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---------- Forwarded message --------- From: Karl Sauvant <[log in to unmask]> Date: Mon, Oct 5, 2020 at 12:05 PM Subject: COVID-19 and FDI: How should governments respond? (Columbia FDI Perspective No 288) To: <[log in to unmask]> View this email in your browser <https://mailchi.mp/law/perspective-no-288?e=763bcf158c> 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看： http://ccsi.columbia.edu/publications/columbia-fdi-perspectives. <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ffa8ce8819&e=763bcf158c> *Columbia FDI Perspectives* Perspectives on topical foreign direct investment issues No. 288 October 5, 2020 Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) Managing Editor: Riccardo Loschi ([log in to unmask]) *COVID-19 and FDI: How should governments respond?* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=a4c2ff51e5&e=763bcf158c> * <#m_-8895240315909854351__edn1> by Ivan Anton Nimac** <#m_-8895240315909854351__edn2> Policy responses to the unprecedented economic shocks caused by COVID-19 have given limited attention to the promotion of FDI, which might have a major role to play in the recovery. Based on good practices demonstrated by countries, there are certain actions that governments should consider during the pandemic’s crisis and recovery phases. To begin with, governments’ economic support to keep firms operational should be extended to both domestic firms and foreign affiliates. Both types of firms contribute to employment and livelihoods, the foreign-owned often also to higher-quality jobs. There has been a proliferation of new barriers to FDI: at least 42 new barriers to entry—mainly in the form of FDI screening and the suspension of foreign work visas—have been put in place between April and July 2020.[1] <#m_-8895240315909854351__edn3> While some have been levelled on all incoming FDI, most measures specifically target either healthcare or “strategic” sectors (e.g., infrastructure, utilities).[2] <#m_-8895240315909854351__edn4> New barriers to FDI entry should be clearly defined, and COVID-19 measures time bound and subject to review. Investment promotion agencies (IPAs) should start with supporting the retention of existing investors. Successful IPAs’ principal roles are marketing, information provision, assistance, and advocacy services. Retention work is intrinsic to their information provision and assistance functions. There are two strong justifications for this. First, falling global FDI flows make it vital to maintain a country’s existing FDI stock. Second, 30% of FDI inflows every year are reinvestment from investors already in the country.[3] <#m_-8895240315909854351__edn5> Successful IPA emergency retention responses, which have supported investors seeking to manage immediate disruptions, include maintaining business continuity by working remotely (Austria, Costa Rica, Jordan), continuously communicating with investors on all government measures (Chile, Ireland, Republic of Korea), providing direct problem-solving assistance, prioritizing investors with important supply chains (Abu Dhabi, Egypt, Ethiopia), and bolstering advocacy to convey to governments the challenges faced by foreign firms (India, Saudi Arabia, Tunisia).[4] <#m_-8895240315909854351__edn6> Since the crisis phase has proven to be of long duration, further technological adaptation by IPAs is needed to carry on investor meetings and site visits. This calls for IPAs strengthening their capabilities to act virtually and innovating their investment-attraction tools. In the recovery phase, governments should consider resetting their FDI policy through a four-step process to help them overcome COVID-19’s impact on FDI flows and to account for such pre-existing transformation drivers as sustainability and technological development: - Governments should first review FDI strategies to test which of their previous FDI target segments remain resilient in the post-COVID-19 economy. This requires assessing the exposure of segments in which investor outreach was being pursued pre-COVID-19, to test if their value propositions remain strong through risk assessments and competitiveness benchmarking. For example, while apparel, automobiles, retail, and leisure industries have been negatively affected, medical machinery and supplies, pharmaceuticals, information-technology-enabled services, logistics, and some media have been less impacted or grown in importance. Reviewing also involves identifying emerging competitive segments that may arise from the global value chain/FDI footprint remapping. Not all countries will have new opportunity sectors. However, near-shoring will create prospects for countries that have not previously been significant FDI destinations, but are located close to major markets. This exercise should also be used to consider segments that are the best fit for other national objectives (e.g., sustainable, green growth, Industry 4.0 sectors). Countries do not evaluate their FDI strategies very frequently. Doing it now requires thinking bigger than a pandemic response and considering other pressing considerations. - Once identified, the priority segments should be confirmed. This entails prioritizing the activities of ministries and agencies responsible for business registration and operations (including licenses, work permits, visas, incentives administration), with IPAs ensuring coordinated action. - Governments should then implement FDI policy reforms to further improve the value propositions of current and emerging priority segments. This may require (i) phasing out any crisis-related screening mechanisms; (ii) aligning the incentive regime with the new target segments; and (iii) reviewing international investment agreements and laws to address problematic issues raised by the pandemic (e.g., clarity of rights and obligations in force majeure situations). Governments should also consider establishing investor-state grievance mechanisms to capture issues before they escalate into legal disputes. - Lastly, countries should promote new segments, with IPAs undertaking investor outreach and facilitating investments. In countries without new opportunities, the work of IPAs should focus on aftercare throughout the recovery phase. Attracting new projects requires new strategies incorporating digital marketing techniques, virtual meetings and virtual site visits. Over time, this will require IPAs to adjust their performance indicators (KPIs) and mix of investor services. Adapting to the new sectoral landscape, bolstering investor confidence and clarifying governments’ ability to develop legitimate policy responses will fortify the key role of FDI in the post COVID-19 recovery and national development agendas. ------------------------------ * <#m_-8895240315909854351__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 series.