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Virtual Institute Chief, Vlasta Macku (left) and UNCTAD's Mohamed Chiraz BalyMore than 30 participants from Vi core Moroccan member, Université Mohammed V – Souissi, and other institutions, including the External Trade Ministry and the Agence marocaine de développement des investissements, gathered for a videoconference on UNCTAD's 2015 World Investment Report (WIR) December 7.

The presentation by Mohamed Chiraz Baly, of UNCTAD’s Division of Investment and Entreprise, outlined recent global investment trends and discussed the reform of the investment regime and issues related to tax avoidance.

“Global foreign direct investment (FDI) inflows declined in 2014, mostly because of the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks,” he said.

“Despite the decline, developing economies are increasingly important as a destination of such investment flows,” Chiraz Baly noted. “China became the world’s largest recipient of FDI, surpassing the United States. Among the top 10 FDI recipients in the world, 5 are developing economies.”

Both UNCTAD’s FDI forecast model and its business survey of large multinational enterprises (MNEs) signal a rise in FDI flows in the coming years.

“The continued strong profitability and large cash holdings of MNEs suggest that the capacity to invest is significant,” he said. “However, a number of economic and political risks may darken the outlook.”

Regarding the environment for FDI, Chiraz Bali noted that countries’ investment measures continue to be geared predominantly towards investment liberalization, promotion and facilitation.

“A number of countries introduced or amended their investment laws or guidelines to grant new investment incentives, or to facilitate investment procedures, in particular in the services sector,” he explained.

In terms of international investment policies, Chiraz Bali said that 31 new international investment agreements (IIA) were concluded in 2014. Canada was the most active country, with seven new treaties. IIAs currently number 3,271 treaties.

However, “there is a pressing need for systematic reform of the global IIA regime to ensure that it works for all stakeholders”, he asserted.

The WIR 2015 offers an action menu for such reform. Among the challenges, one is safeguarding the right to regulate in the public interest to ensure that IIAs' limits on the sovereignty of States do not unduly constrain public policymaking.

“It is also crucial to enhance the systemic consistency of the IIA regime to overcome the gaps, overlaps and inconsistencies of the current system, and to establish coherence in investment relationships,” he added. “Policymakers need to find the right balance, meeting reform needs while maintaining the investment protection rationale of IIAs.”

To conclude, Chiraz Bali highlighted the significant contribution of MNE foreign affiliates to government budgets in developing countries, estimated at approximately $730 billion annually. He went on to outline WIR 2015 proposals fpr a set of principles and guidelines to ensure coherence between international tax and investment policies. 

“The policy imperative is to take action against tax avoidance to support domestic resource mobilization and continue to facilitate productive investment for sustainable development,” he said.

 

 

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