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PROGRESS IN INVESTMENT REFORM INVESTMENT REFORM INDEX

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Title: PROGRESS IN INVESTMENT REFORM INVESTMENT REFORM INDEX


1
Preliminary Results
PROGRESS IN INVESTMENT REFORMINVESTMENT REFORM
INDEX
12 May 2006 Investment Compact Project Team
Meeting Rome, Italy
2
Agenda
  • Overview of Investment Reform Index
  • Progress in Investment Reform in SEE
    Preliminary Results
  • Summary of Good Practice in SEE and CEE
  • Summary of Country Priorities for 2006-2007
    (Investment Compact View)
  • Next Steps and Key Events

3
Overview of Investment Reform Index
4
Overview of Investment Reform Index
The Investment Reform Index and the Investment
Compact
Focus of Investment Compact Program
A. Enterprise and SME Development
B. Policy and Promotion Specific to FDI
Investment Reform Index Enterprise Policy
Performance Assessment (EPPA) Peer Review
1. Monitoring and Evaluation
Country Investment Policy Analysis and
Implementation
Investor Forum Sector Specific Regional
Investment Promotion
Enterprise Forum
2. Implemen-tation Support
4 Areas
Structured Public/Private Debate
Regional Foreign Investors Council, White Book
and Reality Checks
Enterprise Policy Performance Assessment
3. Private Sector Support
Annual Ministerial for SEE Region Programme for
Parliamentary Support
4. Political Support
5
Overview of Investment Reform Index
The IRI is guided by four key objectives
Regional Collab-oration and Peer Review
Targeted Support in Imple-mentation
Public and Private Sector Involvement
Structured Evaluation
?
?
?
?
6
Overview of Investment Reform Index
The IRI measures implementation of reform in 10
key dimensions
Main focus of evaluation in 2006
Part of a separate process conducted in
cooperation with the EC in the framework of the
European Charter for Small Enterprises
7
Overview of Investment Reform Index
Each dimension is broken down into main
sub-dimensions Example Tax Policy
8
Overview of Investment Reform Index
Each sub-dimension is broken down into core
indicators Example Tax Policy ? Tax
Administration
9
Overview of Investment Reform Index
Each indicator is broken down into levels of
reform Example Tax Policy ? Tax Administration
Note This table has been simplified for
presentation purposes each level of reform is
fully detailed in the actual IRI.
10
Overview of Investment Reform Index
Gathering information for scores will follow a
specific process Example Anti-Corruption
CET
Investment Compact
Private Sector
11
Overview of Investment Reform Index
The Investment Reform Index is organised to
involve all levels in the evaluation and input
process
  • IC Core Team collects data and interviews OECD
    Experts to establish a preliminary level of
    progress for each country in each policy
    dimension
  • Local consultants build from the first
    measurement by collecting primary data in the
    countries and conducting interviews with local
    experts. The results analysed by the IC Core Team
    and incorporated into the level of progress
  • The Private Sector and the Country Economic Team
    evaluate the latest measure. This provides an
    opportunity to step back and analyse the
    measurements in a broader context. After
    consultation mechanisms are complete, all parties
    confirm a final measurement, which is published

Local Consultants Country Economic Team
IC Core Team
Private Sector
OECD Experts Local Experts
12
Overview of Investment Reform Index
How the IRI is different from other indices
The OECD Investment Compact IRI relative to other
indices from international organisations
  • Main Differentiating factors of the IRI
  • Focus on a very specific region where history,
    culture and geography allow for more relevant
    benchmarking between countries.
  • Tripartite participatory approach to evaluation
    and measurement including government, private
    sector, and the OECD.
  • Comprehensive evaluation of the investment
    environment structured along ten key dimensions
    in line with OECD standards.
  • Does not only measure but also provides guidance
    on how to improve through good practices.
  • Meta Index which incorporates existing work
    already conducted by other organisations (e.g.,
    World Banks Doing Business report).

