Geneva, 16 October 2014 (UNCTAD press release) – Investment Promotion Conference
This year’s highly anticipated Investment Promotion Conference at UNCTAD’s World Investment Forum 2014 tackled the question of how FDI can contribute to infrastructure development and the greening of economies. The conference was organized in conjunction with the World Economic Forum (WEF) and the United Nations Environment Programme Finance Initiative (UNEP-FI).
The Conference took place following the publication of UNCTAD’s World Investment Report 2014, which identified an annual investment gap of $2.5 trillion in developing countries to meet Sustainable Development Goals (SDG). These investment needs will be for basic infrastructure, food security, climate change mitigation and adaptation, health, and education. There is a potential for increased private sector investment contributions to fill this gap, but it will require new policies, incentive schemes, and investment promotion strategies focussed on SDGs.
Discussions centered on innovative national and international options for financing infrastructure and green growth in developing countries as well as conditions and incentives that need to be in place to create a competitive environment for attracting infrastructure and green investment projects. Conference panelists included executives from transnational corporations, insurance companies, pension funds, industry associations, consulting firms, and investment promotion agencies (IPAs).
In the debate on investment in infrastructure, investors emphasized the need for predictable legal and institutional frameworks over the long term. Mr. Pedro Rodrigues de Almeida from the World Economic Forum stated that the perceived risk related to changes in regulations, taxes, and the way that public institutions work influences investment decisions. Mr. Philipp Gerbert from the Boston Consulting Group echoed this observation and said that the biggest disincentive in developing countries is regulatory uncertainty, which is often considered worse than tough regulations. Mr. Dominic Jermey, CEO of UK Trade & Investment, sees in this area an important role for IPAs as problem solvers and promoters of flexibility and dialogue between the public and private sector.
In the debate on the role of FDI in green growth, private sector representatives emphasized the willingness of companies to work on business models that embrace sustainability. Mr. Bernard Mathieu of Holcim mentioned that in the cement industry, sustainability is now considered as a growth value, adding new business activities such as the development of more sustainable housing materials and waste treatment, which are becoming a major part of the companies’ turnover. Mr. Michael Tost from the mining company Vale added that sustainability aspects now contribute to a company’s competitiveness profile.
In response to questions on the approach that should be taken to green the economy, Kimball C. Chen, Chairman of Energy Transport Group Companies, said that it should be seen as a process by all stakeholders with mid-term targets of becoming “greener” and with “green” as the end goal. It was said that IPAs will play a critical role in this course and require a paradigm shift with an emphasis on reaching SDGs. Mr. Francisco Gonzalez, Director General of ProMexico, explained that such a change is needed and that the business as usual approach will not suffice.
To encourage the exchange of experiences by IPAs in promoting SDGs, UNCTAD’s World Investment Forum 2014 also hosted a workshop on the Geneva Cleantech Cluster organized in cooperation with the Geneva Economic Development Office and the Office for the Promotion of Industries and Technologies.