project progress report

IFD Project , Second Quarterly Progress Report, (December- February 2002)

Introduction

Progress of the project

Plan for the third quarter

Problems & Solutions

1.      Introduction

1.1  This is the second report of the project titled “Investment for Development: Awareness and Capacity-Building on Investment Regimes and International Investment Issues in Selected Developing Countries and Transition Economies.” The project, popularly known as Investment for Development (IFD), is being implemented by Consumer Unity and Trust Society (CUTS), Jaipur. The Department for International Development (DFID), UK is supporting the two-year project. UNCTAD is providing support for the project in terms of information resources and advice and is also guiding the project through their representation on the Advisory Committee. Seven countries, Bangladesh, Brazil, Hungary, India, South Africa, Tanzania and Zambia have been selected for the purpose of the study.

1.2  The main objectives of the project are:

·     Assist project countries to design and implement effective investment policies that will contribute to equitable growth, development and poverty reduction;

·     To delineate measures that will help developing countries, in general, and selected countries, in particular, to construct an environment that stimulates domestic and foreign direct investment;

·     Contribute to the assessment of needs and formulation of negotiating strategies for developing countries for discussions on investment issues at the regional and multilateral levels;

·     Raise awareness and stimulate national debate on investment issues;

·     Build capacity in civil society on investment issues;

·     Encourage a participative policy-making process for investment issues;

·     Raise awareness of the impact of competition policy and sectoral regulatory policies on attracting beneficial investment;

·     Encourage “good regulation” or “re-regulation” rather than just deregulation;

·     Dampen competition for investment between countries;

·     Arrest reductions in labour, environment and other standards – the ‘race to the bottom’ – phenomenon, by examining and disseminating information on the relationship between standards and investment, and

      Encourage cooperation, information sharing and joint initiatives across countries on investment issues.

1.3 During the first quarter of the project (September 2001 to November 2001), institutions in the project countries were identified as partners in the project. A working draft Operational Strategy Note was prepared and sent to all concerned. A Project Advisory Committee (PAC) comprising of international experts including policy makers, representatives of international organisations, academia and other civil society groups was set up to guide the design and implementation of the project. Two core researchers, both from the Indian Institute of Management, Ahmedabad, have been appointed to contribute to research design, prepare two synthesis reports based on country research reports A and B respectively, contribute articles and participate in the project meetings. Two consultants have been engaged on the basis of their interest and ability and their commitment to the fulfilment of the project goals. Draft project reports from four of the seven country partners were received.

II. Progress of the project

2.1 Contracts

2.1.1 The contracts have been received from all project partners except Centre for Policy Dialogue (CPD), Bangladesh. CPD has left the project for their own reasons. Possibly they are overloaded and the IFD project is too small for them. CUTS is now negotiating with Bangladesh Enterprise Institute. Draft report A has been prepared by the CPD but has not been finalised on the basis of the comments of the core researchers and CUTS. The first NRG has also not been held in Bangladesh. We are hopeful of resolving the issue shortly. UNCTAD and PAC would be consulted before finalisation.

2.1.2 In Zambia, Stephen Muyakwa, the independent researcher suddenly informed us on 31^st January 2002 that it would not be possible for him to carry on with the project though he had signed a contract with us.  We are now negotiating with a suitable substitute so that the report A is finalised and the first NRG held.

2.2 Report A

2.2.1 Draft report A has been received from all the seven project countries. The reports from Bangladesh, Brazil and South Africa are available at our website 

2.2.2 Comments from CUTS and the core researchers on each of the reports have been forwarded to the researchers for finalising report A.

2.2.3 Final report A has been received from India and is expected shortly from South Africa, Hungary and 
        Tanzania.

2.3 Partners Meeting

2.3.1 A meeting of partners of the project was held on 12^th December 2001 at Jaipur, India. All partners except Bangladesh, Tanzania and India attended the meeting. Minutes of the meeting are available at our website.

