*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
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"Moving the G20's Investment Agenda Forward", "Emerging Markets and the
International Investment Law and Policy Regime", "Sustainable FDI for
Sustainable Development", "Towards an Investment Facilitation Framework:
Why? What? When?", "Beware of FDI Statistics!", "Towards an Indicative List
of FDI Sustainability Characteristics", “The Importance of Negotiating Good
Contracts", "A New Challenge for Emerging Markets: the Need to Develop an
Outward FDI Policy”, "China Moves the G20 toward an International
Investment Framework and Investment Facilitation", "The Next Step in
Governance: The Need for Global Micro-regulatory Frameworks", and "The
Evolving International Investment Law and Policy Regime: Ways Forward"
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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 228  June 18, 2018
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Investment facilitation: moving beyond investment promotion*
* <#m_1045191909289903425__edn1>
Felipe Hees and Pedro Barreto da Rocha Paranhos**

The Joint Ministerial Statement on Investment Facilitation for Development
,[1] <#m_1045191909289903425__edn3> co-sponsored by 70 WTO members during
the Buenos Aires Ministerial Conference in December 2017, shows that
investment facilitation has emerged as an issue of interest to a
significant number of developed and developing countries.

The informal dialogue organized by the Friends of Investment Facilitation
for Development[2] <#m_1045191909289903425__edn4> in the run-up to the WTO
Ministerial was extremely valuable, as it made clear that a strict focus on
“facilitation”, leaving aside contentious topics like market access,
investment protection and investor-state dispute settlement, is an
important condition for discussions of the matter to progress
multilaterally.[3] <#m_1045191909289903425__edn5>

Despite the growing convergence regarding the scope of the discussions on
investment facilitation, there is at least one issue that requires
clarification, namely the distinction between a multilateral approach to
investment facilitation and the issue of investment promotion.

Investment promotion and facilitation lie on a continuum. The basic role of
investment promotion through investment promotion agencies (IPAs) lies on
one end, promotion, although it might include aspects of facilitation.
“Promotion” is based on disseminating information about comparative
advantages and investment opportunities, in order to render one country
more attractive for international investors when compared with other
countries. “Facilitation” aims at establishing common procedures for all
WTO members. Therefore, it would complement IPAs’ work from the other end
of the continuum.

When promoting a country as a FDI destination, IPAs generally rely on
investment portals or equivalent tools to help investors understand and
navigate the institutional and regulatory intricacies of host countries.
This “facilitating” role is certainly important and useful. However, there
are other investment-facilitating aspects to be considered as well.

Even if they enjoy an official status, IPAs are not necessarily
full-fledged government bodies. They may have a limited role in
establishing procedures affecting investment, potentially limiting their
ability to address regulatory issues that may hinder investment.

Explaining and clarifying the regulatory framework to potential investors
is not tantamount to improving it. Enhancing the regulatory and
institutional environment (cutting red tape, eliminating useless
procedures, avoiding overlapping requirements)—the “facilitating effort” of
countries—invariably requires complicated inter-agency efforts that are
heavily influenced by distinct bureaucratic cultures and legal competences.
It also depends on rule-making beyond the scope of competence of IPAs.

It is undisputable that the investment environment of each country is
unique, as it is a web of central, regional and local government
institutions and policies. By focusing on procedures, and not on any policy
deemed “right” regardless of the peculiarities of each country, a
multilateral framework on investment facilitation would help address
concerns that are common to most countries in their quest to implement and
maintain a friendlier environment for investors.

Procedural inefficiencies represent a cost. Moreover, a “facilitated”
institutional and regulatory environment benefits not only foreign
investors, but also the governments of host countries, especially if based
on a multilaterally agreed framework. It might include elements like
national focal points and single electronic windows, for instance.

National focal points would assist investors in overcoming practical
difficulties in their interactions with distinct agencies and enable
contact with relevant authorities, with the ultimate goal of ameliorating
the business environment and fostering a sustainable partnership between
investors and host countries.

Single electronic windows are important tools to simplify authorization
procedures and increase the level of transparency of information affecting
investments. They are not necessarily the same as the investment portals of
IPAs. Yet, investment portals can be adapted to deliver
single-electronic-window functions as well, e.g., by allowing the
completion of all administrative procedures related to making an
investment, the paying of all associated taxes and fees and the uploading
of all documents required by different agencies.

