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2012/SOM1/IEG/007

Agenda Item: 7 (a)

Investment Facilitation Action Plan (IFAP)

Purpose: Discussion

Submitted by: Australia

/ First Investment Experts’ Group Meeting Moscow, Russia
11-12 February 2012

INVESTMENT FACILITATION ACTION PLAN (IFAP)

During the Investment Experts Group (IEG) meetings in 2011 there was ongoing discussion around the IFAP agenda (ref: 2011/SOM2/IEG/010 and 2011/SOM3/IEG/010). These discussions culminated in APEC Leaders endorsing some key decisions on progressing the IFAP at Honolulu in November 2011.

The key elements of IEG’s IFAP endorsed by Leaders were:

•Re-affirmation of APEC economies’ commitment to IFAP implementation beyond 2011;

•Review of IFAP priority areas during IEG1 2012 in order to establish a focus for the following two-year period, and to similar review every two years going forward;

•Refocusing of IFAP activities towards those with strong analytical and empirical foundations, and those that seek to incorporate hard lessons from previous APEC projects and that produce concrete, tangible outcomes that can be widely distributed;

•Providing annual updates on collective actions in pursuance of IFAP goals, including expected timeframes for implementation;

•Cataloguing basic factual information corresponding to quantitative indices of IFAP implementation; and

•Voluntary reporting of activities undertaken by member economies that respond to, or contribute to, achievement of specific IFAP actions.

Actions to be undertaken at IEG 1 2012

•Consideration by IEG in determining which of the remaining IFAP priority themes, based on the IFAP Principles, should be addressed over the next 2 years in addition to ongoing efforts around the first three themes addressed during 2008 – 2010.

•Review of the arrangements around maintaining the IFAP.

In 2008 the IFAP was adopted by APEC Leaders. Since then, Australia has maintained a supporting role as leader of a ‘Friends of the Chair Steering Group’ to maintain the IFAP. The following economies have participated from time to time in this steering group: Australia, USA, Japan, Korea, Singapore, Thailand, Brunei, Mexico, Chile and Peru. These arrangements require reconsideration by IEG and involvement by other economies is strongly encouraged.

IFAP work agenda to date

IFAP’s initial phase of implementation was envisioned as spanning three years, from 2008 to 2010.

As part of this initial phase, the IFAP focussed on three priority themes based on the first three IFAP principles (listed at Attachment A):

•Promoting accessibility and transparency in the formulation and administration of investment-related policies;

•Enhancing stability of investment environments, security of property and protection of investments; and

•Enhancing predictability and consistency in investment-related policies.

Further priority themes, from the remaining five IFAP principles, are yet to be addressed. These are:

•Improving the efficiency and effectiveness of investment procedures;

•Building constructive stakeholder relationships;

•Utilising new technology to improve investment environments;

•Establishing monitoring and review mechanisms for investment policies; and

•Enhancing international cooperation.

Key to the IFAP and the progress of its underlying eight principles is a broad menu of actions, designed to promote investment facilitation, which an economy can choose to implement (see Attachment B). Implementation of any specific action is voluntary and flexible, reflecting the differences between the APEC member economies, and complementing the consensus based nature under which APEC operates.

As a focus for priority implementation in the first three years of the IFAP (2008-2010), the IEG selected a sub-set of 15 actions from the broader IFAP list, which focused on the initial three priority themes. Priority themes and action items were agreed by APEC ministers in 2008 (see Attachment C).

In order to focus on these three priority themes and ensure progress was being made in implementing them, the IEG examined its existing work program and achievements against the 15 priority action items and identified capacity building and technical assistance gaps which were addressed in 2009 - 2010. Four projects were established to address these gaps:

•a project to establish base line data for all 21 APEC economies using the World Bank’s Investing Across Borders indicators;

•projects to assist member economies establish and maintain effective formal mechanisms for resolving disputes between investors and host authorities;

•an Economic Committee project aimed at improving knowledge about best practice in public consultation for the rulemaking process; and

•a project to produce an e-portal for all investment rules and regulations.

These projects are now being implemented. The table at Attachment D tracks how APEC is addressing the IFAP priority themes and actions and identifies additional capacity building gaps in these priority themes and actions.

Determining IFAP implementation priorities

Given the breadth of recommended actions in the IFAP, the occasional review of priority areas can serve as a useful tool for focusing APEC’s investment facilitation work. At the same time, it is important that economies preserve flexibility of implementation, in order to keep pace with new policy challenges, and ensure that APEC activities can remain responsive to evolving member-economy and stakeholder priorities.

In this regard, it was agreed, at Honolulu in November 2011,that APEC economies should hold two yearly discussions to review IFAP priority areas. It was also agreed that during such discussions, the IEG would solicit member-economy and ABAC input.

Following on from priority theme identification, a suitable sub-set of actions from the broader IFAP list (at Attachment B) could then be identified. This could be supplemented by an examination of IEG’s existing work program and achievements against the identified priority action items, in order to identify capacity building and technical assistance gaps.

Advancing these new themes would complement further actions within the existing three priority themes.

