PROGRESS IN INVESTMENT REFORM INVESTMENT REFORM INDEX

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Preliminary Results
PROGRESS IN INVESTMENT REFORMINVESTMENT REFORM
INDEX
12 May 2006 Investment Compact Project Team
Meeting Rome, Italy
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Agenda

• Overview of Investment Reform Index
• Progress in Investment Reform in SEE
  Preliminary Results
• Summary of Good Practice in SEE and CEE
• Summary of Country Priorities for 2006-2007
  (Investment Compact View)
• Next Steps and Key Events

3
Overview of Investment Reform Index
4
Overview of Investment Reform Index
The Investment Reform Index and the Investment
Compact
Focus of Investment Compact Program
A. Enterprise and SME Development
B. Policy and Promotion Specific to FDI
Investment Reform Index Enterprise Policy
Performance Assessment (EPPA) Peer Review
1. Monitoring and Evaluation
Country Investment Policy Analysis and
Implementation
Investor Forum Sector Specific Regional
Investment Promotion
Enterprise Forum
2. Implemen-tation Support
4 Areas
Structured Public/Private Debate
Regional Foreign Investors Council, White Book
and Reality Checks
Enterprise Policy Performance Assessment
3. Private Sector Support
Annual Ministerial for SEE Region Programme for
Parliamentary Support
4. Political Support
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Overview of Investment Reform Index
The IRI is guided by four key objectives
Regional Collab-oration and Peer Review
Targeted Support in Imple-mentation
Public and Private Sector Involvement
Structured Evaluation
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Overview of Investment Reform Index
The IRI measures implementation of reform in 10
key dimensions
Main focus of evaluation in 2006
Part of a separate process conducted in
cooperation with the EC in the framework of the
European Charter for Small Enterprises
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Overview of Investment Reform Index
Each dimension is broken down into main
sub-dimensions Example Tax Policy
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Overview of Investment Reform Index
Each sub-dimension is broken down into core
indicators Example Tax Policy ? Tax
Administration
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Overview of Investment Reform Index
Each indicator is broken down into levels of
reform Example Tax Policy ? Tax Administration
Note This table has been simplified for
presentation purposes each level of reform is
fully detailed in the actual IRI.
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Overview of Investment Reform Index
Gathering information for scores will follow a
specific process Example Anti-Corruption
CET
Investment Compact
Private Sector
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Overview of Investment Reform Index
The Investment Reform Index is organised to
involve all levels in the evaluation and input
process

• IC Core Team collects data and interviews OECD
  Experts to establish a preliminary level of
  progress for each country in each policy
  dimension
• Local consultants build from the first
  measurement by collecting primary data in the
  countries and conducting interviews with local
  experts. The results analysed by the IC Core Team
  and incorporated into the level of progress
• The Private Sector and the Country Economic Team
  evaluate the latest measure. This provides an
  opportunity to step back and analyse the
  measurements in a broader context. After
  consultation mechanisms are complete, all parties
  confirm a final measurement, which is published

Local Consultants Country Economic Team
IC Core Team
Private Sector
OECD Experts Local Experts
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Overview of Investment Reform Index
How the IRI is different from other indices
The OECD Investment Compact IRI relative to other
indices from international organisations

• Main Differentiating factors of the IRI
• Focus on a very specific region where history,
  culture and geography allow for more relevant
  benchmarking between countries.
• Tripartite participatory approach to evaluation
  and measurement including government, private
  sector, and the OECD.
• Comprehensive evaluation of the investment
  environment structured along ten key dimensions
  in line with OECD standards.
• Does not only measure but also provides guidance
  on how to improve through good practices.
• Meta Index which incorporates existing work
  already conducted by other organisations (e.g.,
  World Banks Doing Business report).