The enhanced coordination among different agencies in host countries can
result in important improvements in the procedures associated with incoming
FDI flows. Equally relevant for both investors and governments of host
countries is the permanent channel of communication designed to address
complaints or grievances before they turn into disputes.

Since the implementation of regulatory and institutional improvements can
be challenging, multilateral rules can act as an important catalyst for
internal changes. A multilateral legal framework on investment facilitation
that includes adequate provisions on technical assistance and addresses
other development concerns can be a game changer in any country. By helping
facilitate investment in areas for which IPAs normally do not have the
competence to do so, a multilateral framework on investment facilitation
can become both a powerful complement to their work and a valuable
instrument to improve the FDI environment. It can establish a common set of
procedures that levels the playing field regarding FDI attraction.[4]

* <#m_1045191909289903425__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_1045191909289903425__ednref2> Felipe Hees (
[log in to unmask]) and Pedro Barreto da Rocha Paranhos (
[log in to unmask]) are Diplomats, Ministry of Foreign Affairs
of Brazil. The opinions expressed in this *Perspective* are the authors’
and do not necessarily reflect the views of the Brazilian government. The
authors are grateful to Ulrika Cederskog Sundling, Fabien Gehl and an
anonymous peer reviewer for their helpful peer reviews.
[1] <#m_1045191909289903425__ednref3> WT/MIN(17)/59.
[2] <#m_1045191909289903425__ednref4> Argentina, Brazil, Chile, China,
Colombia, Guatemala, Hong Kong (China), Kazakhstan, Liberia, Mexico,
Mauritania, Nigeria, Pakistan, Qatar, Republic of Korea, The Gambia, and
[3] <#m_1045191909289903425__ednref5> Felipe Hees and Pedro Mendonça
Cavalcante, “Focusing on investment facilitation – is it that
difficult?” *Columbia
FDI Perspectives*, No. 202, June 19, 2017.
[4] <#m_1045191909289903425__ednref6> An example of a possible framework on
investment facilitation has been put forward by Brazil for the
consideration of WTO members (JOB/GC/169).
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Felipe Hees and Pedro Barreto da Rocha Paranhos,
‘Investment facilitation: moving beyond investment promotion,’ Columbia FDI
Perspectives, No. 228, June 18, 2018. Reprinted with permission from the
Columbia Center on Sustainable Investment (**
<>**).” A copy should kindly be sent to the
Columbia Center on Sustainable Investment at **[log in to unmask]*
<[log in to unmask]>*. *

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Marion A. Creach, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 227, Rob van Tulder and Jan Anton van Zanten, “MNEs and the
   Sustainable Development Goals: what do first steps reveal?,” June 4, 2018.
   - No. 226, Khalil Hamdani, “Investment facilitation at the WTO is not
   investment *redux*,” May 21, 2018
   - No. 225, Michael J. Enright, “To succeed in China, focus on interests
   rather than rules,” May 7, 2018.

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *On September 26, 2018*, CCSI and the UN Sustainable Development
   Solutions Network (SDSN), under the guidance of Prof. Jeffrey Sachs,
   Special Advisor to the UN Secretary-General on the SDGs, and
   Laurent Fabius, President of the Constitutional Council of the French
   Republic, will host a conference to discuss the Global Pact for the
   The Global Pact for the Environment aims to unify international
   environmental governance and codify a human right to the environment in
   international law. *For more information, and to register, please see
   our website here
   - *On September 26, 2018*, CCSI and the Sabin Center for Climate Change
   Law will host a conference on "Climate Change, the Courts, and the Paris
   Agreement." In recent years citizens, sub-national governments and NGOs
   have turned to litigation to hold governments and corporations accountable
   for their contributions to climate change. *For more information about
   this event, including registration, please see our website here
   - *On September 27-28, 2018*, CCSI will hold its Annual Columbia
   International Investment Conference (CIIC) on “Multinationals in the Age of
   Sustainable Development: New Thinking on the Role of International
   Investment Agreements.” The Conference, taking place alongside the 73rd
   Session of the UN General Assembly in New York, will build on a multi-year
   effort to identify guiding principles and practical approaches for aligning
   international investment treaties with the Sustainable Development Goals
   (SDGs).* Additional information will be posted shortly on our website

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2018 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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