How to Implement FDI SME Linkage Programmes in South East European Countries

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How to Implement FDI - SME Linkage Programmes in
South East European Countries
First Meeting of the Working Group on Investment
Promotion Antwerp, 18 June 2007
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• Agenda
• How to Implement concept
• The role of the Working Group on Investment
  Promotion
• FDI SME linkage programme
• Calendar and next steps

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• How to Implement concept

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How To Implement Concept what is it and how
does it fit in with the Investment Compact
strategy?
Concept
FDI - SME linkage programme
Regulatory Impact Analysis
Skills development Increasing labour
mobility
Public procurement systems
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The How to approach is the logical extension of
Investment Compact support to the SEE region
Concept
The Investment Compact Investment Reform Process
(IRPTM) model
OECD good practices
Support in implementation of priority
reforms
Collaborative benchmarking of government policy
Annual Process to Achieve Impact
HOW TO Guidelines Investment promotion Regulator
y reform Human capital Anti-corruption
Six annual country priorities
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Differentiating Factors
Value added of the How to guidelines
Easy to use

• Practical step-by-step approach that is adapted
  to officials that still have limited experience

• Will be developed in close cooperation with
  experts from the region to ensure maximum
  relevance and impact
• Development in regional context ensures that
  lessons learned from countries with similar
  historical and regional experience are distilled
  to the benefit of all participants

Incorporates strong input from the region

• Progressive transfer of expertise to support the
  implementation of recommended measures

Builds capacity progressively
Responds to a specific request for practical
support

• SEE countries express a need to have practical
  guidelines on what to do to implement specific
  policy priorities

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• The role of the Working Group on Investment
  Promotion

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Role of Working Group
Role of the Working Group on Investment Promotion
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• FDI SME linkage programme

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FDI - SME linkage programme
FDI SME Linkage Programme
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FDI - SME linkage programme
Linkage programmes clearly produce benefits for
both local companies and foreign investors
BENEFITS

• Increased economic activity
• Diminished information asymmetries
• Substitution of imports
• Improved balance of payments
• Stronger enterprise sector

For host country

• Increased competitiveness, output, quality
  standards, employment
• Transfer of technology, know-how and management
  capabilities
• Market diversification for local suppliers

For local suppliers

• Lower production costs
• Increased specialisation and flexibility
• Better adaptation of technologies to local
  markets
• Improved access for MNEs

For multinational companies
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FDI - SME linkage programme
Definition of different phases of implementation
that depend on the country progress in building
an FDI SME linkage programme
DRAFT TO BE REVIEWED WITH WORKING GROUP
Phase 2 Design the linkage programme
Phase 3 Implement a pilot programme in one
sector
Phase 4 Extend the linkage programme to other
sectors
Phase 1 Take stock of existing initiatives to
link SMEs with foreign investors and to improve
SME competitiveness

• Define economic and social objectives
• Identify potential sectors
• Select one sector for a pilot programme
• Develop a database of MNEs and local suppliers
• Define methodology for selecting companies
• Set up coordination committee with key
  stakeholders
• Define planning and budget
• Consult with all stakeholders and ensure
  high-level support
• Communicate the objectives
• Define a mechanism to monitor implementation
• Define action plans to implement linkage programme

• Screen companies in the pilot sector
• Assess MNEs supply chains in selected sector
• Identify and prioritise specific needs for
  suppliers
• Approach selected companies
• Secure minimum funding for 2-year pilot
• Conduct audits of each participating company
• Define a development plan to improve local
  companies needs and access to finance
• Prepare marketing and communication package
• Market the pilot sector to both existing and
  potential MNEs
• Record specific feed-back
• Measure and evaluate results
• Select a second sector to extend the programme

• Incorporate results and recommendations from the
  pilot into the overall programme
• Repeat actions from phase 3 in other selected
  sectors
• Assess outputs of the linkage programme after 3-5
  years
• Communicate assessment results to key
  stakeholders to build support for FDI
• Monitor the implementation of action plans and
  incorporate results into the overall linkage
  programme
• Disseminate information on good practice

