Introduction to Project Life Cycle Management€¦ · zPre-investment data }Cost of factors (energy, labour, transport etc.) Æupdated ... matters), real estate….}Regional and local

Med-Academy Intro to FDI IssuesBénédict de Saint-LaurentMarseille, 14 January 2009

Introduction to Project Life Cycle ManagementFrom intelligence & lead generation to project handling and after-care

www.invest-in-med.euJanuary 2009 © inMed-ANIMA 2009

Investment Project Life Cycle

2

www.invest-in-med.euJanuary 2009 © inMed-ANIMA 2009 3

Needed information to adress inquiries from potential investors

Exercise. Can you imagine what resources you have to collect?In order to address the needs of the average investor?Anyway, does he/she exist, the average investor?Then, what to do?How can you prepare the most probable requests?


What type of resources?Resource data base/FAQs

Selling pointsSector overviewsDigests on labour /law /subsidiesCompanies already installed (per region, sector, country of origin)StatisticsMaps, photos, images

Pre-investment data Cost of factors (energy, labour, transport etc.) updatedImmediately available land/offices for projectsIn some cases (Ireland), pre-defined business models (IRR etc.)

Case study: The Invest in France resource centre


Example: Invest in France resource centre In-sourced:

General dataEconomic, sectoral, national…

Out-sourced:Specific data and market studiesLocation infosNetwork of partners: consultants, other ministries (fiscal matters), real estate….Regional and local data

Partnership: in France, with regions; worldwide, with trade missions (« missions économiques ») Built around an intranet –hundreds of pages thousands of documents (same for ANIMA about MEDA)Managed by 1 central operational unit in Paris


Investment intelligence

Knowledge management

"Manual" management via media, contacts, consultants

Resource databases

Information tracking, in particular via internet

Computer-aided tools (Autonomy etc.)

Selection and evaluation of information, exploitation of alarms

Case study: the ANIMA intelligence system


Example: ANIMA intelligence

• FDI projects• Prospects

• Small projects (franchise, rep. office)

InternetWebwatcher /Monitoring

of companies

Others sourcesNewsletters, events,

listings

Direct information

ANIMA team

RecordsIPAs & other

partners

Factiva economic newsflow (>15,000 news per day) Reuters -Dow Jones etc.

Open databasese. g. Kompass, Google, etc.

Semantic Analysis via AFII

Selection of ±2,000 news and alerts per year

for MED

MIPOMediterranean

Investment Project Observatory

VigieInvest in France FDI

data base on 30 European countries

Benchmarkinge. g. with East. Europe


Sources: a. Data banks

Professional data banks, e. g.

Lexis-Nexis : more than 33,000 press sourcesFactiva

(Reuters/Dow-Jones): 10,000 news a dayDun & Bradstreet:

financial information on about 63 million companies and allows to know the localisation of all their branches


Sources: b. InternetInternet

Follow-up of all the internet sites from companies identified from other sourcesIn addition, search engines working on the major internet portals (professional sites, financial news…)

Fidélisation


Sources: c. Newsletters & RSS


Examples of FDI intelligence outputs:Value-added investments

Company Host Size ProjectRenault-Nissan (France)

Morocco € 600 mLarge automotive export complex in Tangiers free zone

Delphi (USA) Morocco 3 000 jobsRelocation of Spanish automotive production in Tangiers

Al Ezz (Egypt) Algeria US$ 750 m New steel plant in the Jijel regionEl Sewedy (Egypt)

Libya US$ 64 m New cable factory with State-owned partners

TAV (Turkey) Tunisia € 500m BOT for the Enfidha airportNational Bank of Kuwait (Kuweit)

Egypt US$ 516 mCompetitive tender to buy Egypt's Al Watany Bank

Orascom / OCI (Egypt)

Turkey US$ 508 m Buy out of Turkish Baticim (cement)

SanDisk (USA) Israel US$ 400 m New stake in Tower SemiconductorsTéléperformance (France)

Egypt 600 jobsNew 600 positions call centre for English-speaking customers

Theolia (France) Morocco 250 jobsThe renewable energy specialist creates a group with 4 subsidiaries in Casablanca

Industrial polarisation

effect

Intra-MEDA FDIs

Creation of a MEDA financial market

Novel projects

Selection among 800 projects for 2007 (MIPO, ANIMA)