Process
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Progress in Investment Reform in SEE
Preliminary Results
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1. Investment Policy
Progress in Investment Reform in SEE
Preliminary Results
15
1. Investment Promotion
Progress in Investment Reform in SEE
Preliminary Results
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1. Investment Policy
Progress in Investment Reform in SEE
Preliminary Results

Bulgaria, Romania
Albania, Montenegro, Moldova
Croatia
FYRoM, Serbia
Bulgaria, Romania, Croatia
Albania, FYRoM, Moldova, Montenegro

Serbia
Albania, FYROM, Montenegro
Bulgaria, Romania
Croatia, Serbia
Moldova
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1. Investment Promotion
Progress in Investment Reform in SEE
Preliminary Results
Albania, Croatia, Moldova, Montenegro

Bulgaria
Romania
Serbia
FYRoM
Albania, Croatia, FYRoM, Moldova
Bulgaria
Romania, Serbia
Montenegro

Albania, Croatia, FYRoM, Moldova, Romania Serbia
Bulgaria
Montenegro
Albania, Romania, Serbia
Bulgaria
FYRoM, Montenegro
Croatia, Moldova
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania, Croatia, FYRoM, Serbia, Montenegro,
Moldova
Bulgaria, Romania
Albania, Croatia
Bulgaria, FYRoM, Romania, Serbia, Montenegro,
Moldova
Bulgaria, Romania
Croatia, FYRoM, Serbia
Albania, Moldova, Montenegro
Albania, Moldova, Romania, Serbia, Montenegro
Bulgaria, Croatia, FYRoM
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2. Tax Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania, Moldova, Montenegro
Croatia, FYRoM, Serbia
Bulgaria, Romania
Albania, FYRoM, Moldova, Montenegro
Croatia, Romania, Serbia
Bulgaria
Albania, Moldova, Montenegro
Romania, Croatia
Bulgaria
FYRoM, Serbia
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3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
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3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
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3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
Moldova
Croatia, Romania
FYRoM, Montenegro, Serbia
Albania, Bulgaria
Albania, Montenegro, Serbia
Bulgaria, FYRoM
Croatia, Moldova
Romania
Albania, Croatia, Moldova
Romania
Bulgaria
FYRoM, Montenegro, Serbia
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3. Anti-Corruption Policy
Progress in Investment Reform in SEE
Preliminary Results
Serbia
Bulgaria
Albania, Montenegro
Moldova, Romania
Croatia, FYRoM
Albania, Montenegro, Serbia
Bulgaria
Croatia, FYRoM, Moldova
Romania
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4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results
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4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results
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4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results

Serbia
Bulgaria, Romania
Croatia
Moldova, Montenegro
Albania, FYRoM
Albania, Croatia, FYRoM Montenegro, Serbia
Romania
Bulgaria

Moldova
Albania, Croatia, FYRoM, Serbia
Bulgaria, Romania
Montenegro
Moldova
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4. Competition Policy
Progress in Investment Reform in SEE
Preliminary Results

Albania, Croatia, FYRoM
Moldova, Montenegro, Serbia
Bulgaria, Romania
Romania
Moldova, Montenegro, Serbia
Croatia, FYRoM
Bulgaria
Albania

Moldova, Montenegro
Bulgaria, Romania
Albania, Croatia, FYRoM Serbia
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5. Trade Policy
Dimension specific results
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5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
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5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
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5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results
Albania Croatia FYRoM Serbia
Bulgaria, Romania
Moldova Montenegro
Albania, Moldova
Bulgaria, FYRoM, Romania, Croatia
Montenegro, Serbia

Albania, Romania, Serbia

Bulgaria, Croatia, Moldova
FYRoM Montenegro

Serbia
Croatia
Bulgaria Moldova Montenegro
Albania, Macedonia Romania
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5. Trade Policy
Progress in Investment Reform in SEE
Preliminary Results

Montenegro
Bulgaria
Albania, Croatia FYRoM, Moldova, Romania Serbia
Bulgaria, Romania
FYRoM
Croatia
Albania, Moldova Montenegro Serbia