2.3.2 Aims of the project at national, regional and international levels were discussed. The basis of selection of project countries was shared with the partners so that they could keep the overall perspective in view. The purpose of the launch meeting (held on 13-14 December 2001) was also shared with the participants.

2.3.3 The partners wanted to know more details of the NRG meetings and the country reports. Representatives from South Africa, Brazil and Zambia expressed doubts on holding the NRG meetings in January 2002 due to country-specific events/problems. They were informed that as long as the overall time schedule is adhered to, such delays would not cause a problem.

2.4 Launch Meeting

2.4.1 The launch meeting of the project was held at Jaipur, India on 13-14 December 2001. Minutes of the meeting are available at our website.

2.4.2 The meeting brought together international experts and eminent personalities to discuss aims and scope of the project, debate on current investment issues and decide on future project activities. Researchers from the seven countries presented preliminary reports on investment regimes in their countries.

2.4.3 On the first day, some of the key issues for the developing countries with respect to investment were discussed which were investment and development, civil society concerns and investment environment. On the second day, the participants discussed international investment agreements and the project methodology.

2.5.1 First PAC Meeting

2.5.1.1 Members of the IFD PAC met informally in Jaipur, India on 15^th December 2001 after the launch meeting, to refine the project planning documents and discuss the role of the PAC members to ensure that their participation in the project is as rewarding as possible. Minutes of the meeting are available at our website.

2.5.1.2 The members discussed the project aims and objectives. The importance of the perceptions of Foreign Direct Investment (FDI), quality control of the project outputs and the next phase of the research reports were also discussed.

2.5.2 Second PAC Meeting

2.5.2.1 The second PAC meeting was held on 22^nd January at Geneva, Switzerland. Minutes are at in our website.

2.5.2.2 The main thrust of the discussions was on investor and civil society surveys to be carried out in the next phase of research. A special niche on the civil society perspective was decided to be included in the survey. Participants also cautioned about poor and inadequate response rates to investor surveys conducted so far by various organisations.

2.6 National Reference Group (NRG) Meetings

2.6.1 A list of NRG members was drawn up by CUTS covering parliamentarians, officials from key national and sub-national government ministries, government agencies, business representatives, relevant civil society organisations, academia and media for India. This was then sent to the partners as a model to help them draw up their own NRG composition.

2.6.2 The first round of NRG meetings was held in India, Hungary, South Africa and Tanzania during the quarter. Representatives of CUTS attended all these meetings. Minutes of these meetings are placed/ will be placed in our website.

2.6.3 The first Indian NRG meeting was held at Jaipur on 12^th January 2002. The participants in the meeting discussed and commented on the preliminary report on the investment regime in India prepared by Biswatosh Saha of Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur. They also discussed the FDI policy context in India and international investment issues. The meeting was co-hosted by CUTS and National Council of Applied Economic Research (NCAER), New Delhi.

2.6.4 The first Hungarian NRG meeting was held at Budapest on 29^th January 2002. The discussions centred on the Hungarian preliminary report prepared by Miklos Szanyi of the Budapest University of Economics and Public Administration. Important investment issues in the country are positive impact of mergers and acquisitions (M&A) vis-à-vis greenfield investments, the role of government in regulating FDI, raising levels of productivity in the economy and investment in education in the country.

2.6.5 The first South African NRG meeting was held at Johannesburg on 08^th February 2002. The participants discussed the report prepared by the Institute of Global Dialogue, Johannesburg. Some of the important issues discussed were whether non-government actors have any role in the investment decision-making process in the country, the measures to attract long term beneficial FDI to South Africa and whether there is a negative perception of FDI in South Africa.

2.6.6 The first Tanzanian NRG meeting was held at Dar-es Salaam on 27^th February 2002. The participants discussed the preliminary report prepared by Lorah Madete of ESRF. In this context, two separate reports on investment, one on mainland and the other on Zanzibar Island were presented at the meeting. These reports covered various factors such as import substitution policy, role of private sector and general attitude towards FDI in the country.