Outputs: Building int’al infrastructureTop ten FDI projects in 2007 so far (MIPO, ANIMA)

Company Host Amount ProjectEmaar (Emirates) Algeria US$ 20 bn Major real estate projects in Greater AlgiersENI (Italy) Egypt US$12 bn Egyptian natural gas projectsReliance (India) Egypt US$ 10 bn Petrochemical plants in EgyptDubai Holding (Emirates)

Turkey € 5 bnNew Dubai towers and other real estate projects in Istanbul

BP (UK) Egypt US$ 5 bnVarious investments in Egyptian oil industry over 5 yrs

TAQA (Emirates) Algeria US$ 4 bn New petrochemical plant in ArzewMubadala & Dubal (Emirates)

AlgeriaUS$ 3.74

bnAluminium smelter through a JV with Sonatrach-Sonelgaz

Malay. Airports (Malaysia)

TurkeyUS$ 3.45

bnBuilding and operation of a new terminal for the Sabiha Gokcen Airport

Emaar (Emirates) Egypt US$ 3 bn Mega-project in real estate in Cairo Citigroup (USA) Turkey US$ 3.1 bn Acquisition of 20% of AkbankFraport (Germany)

Turkey € 2 370 mBOT for 3 terminals at Antalya, Turkey's 2nd-largest airport

Real estate, logistics

Oil and industry

Banking


Outputs: 1,000 world companieshaving recently invested in MEDA Source: MIPO


Turkey274 projects

Algeria279 projects

3 505

2 267

6 355

2 363

Algeria279 projects

3 505

2 267

6 355

2 363

Morocco450 projects

3 375

5 397

4 153

2 382

Morocco450 projects

3 375

5 397

4 153

2 382 Tunisia177 projects

95217

998

3 969

Tunisia177 projects

95217

998

3 969

Cyprus25 projects

0 1408

152

Cyprus25 projects

0 1408

152

Malta22 projects

1 0 14367

Malta22 projects

1 0 14367

2003 2004 2005 2006

FDI inward flows, €m, MIPO2003 2004 2005 20062003 2004 2005 2006

FDI inward flows, €m, MIPO

Egypte284

projects

477

15 862

2 102

9 003

Egypte284

projects

477

15 862

2 102

9 003

477

15 862

2 102

9 003

Israel211 projects

1 153

131

13 758

5 922

Israel211 projects

1 153

131

13 758

5 922

Jordan119 projects

119

2 0491 324

2 901

Jordan119 projects

119

2 0491 324

Jordan119 projects

119

2 0491 324

2 901

Lebanon77 projects

384813

643

700

Lebanon77 projects

384813

643

700 Syria118 projects

4 970

146444

2 982

Syria118 projects

4 970

146444

2 982

4 970

146444

2 982

582

12 936

2 712

14 070

582

12 936

2 712

14 070

Palestine Auth.

11 projects

10801

289

Palestine Auth.

11 projects

10801

289

MEDA share of world FDI

0.7%1.5%

0.9%1.9% 1.7%

3.3%4.1%

0%1%2%3%4%5%

2000 2001 2002 2003 2004 2005 2006

Outputs:A growing piece of the cake


Outputs: Country& sector

positioningMIPO 2003-2006

IsraelHigh techOrigin US

Maghreb & TurkeyTraditional industries,Telecom, off-shoring

& sub-contractingOrigin Europe

MachreqMega-projectsFinance, real

estate, tourism

Origin Gulf & Asia

Method: principal components analysis over 2,088 projects


Project generationGoals

Target investors Search, identify and qualify projects

MeansTargetingUse of economic intelligence (analysis, alerts etc.)Use of promotion toolsDevelopment of a prospection network Co-operation between prospectors or consultants, the national agency, the host sitesUse of the existing resources of the country (e.g. commercial attachés of the Embassies, acting as "business developers”) Training (information tracking, listening, negotiation, culturalapproach)


Targeting: a mustFrequent error: engage in pro-active promotion without targetingTargeting by sector, product and nationality

Based on a clear understanding of comparative and competitive advantages A pre-requisite for success

Firm-specific targetingCustomised approach of individual investors The most effective promotional techniquePrivate sector must be involved to ensure success

