Working Group on Investment Policies and Promotion:Mitigating Risks and Seeking New Opportunities

19pm-20 March 2013

Assessment of investment policies in the MENA region

Marie-Estelle ReySenior Policy Analyst, MENA-OECD Investment Programme

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MENA-OECD background paper:Assessment of MENA countries investment policies

• On-going monitoring exercise• Based on available information, data and comments provided by

countries and analytical carried out in co-operation with countries. Based on the PFI and BCDS methodologies

• Covers 18 countries• Topics:

Investment regimes Restrictions Approval procedures Admittance of foreign personnel Transfer of capital Incentives Land ownership Guarantee against expropriation International investment agreements Investment dispute settlement

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Investment legal regime

• All MENA countries have an investment law (except Bahrain and UAE (at the federal level)

• Three are currently under revision• Several recent amendments (e.g. Algeria – 2009-

2010, Egypt – 2012)

Complexity reduction and increase of protection and predictability

Harmonisation of strategies and rules at the national and regional levels

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Investment Promotion Agencies

• All MENA countries have an IPA (or an office for economic development - Gulf)

• Mandate extensions over the years• Most deal with local and foreign investors (except Tunisia

and Kuwait)• Different degrees of performance and different services

Improvement of services: one-stop shop, after-care, innovative tools

Public-private dialogue and policy advocacy

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FDI restrictions

• Relatively restrictive countries but trends towards more openness• Ownership requirements, minimum capital requirements, local

agent requirements, Arab preference, monopolies• Common restrictions (e.g. security (weapons), oil&hydrocarbons,

transport, media, insurance…) vs. uncommon restrictions (e.g. business services, construction, real estate, commercial activities such as retail trade…)

FDI restrictions streamlining (list) Reviewing and lifting some restrictions, when alternative, non-

discriminatory measures are available to meet legitimate public policy objectives

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Incentives

• Numerous incentives – often complex, can create distorsion effects, lack of clarity and consistency, risk of discretionary power, difficult to manage and control, no impact evaluation

• Debate on impact in the aftermath of the ‘Arab awakening’ and in times of budgetary constraints

Clarify responsibilities of the authorities Review, assess and report Simplification, transparency and non-discrimination Part of the broader agenda on corporate tax policy reforms Avoid harmful regional tax competition

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Other issues

• Approval procedures: unclear rules and procedures, delays, but streamlining efforts

• Access to land: restrictions, titling and cadastre, lengthy procedures, collaterals, free zones practices

• Expropriation: legal protection, but recent issue?• Investor-State dispute: 10 cases since early 2011, rising

concern?

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Conclusions

• Policy and legal reforms to ensure transparency, predictability and non-discrimination – addressing systemic issues

• Contract stability and enforcement• Instruments for risk mitigation• Pro-active measures in investment promotion• Mechanisms to handle disputes with investors