project progress report

IFD Project , Fourth Quarterly Progress Report, (June-August 2002)

1.         Introduction

1.1.   This is the fourth Quarterly Progress Report (June-August 2002) 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, which is popularly known as ‘Investment for Development’ (IFD), is being implemented by Consumer Unity & 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 PAC. Seven countries, Bangladesh, Brazil, Hungary, India, South Africa, Tanzania and Zambia have been selected for the purpose of the study.

1.2.    The 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 (September–November 2001) quarter of the project following developments took place.

•        Institutions in the project partner countries were identified as partners in the project.

•        Operational Strategy Note (OSN) was prepared and sent to all concerned.

•        A Project Advisory Committee (PAC) was set up to guide the design and implementation of the project.

•        Two core researchers both from the Indian Institute of Management, Ahmedabad were appointed.

•        Terms of Reference (TOR) Report A was prepared and sent to all concerned for their reference.

•        Two consultants were engaged on the basis of their interest and ability and their commitment to the fulfillment of the 
   project goals.

•        Draft project reports (Report A) from four of the seven country partners were received.

1.4. During the second (December 2001–February 2002) quarter of the project following developments took place:

•         Draft Report A was received from all partner countries.

•         Final Report A was received from India.

•         The launch meeting of the project was held at Jaipur, India on 13-14 December 2001.

•         A meeting of project partners was held on 12 December 2001 at Jaipur.

•         First PAC meeting was held in Jaipur, India on 15 December 2001 and the second PAC was held on 22 January 
    2002 at Geneva, Switzerland.

•         The first round of National Reference Group (NRG) meetings were held in India, Hungary, South Africa and Tanzania 
    during the quarter.

•         Terms of Reference (TOR) for Report B was prepared along with the questionnaires for civil society, investor and local 
    businesses and sent to all concerned.

•         Centre Policy Dialogue, the Bangladesh partner, opted out of the project for their own reasons. Negotiations were 
    under progress with Bangladesh Enterprise Institute in Dhaka.

•         The Zambian researcher Stephen Muyakwa withdrew from the project. No reasons for the withdrawal were cited.

1.5.    During the third (March-May 2002) quarter of the project following developments took place:

•         In Bangladesh, Bangladesh Enterprise Institute (BEI), Dhaka signed the contract with CUTS as IFD project partner in 
    Bangladesh.

•         In Zambia, Gideon Mudenda took over as the independent IFD researcher.

•         Final Reports A were received from Brazil, Hungary, India, South Africa and Zambia.

•         The Terms of Reference (TOR) of Synthesis Report A was prepared and sent to core researchers and PAC 
    members.

•         Draft Synthesis Report was prepared by IFD core researchers and sent to PAC members for their comments.

•         The Terms of Reference (TOR) of Report B was prepared and sent to all country partners.

•         India Report B was prepared by Sanjib Pohit of NCAER, New Delhi.

•         The first round of NRG meetings were held in Bangladesh, Brazil and Zambia during the quarter.

•         The second quarterly electronic newsletter for the period January-March 2002 was circulated.

•         IFD E-Forum was launched as an online discussion forum on investment issues.

•         A briefing paper entitled ‘Foreign Direct Investment in India and South Africa: A Comparison of Performance and 
    Policy’ was published by CUTS.

•         Terms of Reference (TOR) of Report C was prepared.

2.          Progress in the Fourth Quarter (June-August 2002)

2.1.         Core Researcher

2.1.1.      Laveesh Bhandari of Indicus Analytics, New Delhi has signed a contract with CUTS as core researcher of the IFD 
  project. The change was made in consultation with the PAC.

2.2.         Report A

2.2.1.      Report A has been finalised by each country partner after incorporating the comments received from CUTS and the first 
  NRG meeting participants of the respective country.

2.1.2.     Final reports A have been received from all partner countries: Bangladesh, Brazil, Hungary, India, South Africa, Tanzania  
 and Zambia. They are available on our website www.cuts-international.org/ifd-cr-lm-htm

2.3.        Synthesis Report

2.3.1.    The previous core researchers of the project prepared the draft Synthesis Report, which was sent to the PAC for their comments. The report identifies areas of similarity and contrast in investment policies of partner countries.

2.4.        Report B

2.4.1.    Report B (Performance and Perceptions Report) studies the relationship between policy, perceptions and performance 
through selected case studies. It would be a reader-friendly and a non-technical document. The report will draw on secondary sources and the data from three surveys that will be conducted by each of the partners. The surveys are conducted on civil society, local businesses and domestic subsidiaries of transnational corporations (TNCs). CUTS will also carry out interviews on companies based outside the selected countries.

2.4.2.      All partner countries are preparing Report B. Draft Report B is received from Bangladesh, India and South Africa.

2.4.3.      Hungarian sector case studies for Report B have been received.

2.4.4.      All the draft Reports B and Hungarian sector studies are also available on our website www.cuts-international.org/ifd-cr-lm-htm.