Targeting is especially critical for small IPAs/countrieswith limited resources

Case study: Invest in Denmark


Reasons for targeting

1. No country or territory is good in all sectors –or, if so, it does not need any EDA or invesment promotion!

2. Competition is intensifying in FDI business3. Focus your efforts on your best FDI prospects4. Targeting implies to be specific: targeted companies to discuss

precise niches or business opportunities in the host country

5. Targeting obliges you to understand how your partner/investor is reasoning

6. Investors respond best to material relevant to them7. Targeting provides higher rates of projects effectively

implemented

8. Targeting is more cost effective than untargeted marketing


General targetingSectors and functions

Industrial firms: production, assembling, R&D, logisticsService firms: software, e-business, engineering, call-centre, service centreAdditional segmentations for manufacturing projects: nature of product, market, technologies and skills needed

Category of investmentInvestment “greenfield” – New plantAcquisition of existing plant (re-conversion)Re-investment (extension)

Wide use of internet and data bases


Specific targeting

Selection of a first panel of firmsEconomic criteria such as total turnover and number of employees

Creation of a “Golden List” on a data bank Built on the basis of investment intelligence and daily economic watch

Specific selection of “key accounts” / local industrial groups


Reactive project generation

“Responding to investor enquiries”

Advantages:Enquiries are serious and from companies with a real interest for your locationThe potential for winning the project is realistic

Disadvantages:You will undoubtedly miss opportunities for your location from investors that have not pre-selected you, but for whom your location offers opportunitiesThis activity alone does not contribute to a long term economic development strategy with a focus on stimulating inward investment in certain sectors

Source: IBM-PLI


Proactive project generation “Identifying Investment Prospects before they become enquiries”

Advantages:Proactive marketing strongly contributes to the national economic development strategy by stimulating investment in certain industriesThere are chances of winning the project by being the first IPA to contact the companyIn times of global competition it is essential to be ahead of the game

Disadvantages:Requires more and dedicated resourcesRequires greater sectoral and commercial understanding

Source: IBM-PLI


A good recipe: copy the investor!

2. Create long-list of candidate locations Then identify shortlist

The investor decision process The ED marketing process

2. Product definitionWhat do we sell?

1. PositioningSWOT, comparative advantages, country industrial strategies

4. Site proposal Information & negotiation

5. After-care

3. Selection of target group & identification of

potential investors Company targeting

4. Due diligence and negotiations

5. Implementation

3. Evaluate short-listed locations Then select preferred location

1. Strategic decision & project parametersProduce what and how, market

Source: Richard Banks and others


Abundant seeds, limited cropGoal

FDI

Investment Approvals

Investment Applications

Investor Reconnaissance Visits

Meetings with Individual Prospective Investors

Investor Contacts Generatedby Promotional Activities

National Objectives

No. of Investments

No. of Project Approvals

Require

No. of Project Applications

No. of Site Visits

Require

No. of Meetings/Presentations

No. of Investor Contacts

Require

Require

Require

1,000 jobs

10 new investments

18 approvals

20 applications

100 site visits

1,000 meetings

10,000 contacts

Source: TSG


Prospection networkExample of Invest in France

IFA OfficesAmsterdamAtlanta (in 2007)BarcelonaBrusselsChicagoDusseldorfFrankfortLondonMadridMilanNagoyaNew YorkOsakaPalo AltoShanghaiStockholmTokyoZurich

IFA branches in Economic missionsDelhiHong KongMoscow (in 2007)SeoulTaipeiTel Aviv (in 2007)Toronto (in 2006)

Countries of interestSouth AfricaArgentinaAustraliaAustriaBrazilChiliDenmark

Egypt

U.A.E.FinlandGreeceIrlandIslandKuweitMalaisiaMexico

NorwayPolandPortugalSaudi ArabiaSingapourThailandCzechoslovakiaTurkey

Attracting international investment


Prospection network Example of Invest Sweden - ISA


Project qualificationStrategic interest of the project

For the investorFor the country

Project stage (feasibility, financing, implementation)Estimated timetable (decision date, main deadlines)Subjective elements influencing the decision

ProbabilityOf an effective launch of the projectTo get the project for the country /the sitePossible doubts and questions on the project (economic feasibility, technology risk, fragility of the mother company, investor’s track records etc.)

