project progress report

IFD Project , Fifth Quarterly Progress Report, (September-December 2002)

  Introduction
Progress of the Project
Plans for Next Quarter
Problems and Solutions

1.             Introduction

1.1.    This is the fifth Quarterly Progress Report (September-December 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’. It was decided at the project interim meeting held at New Delhi on 25^th November 2002 that this report would be brought in line with the calendar year. The fifth quarterly report, therefore, covers a period of four months, that is, September to December 2002.   

1.2.    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.  

1.3.    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.

1.4  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.

1.5 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.

1.6  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.  
·        Sanjib Pohit of NCAER, New Delhi, prepared India Report B.  
·        The first round of NRG meetings was 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.

1.7  During the fourth quarter (June to August 2002), the following developments took place:  

·        Laveesh Bhandari of Indicus Analytics, New Delhi took over as core researcher of the IFD project. The change was made in consultation with the PAC.  
·        Final reports A were received from each project partner.  
·        Draft reports B were received from Bangladesh, India and South Africa.  
·        The previous core researchers of the project prepared the draft synthesis report that has been circulated for comments. ·        The second round of NRG meetings was held in Bangladesh, Brazil, India and South Africa.  
·        The third issue of IFD newsletter on the theme of Mergers and Acquisitions (M&A) was published.  
·        The third quarterly electronic newsletter for the period April-June 2002 was circulated.  
·        A briefing paper entitled ‘Regulating Corporate Behaviour’ was published.  
·        A monograph entitled ‘Foreign Direct Investment in Developing Countries: What Economists (Don’t) Know and What Policymakers Should (Not) Do!’ was published.  
·        Ms. Sanchita Chatterjee represented CUTS for the second NRG meeting in Bangladesh held on 08th August 2002.  

2.          Progress in the Fifth Quarter (September-December 2002)  

2.1 Report B

2.1.1 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. 

2.1.2 Draft reports B have been received from all project countries except Zambia.

2.1.3 Draft report B is expected from Zambia in January 2003. All the draft reports B are also available on our website www.cuts-international.org/ifd-cr-lm-htm.

2.2 National Reference Group (NRG) Meetings

2.2.1 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. 

2.2.2 The second round of NRG meetings have been held in all project countries except Zambia. During the quarter, the second NRG meeting was held at Budapest, Hungary on 12th September 2002. 23 members of the NRG met to discuss foreign direct investment and its role in the Hungarian economy. The second NRG meeting of Tanzania was held on 20 November 2002 in Dar-Es-Salaam. The meeting was attended by 40 people and discussed the findings of civil society and investors’ surveys in Tanzania.  

2.2.3 The report of the second NRG meeting of Bangladesh, held in the previous quarter on 8 August 2002.  

2.2.4 The second NRG meeting of Zambia would be held in January 2003.  

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

2.3 Regional Seminars

The project envisaged organising three regional seminars, one in South Asia, one in East Africa and one in Latin America in collaboration with UNCTAD. The main aim of the regional seminars was to build capacity in civil society on investment issues using the project results. The discussions would centre on economic and political issues relating to FDI so as to enable them to better understand national, regional and international rule making in this area. During the quarter, all the three regional seminars were organised at Nairobi, New Delhi and Sao Paulo respectively. The agenda for these meetings was finalised in consultation with UNCTAD. 

2.3.1 The Africa regional seminar was held on 18-19 October 2002 at Nairobi, Kenya in collaboration with UNCTAD and EcoNews, Africa. Project partners from South Africa, Tanzania and Zambia presented their findings before the participants. FDI policies and practices, global regional trends and corporate social responsibility were discussed in addition to private investment in public services and WTO negotiations on investment. Participants came from all over Africa, and represented civil society, policymakers and academia. 

