Seminar “Advanced Information Standard", 27 - 28 October 2010

The Advanced Investment Certification Programme for

Regions in CroatiaThe Advanced Information Standard:

Approach and Methodology

Presentation by Declan Murphy and Dražen Derado

Notes on Presentation and SeminarThe presentation and seminar is divided into four main parts:

1. Part 1 of the presentation and seminar sets the background and outlines the overall strategic approach and main components of the AICPR – Information. It spells out the differences between it and the basic information standard. And explains how this builds on work done to date, investor needs, the quality of information required, etc.

2. Part 2 of the presentation and seminar takes the six modules proposed for the AICPR – Information Standard and explains them in more detail.

3. The second day will focus more on feedback from each county: (5 minute statement + feedback by each county), current status of their information databases, how they see action being taken with AICPR Information Standard and questions/issues of concern, etc. Interactive discussion with the Counties on work to date and the proposed Advanced Information Standard are central in the seminar.

4. The final section will address conclusions, key tasks and next steps

Main Themes of Presentation

1. Background

2. Challenges for Croatia and Regions

3. Importance of Information

4. ICPR standards

5. The Advanced ICPR Modules -- Information

6. Assessing and Certifying Progress

7. Summary Aims and Objectives

Part 1

Background on Overall Programme“DEVELOPMENT OF THE INVESTMENT CLIMATE IN CROATIA”

1. Croatia seeks to be a competitive member of the European Union. The overall programme therefore has the objective of enhancing the business and investment climate across Croatia in order to ensure cohesive regional development (EU terms of reference, 2008)

2. The Programme aims to build on previous work done in Croatia (MELE, CARDs, USAID) and focus on meeting new levels of progress, professionalism and standards with: (1) The Information Standard (2) The Property Standard (3) The Marketing Standard

3. This seminar is concentrated on The Information Standard and in particular on the ‘Advanced Investment Certification Programme for Regions’. In general the Information Standard ‘demonstrates that a Region can meet the information needs of a typical investor and knows how to use the information in a selling situation’ (EU terms of reference, 2008).

4. Attracting new investment is a highly competitive business and The Information Standard is a vital component of the approach taken by countries and regions.

Challenges faced by Croatia

1. Progress achieved in attracting FDI not to level of EU + neighbours

2. How can Croatia’s regions attract more and better quality FDI?

3. Learning from the experiences of other similar size countries (e.g. Ireland, Slovakia, Czech Republic)

4. Work done to date on Information, Property and Marketing Standards needs to be built on so that Croatia becomes a stronger competitor

5. The focus of this presentation is on INFORMATION: specifically the Advanced Investment Certification Programme

• Global economic environment tougher for attracting FDI…

• EC receives major proportion of international FDI (new EC members)

• China, India, South East Asia, Brazil major destinations for FDI. All have professional + aggressive approach to FDI promotion

• Croatia faces increased competition for FDI in the wider South East Europe and the Western Balkans

• The Croatian market is relatively small. Croatia and its regions need to develop an information base and marketing message to attract FDI

BUILDING ON PROGRESSBUILDING ON PROGRESS INTERNATIONAL COMPETITIONINTERNATIONAL COMPETITION

Comparative Performance in FDIIndicator 

Country

FDI Inflowsin 2007 $ billion

FDI Inflowsin 2009 $billion

FDI Inward Total Stock

2009 $ billion

Number of Greenfield Projects in

2009

Number of Greenfield

Projects in 1st Q 2010

Croatia 5 2.6 36.6 28 4

Serbia 3.4 2 25 57 21

BiH 2 0.5 8 20 9

West Balkans Region: Croatia compares well, but falling behind in the no. of greenfield projects

Romania 9.9 6.3 74 201 81

Bulgaria 12.4 4.5 51 101 23

Slovakia 3.6 -5 50 57 24

Czech Rep. 10. 2.7 116 99 40

New and established EU member states: much higher inflows, stock + no. of greenfield projects

Austria 31.2 7 169 73 25

Denmark 17.8 7.8 158 36 10

Ireland 24.7 24.9 193 176 49

Source: UN World Investment Report 2010Source: UN World Investment Report 2010

FDI: How does Croatia compare?1. Croatia compares well with near neighbours in the West Balkans but

recent trends in greenfield projects show Serbia achieving double the Croatian performance. In 2010 BiH is achieving a better performance in greenfield projects (9 v 4). Croatia urgently needs to raise its performance in informing, servicing and attracting FDI.