Assuring more concrete IFAP outcomes

The first three years of IFAP implementation saw a number of investment facilitation activities, including a range of different projects. Many of these projects took the form of workshops or seminars. Though extremely valuable as forums for education and exchange of information, seminars can often have a limited impact, benefiting only those officials who are able to attend, and often lacking follow-up potential or sustainable benefits.

In order to increase the value of IFAP as a tool for capacity building and for making a lasting contribution to improvement of investment climates, APEC economies agreed (at Honolulu in November 2011) to the refocusing of IFAP activities towards activities with strong analytical and empirical foundations (for example, case studies and expert reports) — activities that seek to incorporate hard lessons from previous APEC projects; and activities that produce concrete, tangible outcomes that can be widely distributed.

Future PSU involvementand reporting

A broadened focus of the IFAP agenda will be complemented by a mechanism for demonstrating progress in implementing the overarching Bogor Goals. As agreed by leaders at Honolulu in November 2011, the IEG will implement a three-part process for demonstrating IFAP progress which involves: reporting of collective APEC actions, reporting of factual developments, and voluntary reporting of individual actions.

Whilst the final content and form of such reporting has yet to be determined, there has been agreement with the PSU that it will undertake this task.

Attachment A

IFAP PRINCIPLES
  1. Promote accessibility and transparency in the formulation and administration of investment-related policies.
  2. Enhance stability of investment environments, security of property and protection of investments
  3. Enhance predictability and consistency in investment-related policies
  4. Improve the efficiency and effectiveness of investment procedures
  5. Build constructive stakeholder relationships
  6. Utilise new technology to improve investment environments
  7. Establish monitoring and review mechanisms for investment policies
  8. Enhance international cooperation

Attachment B

Investment facilitation – menu of actions and measures

1
Promote accessibility and transparency in the formulation and administration of investment-related policies / ▪Publish laws, regulations, judicial decisions and administrative rulings of general application, including revisions and up-dates.
▪Adopt centralised registry of laws and regulations and make this available electronically.
▪Establish a single window or special enquiry point for all enquiries concerning investment policies and applications to invest
▪Make available all investment-related regulations in clear simple language, preferably in languages commonly used by business
▪Following establishment of an Investment Promotion Agency (IPA), or similar body, and make its existence widely known
▪Make available to investors all rules and other information relating to investment promotion and incentive schemes
▪Allow investors to choose their form of establishment within legislative and legal frameworks.
▪Ensure transparency and clarity in investment-related laws
▪Improve upon the APEC-wide website (e-portal) to replacing the hard copy publication of the APEC Investment Guidebook (IEG)
▪Encourage on-line enquiries and on-line information on all foreign investment issues
▪Maintain a mechanism to provide timely and relevant advice of changes in procedures, applicable standards, technical regulations and conformance requirements
▪To the extent possible, provide advance notice of proposed changes to laws and regulations and provide an opportunity for public comment
•Explore the possibility of using the international benchmarks on a voluntary basis as a reference point for peer dialogue and measuring progress
2
Enhance stability of investment environments, security of property and protection of investments / •Establish timely, secure and effective systems of ownership registration and / or property use rights for land and other forms of property
• Create and maintain an effective register of public or state owned property.
•Ensure costs associated with land transactions are kept to a minimum including by fostering competition.
•Foster the dissemination of accurate market reputation information including creditworthiness and reliability
•Explore the possibility of using the World Bank Doing Business indicator “Enforcing Contracts” as the basis for peer dialogue and benchmarking and measuring progress across APEC
•Encourage or establish effective formal mechanisms for resolving disputes between investors and host authorities and for enforcing solutions, such as judicial, arbitral or administrative tribunals or procedures
•Encourage and facilitate the use of arbitration and other means of alternative dispute resolution for the settlement of international commercial disputes between private parties
•Facilitate commercial dispute resolution for foreign investors by providing reasonable cost complaint-handling facilities, such as complaint service centres, and effective problem-solving mechanisms
•Take steps to accede to an arbitral convention
3
Enhance predictability and consistency in investment-related policies / •Increase use of legislative simplification and restatement of laws to enhance clarity and identify and eliminate inconsistency.
•Provide equal treatment for all investors in the operation and application of domestic laws and principles on investment
•Reduce the scope for discriminatory bureaucratic discretion in interpreting investment-related regulations
•Maintain clear demarcation of agency responsibilities where an economy has more than one agency screening or authorising investment proposals or where an agency has regulatory and commercial functions
•Establish and disseminate widely clear definitions of criteria for the assessment of investment proposals
•Establish accessible and effective administrative decision appeal mechanisms including where appropriate impartial “fast-track” review procedures
4
Improve the efficiency and effectiveness of investment procedures / •Simplify and streamline application and, registration, licensing and taxation procedures and establish a one-stop authority, where appropriate, for the lodgement of papers
•Simplify and reduce the number of forms relating to foreign investment and encourage electronic lodgement
•Shorten the processing time and procedures for investment applications.
•Promote use of “silence is consent” rules or no objections within defined time limits to speed up processing times, where appropriate
•Ensure the issuing of licences, permits and concessions is done at least cost to the investor
•Simplify the process for connecting to essential services infrastructure
•Implement strategies to improve administrative performance at lower levels of government.
▪Facilitate availability of high standard business services supporting investment
5
Build constructive stakeholder relationships / •To the extent possible, establish a mechanism to provide interested parties (including business community) with opportunity to comment on proposed new laws, regulations and policies or changes to existing ones prior to their implementation
•Continue to share APEC member economies’ experiences of successful stakeholder consultative mechanisms
•Promote the role of policy advocacy within IPAs as a means of addressing the specific investment problems raised by investors including those faced by SMEs
•Continue to share APEC member economies’ experiences of successful public private dialogue to take advantage of the information on successes and problems encountered by established investors
• Promote backward investment linkages between businesses, especially between foreign affiliates and local enterprises including through the promotion of industry clusters
•Encourage high standards of corporate governance through cooperation aimed at promoting international concepts and principles for business conduct, such as APEC’s programs on corporate governance and anti-corruption.
• Examine and share APEC member economies’ experience with responsible business conduct instruments
6
Utilise new technology to improve investment environments / •Promote the introduction and use of new technologies aimed at making the investment process simpler and faster
•Maintain adequate and effective protection of technology and related intellectual property rights
•Where possible, give effect to international norms for property protection
7
Establish monitoring and review mechanisms for investment policies / •Conduct periodic reviews of investment procedures ensuring they are simple, transparent and at lowest possible cost
8
Enhance international cooperation / •To the best extent possible, accede to, or observe, multilateral and/or regional investment promotion and facilitation conventions
•Make use, where appropriate, of international and regional initiatives aimed at building investment facilitation and promotion expertise, such as those offered by the World Bank, UNCTAD and OECD
•Ensure measures exist to ensure effective compliance with commitments under international investment agreements
•Review existing international agreements and treaties to ensure their provisions continue to create a more attractive environment for investment.

