Remarks by Angel Gurría,
Tunis, 3 October 2016
(as prepared for delivery)
Excellences, Ministers, Ladies and Gentlemen,
It is an honour to join you here today for the launch of the joint EU-OECD Regional Programme on Enhancing Investment Policies and Promotion in the Southern Mediterranean Region.
The need to revive domestic and international investment
We find ourselves stuck in a low-growth trap. As the OECD’s Interim Economic Outlook said last month: poor growth expectations have further depressed trade, investment, productivity and wages.
Today we are here to focus on the revival of a key element of this equation: investment. In 2015, global investment flows are picking up, standing at about 16% below their pre-crisis level. However, FDI flows to the MENA region continue to lag. Regional instability and insecurity has contributed to a fall of more than 50% between 2008 and 2015!
Despite a rebound in FDI flows in some countries in 2015, prospects remain uncertain. In Europe, which remains the region’s major trade and investment partner, the situation is also worrying. EU FDI inflows remained 40% below pre-crisis levels, and outflows were almost 60% below pre-crisis levels!
Intra-regional investment is also very low in the MENA region. This is a missed opportunity for growth. The region is one of the least globally-and-regionally integrated regions in the world, in terms of exports and FDI. Regional trade and investment liberalisation initiatives exist but lag behind those of other regions and are poorly implemented.
Without concerted efforts to address this situation, the MENA region and the global economy more broadly will fail to benefit from the new jobs, added value, and better living standards that domestic and international investment bring.
How the OECD can help
Against such a backdrop, action urgently needs to be taken. In recognition of that fact the Programme we are launching today with the European Commission is about building trust to attract investment in the MENA region and bringing tangible results for the countries and their citizens.
The good news is that many countries have already embarked upon reforms to their legal regime for investment. Modernised investment laws were enacted in Jordan, Iraq and Egypt in 2015, and in Morocco and Algeria last June. And just two weeks ago the Tunisian Parliamentary Assembly passed a new, much awaited Investment Code.
This is fantastic progress, but more needs to be done to create comprehensive policy packages to raise investment. The OECD’s work on investment in the MENA region has already indicated a number of steps that would help immediately as set out in our Better Policies Brochure for the MENA and building on the OECD Policy Framework for Investment.
Allow me to share a few examples with you:
First, structural reform efforts need to be stepped up to lift unnecessary sectoral restrictions, cut red tape and simplify regulatory procedures. The level of restrictions on FDI in the region is more than twice the level found in OECD countries. This dissuades potential investors and hampers improvements in export competitiveness.
Second, investment treaties need to reassure investors, but MENA countries also need to address inconsistencies between treaties. At present the 18 MENA countries have signed over 700 bilateral investment treaties, of which over 220 are with OECD countries. This proliferation has resulted in multi-layered rules, with provisions that are often confusing to investors, and to uneven protection status, depending on the country of origin and foreign or domestic ownership of investment. A concerted effort is needed to address these inconsistencies through improved delineation of investment protection principles and better alignment with domestic legal and regulatory frameworks.
Third, investment promotion agencies can also play an important role. They can help to attract more and better investment, but also develop local production chains, business clusters, SME capacity and more generally build linkages between investors, small and large, domestic and foreign. MENA countries should ensure that they are providing investors with a one-stop shop to process and target investors.
We must also understand that these reforms cannot be achieved without dialogue, trust and the formation of partnerships. Strong inter-institutional relationships and coherence is essential. But so is an effective public-private dialogue to improve the policy advocacy role of the private sector and ensure efficient design and implementation of reforms. I’m delighted that a session of the MENA-OECD Forum this afternoon is focused on this issue.
The EU-OECD Programme on Promoting Investment in the Mediterranean
In this context, the EU-OECD Programme on Promoting Investment in the Mediterranean is timely and responds to country needs and requests. The Programme will aim to boost the quality and quantity of investment into and within the Mediterranean region. It will support governments through regional and national actions to create more robust and coherent investment policies and strategies by:
Working hand-in-hand with our partners in the region and with the EU, the OECD will be a driving force behind this Programme over the next four-years.
Excellences, Ministers, Ladies and Gentlemen,
If we are to turn our efforts on investment policy into tangible results, we need to forge closer partnerships within and between countries and with the investor community. This will ensure that we can enhance the role of Investment Promotion Agencies in attracting high quality investment, and address the broader policy questions which are essential to making investment for development a shared reality.
Let us work together to design, deliver and implement better investment policies for better lives.