christophe saint-martin/ invest in france agency euromediterranean conference / naples / 8-9 june...
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Christophe Saint-Martin/ Invest in France Agency
Euromediterranean Conference / Naples / 8-9 June 2006
Investment in the
Mediterranean : Balance and perspectives
ANIMARéseau Euroméditerranéen d’Agences de Promotion des InvestissementsEuromediterranean Network of Investment Promotion Agencies
ANIMA
June 2006 © ANIMA-AFII 2006 2
OverviewMain MEDA assets
Market and growth (320 million inhabitants in 2025) Proximity of EU +Association Agreements +2010 Free Trade Zone Moderate cost of labour (1/5th of EU average) Local resources & niches (from oil to brains…) The 20-35 year generation is a gold mine!
A growing interest, but investors still hesitant Fragmented Mediterranean market Mixed image -economy / geopolitics / culture Gaps (but improvements) in law enforcement, business attitude,
or technical obstacles (logistics, training…) MEDA often absent of the investor short list
Many opportunities do exist now Many ways of investing: JVs, privatisations, stakeholding,
overseas branches Local market, exports, off-shoring, services, infrastructure, R&D
ANIMA
June 2006 © ANIMA-AFII 2006 3
Comparative advantagesPer 1 000 people
16
294
28
301
58
117
209
24
30
13
52
73
256
158
230
160
376
46
320
78
314
0 100 200 300 400
Algeria
Cyprus
Egypt
Israel
Jordan
Lebanon
Malta
Morroco
Palestinian A.
Syria
Tunisia
Turkey
Czech Rep.
Hungary
Poland
Slovakia
Slovenia
China
Malaysia
Thailand
France
Internet users(ITU 2002)
Thousand US$ per year
2689
7718
1764
22123
2220
4272
3358
5412
6647
6102
4824
12235
1374
4593
1654
18756
0 5000 10000 15000 20000 25000
Algeria
Cyprus
Egypt
Israel
Jordan
Malta
Turkey
Czech Rep.
Hungary
Poland
Slovakia
Slovenia
China
Malaysia
Thailand
France
Industrial annual wages (ILO 1999-2003)
ANIMA
June 2006 © ANIMA-AFII 2006 4
A wind of changein the Mediterranean in
2005
According to our observatory (MIPO), 686 foreign investment projects announced or started in 2005
Growth trend: 232 projects in 2003 / 343 in 2004 / 686 in 2005
A total capital investment figure of over €40bn in 2005 !
The quality of new investments is promising Some strategic/ high profile/ high tech projects (R&D etc.) Projects coming from 50 different countries : mainly France
(152 projects), United States (106) and Emirates (41 projects)
Presence of major companies (Intel, BP, Danone, Shell, Coca-Cola…)
ANIMA
June 2006 © ANIMA-AFII 2006 5
More than 1,000 world companies
have recently invested in MEDASource: MIPO
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MIPO resultsEncouraging trend
Diversification of investors (Gulf, OECD, emerging countries…)
The main investors (FDI amounts) in MEDA are :
Saudi Arabia (€6.8 bn), United States (€6.3 bn) and the United Kingdom (€6.1 bn)
MEDA is becoming increasingly attractive
A wind of change The gap between MEDA and Central & Eastern Europe
seems to be closing MEDA recovery is an on-going process
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11 66010 150
6 147
43 948
19 844
7 974
686
341
233167
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
2002 2003 2004 2005
0
100
200
300
400
500
600
700
FDI flow, UNCTAD- US$m FDI flow, MIPO, €m Nb. of projects
FDI attraction, MEDA region
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June 2006 © ANIMA-AFII 2006 8
A strong take-off in 2005
1 806
6 753
3 493
Algeria 93 projects
(2005) Energy, banks & services
477
2 504
8 922
Egypt101
projects (2005)
Energy, chemicals,
banks, tourism
16 895
582
2 712
Turkey73 projects (2005)Telecoms, automobile, banks, agri-food
3 225
4 261
2 430
Morocco 118 projects
(2005) Agri-food, industrial
sectors & ICT
1 153
131
5 922
Israel94 projects
(2005)Software,
electronics, banks
95217998
Tunisia78 projects
(2005)Energy,
telecom, textile
services 111
2 0271 244
Jordan46 projects (2005)Tourism, real estate, banks, software
2003 2004
2005FDI amount, €m, MIPO
Palestine Auth.5 projects (2005)Banks, ICT
Malta5 projects (2005)Drugs, logistics, banks
Cyprus7 projects (‘05)
Telecoms, services, agri-food
100434
2 982 Syria40 projects (‘05)Energy, tourism, banks, agri-foodLebanon
26 projects (‘05)Tourism, ICTreal estate
0 1408
414724731
ANIMA
June 2006 © ANIMA-AFII 2006 9
Why such an increase ?A number of sizeable investments in the energy sector (Algeria, Egypt, Tunisia, Syria etc.)Big real estate and/or tourism projects
