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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Inception Meeting of the Subregional Investment Working Group
Inception Meeting of the Subregional Investment Working GroupThe Inception Meeting of the Subregional Investment Working Group was held in Bangkok, Thailand on 18-19 December 1995. The Meeting was co-organized by the Asian Development Bank (ADB) and the Foreign Investment Advisory Service (FIAS)1, and hosted by Thailand's Board of Investment (BOI). Participants included representatives from the six countries of the Greater Mekong Subregion (GMS)—Cambodia, People's Republic of the China (PRC), Lao People's Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam—FIAS and ADB staff, and consultants. Observers included representatives from Thailand's Board of Investment, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), the National Economic and Social Development Board (NESDB), and the Overseas Economic Cooperation Fund (OECF). The objective of the Meeting was to establish a Subregional Investment Working Group (SIWG) within the context of the Greater Mekong Subregion Economic Cooperation Program supported by the ADB regional technical assistance (RETA). This Working Group will provide an avenue for cooperation related to the regulatory framework for investment, provide a long-term vehicle for cooperation in investment promotion efforts, and support cooperation among the participating countries in general investment facilitation, especially in the context of complementary investment and tranborder projects. In his welcome address and opening statement, Mr. Chakramon Phasukavanich, Deputy Secretary General, BOI, Thailand, noted the BOI's firm commitment to supporting the investment-related activities of the GMS economic cooperation program. He further noted that progress has already occurred in bilateral investment cooperation, including Thailand's agreements relative to investment promotion and double taxation. He stressed the need for the deliberations of the Subregional Investment Working Group (SIWG) to result in concrete and implementable measures, thus enhancing the investment environment in the GMS. The country delegations expressed their continuing support for the economic cooperation process and the importance of the SIWG, and highlighted specific regulatory arrangements which have attracted and encouraged increased foreign direct investment (FDI). Mr. Phan Ho of the Ministry of Planning, Cambodia noted his Government's goals of reducing poverty, generating employment, and developing agriculture, all aimed to improve the overall living standards of the people, and pointed out that these goals could be more readily achieved through foreign investment in human resource development. Ms. Liu Fangyu of the People's Bank of China, the PRC, noted that the country's Ninth Five-Year Plan of National Development and the Fifteen Year Development Program give high priority to subregional cooperation. She also informed the Meeting that over 160 countries and regions are now investing in the country; this investment has been greatly facilitated by the Government's recently renewed guidelines "Provisional Regulations on Foreign Investment Guidance" and the "Foreign Investment Industrial Guidance Catalogues." Mr. Boun Omme Southichak of the Permanent Office of the Foreign Investment Management Committee (FIMC), Committee for Planning and Cooperation, Lao PDR noted that small/large country differences need to be recognized in investment cooperation, and that large-scale infrastructure-related projects require public-private sector collaboration. Ms. Kyi Kyi Tin Gyi of the Ministry of National Planning and Economic Development, Myanmar noted that while her country is in a transitional stage of economic development, the Government's "Foreign Investment Law" of 1988 and the "Citizens Investment Law" of 1994 have been successful in attracting investment from countries both within and outside the subregion. Mr. Nguyen Toai of the Ministry of Planning and Investment, Viet Nam noted that the promulgation of the Foreign Investment Law at the end of 1987, with amendments in 1990, 1992, and 1993, has provided a favorable legal environment for FDI in Viet Nam. Subsequent improvements in the institutional and legal environments have attracted increasing levels FDI. In his introductory remarks, Mr. Noritada Morita, Director, Programs Department (West), ADB reviewed the progress to date of the Subregional Economic Cooperation Program and stressed the importance of strengthening the role of the private sector in the process of development, both in supporting appropriate priority subregional projects, and in responding to resulting commercial opportunities. Mr. Boris Velic, Manager, FIAS, highlighted the long-term nature of the investment process and the importance of transparent regulations, developed institutional capacity, and efforts to remove existing trade barriers. Conduct of the MeetingThe sessions were moderated by Mr. Andrew Proctor of the Asia Pacific Regional Office, FIAS, Mr. Cesar Virata, Special Adviser to ADB's RETA 5535, Mr. Boris Velic, Mr. Noritada Morita, and Dr. Greorge Abonyi. Mr. Proctor provided an overview of the background issues paper "Opportunities for Cooperation in Foreign Direct Investment in the Greater Mekong Subregion."2 Issues for Potential CooperationThe Meeting accepted the three themes—investment promotion efforts, general investment facilitation, and regulatory framework for investment—as the organizing framework for the work of the Subregional Investment Working Group. The Meeting noted that the strengthening of the domestic investment environment is a necessary factor for effective subregional cooperation. The Meeting further noted the importance of the involvement of the private sector. Investment Promotion EffortsThe Meeting noted the need for strengthening subregional promotion in order to attract investment in an increasingly competitive global economic environment. The Meeting also noted the importance of promoting FDI by investors from within the subregion. In this context, the Meeting noted the desirability of the members of the GMS supporting trade fairs, investment workshops, and similar events which are held by other members. The Meeting also recognized the potential benefits from securing external assistance for the conduct of these investment promotion activities. Within the context of various investment promotion methods and techniques, the Meeting agreed to recommend the following topics for inclusion in the scope of work of the SIWG: (i) development of subregional promotional materials (suggesting that the materials already developed by Thailand should be used as a base), including suitable text for inclusion in national promotional