2.3.2 The Asia-Pacific regional seminar was held on 24-25 November 2002 at New Delhi, India in collaboration with UNCTAD. In addition to the project partners from Bangladesh and India, project researchers and civil society representatives from Asia-Pacific region and representatives of the government also participated. Partners from Bangladesh and India presented their findings from the project. 

2.3.3 The Latin America regional seminar was held on 04-05 December 2002 at Sao Paulo, Brazil in collaboration with UNCTAD and CAMPINAS. The participants were all from the Latin American countries. The project partner from Brazil presented his findings.

2.4 Interim Meeting

The interim meeting held at New Delhi, India on 25th November 2002 provided an opportunity for project participants to take stock of achievements in the project so far and to plan ahead. All the partners, Project Advisory Committee (PAC) members, consultants, core researcher and representatives from DFID and UNCTAD participated. It provided an opportunity to partners to discuss and debate with the PAC members on the quality and content of the reports, take on board regional reactions, suggest how process could be improved for the next year, how networking and advocacy could be effectively conducted regionwise and how reports could be compiled in useful and interesting ways. 

2.5 Third Project Advisory Committee Meeting

The Project Advisory Committee (PAC) of the IFD project met at New Delhi on December 25 2002 for the third PAC meeting under the project. This Committee, comprising of investment experts from around the world, discussed the progress of the project and the way ahead.

2.6 Outreach

2.6.1 On 26 November 2002 a Research Seminar on Foreign Direct Investment and Development – the Policy Dimension was held. The aim was to discuss country experiences of national policies and development benefits of foreign direct investment (FDI), common concerns regarding national policies and, researchers’ opinions on bilateral investment treaties (BITs) and international investment agreements (IIAs) based on their research and studies. The countries represented by researchers were Bangladesh, India, Sri Lanka, Nepal, Philippines, Hungary, South Africa, Tanzania, Zambia and Brazil. 

2.6.2 Taking advantage of the presence of a large number of civil society representatives, researchers, academia, media and policy makers from the Asia Pacific region, a one-day seminar on the ‘State of Competition Policy and Law in the Asia Pacific region’ was also organised on 26th November 2002 at New Delhi. This could be managed at a little extra cost. The seminar focussed on the competition scenario in the Asia Pacific region, the international challenges in competition and the regional and multilateral approaches towards competition policy and law. Many research and consumer organisations from various countries like Australia, Bangladesh, Fiji, India, Indonesia, Japan, Kenya, Malaysia, Nepal, Sri Lanka etc. participated in the conference. Presentations were also made by FEMAG, an Australian pro-competition group, which has worked in the area of competition in Philippines, Vietnam and other southeast Asian countries. 

2.6.3 The regional seminars were announced not only on our website and publications but also in Bridges. These seminars evinced a lot of interest and CUTS received quite a few requests from various people who wanted to attend the same. In every regional seminar, there were a few people who attended the proceedings on their own. 

2.6.4 The August 2002 issue of IFD newsletter received a good response. The theme for this issue was Investment and the Environment. Contributions were received from the Bangladesh and Tanzania project partners. 

2.6.5 The fourth and fifth issues of the quarterly electronic newsletter for the period July-September 2002 and October-December 2002 respectively were circulated. 

2.6.6 A briefing paper entitled ‘Multilateral or Bilateral Investment Negotiations? Where can Developing Countries Make Themselves Heard?’ has been published. It explores the current state of international law of the protection of foreign investment and discusses the pros and cons of multilateral negotiations on investment. 

2.6.7 Rajan Gandhi represented CUTS at the 2002 conference of the OECD Global Forum on International Investment (GFII) at Shanghai, China, on 5-6 December 2002. The Chinese Ministry of Foreign Trade and Economic Co-operation hosted the event. He also attended the meeting of the OECD Emerging Asia Investment Policy Initiative on 06th of December 2002. Rajan also presented two papers at the conferences. After the conference, CUTS has received queries evincing interest in the IFD project.