Proposed attitude for the IPA Stop, or yellow light (go if), or green light (reasonable effortto be done to get the project)


Effort in project qualification: the « contract review »

Materiality & credibility of the projectDue diligence & project economics (is it viable, serious?)Estimating the probability of winning Timescale (decision schedule)Non-economic considerations Allocating IPA effort reasonably

Content of an offerClear specifications from prospectorsLocal vs. national elements Fixed vs. variable elementsElectronic vs. paper offersNeed for synthesis in case of offers on multiple sites

How to add value to an offer?


Data to be collected on the project1. Project objectives (market share, potential clients)2. Type of investment (greenfield, extension, partnership) 3. Production considered4. Transfer of specific technologies5. Job creation (production, logistics /commercial, admin.)6. Global economic impact (spillovers, linkages etc.)7. Amount of investment, funding (and self-financing share)8. Structure and ownership considered 9. Timing (decision date, investment date, start date)10. Decision process (status? who decides?)11. Geographical flexibility (mobile project?) and competitors12. Localisation strategy (main criteria, priorities, needs)13. Specific needs (labour, training, land, buildings, sub-contracting,

utilities, infrastructure and services, R&D…)14. Aids and support sought


Investor servicing

1. Project handling & Offers to investors2. Investment facilitation & one-stop shops3. Follow-up, after-sale, after-care, clubs etc.


Project handling

GoalsNurture potential and existing investorsTransform prospects into real projectsSpeed up implementation and add value

MeansAnswering day to day questionsAdapted web site (FAQ, facts, data)Effort in project qualificationPreparation of relevant offersSupport projects (financial and fiscal aids, facilitation)


Among other functions:Feed the decision process within the company

Industrial level (sector-based information, technical input..)Financial level (DB, incentives, costs…)Decisional level

Feed the project formalisation process Geographical issue (location identification)Real-estate issue (technical criteria)Industrial issue (suppliers, utilities)Human resources issue (typology of employment) etc.

Suggest partners, ideas etc.

Project handling


Offer preparation strategyMore and more, projects are won after “tenders”Hence the need to prepare formal offersConditions to win

Good qualification –good RFPs or brief for the EDAIssues really strategic for the investorPrecisely tackled in the IPA offer

Use of pre-existing resources Pre-investment dataKnowledge management (resource centre)

Electronic offers, unless requiredSimple presentation (often, Power Point)Encapsulated into an Acrobat PDF file

Method

Packaging


Efficient offersThe do

Acknowledgement of receipt in 24 hoursStandardisation /offer format (PDF, PowerPoint, templates)Pre-investement dataImportance of personal contacts /feeling /reportingAppointment of an identified counterpartRegular information and follow-up

The don’tsSend documents under standard (poor English, bad presentation, errors...)Give illusions via unreliable promises (« for me, X. is the country of the eternal potential »)Make contact with VIPs/ top level without real content /newsCompete badly with other fellow national operators


Template for a synoptic offerLettre d’envoi / Letter II. Résumé / Executive summary

A. Votre projet, vos besoins / Our Understanding of Your NeedsB. Vos priorités / Your PrioritiesC. Notre engagement à vos côtés / Our Commitment to your ProjectD. Caractéristiques du secteur en France / Specifics of the Industry in FranceE. Synthèse des meilleures offres françaises / Synopsis of the Best French BidsF. Vos contacts / Your contacts

III. Infos AFII / Invest in France Information Package

Site internet / Web siteArgumentaires / Investment rationale in FranceAutres données (fiscales, réglementaires) /Other Info (law etc.)

IV. Offre de la région A/Region A OfferChiffres-clés, plans de situation / Key Figures,

Location, MapsUne région attractive. Les « plus » / Region

A Attractiveness. The « plusses »Contexte d’activité et secteur /Your Business

Environment& Sector in Region ARéseau d’entreprises, recherche etc. /

Company Network, R&D…Communication, logistique, services /

/Communication, Logistics, ServicesEducation, formation, marché du travail /

Education, Training, Labour MarketCulture et qualité de vie / Culture and Quality

of LifePrésence de votre pays /Your Country’s

PresenceSites proposés / Proposed LocationsLes aides / Investment Support

V. Offre de la région B / Region B Offer


ObjectivesDeliver on time –precede needs if possible…

Save money (DHL and printouts are expensive)Save time Get quick feedbackCustomised offers… but standardisation

Go to the point

Pre-investment data

Templates


The financial package

Subsidies, grants, tax exemptions, loans, land and building facilities etc.EU and WTO rules limiting the distortion of competitionUsefulness and limits of economic intervention by the public authorities How to get rid of « aid seekers » ?