Albania, Croatia, Romania FYRoM
Bulgaria, Montenegro
Serbia
Moldova
Romania, Bulgaria
Albania, Croatia, FYRoM, Moldova
Serbia, Montenegro
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6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
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6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
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6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
Montenegro
Romania
Albania, Croatia, Moldova, Serbia
Bulgaria
Romania
Albania, Croatia, FYRoM, Moldova
Montenegro
Bugaria, Serbia
Montenegro
Serbia
Albania, Croatia, FYRoM
Bulgaria, Moldova, Romania
Croatia, FYRoM, Moldova
Albania
Bulgaria
Serbia
Montenegro
Romania
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6. Regulatory Reform
Progress in Investment Reform in SEE
Preliminary Results
Albania Croatia FYRoM Moldova
Bulgaria, Montenegro
Romania
Serbia
Montenegro
Romania, Serbia
Albania, Croatia, FYRoM
Bulgaria, Moldova
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7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
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7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
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7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
Albania, FYRoM, Moldova, Montenegro
Bulgaria, Croatia
Romania, Serbia
Albania, FYRoM, Moldova, Montenegro
Romania
Bulgaria
Serbia
Croatia
Albania, Serbia
Bulgaria Montenegro Romania
Croatia, FYRoM
Moldova
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7. Human Capital
Progress in Investment Reform in SEE
Preliminary Results
Albania, Moldova
Croatia, Montenegro Romania, Serbia
Bulgaria
FYRoM
Montenegro
Moldova
Albania, FYRoM, Serbia
Bulgaria, Romania, Croatia
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Summary of Good Practice in SEE and CEE
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Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions
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Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions (2)
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Summary of Good Practice in SEE and CEE
Preliminary Examples of Good Practice related to
the IRI Dimensions (3)
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Summary of Country Priorities for 2006-2007
(Investment Compact View)
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Albania
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Tax Ensure that VAT reimbursement is
  systematically monitored. The VAT is reimbursed
  within 30 days, which is mandated by law.
• Tax Change the tax regulation stating that
  start-ups must pay taxes on estimated profits
  before beginning operations.
• Investment Promotion Create a new strategy for
  the National Business Agency, following the
  merger of the investment promotion and SME
  agencies.
• Regulatory Reform Implement the programme for
  regulatory reform to create the basis for RIA.
• Anti-corruption Develop and implement a new
  anti-corruption action plan with clear time bound
  targets and success indicators.
• Human Capital Finish drafting, adopt and
  implement the employment strategy, ensuring that
  it is in line with the principles of the European
  Employment Strategy.

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Bulgaria
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Investment Promotion Reinforce the cluster
  approach in investment promotion to further
  promote linkages between foreign investors and
  SMEs.
• Tax Create an overarching tax strategy
  specifying the principles and economic goals of
  taxation, current and future tax rates, and
  improvement of the tax administration.
• Anti-corruption Create a coherent, comprehensive
  Conflict of Interest Policy and ensure that it is
  applied and monitored.
• Competition Implement a deterrent sanctioning
  policy to limit hard-core anticompetitive
  behaviour (e.g. cartels).
• Trade Streamline customs and administrative
  procedures to decrease the complexity and time
  required for imports and exports.
• Regulatory Reform Define and implement a
  comprehensive regulatory reform strategy which
  includes a formal, systematic RIA programme.

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Croatia
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Competition Reinforce the Competition Authority
  by allowing it to issue fines.
• Investment Promotion Develop an Investment
  Promotion Strategy that is closely tied to the
  overall development strategy.
• Tax Closely monitor the activity of the newly
  established Financial Police in order to avoid
  overlapping responsibilities with tax
  administration auditors.
• Regulatory Reform Develop and implement a
  comprehensive RIA programme.
• Anti-corruption Develop an action plan for
  customs reform and put in place a system based on
  indicators to monitor implementation.
• Human Capital Adopt the new Law on Education
  with particular focus on adult education.

