The Importance of a Team Approach to Investment Promotion

01 August 2016 Category: Topical Review

Global and regional markets for foreign investment are now significantly more competitive than ever before. It is critical for any location that aspires to attract (and retain) new foreign investment to ensure that its investment promotion arrangements are coherent and effective, ensuring that the different participating agencies complement each other, capitalize on any synergies, and avoid sending out potentially confusing or even conflicting messages to potential investors.

The successful attraction of FDI is never the achievement of a single body. It requires the coordination of many public and private stakeholders. The concept of working across agencies and institutions has become increasingly important in public management theory and practice, reflecting the need to combat the increased complexity and fragmentation increasingly found in this area nowadays. The need for more coordination has become a focal issue. A commonly held notion is that working across organizational and political/administrative boundaries enables more efficient and effective policy development and implementation and service delivery.

Potential foreign investors often draw conclusions regarding how important investment is to a government by observing how well coordinated and effective the efforts in place to facilitate and attract investment are, and, from that, infer how likely their venture is to succeed in such a location. Any perception of overly-complicated or even confused institutional arrangements can be interpreted as increasing the commercial risk of operating in such environments. Conversely, the evidence suggests that higher levels of coordinated support and assistance in place typically bring into the economy higher levels of investment. The attraction set-up and operation of investments always requires coordination of many public and private stakeholders covering various economic sectors and many areas of government involvement.
The Philippines presents an interesting example of how one country approached and implemented effective investment promotion networks. In 2009 the Government set up a steering committee to oversee the formulation of a new Philippines Investment Promotion Plan (PIPP). Up to that time, although the Board of Investments (BOI) was nominally the country’s main investment promotion body, it played little role in coordinating and monitoring investment promotion activities across the array of other promoting bodies active across the Philippines. The PIPP was designed to serve as a handbook for all organizations involved in promoting the entire Philippines as an investment destination.

The PIPP is powered by Team Invest Philippines, which is composed of all Invest Promotion Agencies put together to broaden locational assistance and obtain the best capital returns for potential investors. The steering committee governs the team and it is composed of the heads of each of the IPAs. A key function of the committee is designing and taking key strategic decisions. Below the steering committee there is a technical working group that supports the steering committee and is composed of the operational heads of the IPAs offices concentrated on investment promotions/marketing. The BOI acts as the secretariat.

The IPAs are grouped into three main clusters to better assist the foreign investors coming to the Philippines – (a) manufacturing and logistics, (b) tourism, and (c) agribusiness. By working together under the same cluster group, IPAs avoids sending mixed signals to investors. As part of the effort to improve investment promotion, the Philippines government stripped the BOI of its regulatory responsibilities in 2012, transferring them to another government agency, thus refocusing the BOI as a dedicated IPA for investor outreach, investment facilitation, and aftercare.

The PIPP is regarded as having been successful in establishing the country as one of the major investment destinations in Asia, and it succeeded in harmonizing the Philippines’ efforts into a cohesive and effective investment promotion effort.