2. In comparison with recent new entrants to the EU (Romania and Bulgaria) and established EU members that compare in size with Croatia then Croatia is behind these countries on all indicators.

3. Croatia V Ireland: Ireland’s inflows in 2009 were 10 times higher; Ireland’s total stock of FDI in 2009 was 6 times greater; and Ireland had 6 time more greenfield projects than Croatia had in 2009/10.

4. The differences in performance should not be seen in a negative way. They show the OPPORTUNITY AND POTENTIAL FOR CROATIA.

5. In brief, by building a much more competitive approach and putting in place some of the major building blocks (professional and efficient Information, Property, and Marketing Standards) Croatia can move quicker on the path to new levels of FDI and regional development.

Key Questions for RegionsHow to attract international investment to Croatia?How to attract international investment to Croatia?

Counties’ role and commitment to action in this national challenge?Counties’ role and commitment to action in this national challenge?

Concrete steps to achieve results + new levels of investment?Concrete steps to achieve results + new levels of investment?

The AICPR and specifically the Information Standard is an important component

in addressing these questions and issues

The AICPR and specifically the Information Standard is an important component

in addressing these questions and issues

How does Croatia and counties compare with other countries/regions?How does Croatia and counties compare with other countries/regions?

Importance of Information

“More than 70 per cent of investment promotion intermediaries may be

missing out on foreign investment by failing to provide investors with

accurate and timely information”

Source: World Bank Group - Global Investment Promotion Benchmark Report 2009 (213 investment promotion institutions in 181 countries assessed)

“More than 70 per cent of investment promotion intermediaries may be

missing out on foreign investment by failing to provide investors with

accurate and timely information”

Source: World Bank Group - Global Investment Promotion Benchmark Report 2009 (213 investment promotion institutions in 181 countries assessed)

ICPR Standards – MELEThe ICPR StandardsThe standards• To become certified a Region will be rated on its ability to successfully meet

three standards. These standards are based on research carried out into the needs of major international investors and best practice among successful investment attraction agencies.

The Investor Information Standard• Certifies that the Region can meet the information needs of a typical investor

and knows how to use the information is a selling situation. To meet the requirements of the standard a region should;

• Complete a detailed information checklist and identify sources of relevant detailed information for follow-up questions.

• Conduct a survey of existing investors in the region to understand both strengths and weaknesses of the regional ‘product’ and to identify expansion opportunities or investment barriers.

• Develop a local suppliers database to service the needs of targeted investors • Complete a report on one or more high growth potential sectors in the region

Source: Ministry website: www.mingorp.hr

AICPR Information Modules

INTEGRATED WITH PROPERTY + MARKETING STANDARDS INTEGRATED WITH PROPERTY + MARKETING STANDARDS

INVESTOR INFORMATION

INVESTOR INFORMATION

REGIONAL INFORMATION

REGIONAL INFORMATION

COMPANY INFORMATION

COMPANY INFORMATION

SECTORAL INFORMATION

SECTORAL INFORMATION

RESULTS + IMPACT

INFORMATION

RESULTS + IMPACT

INFORMATION

COMPETITIVE-NESS

INFORMATION

COMPETITIVE-NESS

INFORMATION

How the AICPR differs?1. The AICPR Information Standard seeks to bring the standard + quality

of information sources in regions to new levels of excellence.

2. Six easily understood modules are the foundation for the AICPR Information Standard. The standard will have structured integration with other standards (property + marketing).

3. The AICPR will expand existing information, provide new information and include more comparative data for Croatia/regions and competing countries/regions.