Attachment C

Priority IFAP Actions for 2008-2010

E-transparency /
  • Publish laws, regulations, judicial decisions and administrative rulings of general application, including revisions and up-dates.
  • Make available to investors all rules and other information relating to investment promotion and incentive schemes.
  • Establish an APEC-wide website or e-portal to replace the hard copy publication the APEC Investment Guidebook.
  • Simplify and reduce the number of forms relating to foreign investment and encourage electronic lodgment.
  • Encourage on-line enquiries and on-line information on all foreign investment issues.

Reducing investor risk through more certainty /
  • Maintain a mechanism to provide timely and relevant advice of changes in procedures, applicable standards, technical regulations and conformance requirements.
  • Establish and maintain effective formal mechanisms for resolving disputes between investors and host authorities and for enforcing solutions, such as judicial, arbitral or administrative tribunals or procedures.
  • Provide advance notice of proposed changes to laws and regulations and provide an opportunity for public comment.
  • Establish and disseminate widely clear definitions of criteria for the assessment of investment proposals.
  • Establish timely, secure and effective systems of ownership registration and property use rights for land and other forms of property.

Simplifying business regulation including reducing business costs /
  • Simplify and streamline application and, registration, licensing and taxation procedures and establish a one-stop authority for the lodgement of papers.
  • Shorten the processing time for applications.
  • Conduct periodic reviews of investment procedures ensuring they are simple, transparent and at lowest possible cost.
  • Ensure the issuing of licences, permits and concessions is done at least cost to the investor.
  • Simplify the process for connecting to essential services such as telecommunications and utilities.

Attachment D

E-Transparency
Priority Actions / IF Goals/Objectives / Existing Capacity Building Actions/Achievements / Identified Capacity Building Gaps
Publish laws, regulations, judicial decisions and administrative rulings of general application, including revisions and up-dates / Economic benefits of transparency adequately recognised by economy
Clear, transparent and “readily available” information from all levels of government
Easy to understand information
High level of electronic dissemination of information on investment laws, regulations, policies, promotions and incentives
Minimum number of investment approval procedures with easy to use electronic lodgement and processing
Specialised on-line enquiry and feedback points
Defined roles, responsibilities and accountabilities for institutions responsible for the creation and maintenance of registers and websites holding information. / APEC’s Transparency Standards on Investment, IAP Transparency reporting
Voluntary assessments against APEC-OECD Regulatory Reform Checklist and other international transparency benchmarks and standards.
Online business registration procedures in many economies –some international best practice
Hard copy guide to APEC-wide investment laws, regulations and policies produced every 3 years
Transparency provisions increasing in intra-APEC investment agreements or FTAs
Recent projects addressing these actions: EC/Tel WG joint seminar on e-governance, Capacity Building for International investment Agreements, Good Governance in Investment Promotion, Capacity Building for Sharing Success Factors, Seminar for Sharing Experience on Improving Investment Policy, Joint APEC-BOI-FIAS Workshop on Improving Investment Promotion Performance in Accessibility to Investors and Information Provision, CoreElements Training. / Overly complex regulatory structures
Hard to understand legal texts
Lack of electronic certification and publishing of documents
Lack of computerised, central registry of laws and regulations