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FYR Macedonia
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Investment Promotion Adopt an investment
  promotion strategy that reflects government and
  private sector consensus on the countrys
  investment promotion activities.
• Regulatory Reform Create a comprehensive
  regulatory reform policy and strategy
  incorporating a RIA programme which
  systematically evaluates new legislation.
• Tax Ensure that VAT reimbursement is
  systematically monitored and that VAT is
  reimbursed within 30 days, as stated in the law.
• Competition Strengthen the competition authority
  powers to impose sanctions.
• Human Capital Reduce the wage wedge, which is
  one of the highest in the region.
• Human Capital Develop and implement a
  comprehensive workforce skills development
  strategy. (TBC)

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Moldova
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Competition Set up an independent National
  Competition Protection Authority with adequate
  budget and staff to carry out investigations and
  impose remedies and sanctions.
• Investment Promotion Define and implement a
  comprehensive investment promotion strategy,
  working closely with the Swiss funded OECD
  Investment Compact project in this area.
• Tax Implement a Code of Ethics for tax
  inspectors and a monitoring system to ensure
  regulations are enforced.
• Anti-corruption Implement an enforcement law
  requiring officials to declare assets.
• Regulatory Reform Following an effective
  guillotine approach on legislation, define and
  implement a comprehensive, multi-year regulatory
  reform strategy.
• Human Capital Develop a comprehensive strategy
  to improve adult and vocational education.

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Romania
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Investment Promotion Elaborate a comprehensive
  Investment promotion Strategy that includes
  priority sectors and concrete programs to tie
  foreign investment to local investment (SMEs).
  This IP Strategy should also be clearly linked to
  the industrial and export promotion strategies
• Investment Promotion Strengthen the investment
  Promotion Agency with additional staff and budget
  (aim to double budget from 500,000 Eur to 1
  Million Eur and increase staff to 40 from 19).
  The agency should intensify promotion to
  potential foreign investors through
  country/specific missions and offer clear and
  well-packaged on the ground services for
  potential and existing investors.
• Implement transparent and consistent standards
  for tax inspectors to impose sanctions and
  monitor the results with pre-defined indicators
  to reduce discretionary power.
• Regulatory Reform Introduce Regulatory Impact
  Analysis for all newly adopted legislation.
• Anti-corruption Introduce a system with
  indicators to monitor implementation of the
  public procurement law. This system can then be
  used as basis to monitor other area of
  anti-corruption (such as customs reform,
  professionalism of civil service).
• Human Capital Adapt the education strategy
  (including vocational training and adult
  learning) to reflect the specific needs of the
  labour market over the next ten years.

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Serbia
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Competition Establish a Competition Authority to
  enforce the law by carrying out investigations
  and imposing remedies and sanctions.
• Investment Policy Allow foreign and local
  investors to own all types of land (e.g. urban
  construction land).
• Anti-corruption Create a comprehensive customs
  anti-corruption Action Plan and system to monitor
  implementation.
• Anti-corruption Apply the law on public
  procurement and introduce a system to monitor
  implementation.
• Tax Enforce law to reimburse VAT within 30 days
  and with effective monitoring and application of
  sanctions.
• Human Capital Develop specific strategies for
  adult and vocational education.

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Montenegro
Summary of Country Priorities for 2006-2007
(Investment Compact View)

• OECD IC Recommended Country Priorities
• Investment Promotion Define and adopt an
  investment promotion strategy that reflects
  government and private sector consensus on the
  investment promotion priorities.
• Competition Adopt a competition strategy that
  includes appointing an independent competition
  authority with power to investigate
  anti-competition behaviour and impose sanctions
• Anti-corruption Adopt the new draft law on
  public procurement and enforce effective
  implementation timetable.
• Regulatory Reform Define and implement a
  long-term regulatory reform strategy and
  implement a RIA programme for all newly adopted
  legislation.
• Tax Ensure Tax Administration Inspectors are
  based on clear monitoring indicators (e.g. filing
  of returns) instead of discretionary behaviour
  encouraged by needing to meet budget estimates
• Trade Ensure alignment of technical standards
  with EC standards

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Next Steps and Key Events
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2005-2006 Key Events for the Investment Reform
Index
Next Steps and Key Events
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Preliminary Results

• All of the results are preliminary.
• Results will be finalised in July 2006.
• For any comments or questions please contact
  Georgiana Pop (georgiana.pop_at_oecd.org) Erin
  Hengel (erin.hengel_at_oecd.org)