Investment promotion agencies (IPAs) play a crucial role in facilitating FDI growth, experts from global consultancy Frost & Sullivan said in a recent research paper on crossborder investment trends. However, as the paper finds out, they are faced with various issues when trying to stimulate growth.
“Insufficient coordination between government agencies has been a concern for IPAs,” Sara Lai, research analyst at Frost & Sullivan, said in a statement after publishing the research paper. “The increasing competition for FDI, lack of funding and inability to meet the growing demands of investors have been distinct challenges.”
Operational activities are also a hindrance to IPAs trying to attract FDI. The lack of funding, coordination with other FDI players and budgetary constraints are all major concerns for IPAs.
In order for countries to maintain FDI growth, IPAs need to be more engaging with national policies to promote FDI, Frost & Sullivan experts said in the report. Iain Jawad, Frost and Sullivan's strategic partnerships director, said IPAs need to be a one stop shop, facilitating investment assistance to investors.
“Agencies can improve their success rates through greater strategic focus, prioritisation, and personalised approaches to client engagement,” Mr Jawad said shortly after the research paper was published.
Among other trends spotted by Frost & Sullivan experts, hi-tech and healthcare industries are key investment areas among IPAs worldwide: one-fifth of all IPAs surveyed by the consultancy ranked research and development as their top target investment sector. The second most popular area was manufacturing. Additionally, the research paper predicts that crossborder investments in Asia are expected to experience record growth despite recent low recordings, while FDI growth in developed economies is expected to decline.