4. Use information in a proactive and public way. At present the ‘Investor Checklist’ is an internal tool – the AICPR will seek to select ‘Key Facts for Investors’ from this Checklist and make it more accessible.

5. New modules focus on competitiveness and results + impact of FDI.

INVESTOR INFORMATIONINVESTOR INFORMATION

REGIONAL INFORMATIONREGIONAL INFORMATION

COMPANY INFORMATIONCOMPANY INFORMATION

SECTORAL INFORMATIONSECTORAL INFORMATION

COMPETITIVE-NESSINFORMATION

COMPETITIVE-NESSINFORMATION

RESULTS + IMPACTINFORMATION

RESULTS + IMPACTINFORMATION

Integrated and Strategic Approach

Information Standard

Property Standard

Essential to coordinate the approach and methodology for the three standards and ensure they complement and support each other

Essential to coordinate the approach and methodology for the three standards and ensure they complement and support each other

Marketing StandardMarketing Standard

1. AICPR Information Modules

1. INVESTOR INFORMATION:

(a) Investor Information Checklist (existing checklist in regions – mainly an internal archive) (b) ‘Key Facts for Investors’ – summary statement with key facts, comparative data – for public use and to be updated regularly

2. REGIONAL INFORMATION:

(a) SWOT analysis with focus on opportunities and strategy for the region – an internal process to help counties identify key points(b) Summary regional profile for investors

3. COMPANY INFORMATION:

(a) Company database that shows separately all FDI companies (b) major indigenous companies that are potential business partners and/or potential product, component and service suppliers (c) Database of indigenous companies that are qualified/interested in linkage i.e. supplying FDI companies

2. AICPR Modules and Components

4. SECTORAL INFORMATION: (a) Priority sector information including sector surveys

(b) Sector profiles – short format on target sectors and explains region’s advantages

(c) Sector studies – more elaborate format

5. COMPETITIVENESS INFORMATION: (a) National, regional and county statements on competitiveness

(b) Comparison with other EU and OECD country regions

6. RESULTS + IMPACT INFORMATION: (a) Facts on FDI investment, summary of employment, investment,

exports

(b) Economic contribution (e.g. wages/purchases/tax paid) by FDI companies

Overview on Information StandardInvestor Needs and Key

County Promotion Messages to Investors

InvestorInformation

Regionalinformation

Sectoral Information

Competitive-ness

Information

Building on the Basic Information Standard and Work Undertaken to date

Company information

Results +Impact

Information

InvestorNeeds

AdvancedInformation

Standardmodules

Basic Information

Standard

Assessing the Advanced Standard

Comparative Data

Competitive-ness Focus

Information Accessible

Results + Impact of FDI

Up to date + Systems

Standard + Quality +

Presentation

Focus on Investor

Needs + Use

Summary Aims of AICPR - Information Use+ build on work done to date and bring counties/regions to new levels of expertise in information?

Use+ build on work done to date and bring counties/regions to new levels of expertise in information?

Strengthen regional skills and their capabilities in gathering, presenting + maintaining information ?

Strengthen regional skills and their capabilities in gathering, presenting + maintaining information ?

Ensure information is relevant, focused on investor needs, accurate, systematic, easily accessible and user-friendly?

Ensure information is relevant, focused on investor needs, accurate, systematic, easily accessible and user-friendly?

AICPR Information Modules

INTEGRATED WITH PROPERTY + MARKETING STANDARDS INTEGRATED WITH PROPERTY + MARKETING STANDARDS

INVESTOR INFORMATION

INVESTOR INFORMATION

REGIONAL INFORMATION

REGIONAL INFORMATION

COMPANY INFORMATION

COMPANY INFORMATION

SECTORAL INFORMATION

SECTORAL INFORMATION

RESULTS + IMPACT

INFORMATION

RESULTS + IMPACT

INFORMATION

COMPETITIVE-NESS

INFORMATION

COMPETITIVE-NESS

INFORMATION

Any Any questions?questions?

Thank you …