Process
13
Progress in Investment Reform in SEE
Preliminary Results
14
1. Investment Policy
Progress in Investment Reform in SEE
Preliminary Results
15
1. Investment Promotion
Progress in Investment Reform in SEE
Preliminary Results
16
1. Investment Policy
Progress in Investment Reform in SEE
Preliminary Results

Bulgaria, Romania
Albania, Montenegro, Moldova
Croatia
FYRoM, Serbia
Bulgaria, Romania, Croatia
Albania, FYRoM, Moldova, Montenegro

Serbia
Albania, FYROM, Montenegro
Bulgaria, Romania
Croatia, Serbia
Moldova
17
1. Investment Promotion
Progress in Investment Reform in SEE
Preliminary Results
Albania, Croatia, Moldova, Montenegro

Bulgaria
Romania
Serbia
FYRoM
Albania, Croatia, FYRoM, Moldova
Bulgaria
Romania, Serbia
Montenegro

Albania, Croatia, FYRoM, Moldova, Romania Serbia
Bulgaria
Montenegro
Albania, Romania, Serbia
Bulgaria
FYRoM, Montenegro
Croatia, Moldova
18
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
19
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
20
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
21
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
22
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania, Croatia, FYRoM, Serbia, Montenegro,
Moldova
Bulgaria, Romania
Albania, Croatia
Bulgaria, FYRoM, Romania, Serbia, Montenegro,
Moldova
Bulgaria, Romania
Croatia, FYRoM, Serbia
Albania, Moldova, Montenegro
Albania, Moldova, Romania, Serbia, Montenegro
Bulgaria, Croatia, FYRoM
23
2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania, Moldova, Montenegro
Croatia, FYRoM, Serbia
Bulgaria, Romania
Albania, FYRoM, Moldova, Montenegro
Croatia, Romania, Serbia
Bulgaria
Albania, Moldova, Montenegro
Romania, Croatia
Bulgaria
FYRoM, Serbia
24
3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
25
3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
26
3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
Moldova
Croatia, Romania
FYRoM, Montenegro, Serbia
Albania, Bulgaria
Albania, Montenegro, Serbia
Bulgaria, FYRoM
Croatia, Moldova
Romania
Albania, Croatia, Moldova
Romania
Bulgaria
FYRoM, Montenegro, Serbia
27
3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
Serbia
Bulgaria
Albania, Montenegro
Moldova, Romania
Croatia, FYRoM
Albania, Montenegro, Serbia
Bulgaria
Croatia, FYRoM, Moldova
Romania
28
4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results
29
4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results
30
4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results

Serbia
Bulgaria, Romania
Croatia
Moldova, Montenegro
Albania, FYRoM
Albania, Croatia, FYRoM Montenegro, Serbia
Romania
Bulgaria

Moldova
Albania, Croatia, FYRoM, Serbia
Bulgaria, Romania
Montenegro
Moldova
31
4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results

Albania, Croatia, FYRoM
Moldova, Montenegro, Serbia
Bulgaria, Romania
Romania
Moldova, Montenegro, Serbia
Croatia, FYRoM
Bulgaria
Albania

Moldova, Montenegro
Bulgaria, Romania
Albania, Croatia, FYRoM Serbia
32
5. Trade Policy
Dimension specific results
33
5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
34
5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
35
5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania Croatia FYRoM Serbia
Bulgaria, Romania
Moldova Montenegro
Albania, Moldova
Bulgaria, FYRoM, Romania, Croatia
Montenegro, Serbia

Albania, Romania, Serbia

Bulgaria, Croatia, Moldova
FYRoM Montenegro

Serbia
Croatia
Bulgaria Moldova Montenegro
Albania, Macedonia Romania
36
5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results

Montenegro
Bulgaria
Albania, Croatia FYRoM, Moldova, Romania Serbia
Bulgaria, Romania
FYRoM
Croatia
Albania, Moldova Montenegro Serbia

