Restarting Investment Promotion in the New Normal

Date Published
August 18, 2020
UNCTAD sees a 40% decline in foreign direct investments in 2020, the largest decline in years.

Investment promotion agencies (IPAs) have an important role to play in jumpstarting economies affected by the pandemic. The task at hand is challenging since businesses are still reeling from the double impact of the health and economic crisis. In spite of that, new opportunities have emerged, particularly in the health, food and agriculture, and technology-related sectors. However, IPAs cannot return to business as usual and must change with the new normal.

A report from the United Nations Conference on Trade and Development (UNCTAD) in July 2020 provides an overview of the coronavirus disease (COVID-19) response of more than 180 national agencies from Africa, Americas, Asia–Pacific, and Europe. It also identifies the challenges, trends, and best practices in investment promotions.

UNCTAD sees a 40% decline in foreign direct investments in 2020, the largest decline in years. Countries have responded with a mix of investment facilitation and liberalization measures. At the same time, there was “intensified screening of foreign investment for national security reasons,” including measures to secure and strengthen domestic capacity on healthcare, pharmaceuticals, and medical supplies and equipment.

Crisis and recovery support

IPAs were called upon to provide crisis support and relief to investors and businesses.

Majority or 77% of IPAs use digital platforms and tools, including social media, to provide information and services related to COVID-19, such as quarantine information, government support for business, and customs issues. The Europeans lead efforts to reach investors through multiple digital channels. On the other hand, 44% of IPAs from emerging economies gave little or no information to address COVID-19 concerns on their website or on social media.

IPAs from Europe and the Asia–Pacific region have started to shift their focus from crisis support to recovery and post-pandemic preparedness as countries ease restrictions and businesses reopen.

Trends in the new normal

Marketing and outreach activities of IPAs will primarily be conducted online and include virtual forums and webinars. The use of social media will increase further to identify investors, engage with stakeholders, and provide and get feedback. Online services will also include investment facilitation, such as business and incentive applications, and aftercare services, such as advice and assistance on restarting operations after lockdown and finding new suppliers.

Some IPAs have also been actively supporting the micro, small, and medium-sized enterprises to preserve the supply chain and the domestic enterprise base. Assistance includes improving their digital skills and helping them shift to e-commerce.

Investment and regional opportunities

New investment areas come from growing demand for essential goods (e.g., food, medical supplies) and technology-driven solutions and from regional opportunities. For example, some countries are vying to become a regional hub for the manufacturing and distribution of food and pharmaceutical products using blockchain and other digital technology.

Common challenges faced by counties have opened opportunities for strategic partnerships among IPAs and with public and private organizations to pool resources and find innovative solutions. Some IPAs have organized joint webinars to share best practices in investment promotion.