Administrative facilitation & other services

E-administrationOne-stop-shopsProtecting investors against red tape abuses / corruptionExtra services: HR recruitment & training packages, facilitation for expat executives (housing, working visas, international schools), etc.


It is 7 times more expensive to land a new customer than to sell to an existing one

Former Chairman of Ford UK

Local development benefits from FDI will not come about at once

Incremental investment can account for 60% of investment flows in Western European countries

According to PWC Consulting, 2/3 of companies say that after-care influences their expansion plans

Perception of host country = key trigger for investment

Positive impact for potential investors of witnessing existing investor expansion

Why is after-care so important?


After-care: some targetsKey projects or issues

Re-investment, production unit expansionCo-investment opportunitiesSector/cluster development initiativesRisks of closure or vulnerable industryLicences, privatisations

Key players in target sectors: foreign-owned firms per sector, country of origin, function

Multinationals with foreign/local clients/suppliersPotential for new types of activity, for growth, for suppliers

MNCs and foreign-owned firms whose know-how could be used/ developed locally to integrate suppliers

Reinforcement of the supply chain value‘Embedding’ companies more strongly in the territory

Retention of existing companies


After-care: methodsKnowledge of impatriates

Follow-up of prospects and projects (data bases, maps etc.) Cf. British companies in France

After-sales service Importance of nurturing companies after investmentCultural differences (e. g. Japanese investors, often gregarious)Information, news, facilitation, “clubs” for existing investors, taking care of expatriate families

Marketing activitiesConferences, seminars, exhibitions, conventionsDirect mail to companies, satisfaction surveys etc.

Links with private firms, networks, resourcesLinks with local Chambers, Employers’ AssociationsLinks with Universities, vocational training centres


After-care: example

Knowledge of the existing foreign basis per nationalityExample of UK companies in France

Total UK and Irish investments in France:

1,800 companies200,000 jobs

UK and Irish investment flows in France:

40/50 projects per year2,000/3,000 new jobs per year€ 12/13 bn per year


The image of the aircraft(given by a foreign investor in a MEDA country)

As a plane, the investor has landed in the countryThe plane has stopped on the runway and seems abandonned…

No information about parkingNo luggage handlingNo passenger handlingPoor condition of the airport

Importance of follow-up Re-investment account for less than 10% of FDI flows for MEDAMost IPAs/EDAs are either waiting passively or searching abroad (when the resource is here)


Back to Policy advocacyGoal 1: increase country attractiveness

Political and social stabilityLegal frameworkSocial legislation Training of the workforce

Goal 2: build a business environment favourable to investors

Sectoral regulations for project approvalProtection of the investorTaxation, repatriation of profitsTech-parksReal estate, infrastructure and "utilities" Venture capital Facilities offered to expats


Facilitate investment and exchanges

Location criteria for investorsImportance of qualitative factors (personal experience and links, confidence, political stability of the system, consistency speech vs. reality)Discrepancies between the "official" framework and local practices Bureaucracy, other obstacles and costs (red tape)Technical barriers to commercial exchangesStandards and qualifications Be the advocate of foreign investors vis-à-vis the Government


Required changes in mindsetsCurrent attitude

A public administration “granting” authorisations (and sometimes tax exemptions) to those investors who take the risk to come in your country/territoryBetter than creating bureaucratic obstacles, of course

New mindsets 1. Consider that the investor is a client, a customer and must be served (investor servicing, after-sale, after-care)2. Understand that FDI is now a world market, that it is not the investor who receives a privilege when he gets a licence to invest here (but the contrary: the territory is privileged…)3. Realise that passive investment promotion and FDI facilitation must be complemented by a pro-active search for targets (often abroad) fitted to your competitive strengths

Documents

Introduction to Project Life Cycle Management€¦ · zPre-investment data }Cost of factors (energy, labour, transport etc.) Æupdated ... matters), real estate….}Regional and local