventh Investment Symposium, 2002 Validivostok” to be uploaded at the APEC IEG website.

(b) APEC Investment Mart 2003.

15.  Thailand presented a progress report on the preparations of the APEC Investment Mart 2003 that will be held in Bangkok from 16-21 October 2003 under the theme: “Asia Pacific-Invest with Confidence, Benefit from Diversity”.

16.  Thailand informed that 11 economies have confirmed their participation in the APEC Investment Mart and encouraged those economies that have not confirmed their participation to do so by 16 June 2003. The members agreed to encourage their private sector to participate in the match-making program which will be registered on line through the APEC Investment Mart 2003 website in June this year. Singapore suggested Thailand circulate to all member economies a message via e-mail with relevant information to be distributed to the business community.

(c) Cross-border Mergers and Acquisitions/Start-up Companies and Venture Capital

(c.1.) Phase II Study on APEC Cross-border Mergers & Acquisitions.

17.  Malaysia informed that the evaluation report on “Phase 1 Study on APEC Cross-border M&As” have been submitted to the APEC Secretariat together with comments received from the small group i.e. Australia and Mexico. Malaysia also informed that based on the outlined of the Korean Study received, it would appear that there would be duplication/overlapping of work between the two studies. In order to avoid this duplication/overlapping the IEG agreed to the Malaysian proposal to put the Phase II Study on hold pending the outcomes of the Korean study. The IEG further agreed that depending on the outcomes of the Korean study and if there are volunteering economies who might wish to coordinate such study, the Group might wish to consider a similar case study based on the experiences of the Latin American economies. The IEG further agreed that the Korean study also address these aspects in their study conclusions.

(c.2) Korea’s study on Cross-border M&As: Case studies of Korea, China and Hong Kong, China.

18.  Korea presented the purpose, uniqueness, the methodology and timetable of the study. The IEG was informed by Korea that the interim results of the Korean study would be available by June 2003.

(d) Study on Venture Capital Investment in APEC Economies.

19.  The US PECC presented the outcomes of the study. The Group thanked PECC and Chinese Taipei for this study and welcomed PECC’s recommendations and advised on how the IEG could follow up such recommendations. The Group endorsed the Study.

(e) Seminar on “Venture Capital and Start-up Companies” on the Implementation of the Menu of Options.

20. China reported that due to the SARS outbreak the Seminar which was planned to be held in mid June had to be postponed. Given that this project was 2002 APEC funded activity that will expire by December 31, 2003, China indicated that they may have to ask the BMC for an extension if the Seminar can not be held by December 2003

(ii) Menu of Options

21. The IEG Chair reminded the Group to provide a thorough response to Ministers’ instruction to review and report progress made by member economies in implementing and improving the Menu of Options on Investment in 2003 and report to the Ministerial Meeting in October 2003.

(a)  Forward Progress on the Menu of Options

22. The Group discussed how the economies and the IEG will report its progress in implementing and improving the Menu of Options on Investment and report by the Ministerial Meeting in October 2003.

23. The Group discussed the US and the Chair’s proposals outlining the work plan for responding the Ministers mandate to report on the progress of the implementation of the Menu of Options.

24. Some member economies submitted individual draft reports on their progress and the remaining economies are encouraged to do as soon as possible. The Group agreed to report on items they have implemented of the Investment Menu of Option to the Chair, who will prepare the Group’s summary report intersessionally for final consideration of the Group at IEG III.

(b)  Expansion of the Menu of Options

25. The Chair informed that the proposal on “Competition Policy and Regulatory Reform” to be included in the IEG Menu of Options was sent to the “Competition Policy and Deregulation Group” (CPDG) and to the “Strengthening Economic Legal Infrastructure” (SELI) for their comments, and that only the SELI replied positive to this initiative and he will follow up to the CPDG chair to get their comments on this proposal.

26. The Group agreed to endorse the final proposal on “Competition Policy and Regulatory Reform” to be included in the IEG Menu of Options, and only revise it if the CPDG submit comments on the contrary.