Egypt, Jordan, Lebanon, Morocco, Syria… Originating in particular from the Gulf States
Several major privatisation operations, e. g. in Turkey
3 deals for Turk Telekom, Telsim & Turkcell = US$ 14 bn
The Arab investors (Gulf etc.) are shifting part of their investments from the Americas to MEDAComplete transformation of the banking sector
Opening of a number of agencies and takeover of banking networks by large European banks
And IPAs’ and ANIMA's efforts…
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June 2006 © ANIMA-AFII 2006 10
Donor & recipient countries in 2005
Further diversification in the origin of investors Europe still the major share of FDI input into MEDA (50% in
projects, 40% in capex) -North America stable at 18% Gulf States and other MENA countries on the rise (15% against
11% in 2004 and a mere 6.5% in 2003) Asia (6%) and intra-MEDA (5%) also growing
Recipient countries in 2005 Turkey takes the lead due to large deals in the telecom field Egypt – large projects in energy, banking and real estate Israel – remarkable number of technological investments Syria, Algeria, Morocco (€2 to 3 bn each, but different profiles) Small countries (Tunisia, Jordan, Lebanon) perform relatively well
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June 2006 © ANIMA-AFII 2006 11
Announced FDI into MEDA Main cumulated flows, 2003 to 2005Source: MIPO
O-D flows over €0.5bn
Algeria
Cyprus
Egypt
Tunisia
Malta
Morocco
0.5
bn
2.6bn
1.7bn
8.9bn
8.1bn
1.2
bn
5.5
bn
2.7bn
7.1bn
3
.5bn
6.7bn
2
.1bn
5.4bn
1.0
bn
2.
5
bn
2.1bn
Europe37.2bn
Gulf & MENA23.8bn
Americas14.7bn
4.1b
n
Jordan
Asia & emerg.11.6bn
Israel
Syria
1
.4bn
3
.9bn
Turkey
0.7bn
0.9bn Lebanon
11.9bn
Palest. Auth.
1.6bn
1.8
bn
Intra
-MED
A
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June 2006 © ANIMA-AFII 2006 12
Why is Europe concerned?The Euro-Med challenge: an increasing divide! The southern rim (‘MEDA’, 10 countries, 240 m pop.) needs to create 4 million jobs per year just to maintain its current unemployment rate
No jobs equals major risksThis challenge may be transformed into an opportunity:
A boost for local and regional development (40 million jobs mean 40 million consumers)
A new burst of growth for EU companies and societies looking for markets and growth
An obligation to develop reforms towards an investor-friendly environment
EU-15: EU-15: US$US$ 22,68922,689
MEDA-10: 2,360 MEDA-10: 2,360 US$US$
New New members-members-10: 10: US$5,373 US$5,373
GDP per capita 2002, World Bank
The biggest economic divide in the world!
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June 2006 © ANIMA-AFII 2006 13
EU companies looking at MEDA as a growth
destination
Eastern Europe and China are becoming less attractive (costs, capacity saturation etc.)Big companies are better aware of the MEDA opportunities MEDA is closing its gap vs. Eastern Europe (46% of projects in 2005, vs. 28% in 2002)
Quotes from les Echos, 24/5/2006:
"Though tempting, the Chinese market remains complicated and expensive"
"I very highly disadvise China to SMEs without a real know-how and robust shoulders"
"Settling here has a price. You have to integrate the language, distance, culture, the relative value of contracts, regulations… "
"Start-ups have difficulties with Chinese wages in new technologies"
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June 2006 © ANIMA-AFII 2006 14
Example of MedValleyPotential innovation hubs at the very gates of EuropeThousands of engineers & researchers !100 clusters, technoparks, R&D centres detected by ANIMA in the South
Algeria1 (5) Morocco
1 8
Tunisia1 (5) 8
Malta2 1
Spain17 16
Portugal5 5
France47 57
Italy17 51
Greece4 10
Turkey15 2
LibyaEgypt3 5 (40)
SyriaCyprus2 1
Israel2 26
Jordan1 1
Lebanon2
Palestine1 1
technopoles incubators & nurseries
Algeria1 (5) Morocco
1 8
Tunisia1 (5) 8
Malta2 1
Spain17 16
Portugal5 5
France47 57
Italy17 51
Greece4 10
Turkey15 2
LibyaEgypt3 5 (40)
SyriaCyprus2 1
Israel2 26
Jordan1 1
Lebanon2
Palestine1 1
technopoles incubators & nurseries
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June 2006 © ANIMA-AFII 2006 15
A growing number of very large scale investments
Top capital investments announced in 20051. Oger (Saudi Arabia), telecomm. network, Turkey, $6.55 bn
2. Vodafone (UK), telecomm. network, Turkey, $4.55 bn
3. Shell (Netherlands), energy, Turkey, $4.14 bn
4. Intel (United States), electronic components, Israel, $4 bn
