Investment promotion and investment in agriculture - Mike Pfister - OECD Investment Policy Review of...
-
Upload
oecd-directorate-for-financial-and-enterprise-affairs -
Category
News & Politics
-
view
4.219 -
download
3
description
Transcript of Investment promotion and investment in agriculture - Mike Pfister - OECD Investment Policy Review of...
OECD INVESTMENT POLICY REVIEW OF MYANMAR
Mike PfisterInvestment Policy Reviews, OECD
4 March 2014, Yangon
Supported by the AANZFTA Economic Cooperation Support Program
Investment Policy Review of Myanmar
INVESTMENT PROMOTION & FACILITATION AND OTHER AREAS
OF THE PFI
• Strong reform momentum, very quick reforms
• Pushing up against capacity of MIC and other agencies in charge of “investment promotion”
• This calls for eventual de-regulation: but not all cost – need accompanying capacity
• Attractiveness of SEZ models: careful!
Context
• Effective investment promotion a function of sound policy environment
• Need for clear demarcation of Promotion and Facilitation – DICA mandate broad
• Focus should be on:– Transparency (criteria based system, reducing discretion)
– Accountability (feedback from private sector, UMFCCI etc...)
– Efficiency (streamlining, cutting down red tape, 1-stop shop)
– Monitoring policy effectiveness (DICA to develop KPIs, objectives)
• Need to improve data for better policy development
Investment Promotion & Facilitation
DICA’s broad mandate
Ideally: DICA as interface for investors
Investors
1 stop shop
Need for effective policy advocacy
Policy Advocacy investor feedback to
policies: surveys, public-private committees for
business climate reforms...
Main recommendations
• Investment promotion is perhaps less important for Myanmar at present than investment facilitation.
• Continue to streamline procedures (ease of doing business)
• Ensure that one-stop shops include single-point authority.
• DICA should take responsibility for addressing investor grievances and serve as a policy advocate within government for the private sector.
• Keeping existing investors happy is the best form of promotion.
• SMEs form:– 90% of the industrial sector
– 92% of the manufacturing sector
• Active SME promotion is at an infant stage
• SME Law: need accompanying capacity building
• Vibrant SME sector key to developing linkages: absorptive capacity to break away from low-technology with limited manufacturing equilibrium
• Myanmar will benefit more from FDI if domestic investment grows
• Renewed focus on Human Resources needed – 2% GDP of public investment too low…. Skills?
• Other SME issues: microfinance etc.
SME Development and linkages
Backward linkages: technology & knowledge transfer
Technology, know-how, management and product standards
Domestic market, Export, GVC
TE
CH
& K
NO
WL
ED
GE
T
RA
NS
FE
R
Role of policy:SME policy, financing, vocational training
• Zones can help pilot reforms (Shenzen, Shanghai)
• A lot of FDI expected to come through SEZs in Myanmar;
• 3 SEZs, 18 zones, 34 sub-zones – many not fully operational, land prices high;
• Thilawa can be promising, given its strategic location, but governance will be key to its success;
• Need to link with the broader domestic economy; not just become import-export hubs;
• Promote linkages, monitoring general and environmental performance of companies in zones; develop training and R&D locally.– Example: CSR Unit in Clark Development Corporation, Philippines
• SEZ success depends on broader economic reforms
Role of SEZs
• Trade related challenges, TBs and NTBs; including imported counterfeit products;
• Increased trade facilitation measures could particularly benefit SMEs (incl. standardisation, certification…);
• Need to enhance competition in the banking sector, improve financial intermediation, microfinance
• Infrastructure: develop comprehensive sector development plans with clear roles for private sector, government and SEEs
• Build independent and effective regulatory agencies (transparency, regulatory certainty…)
• Ensure level playing filed between SEEs and private investors important to attract private sector
Trade, finance, infrastructure
Investment Policy Review of Myanmar
PROMOTING SUSTAINABLE
INVESTMENT IN AGRICULTURE
IN MYANMAR
Context
• Around 34.8% of GDP and 61.2% of employment
• Potential for rapid agricultural development relying on abundant land and water resources
• 30-year Master Plan for Agriculture Development:
Improve food security and farmers’ incomes and reduce poverty by increasing production (rice, oilseed and bean) through better technologies and access to finance and market liberalisation
• Relatively low public expenditures in agriculture:
Among ASEAN countries, lowest per capita agricultural expenditure and lowest share of agricultural expenditure to agricultural GDP
• Growing investment from neighbouring countries in both food and non-food crops
Investment policy in agriculture
• Land legislation revised in 2012: adoption of the Farmland Law and the Vacant, Fallow and Virgin (VFV) Land Management Law
• Foreign Investment Law enacted in 2013
Particularly favourable to large agricultural investors:
– Time and size limits on land use rights can be lifted for projects approved by the government
– Foreign investment restricted in a few agricultural activities
– Generous tax incentives
Challenges
• Insecure land tenure rights– Complex and long registration process:
Involvement of three government levels for farmland and application to the central level combined with heavy requirements for VFV land.
– Lack of recognition of customary land use rights:
No mention of customary rights in the new legislation; smallholders at risk.
– Overlapping responsibilities of agencies responsible for managing land:
Farmland Administration Bodies as line agencies within the MOAI; Central Committee for the Management of Vacant, Fallow and Virgin Land as a multi-ministerial committee formed at the President’s discretion; and the MECF
– Promotion of large-scale land allocations with weak safeguards:
Increase of large-scale allocations to 1.38 million ha in 2012, with large areas remaining undeveloped and uncultivated by companies.
16
Challenges
• Limited access to finance
– Small short-term loans from the MADB
– High interest rates from informal lenders
• Limited access to and low quality of agricultural inputs
• Weak extension services and R&D
17
Recommendations
Securing land tenure rights
• Harmonise the land legislation
Develop a unique comprehensive land law; Enhance the co-ordination across the Ministries responsible for land.
• Accelerate land registration
Set up an efficient institutional structure at national and local level for land titling and land surveys;
Establish a one-window service.
• Recognise customary rights
Protect customary rights, including collective rights and rights on land used for shifting cultivation;
Consider the diversity of customary law across different ethnic groups and geographic areas.
18
Recommendations
Attracting investment
• Develop clear selection criteria before granting investment incentives
• Establish independent and accessible procedures to address grievances
• Promote the free choice of crops
• Reform the MADB to expand its coverage
• Strengthen extension services and increase public funding on R&D
Myanmar could recover its place as a major agricultural producer and exporter in Southeast Asia
19
Recommendations
Promoting responsible investment
•Develop adequate safeguards for large-scale land acquisitions:
Promote transparent and inclusive consultations
Protect existing land tenure rights
•Establish transparent and fair expropriation and compensation mechanisms
•Set up a regulatory framework to support inclusive business partnerships
•Impose Environmental and Social Impact Assessments, especially for large-scale investments.
Policy Framework for Investment (and User’s Toolkit)
www.oecd.org/investment/pfi.htm
www.oecd.org/investment/toolkit/
FDI Indexwww.oecd.org/investment/fdiindex.htm
Investment Policy Reviewswww.oecd.org/investment/countryreviews.htm
ASEAN-OECD Investment Programmewww.oecd.org/daf/inv/mne/seasia.htm
ASEAN Investment websitewww.investasean.asean.org
For further information