Albania, Croatia, Romania FYRoM
Bulgaria, Montenegro
Serbia
Moldova
Romania, Bulgaria
Albania, Croatia, FYRoM, Moldova
Serbia, Montenegro
37
6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
38
6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
39
6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
Montenegro
Romania
Albania, Croatia, Moldova, Serbia
Bulgaria
Romania
Albania, Croatia, FYRoM, Moldova
Montenegro
Bugaria, Serbia
Montenegro
Serbia
Albania, Croatia, FYRoM
Bulgaria, Moldova, Romania
Croatia, FYRoM, Moldova
Albania
Bulgaria
Serbia
Montenegro
Romania
40
6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
Albania Croatia FYRoM Moldova
Bulgaria, Montenegro
Romania
Serbia
Montenegro
Romania, Serbia
Albania, Croatia, FYRoM
Bulgaria, Moldova
41
7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
42
7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
43
7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
Albania, FYRoM, Moldova, Montenegro
Bulgaria, Croatia
Romania, Serbia
Albania, FYRoM, Moldova, Montenegro
Romania
Bulgaria
Serbia
Croatia
Albania, Serbia
Bulgaria Montenegro Romania
Croatia, FYRoM
Moldova
44
7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
Albania, Moldova
Croatia, Montenegro Romania, Serbia
Bulgaria
FYRoM
Montenegro
Moldova
Albania, FYRoM, Serbia
Bulgaria, Romania, Croatia
45
Summary of Good Practice in SEE and CEE
46
Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions
47
Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions (2)
48
Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions (3)
49
Summary of Country Priorities for 2006-2007
(Investment Compact View)
50
Albania
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Tax Ensure that VAT reimbursement is
    systematically monitored. The VAT is reimbursed
    within 30 days, which is mandated by law.
  • Tax Change the tax regulation stating that
    start-ups must pay taxes on estimated profits
    before beginning operations.
  • Investment Promotion Create a new strategy for
    the National Business Agency, following the
    merger of the investment promotion and SME
    agencies.
  • Regulatory Reform Implement the programme for
    regulatory reform to create the basis for RIA.
  • Anti-corruption Develop and implement a new
    anti-corruption action plan with clear time bound
    targets and success indicators.
  • Human Capital Finish drafting, adopt and
    implement the employment strategy, ensuring that
    it is in line with the principles of the European
    Employment Strategy.

51
Bulgaria
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Investment Promotion Reinforce the cluster
    approach in investment promotion to further
    promote linkages between foreign investors and
    SMEs.
  • Tax Create an overarching tax strategy
    specifying the principles and economic goals of
    taxation, current and future tax rates, and
    improvement of the tax administration.
  • Anti-corruption Create a coherent, comprehensive
    Conflict of Interest Policy and ensure that it is
    applied and monitored.
  • Competition Implement a deterrent sanctioning
    policy to limit hard-core anticompetitive
    behaviour (e.g. cartels).
  • Trade Streamline customs and administrative
    procedures to decrease the complexity and time
    required for imports and exports.
  • Regulatory Reform Define and implement a
    comprehensive regulatory reform strategy which
    includes a formal, systematic RIA programme.

52
Croatia
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Competition Reinforce the Competition Authority
    by allowing it to issue fines.
  • Investment Promotion Develop an Investment
    Promotion Strategy that is closely tied to the
    overall development strategy.
  • Tax Closely monitor the activity of the newly
    established Financial Police in order to avoid
    overlapping responsibilities with tax
    administration auditors.
  • Regulatory Reform Develop and implement a
    comprehensive RIA programme.
  • Anti-corruption Develop an action plan for
    customs reform and put in place a system based on
    indicators to monitor implementation.
  • Human Capital Adopt the new Law on Education
    with particular focus on adult education.