2.6.7 The Brazilian NRG is scheduled for 12^th March 2002.

2.7 Outreach

2.7.1 The second issue of ‘Investment for Development,’ a quarterly newsletter was published during the quarter and is available in our website. The newsletter contains an update on the project, highlights from the research, relevant articles and selected news items on investment issues. The project partners were encouraged to contribute by writing articles for the newsletter.

2.7.2 A quarterly electronic newsletter was also circulated in December 2001 and a hardcopy is available in our website.

2.7.3 An attractive poster on the project was designed and circulated widely.

2.7.4 The project attracted publicity in the local media of India.

2.7.5 Pradeep S. Mehta, Secretary General of CUTS attended a Meeting on Investment on 21-24 January 2002 at Geneva. The meeting was organised by UNCTAD.

2.7.6 Pradeep also participated in the Global Forum on International Investment at a Conference on FDI and Environment at Paris on 7-8 February 2002. The conference was organised by OECD.

2.7.7 A section of CUTS website has been dedicated to the project and is regularly updated with progress reports and other news items. Most reports are available to download from the site.

2.8 Other issues

2.8.1 The draft Operational Strategy Note was circulated to all PAC members for comments and suggestions for improvement. Since there were no suggestions, the draft OSN has been treated as final and put on the web. All concerned have been requested to refer and download the same.

2.8.2 Terms of Reference (TOR) for report B, questionnaires for civil society and investors and for companies based outside the selected countries that are investing or considering investing in these countries were circulated to all the PAC members and core researchers for comments and suggestions. They have been finalised, put on the web and all concerned advised to refer to the same. The TOR and questionnaires are available in our website.

III. Plans for the third quarter

3.1 During the next quarter, it is planned to finalise the partner in Bangladesh after consulting the PAC, organise the NRG and finalise report A. Similarly, in Zambia steps would be taken for organising NRG and finalising report A. It is planned that this exercise would be over by April 2002.

3.2 Final report A from the remaining partners would be received by the end of March 2002. Upon receipt of final report B (July 2002), it is planned to publish report A and report B together country wise.

3.3 The core researchers have started work on compilation of report A (Investment Policy Comparison) and the draft report is expected by the end of March 2002. It would be sent out to the PAC members and revised as necessary on the basis of CUTS and PAC comments and finalised by May 2002.

3.4 Draft report B from all the project partners would be received by April 2002. The second round of NRG meetings are scheduled in May 2002.

3.5 For outreach, the following activities are planned:

·         Second electronic newsletter in March 2002.

·         Third newsletter ‘Investment for Development’ in May 2002.

·         Publication of two briefing papers.

3.6 During the quarter it is planned to draft the terms of reference for reports C and D and to circulate the same to  
      PAC members for comments. The terms of reference would then be finalised and sent to all project partners.

3.7 Five major international events are scheduled after July 2002:

·     A regional seminar each in Africa, Latin America and Asia in collaboration with UNCTAD. The main aim of the seminars is to build capacity in civil society on investment issues using the project results. Each seminar will last two days and the participants would discuss economic and political issues relating to FDI so as to enable them to better understand national, regional and international rule making in this area.

      An interim meeting together with one of the above. This meeting would provide an opportunity for project participants to take stock of achievements in the project and to plan ahead. Partners would present their research results and obtain regional reactions. The project participants would make suggestions on how process can be improved for the second year of the project.

·     A Project Advisory Committee meeting would be held with the interim meeting.

During the quarter, detailed planning for these events would be done.

IV. Problems and Solutions

4.1 The second quarter witnessed the Bangladesh partner and the Zambian independent researcher abandoning the project thereby delaying the first NRG and final report A in those countries.

4.2 As envisaged in the OSN, CUTS has at hand a list of standby partners with whom contact has been established to carry on the research.