The Organisation for Economic Co-operation and Development (OECD) has called on Eurasian investment promotion agencies (IPAs) to enhance their private-sector links and their governments to grant them more institutional independence.
The Organisation’s recent report on investment promotion in the region also suggests the industry-wide shift towards digitisation presents an opportunity for Eurasian IPAs to do more with their limited budgets.
The report comes at a critical time for the region. Reduced demand for energy and its other primary exports, coupled with its perception as a frontier market, makes Eurasia particularly vulnerable to the economic fallout from Covid-19. This places a premium on attracting and retaining FDI.
"It’s clear the region’s IPAs need to improve their relationship with the private sector so that businesses see them as a real partner,” said Ana Novik, head of the OECD’s investment division. “Making them a little more autonomous and increasing their decision-making power could also strengthen their policy advisory role."
While there is no one-size-fits-all approach, the report finds that autonomous budgets, greater flexibility and shorter reporting lines could help establish Eurasian agencies as go-to partners for investors. The IPAs cite inadequate staff as their second biggest challenge and the OECD recommends they redress their current shortage of employees with significant private-sector experience.
“The most productive and proactive IPAs are business-oriented and employ sector specialists,” noted Boštjan Skalar, CEO of the World Association of Investment Promotion Agencies. “Without this, they can’t speak business’s language or understand what investors are looking for.”
The Covid-19 crisis is an added impetus for the region’s IPAs to improve their digital capabilities which currently fall short. Their websites can be difficult to find in English and only a few agencies use data-tracking tools such as customer relationship management software which, in turn, can be used to develop digital investment promotion activities. Digitisation could also be a cost-effective way of improving efficiencies and increasing their visibility.
Indeed, as is typical of young IPAs, Eurasia’s spend a disproportionately large chunk of their budgets on image building, on the assumption they are not known as investment destinations. In Central Asia, coordinating activities to promote a regional image and highlight the five countries’ joint strengths could be a better way to position themselves globally.
“Countries in this region are cooperating more and more several of topics, including trade and investment, as part of their economic reforms and connectivity agendas,” said Peline Atamer, the OECD policy analyst who led the report. “In terms of pure marketing, joint promotion can really help them increase their visibility as a regional market rather than individual, small markets.”
According to Mr Skalar, the recent growth of near-shoring and reshoring in response to Covid-19 also makes regional cooperation and supply chains more important than ever.