In a bid to facilitate foreign direct investment, 12 developing nations signed 22 bilateral investment pacts during a fortnight of negotiations that wrapped up Friday in Sapporo under the auspices of the United Nations Conference on Trade and Development.
“We are happy to see that it is actually very successful beyond our expectation,” Karl Sauvant, officer-in-charge of UNCTAD’s Division on Investment, Technology and Enterprise Development, said in Tokyo on Thursday, ahead of Friday’s closing of the Sapporo session.
The session was the first time that UNCTAD has sponsored such intensive negotiations.
The conclusion of the bilateral investment pacts is counted on to boost investment both from within and outside those developing countries, providing potential investors with a stable legal framework and a certain predictability.
Among the 12 countries, Cambodia concluded bilateral treaties with Croatia, Egypt, Laos, Myanmar and the Philippines, while Croatia signed treaties with India, Laos and Peru.
“Twenty-two international treaties is probably the greatest number of treaties signed and negotiated and initialed over a two-week period,” said Sauvant, who was accompanied by Masataka Fujita, UNCTAD’s transnational corporations affairs officer.
Sauvant paid tribute to late Prime Minister Keizo Obuchi, who initiated the Sapporo round and pledged Japan’s financing of the scheme during UNCTAD’s Bangkok meeting in February.
With the Japanese government’s funding through the U.N. Development Program, UNCTAD provided the participants in Sapporo with expert advice, facilities, secretarial assistance and travel funds.
“Foreign direct investment is central to development,” Sauvant stressed. “To attract foreign direct investment, you need good regulatory framework. And increasingly, it is important that you have an international framework at a bilateral level, which gives a certain amount of protection and security to foreign investors.”
As of the end of 1999, the investment inflows to developing countries amounted to $190 billion –compared with $6 billion logged at the beginning of the 1980s — due to increasing cross-border mergers and acquisitions.
A total of 1,885 bilateral investment treaties had been concluded among 174 countries as of 1999, with 498 concluded among developing countries in parallel with increasing foreign direct investment originating in developing nations.
“It is increasingly becoming important for developing countries to conclude bilateral investment treaties among themselves in order to send a signal to the international business community that these countries are open for business,” Sauvant said.
However, concluding bilateral investment pacts “was not all easy,” he said. “In the end, a number of treaties were negotiated but not finalized.”
At issue was the question of equal treatment of foreign and domestic players, as some countries want to maintain preferential treatment of their indigenous players to protect domestic industries, he added.
“I think this was certainly, as far as I know, one of the issues which require further discussion.”