53
FYR Macedonia
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Investment Promotion Adopt an investment
    promotion strategy that reflects government and
    private sector consensus on the countrys
    investment promotion activities.
  • Regulatory Reform Create a comprehensive
    regulatory reform policy and strategy
    incorporating a RIA programme which
    systematically evaluates new legislation.
  • Tax Ensure that VAT reimbursement is
    systematically monitored and that VAT is
    reimbursed within 30 days, as stated in the law.
  • Competition Strengthen the competition authority
    powers to impose sanctions.
  • Human Capital Reduce the wage wedge, which is
    one of the highest in the region.
  • Human Capital Develop and implement a
    comprehensive workforce skills development
    strategy. (TBC)

54
Moldova
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Competition Set up an independent National
    Competition Protection Authority with adequate
    budget and staff to carry out investigations and
    impose remedies and sanctions.
  • Investment Promotion Define and implement a
    comprehensive investment promotion strategy,
    working closely with the Swiss funded OECD
    Investment Compact project in this area.
  • Tax Implement a Code of Ethics for tax
    inspectors and a monitoring system to ensure
    regulations are enforced.
  • Anti-corruption Implement an enforcement law
    requiring officials to declare assets.
  • Regulatory Reform Following an effective
    guillotine approach on legislation, define and
    implement a comprehensive, multi-year regulatory
    reform strategy.
  • Human Capital Develop a comprehensive strategy
    to improve adult and vocational education.

55
Romania
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Investment Promotion Elaborate a comprehensive
    Investment promotion Strategy that includes
    priority sectors and concrete programs to tie
    foreign investment to local investment (SMEs).
    This IP Strategy should also be clearly linked to
    the industrial and export promotion strategies
  • Investment Promotion Strengthen the investment
    Promotion Agency with additional staff and budget
    (aim to double budget from 500,000 Eur to 1
    Million Eur and increase staff to 40 from 19).
    The agency should intensify promotion to
    potential foreign investors through
    country/specific missions and offer clear and
    well-packaged on the ground services for
    potential and existing investors.
  • Implement transparent and consistent standards
    for tax inspectors to impose sanctions and
    monitor the results with pre-defined indicators
    to reduce discretionary power.
  • Regulatory Reform Introduce Regulatory Impact
    Analysis for all newly adopted legislation.
  • Anti-corruption Introduce a system with
    indicators to monitor implementation of the
    public procurement law. This system can then be
    used as basis to monitor other area of
    anti-corruption (such as customs reform,
    professionalism of civil service).
  • Human Capital Adapt the education strategy
    (including vocational training and adult
    learning) to reflect the specific needs of the
    labour market over the next ten years.

56
Serbia
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Competition Establish a Competition Authority to
    enforce the law by carrying out investigations
    and imposing remedies and sanctions.
  • Investment Policy Allow foreign and local
    investors to own all types of land (e.g. urban
    construction land).
  • Anti-corruption Create a comprehensive customs
    anti-corruption Action Plan and system to monitor
    implementation.
  • Anti-corruption Apply the law on public
    procurement and introduce a system to monitor
    implementation.
  • Tax Enforce law to reimburse VAT within 30 days
    and with effective monitoring and application of
    sanctions.
  • Human Capital Develop specific strategies for
    adult and vocational education.

57
Montenegro
Summary of Country Priorities for 2006-2007
(Investment Compact View)
  • OECD IC Recommended Country Priorities
  • Investment Promotion Define and adopt an
    investment promotion strategy that reflects
    government and private sector consensus on the
    investment promotion priorities.
  • Competition Adopt a competition strategy that
    includes appointing an independent competition
    authority with power to investigate
    anti-competition behaviour and impose sanctions
  • Anti-corruption Adopt the new draft law on
    public procurement and enforce effective
    implementation timetable.
  • Regulatory Reform Define and implement a
    long-term regulatory reform strategy and
    implement a RIA programme for all newly adopted
    legislation.
  • Tax Ensure Tax Administration Inspectors are
    based on clear monitoring indicators (e.g. filing
    of returns) instead of discretionary behaviour
    encouraged by needing to meet budget estimates
  • Trade Ensure alignment of technical standards
    with EC standards

58
Next Steps and Key Events
59
2005-2006 Key Events for the Investment Reform
Index
Next Steps and Key Events
60
Preliminary Results
  • All of the results are preliminary.
  • Results will be finalised in July 2006.
  • For any comments or questions please contact
    Georgiana Pop (georgiana.pop_at_oecd.org) Erin
    Hengel (erin.hengel_at_oecd.org)
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