2.4.5.      All the other drafts of Report B are expected soon from Brazil, Hungary, Tanzania and Zambia.

2.5.        National Reference Group (NRG) Meetings

2.5.1.    A major component of the project is to constitute a NRG in each project country for conducting periodic consultative meetings. It includes representatives of the civil society, government and media. For more information kindly refer to Operational Strategy Note (OSN). The purpose of constituting NRG is to provide a sounding board and quality check on the research outputs.

2.5.2.    The second round of NRG meetings were held in Bangladesh, Brazil, India and South Africa in this quarter.

2.5.3.    The India second NRG meeting was held on 9^th June 2002. The participants besides discussing Report B also discussed investment & competition at the WTO-India’s approach, regulatory reforms and FDI, FDI in India, FDI and infrastructure sector and civil society concerns of FDI.

2.5.4.    The Brazil second NRG meeting was held on 28^th June 2002. Besides discussing Report B, the participants had a panel discussion on ‘The Access of Mercosur’s Exports to the European Market’.

2.5.5.    The second South Africa NRG was held on 5^th July 2002. Among the discussions that took place were FDI in South Africa, sector studies (automobile & components, telecom & food and beverage), the use of FDI for developmental purposes, and strategies to be adopted to attract greater FDI inflows in three sector studies.

2.5.6.    The second Bangladesh NRG meeting was held at Dhaka on 8^th August 2002. Bangladesh sector studies (RMG and textiles, cement and telecom) under report B and policy implementation in Bangladesh were discussed. (The NRG meeting report is yet to be received)

2.5.7.      All the NRG reports are available on our website www.cuts-international.org/ifd-indx-htm

2.6.         Outreach

2.6.1.    The May issue of IFD Newsletter received a good response. The theme for this issue of the Newsletter was Mergers and Acquisitions (M&A). Contributions of articles for this issue were received from the Indian, South African, Brazilian and Hungarian researchers.

2.6.2.    The third issue of quarterly electronic newsletter for the period April-June 2002 was circulated.

2.6.3.    A briefing paper entitled ‘Regulating Corporate Behaviour’ has been published by CUTS. It discusses the background and necessity of codes of conduct for multinational corporations.  It argues for mandatory codes for MNCs.

2.6.4.   A monograph entitled ‘Foreign Direct Investment in Developing Countries: What Economists (Don’t) Know and What Policymakers Should (Not) Do!’ was published during the quarter. The paper discusses determinants and the impact of FDI, and effectiveness of FDI policies in attracting a higher FDI.

2.6.5.    Ms Sanchita Chatterjee represented CUTS for the second NRG meeting in Bangladesh held on 8 August 2002. Bangladesh sector studies (RMG and textiles, cement and telecom) under Report B, and various policy issues in the country were discussed in the meeting.

2.6.6.    The ‘Investment for Development’ project has made a good impact considering the responses to its publications and events. Regular inquiries about the project are received individuals and organisations. A number of queries are being received about the Africa regional seminar scheduled to be held in Nairobi, Kenya on 18-19 October 2002.

3.       Plans for the Fourth Quarter (September-November 2002)

3.1.    The second round of NRG meetings are scheduled to be held in the following     partner countries:

Hungary: 12 September 2002
Tanzania: Date yet to be decided
Zambia: 10 October 2002

3.2.        Report C

3.2.1.    Report C is to be prepared as a separate document covering the discussions at all three NRG meetings including minutes of the meeting, background and analysis of key areas of debate, prioritised policy recommendations emerging from the meeting reflecting priorities. Reports A (FDI policy report) and B (FDI performance and perceptions report) would act as a base for Report C. Report C would contain list of actions/recommendations for government, civil society and IGO’s. The report will be a reader friendly document with clear policy recommendations and action points for the stakeholder groups reflecting consultation with but not necessarily endorsed by all stakeholders.

3.3.      The Synthesis Report A will be finalised on the basis of comments received by CUTS and PAC members. The final report 
 will be available on our website.

3.4.     As part of the IFD project, CUTS will hold three regional seminars in Asia, Africa and Latin America in collaboration with UNCTAD. The Africa Regional Seminar is being planned on 18-19 October in Nairobi, Kenya in collaboration with Eco News Africa (ENA). The purpose of the seminar is to reach out to civil society of Africa on investment issues. The Asia Regional Seminar is scheduled to be held in New Delhi on 25-26 November 2002.

4.        Problems and Solutions

4.1.     IFD core researchers Rakesh Basant and Sebastian Morris have withdrawn from the project. Mr Laveesh Bhandari of Indicus Analytics, New Delhi has now taken over as the core researcher of the IFD project. The change was effected in consultation with the PAC. \

4.2.     A little error has been noted in the OSN regarding the time of preparing Report C. The OSN mentions Report C is to be prepared after the second NRG meeting. But it is felt that Report C will be finalised after the third NRG meeting and the TOR has been made accordingly. An explanatory note has been sent to all concerned about the matter.

4.3.    In Tanzania, the researcher Lorah Madete has left The Economic and Social Research Foundation (ESRF), Tanzania for US. She was the main contact person. We are in touch with ESRF for providing a suitable substitute.