As expectations rise about what Foreign Direct investment can deliver, so competition between Investment Promotion Agencies (IPAs) grows. Meanwhile, Governments are becoming more and more demanding about the performance of IPAs and expect to see better returns for the taxpayer.
In my experience this shows itself in different ways. First there is the inevitable downward pressure on budgets, and the attempt to squeeze more output while simultaneously cutting resources. Then there is the desire on the part of Governments to attract more high value FDI, with an approach aimed at focusing more effort on those companies which have the greatest potential to add value to the recipient economy.
Additionality is a third issue. Establishing exactly what influence the IPA has had over a company’s decision to invest is notoriously difficult, especially if the global economy is booming and the company might well have invested with or without the assistance of the IPA.
So how do IPAs respond to these conflicting pressures?
Cost-wise, try cutting out waste, for example by reducing back office functions at home or introducing light touch methods for handling lower value projects.
Results-wise, it is good to revisit your approach to promotion. If you have not already done so, try organising your IPA on a sectoral basis so as to ensure that you are aligned to what you are trying to market – a business growth opportunity defined by a sector.
A focus on aftercare and expansions of existing investments can be cost effective. This often can be linked with better managing of relationships with regional or sub regional partners. Creating a common agenda through mutual trust and effort from all parties can increase results whilst lowering costs.
For more on these topics and on targeting high value FDI read my extended blog