2.6.8 During the Asia-Pacific regional seminar held at New Delhi, a press conference was organised. Karl Sauvant, Director, Investment, Technology and Enterprise, UNCTAD, Christian Rogg, Investment Climate and Competition team, DFID and Pradeep S. Mehta Secretary General CUTS participated. The press conference received wide coverage in the press.

2.7 Project related travel

2.7.1 Since Tanzania was lagging behind in the report B, Sanchita Chatterjee of CUTS visited the project partner in Dar es Salaam on 17th November 2002 to hold discussions.  

2.7.2 The independent researcher in Zambia also did not deliver the report B and could not be contacted. Rajeev Mathur of CUTS visited Lusaka between 11-15 November 2002 to make alternative arrangements. Another researcher was selected and appointed. He was briefed on the ‘way forward.’ Report B is expected by the end of January 2003.

3.       Plans for the Sixth Quarter (January-March 2003)

3.1 National Reference Group (NRG) meetings

3.1.1 The second NRG meetings would be held in Zambia sometime in January 2003.  

3.1.2 The third NRG meeting has been fixed in Bangladesh for 05th January 2003 at Dhaka.  

3.1.3 All project countries would hold their third NRG meetings by the end of February 2003.  
 

3.2 Report B

3.2.1 The only pending report B from Zambia is expected by the middle of January 2003. 

3.2.2 All other project partners would finalise the reports B by the middle of January 2003.  
 

3.3 Report C

Report C would cover discussions at all three NRG meetings, analysis of the key areas of debate and prioritised policy recommendations. Reports A and reports B 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 would 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. By the end of February 2003, report C is expected from all project partners.

3.4 Synthesis Reports

3.4.1 Synthesis Report A based on all seven-country report As, is being revised by the IFD Core Researcher Laveesh Bhandari as per the terms of reference.  

3.4.2 Bhandari will also prepare Synthesis Report B based on all the seven country report Bs. 

3.4.3 The other two synthesis reports will be prepared by Suman Bery of National Council for Applied Economic Research (NCAER), New Delhi and David Ongolo, a Research Advisor for CUTS Africa Resource Centre, Lusaka, Zambia. Suman Bery will would prepare a report on Large Emerging Economies: India, Brazil and South Africa, and David Ongolo would prepare a report on Least Developed Countries: Bangladesh, Tanzania and Zambia.
 

3.5 Publications

In addition to the IFD newsletter ‘Investment for Development’ and the electronic newsletter, it is planned to publish the following during the quarter:

3.5.1 Monographs:

3.5.1.1 ‘ABC of FDI’ that would take up some myths of FDI and will seek to dispel them using examples and empirical data.

3.5.1.2 The Home Country Role in promoting FDI.

3.5.2 Briefing Papers:

3.5.2.1 Public-Private Partnership: How successful?

3.5.2.2 Policies that Really Attract FDI

3.5.2.3 FDI in Mining and the Environment

3.5.2.4 Investor-State Disputes.

4.        Problems and Solutions  

4.1 Due to survey fatigue, all the researchers were finding it difficult to conduct the investor surveys. It was felt that without adequate number of responses, samples would not be representative. The investor surveys were envisaged to determine investors’ perceptions that would eventually help in drafting a set of policy recommendations. The issue was discussed at the third Project Advisory Committee meeting held on 25th November 2002. It was decided not to pursue the investor surveys.  

4.2 The partners were requested to approach their respective Investment Promotion Agencies for collecting material for failed investments. At the same time, it was decided to extend the civil society survey to cover at least 50 responses.  

4.3 Some errors were pointed out in the research reports. It was decided to seek help of country experts for accuracy.  

4.4 The alternative independent researcher at Zambia also abandoned the project and is not responding to any communication. To make up for the lost time, CUTS has engaged a full-time researcher at Lusaka, Zambia.  

4.5 Some factual inaccuracies were found in some of the research reports. It was decided to have them vetted by some country experts in all countries.