PEZA, BOI promotions dismal–World Bank

The World Bank said the Philippines’ two investment promotion agencies were “weak,” especially in inquiry handling and providing information to foreign companies looking to invest in the country.

In its “Global Investment Promotion Benchmarking 2009: Summary Report” released Monday, the Washington-based lender rated the Philippine Economic Zone Authority (PEZA) as “weak”—which obtained a score of 21 percent to 40 percent—while the Board of Investment (BOI) was rated “average,” with a score of 41 to 60 percent.

The World Bank, however, did not elaborate on the result of the survey for the Philippines.

The GIPB 2009 evaluates the 181-country Investment Promotion Intermediaries (IPIs) and 32-subnational IPIs and sets out a framework for assessing and improving IPI capacity to provide information to foreign companies looking to invest.

It measures the ability of IPIs to meet investors’ information needs at the early stages of the investment process. The GIPB evaluated IPIs in terms of their Web sites and inquiry-handling skills.

GIPB scores are presented in the form of an index and IPIs can obtain the highest possible score of 100 percent.

“Elsewhere in Asia, performance has remained weak with average overall scores of 40 percent in East Asia and the Pacific and 36 percent in South Asia. [These] weak results are primarily explained by a failure to respond to inquiries,” the report said.

“Inquiry handling is at a core of investment promotions. It enables an IPI to influence company perceptions and win investment projects—but it remains a stumbling block for many IPIs,” it added.

The World Bank said that today’s shrinking economic environment makes effective promotion of foreign investment an especially competitive activity for countries.

“The current global economic slowdown and associated financial instability are expected to significantly reduce flows of FDI [foreign direct investments] in 2009 and beyond . . . As the pool of FDI shrinks, there will be more competition for fewer projects. The ability of IPIs to influence investment decisions with timely and relevant country and sector information and facilitation efforts will be more crucial than ever,” the report said.

The lender added that IPIs should rethink their strategies to maintain their relevance in the current FDI context. This includes shifting focus in the short to medium-term from outreach to offering more professional facilitation services to any new opportunities knocking on their doors. IPIs should offer aftercare services to existing business to ensure their retention of jobs in the economy.

“The effective provision of relevant information can lessen investors’ perceptions of risk and their transaction costs during the site-selection process, thereby making the IPI’s location more competitive,” the bank added. –Darwin G. Amojelar, Senior Reporter, Manila Times