* ** <#m_-8895240315909854351__ednref2> Ivan Anton Nimac ([log in to unmask]) is Global Lead for Investment Policy and Promotion at the World Bank Group. The views expressed here are his own. The author would like to thank Gary Gereffi, Sebastian Reil and Douglas Van den Berghe for their helpful peer reviews. [1] <#m_-8895240315909854351__ednref3> Team research of the Investment Climate Unit, World Bank Group, July 2021. [2] <#m_-8895240315909854351__ednref4> OECD, *Acquisition- and Ownership-related Policies to Safeguard Essential Security Interests* (Paris: OECD, 2020) <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b628bdf470&e=763bcf158c>, Section 2.1.1. [3] <#m_-8895240315909854351__ednref5> World Bank, *Global Investment Competitiveness Report 2017/18* (Washington D.C.: WBG, 2018) <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=6edfc97939&e=763bcf158c>, p. 20. [4] <#m_-8895240315909854351__ednref6> World Bank, “The initial responses of investment promotion agencies to Covid-19 and some observed effects on FDI” (Washington, D.C.: WBG, 2020) <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=23d531c834&e=763bcf158c> . *The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Ivan Anton Nimac, ‘COVID-19 and FDI: How should governments respond?’ Columbia FDI Perspectives, No. 288, October 5, 2020. Reprinted with permission from the Columbia Center on Sustainable Investment (**www.ccsi.columbia.edu* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=12afb894fc&e=763bcf158c>*).” 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, Riccardo Loschi, [log in to unmask] *Most recent Columbia FDI Perspectives* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=8996c67f65&e=763bcf158c> - No. 287, Florence Dafe and Zoe Williams, ‘Explaining the rise of third-party funding in investment arbitration,’ September 21, 2020 - No. 286, George A. Bermann, N. Jansen Calamita, Manjiao Chi, and Karl P. Sauvant, ‘Insulating a WTO Investment Facilitation Framework from ISDS,’ September 7, 2020 - No. 285, Sarah Atkinson and Jessica Hanson, ‘Corporate inversions and FDI in the United States,’ August 24, 2020 *All previous FDI Perspectives are available at * *http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9a4e28c69b&e=763bcf158c> *. * *Other relevant CCSI news and announcements* - CCSI announces a *call for papers* for the 2020 edition of the Yearbook on International Investment Law and Policy. Original contributions to be considered for publication in the Yearbook will be accepted on a rolling basis until *February 28, 2021.* More information can be found here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=362a4743a8&e=763bcf158c> . - *On October 13, 2020*, join CCSI, FAO, Global Donor Platform for Rural Development, International Land Coalition, IFAD, Land Portal, and Welt Hunger Hilfe for a Committee on World Food Security (CFS) High-Level Special Event on Strengthening Global Governance of Food Security and Nutrition. See further details, including registration link, here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=06e129466e&e=763bcf158c> . - *On October 15, 2020*, CCSI, RMF (Responsible Mining Foundation), Pact, University of Delaware, and UN Sustainable Development Solutions Network (SDSN) are co-hositng "Mining & the SDGs: ASM and LSM Perspectives." For more information, and to register, please see our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=beda79541a&e=763bcf158c> . 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 © 2020 Columbia Center on Sustainable Investment (CCSI), All rights reserved.* [log in to unmask] *Our mailing address is:* Columbia Center on Sustainable Investment (CCSI) Columbia Law School - Earth Institute, Columbia University 435 West 116th Street New York, NY 10027 Add us to your address book <https://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> unsubscribe from this list <https://columbia.us6.list-manage.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&e=763bcf158c&c=5f30ac00d8> update subscription preferences <https://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=763bcf158c> [image: Email Marketing Powered by Mailchimp] <http://www.mailchimp.com/email-referral/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=referral_marketing&aid=ab15cc1d53&afl=1> ------------------------------ Spam <https://antispam.law.columbia.edu/canit/b.php?c=s&i=013Ag5qQz&m=4bbc744d2d35&t=20201005> Not spam <https://antispam.law.columbia.edu/canit/b.php?c=n&i=013Ag5qQz&m=4bbc744d2d35&t=20201005> Forget previous vote <https://antispam.law.columbia.edu/canit/b.php?c=f&i=013Ag5qQz&m=4bbc744d2d35&t=20201005> -- *Karl P. 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JGH 825, New York, NY 10027 | p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | w: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "Insulating a WTO Investment Facilitation Framework from ISDS", "A G20 Facility to Rekindle FDI Flows", "Enabling the Full Participation of Developing Countries in Negotiating a WTO Investment Facilitation Framework", "Concrete Measures for a Framework on Investment Facilitation for Development", "Making FDI more Sustainable", "Facilitating Sustainable FDI by...", "An International Framework to Discipline Outward FDI Incentives?", "The Case for an Advisory Centre on International Investment Law", "An Advisory Centre on International Investment Law: Key Features", "Incentivizing Sustainable FDI: The Authorized Sustainable Investor", "The Potential Value-added of a Multilateral Framework on Investment Facilitation for Development", "International Investment Facilitation: By Whom and for What?", "Towards an Investment Facilitation Framework: Why? 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