• Review existing policies, strategies and
  programmes (incl. incentive schemes, SME
  competitiveness programmes, export promotion
  programmes) that are relevant for the development
  of linkage programmes
• Formulate recommendations for policy improvement,
  if necessary, to prepare the launch of linkage
  programmes

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FDI - SME linkage programme
Each phase will be broken down into detailed
guidelines (1)
DRAFT TO BE REVIEWED WITH WORKING GROUP
First level of actions
Second level of actions
2.1.1. Review existing policies and strategies
(including incentive schemes) that are relevant
for the development of the linkage programme
2.1. Define economic and social objectives
2.2. Identify potential sectors
2.2.1. Define criteria for sector selection (e.g.
national strategic priorities, number of local
companies in the sector, technology content,...)
2.3. Select one sector for a pilot programme
2.4. Develop a database of MNEs and local
suppliers
2.4.1. Structure the content of each MNE/supplier
database 2.4.2. Complete each MNE/supplier
file 2.4.3. Select software to manage the
MNE/supplier database 2.4.4. Complete database
for pilot sector
2.5. Define methodology for selecting companies
Phase 2 Design linkage programme
2.6. Set up coordination committee with key
stakeholders
2.7. Define planning and budget
2.8. Consult with all stakeholders and ensure
high-level support
2.9. Communicate the objectives
2.10. Define a mechanism to monitor implementation
2.11. Define action plans to implement the
linkage programme
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FDI - SME linkage programme
Each phase will be broken down into detailed
guidelines (2)
DRAFT TO BE REVIEWED WITH WORKING GROUP
Third level of actions
Proposed Database Structure
Section A. General Information Company
Name Country/Countries of Incorporation Company
Type (foreign company/joint venture) Main
Management Body Top Management Officials Contact
information Headquarters/Regional
Representative Office
Section D. Geographical Presence and Global
Operations Countries of operation Presence in the
country Linkages with Suppliers
Section E. Financial Structure and
Accounts Ownership Structure Financial Statements
Second level of actions
Section B. Company Profile Main
Industry Business Segments Types of
Products Property Type Statutory Capital Volume
of Investment (quarterly/yearly) greenfield
investment investment in fixed capital Volume of
Sales (quarterly/yearly) Turnover Index Volume of
Taxes Paid (last 2 years) Number of Employees
2.4.1. Structure the content of each
MNE/supplier database
Section F Key Supply Needs Estimated breakdown
of supply costs (in percent) Main supply needs by
category (in percent) Main suppliers by
nationality/locality
Section G History of Contacts Meetings E-mail
Communication Phone Communication
Section C. Corporate History Date of
Creation/Incorporation Key Dates (tied into
calendar/schedule) Product Milestones Recent
Partnerships/Acquisitions (last 2 years) Main
Changes in Corporate Strategy
Section H Strategy and Planning Company
Approach (by region/operations/products) Ideas
for Collaboration Actions Opportunities Key
Strategic Dates (tied into the calendar)
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FDI - SME linkage programme
To increase the linkage programmes effectiveness
and efficiency several key success factors should
be considered
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• Calendar and next steps

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Process Timetable 2007/2008
Process Timetable
Phase 1 Take stock of existing initiatives to
improve SME competitiveness and link SMEs with
foreign investors
2007
Draft and finalise guidelines to design and
implement FDI-SME linkage programmes
June December 2007
Phase 2 Design the linkage programme
Phase 3 Implement a pilot programme in one
sector
Phase 4 Extend the linkage programme to other
sectors
Publish How To Guidelines
2008 onwards
January April 2008
May 2008 onwards
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Next steps
Next steps
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Timeliness How-To Phase I TIPA
Process Timetable
Initiate Research
Review Concept Paper
Analyse Globally
Design questionnaire
Review Results
Collect Data
Conduct Missions
Evaluate
Draft Guidelines
Consolidate Information
Review Guidelines
Define Action Work Plans
Review Results
Note Timeline for How-to in purple timeline
for Project Strengthening Sector Specific
Sources of Competitiveness in blue.