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Regions and Countries Country Assistance Plans Document
GMS Assistance Plan : VI. Sector Properties and Proposed Program for 2001-2003
H. Investment98. FDI is playing an increasingly important role in the development of the GMS countries as economic reforms move toward greater trade liberalization and privatization. An enabling environment conducive to FDI flows combines the friendliness of the policy framework, the economic opportunities available, and the ease of doing business in the country. In the aftermath of the economic crisis, the GMS countries felt the need to work more closely together to reverse the capital flight that has occurred as a result of the crisis. The Second Meeting of the Subregional Investment Working Group (SIWG) was convened in September 1999 to discuss the strategy and priorities for investment cooperation. The GMS countries agreed to work on three areas—investment promotion, investment facilitation, and the regulatory framework for investment— and identified the focus of activities in each of these areas. 99. Investment promotion would focus on specific projects to be promoted as well as target markets. In the East West Economic Corridor, the preinvestment work in progress has already identified the specific trade and investment possibilities in specific locations in the context of an industrial development strategy. The strategy calls for the establishment of industrial facilities, upgrading of infrastructure and services facilities, promotion of small and medium enterprises, and coordination at the policy level of investment incentives and related investment policies. Equally important is institution and capacity building for investment promotion which includes training in negotiations, database and webpage design, and promotional literature production. 100. In investment facilitation, the focus will be on information collection, information sharing, and capacity building for information management. Efforts will be made to link the GMS databases and one-stop shops. Further coordination with ASEAN, UNIDO, ESCAP, and the World Bank in these areas will be pursued. While improvements in the regulatory environment would support investment promotion efforts, the unique legislative and institutional settings in each of the countries should be taken into account in synchronizing the pace of investment policy reforms in the GMS. Capacity building is key to establishing and implementing the regulatory framework that is conducive to foreign investment. 101. Based on these thrusts, the SIWG identified six priority areas of cooperation. An important priority will be building institutional capacity for investment promotion and facilitation in the GMS. Improvement in information systems will have to accompany efforts at capacity building to improve the collection, processing and dissemination of investment-related information for investment facilitation. A third important activity involves support to the GMS Business Forum in the design and implementation of an appropriate structure for engaging and sustaining the involvement of the private sector in the GMS processes. The GMS countries also agreed to a project to strengthen the regulatory and incentive structure in the GMS countries that will have to be coordinated with the ASEAN Investment Area initiative (AIA). Finally, a project on the design and implementation of fast-track approval procedures will be conducted, possibly linking with different ‘one-stop shops’ in the GMS countries, and pilot tested in the East West Economic Corridor.
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