WAIPA


To what extent does IPA best practice change depending on the level of advancement of the country’s economic and legal frameworks? The gap between IPA practices between ‘developing’ and ‘developed’ countries has narrowed significantly. You increasingly see middle-income countries in particular demonstrate very sophisticated ways of tackling the four functions that I mentioned earlier. The playing field has certainly leveled significantly.


Some have noted governments’ more interventionist approach in their FDI policies and participation in deal approvals. Have you also noticed this trend, and how do you see it impacting the work of IPAs? FDI has moved to the top of the national agenda in many countries – from emerging to mature markets. This, in and by itself, implies more government involvement, and hence, this enhances and creates more challenges for the work of IPAs to be the interface between businesses and their governments.


This trend is really consistent with the gap being narrowed between


mature and maturing markets, as it has moved up the agenda in many developed nations as well.


How important is a sector’s first inbound deal in opening the market to future investors? It’s very important from the standpoint of testimonials, and a recent Waipa survey revealed that the core marketing strategy for most IPAs is based on testimonials. And a sector’s first inbound deal, depending on how important the incoming investment is, is a major endorsement, so to speak, of that country.


And depending on the sector, the first deal can also signal to other


corporations what the government’s stance is on foreign investments in that area. This differs substantially, however, from sector to sector. Certain sectors such as defence are extremely sensitive even in mature markets. Natural resource sectors are also somewhat sensitive.


“ WWW.IFLR.COM


The core marketing strategy for most IPAs is based on testimonials


Carlos Bronzatto Executive director, World Association of Investment Promotion Agencies


Geneva, Switzerland W: www2.waipa.org


EXPERT ANALYSIS So the first deal in a sensitive sector is not, in itself, likely to open that


sector to other foreign investors as compared to the first deal in a less sensitive sector.


Last year marked the first time FDI into emerging markets exceeded volumes into developed markets. Which countries, and sectors, do you see as the markets to watch? Again, this is consistent with my previous comments regarding how the gaps between markets are narrowing. In addition to the statistics you mention, it seems that this year’s outflows from emerging markets have also exceeded the volumes the outflows from developed markets. So another barrier has been broken regarding dealflow.


I think that naturally, the BRIC [Brazil, Russia, India and China]


countries and other emerging nations such as Turkey, Mexico, and Indonesia will increasingly be at the forefront of deal activity. But I expect, going forward, there will be a bit of a rebalancing regarding where inflows and outflows, which means there will be more competition as well as possibly a fairer distribution worldwide of long-term productive investment.


An example of this rebalancing is the incipient trend of some corporates


in areas such as manufacturing choosing to re-localise back to their original mature markets as labour costs in some emerging nations rise


What is your top piece of advice to investors considering a foreign investment in an emerging market? They must remember that the international media does not always reflect the actual local conditions in emerging markets – these are often more positive than portrayed by the international business press.


Also, the perception of risk, after 2008, has substantially changed. So


rather than looking at ratings investors should do their own diligence, engage with local governments, and speak to longer-established investors to help them make their own assessments of return on investment based on the experience of those that are already operating in the country.


What are Waipa’s priorities for the coming 12 months? Waipa is engaging a new strategic plan, pursuant to which our research capacity will expand by further building the intelligence and research unit. We will also enhance our advocacy activities regarding the role of IPAs before their own governments, and try to actually guide governments and businesses into looking at the right investment metrics and signals in an unbiased way.


About the contributor A Brazilian/Italian national, Carlos Bronzatto obtained his law degree from the Federal University of Rio Grande do Sul, in Brazil. After internships and trainee positions, he commenced corporate law practice in 1994 at Demarest & Almeida (Sao Paulo), where he was involved in large M&A deals, privatisations and eurobond issuances out of Brazil. In late 1995, he joined Banco Multiplic (Sao Paulo) where he helped structure local companies’ trade and corporate finance transactions.


In 1998 Bronzatto joined Chadbourne & Parke in New York as a foreign associate, and then in 2000 he obtained a master’s degree in banking, corporate and finance law from Fordham University School of Law, in New York. After his masters, he then joined Shearman & Sterling, becoming part of the firm’s Latin American team within its corporate finance division. He serviced Spanish-speaking Latin American as well as Brazilian issuers of equity and debt.


As executive director of the World Association of Investment Promotion Agencies (Waipa) Bronzatto advises governments in their investment promotion framework. He is also responsible for the content of Waipa conferences, training and other initiatives. He has been based in Geneva, Switzerland since 2008.


IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014 9


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