materials where appropriate, and exploration of dissemination mechanisms; (ii) initiation of and participation in promotion missions both within and outside the region, including responding to invitations to arrange and seeking hosts for such missions; and (iii) development of a promotional strategy, including deciding which aspects of the regional investment environment should be promoted, the appropriate mechanisms/techniques for promotion, and the timing of the promotional activities. In this regard, the Meeting requested further assistance from ADB and FIAS. The Meeting agreed that the initiatives required to promote investment on an individual and subregional level might best be taken by the investment promotion agency in each country. The Meeting noted the need for GMS investment missions, and agreed to recommend this concept to their respective governments. The Meeting also noted the upcoming private sector forum in Seoul, Republic of Korea in March 1996 and the Kreditanstalt für Wiederaufbau (KfW) forum in Germany in May 1996. The Meeting requested the support of FIAS and ADB in identifying similar forums and in assisting the participation of the subregional countries. The Meeting also noted that the forum in Germany may provide the first opportunity for this cooperative promotion effort. General Investment FacilitationThe Meeting noted the importance of investment facilitation in reducing the gap between investment commitments and implementation. The Meeting further noted the existence of the positive cross-border relations in the subregion, and the need to strengthen these ties even further. The Meeting agreed to recommend the following activities for inclusion in the scope of work of the SIWG: (i) conducting training and personnel exchanges, including seminars and forums that strengthen the overall investment promotion process, especially among the investment promotion agencies; (ii) developing subregional agreements and/or adapting existing agreements, such as the utilization of the Association of Southeast Asian Nations (ASEAN) investment promotion and protection agreement; (iii) encouraging bilateral agreements, such as double taxation agreements; (iv) improving the quality of FDI data collection, processing, and dissemination, including standardizing reporting definitions; and (v) exchanging subregional experiences on policy and promotion issues. Regulatory Framework for InvestmentThe Meeting noted that subregional promotion efforts may not generate expected results, and may even be counterproductive, unless the regulatory framework for investment is correspondingly adequate. Although regulatory framework decisions are usually taken at the national level, the Meeting noted the importance and special needs of transborder projects, the need to work toward greater consistency of related approval and regulatory procedures, and to explore the possible development of special approval procedures for such projects. The Meeting agreed to recommend the following issues related to transborder or complementary projects of multi-country investments for inclusion in the scope of work of the SIWG: (i) the possibility of simplifying and increasing the consistency of investment application procedures; (ii) improving the consistency of incentives and guarantees; (iii) identifying and addressing the legal, bureaucratic, and other regulatory inconsistencies at the national level; and (iv) the exchange of relevant experience both within and outside the subregion. Subregional Investment Working Group: Implementation ArrangementsThe Subregional Investment Working Group (SIWG) was formally established and agreed to at the Third Conference on Subregional Economic Cooperation in April 1994 in Hanoi, Viet Nam, and reaffirmed at the Subregional Ministerial Meeting in Yangon, Myanmar in April 1995, and again at the Fifth Ministerial Conference in Manila, Philippines in November 1995. In reviewing the draft TORs (Appendix 1, contains the final TORs), the Meeting agreed that for membership, each country will nominate senior-level representatives of government agencies responsible for the promotion and/or regulation of investment. The Meeting noted that senior representatives of other investment-related agencies could be involved, as required. The Meeting agreed that chairperson and venue should be rotated among the participating countries, with the host country acting as the chair, and ADB and FIAS, at the request of the SIWG, providing assistance in the conduct of the meeting. The Thai delegation offered that a Meeting be held in Thailand in May 1996. The Meeting noted the importance of consulting with the private sector throughout the process of subregional investment promotion. In this context, the Meeting was informed of the decision of the Fifth Ministerial Conference to "involve private sector organizations--chambers of commerce or their equivalent--in the subregional cooperation program," and its request to ADB to prepare a draft note on this issue for this Meeting. This Note (Appendix 2) develops some preliminary ideas related to strengthening the GMS chambers of commerce (or their equivalent) to support the GMS Economic Cooperation process. Closing Remarks/Other Issues/Acknowledgments/Next MeetingThe Meeting noted the investment-related programs currently being conducted by ESCAP, in particular, Regional Investment Information and Promotion Service (RIIPS), and offered to cooperate in the future work of the SIWG. In the closing remarks on behalf of the Royal Thai Government, Ms. Atchaka Brimble, Director, International Affairs Division, Board of Investment, Thailand, thanked the participants of the Meeting for the successful deliberations, and expressed the hope that the work begun here over the last two days will serve to strengthen subregional cooperation in general. Ms. Atchaka announced the upcoming GMS Investment Workshop in Thailand in May 1996 and reiterated the offer of the Royal Thai Government to use this Workshop as the occasion for the next meeting of the SIWG. The Inception Meeting of the Greater Mekong Subregion Investment Working Group was conducted in an atmosphere of cooperation and mutual understanding. The Meeting expressed its appreciation to the Royal Thai Government for its gracious hospitality and excellent arrangements, to ADB and FIAS for their continued support of the work of the SIWG, and to Thailand's BOI for its support of this Meeting. The Meeting agreed that ADB/FIAS will prepare a draft work program for the next meeting of the SIWG and submit this to the participating governments for their consideration. The Meeting agreed that ADB/FIAS will follow-up on the venue and timing of the next meeting of the SIWG and report to the respective governments.
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