5. Emaar Properties (UAE), real est./ public works, Egypt, $4 bn
6. Aref Investment (Kuwait), real est./ public works, Syria, $4 bn
7. Emaar Properties (UAE), real est./ public works, Syria, $3.9 bn
8. Telia Sonera (Sweden), telecomm. network, Turkey, $3.1 bn
9. Credit Line (Russia), energy, Syria, $2.7 bn
10. Apachi (United States), energy, Egypt, $2 bn
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June 2006 © ANIMA-AFII 2006 16
Work in progress… Legal integration of the Mediterranean markets (Standards, Customs)
Via Euromed Market and Euromed Quality
Physical integration Via Euromed Transport
Creation of a legal framework (e.g. IP rights) Via ANIMA Investment Charter And other efforts - Doing Business (World Bank),
OECD
Networking and information sharing on potential markets and investors
SMILE and MIPO bases, UNIDO opportunities exchange, business forums, ANIMA web site
Improvement of the Mediterranean image for investors
E. g. annual ANIMA business summit with The Economist –or this event…
Boost
Investments into the
Mediterranean
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June 2006 © ANIMA-AFII 2006 17
Methodology : how to measure FDI performance?
Macro-economic approach: financial records (past) Method: national financial accounts (Central Bank) Why? worldwide coverage; long series; ‘objective’ data Limits: mixes portfolio and physical investment; not fitted
for regional/local agencies; only financial; only registered with official disbursement
Micro-economic approach: announcements (past + anticipation)
Method: detection of individual projects via IPA registration or economic intelligence (media, newsletters, internet)
Why? knowledge of projects; may include jobs Limits: estimation by default (depending on the net size);
based on declarations; mixes various types of info/ projects
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June 2006 © ANIMA-AFII 2006 18
MIPO process
• FDI projects• Prospects
• Small projects (franchise, rep.
office)
InternetWebwatcher /
Monitoring of companies
Others sourcesNewsletters, events,
listings
Direct information
ANIMA team
RecordsIPAs & other
partners
Factiva economic newsflow (>15,000 news per day) Reuters -Dow Jones etc.Open databases e. g. Kompass, Google, etc.
Semantic
analysis
Selection of ± 1,000 news
and alerts per year for MEDA
MIPOMediterranean
Investment Project
Observatory
VigieInvest in France FDI data base on
30 European countries
Benchmarkinge. g. with East. Europe
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June 2006 © ANIMA-AFII 2006 19
About MIPO: data collected on each
projectDate of the newsOrigin countryHost countryCompany or investorSector (23 sectors)Summary of the project (in Engl. & French)Type of project (greenfield, brownfield, JV etc.)Type of company (Transnational, major co., SME)
FDI amount in €m (known for 46% of projects)Jobs created (known for 16% of projects)
Detailed news One or several articles, source, web site,
informations on the company etc.
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June 2006 © ANIMA-AFII 2006 20
Examples of MIPO outputs
ANIMA
June 2006 © ANIMA-AFII 2006 21
Thank you / Contact usCoordination (French desk) : Bénédict de Saint-Laurent, (AFII), France T : + 33 4 96 11 67 62 Mailto : [email protected]
Italian desk: Raffaela Di Emidio, (ICE), Italie T : + 39 06 59 92 68 89 Mailto : [email protected]
Moroccan desk: Laïla Sbiti, Direction des Investissements, Ministère des Affaires Générales, des Affaires Economiques et de la Mise à Niveau de l’Economie, Maroc T : + 212 37 67 35 06 Mailto : [email protected]
EuropeAid Co-operation Office : Fabian Verhoeven Mailto : [email protected]
ANIMA
June 2006 © ANIMA-AFII 2006 22
ReferencesThe MEDA region covers: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Authority, Syria, Tunisia and Turkey
ANIMA - Euromed Network of Investment Promotion Agencies
Is a European-funded project devoted to helping MEDA acquire the tools and the strategies to attract foreign direct investment
The Invest in France Agency (AFII), assisted by ICE (Italy) and the Direction des Investissements (Morocco), runs the project
The MEDA Investment Agencies, the City of Marseille, the Euroméditerranée Agency and the Provence-Alpes-Côte d’Azur region also contribute
The Mediterranean Investment Project Observatory (MIPO) is a tool developed by ANIMA to monitor investment into the MEDA region and is available on line via the ANIMA website
www.animaweb.org