27. Japan presented a proposal to further improve the Menu of Options and the Collective Action Plan. The Group welcomed Japan’s proposal and endorsed the idea to work on how to improve those areas. Japan also informed that they will develop a further and more detailed proposal by the next meeting.

Transparency Standards on Investment

Implementation of Transparency Standards

28. The Group discussed the US’ proposal for APEC Leaders’ Transparency Standards on Investment.

29. The Group agreed to further discuss this proposal, but asked some time to take this issue back at their capitals. The Group got consensus that the economies will have three weeks from this meeting to send their comments to the IEG Chairman with copy to the APEC Secretariat and to the US, who will attempt to address questions and comments in a revised version to be available in the next IEG meeting.

Investment Guidebook

30. China reported on the progress made in updating the 5th edition of the Investment Guidebook. China informed that there are only two economies who have not submitted their investment regime report and also explained that the aim is to have the Guidebook printed and ready for distribution by the next IEG meeting in August. China reminded that this publication will be distributed during the Investment Mart and made a final call to those economies that have not submitted their investment regime to do so immediately.

31.  The Group agreed to proceed to the printing of the hard copy of the 5th Edition of the Investment Guidebook with the reports timely submitted, leaving open the possibility to use the Internet version for the Economies who did not submit their documents on time.

IEG Projects

(i) New 2004 project proposals

32. Chile informed that is preparing a project of a seminar on investment which would count with the participation of the OECD, to take place in one of the IEG meetings during 2004. Chile will submit a proposal by the IEG III meeting in August.

33.  The Group welcomed Chile’s idea and China suggested Chile to organize the above event as an Investment Symposium where both government officials and the business sector would be invited.

(ii) IEG’s contribution to WTO’s work on Investment

34. Mexico presented a progress report on the Study and Seminar on International Investment Instruments and their legal interpretations. Mexico informed that the Study will be completed and circulated by mid July for IEG comments.

(iii) APEC funded projects

35. The Secretariat reminded the Group on the APEC Guidebook requirements for project management, especially those issues related with project evaluation, project reports, contract and travel undertaking. The Secretariat encourage the Group to remind project overseers to keep inform the APEC Secretariat on the developments on their projects.

Other Business

(i) Follow-up study on "The Impact of APEC Investment Liberalization and Facilitation".

36. The Group welcomed the report by the Japanese Delegation on the current status of and the future work plan for the follow-up study on "The Impact of APEC Investment Liberalization and Facilitation", which will be carried out under the Economic Committee (EC) during 2003 and 2004.

37. China suggested Japan to address how the governmental measures adopted to combat terrorism and SARS could affect the free flows of investment in the region.

(ii) Policy Discussion Forum

38. Japan expressed the intention to make a presentation on the investment policies at the IEG III meeting due to a new initiative promoted by the Government to increase inward Foreign Direct Investment. The Group welcomed Japan’s suggestion.

(iii) PECC Publication: An Assessment of Impediments to Foreign Direct Investment in APEC Member Economies.

39. The Group welcomed the PECC report and made comments that some of the information used by the researchers was outdated and expressed their desire to contact PECC to update the information.

(iv) IEG response to SARS outbreak.

40. The Group discussed how to address the impact of SARS on the investment environment in the region. The Group agreed to have an informal exchange of information among Member economies intersessionally and to provide information by IEG III meeting on the impact of this disease on their investment flows and as well as the strategies that economies have adopted to avoid its impact.

(v) Date and Venue of the next meeting

41. Thailand informed that next meeting will be held in Phuket in August. The final date will be informed through APEC Secretariat.

Document Access

42. A decision was made by IEG on the document access for the documents circulated at the meeting.

First Reading of the Draft/Report/Minutes of Meeting

43. The draft of the Chair’s Report was circulated for preliminary comments by the members. The Group decided that members should make comments on the draft Chairman’s Report of the IEG Meeting in Khon Kaen, Thailand by 15th June.

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