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Options for Investment Liberalization and Business Facilitation
to
Strengthen the APEC Economies -
For Voluntary Inclusion in Individual Action Plans
APEC leaders and ministers at Bogor, Osaka, Subic, and Vancouver have committed their economies to create free and open investment by 2010 and 2020. They endorse Individual Action Plans (IAPs) as a core instrument in this process. They have called for transparency in, and the annual improvement of IAPs. ABAC has also called on APEC economies to make progress in the investment area.
In response to both government and business, the Investment Experts Group, at St. Johns, Canada, undertook to compile a "menu of options" for helping economies to identify policy measures that member economies may include unilaterally in their IAPs for implementation of this objective. There was a consensus that the project should focus on concrete measures, rather than on continued philosophical debate. APEC ministers endorsed the "menu" initiative at Vancouver.
With these instructions in mind, the following document is a non-exhaustive "master menu" of investment-liberalizing and business-facilitating measures from which economies may voluntarily select any of a number of options to make progress toward creating a free and open investment regime. It is intended as a reference tool that economies may refer to when updating their IAPs.
The APEC approach to liberalization and facilitation of trade and investment, as reiterated by APEC Leaders at Vancouver, recognizes the diversity that exists among APEC economies. This "menu of options" is consistent with this recognition of diversity, providing members with a broad range of choices suitable for different circumstances. The items are not prescriptive and, where chosen, may be modified to suit particular circumstances. The menu is not designed to set out the steps in the liberalization process and will evolve over time.
The IEG intends to update this menu on a regular basis, starting in 1999, so as to capture the benefit of APEC economies’ increasing experience and changing views.
| Item No. | Description |
| GENERAL | |
| 1.01 | Broaden definitions of investment and foreign investment in existing legislation, regulations and administrative procedures to permit the widest variety of forms of investment and allow for newly emerging forms to be covered, without a need for future changes in domestic legislation/ regulations. -- The definition might include – illustratively - not just new ("green field") investments, but also acquisition of shares of domestic enterprises, management contracts, long-term leases, all forms of business organization (e.g. wholly owned, subsidiaries, partnerships, branches, joint ventures, smart partnerships, strategic alliances, venture capital), certain kinds of debt instruments, intellectual property, etc. |
| 1.02 | Permit and promote all forms of investment through means other than, or additional to, broadening the definitions of investment and foreign investment in existing legislation, regulations and administrative procedures. |
| 1.03 | Commit to locking in current treatment for investors in specific sectors (i.e. standstill on restrictions). |
| On prior authorization requirements: | |
|---|---|
| 1.04 | Eliminate or phase out prior authorization requirements. If appropriate, replace them with post-establishment notification. |
| 1.05 | Make approval within any existing prior-authorization mechanism automatic except in limited specified situations. |
| 1.06 | Raise the threshold (value of an investment) above which prior authorization is required. If appropriate, announce progressive raising of the threshold, according to a schedule with a certain date to eliminate most or all prior authorization requirements. |
| 1.07 | Limit the requirement for prior authorization to selected sectors. If appropriate, replace it with post-establishment notification. |
| Involving other economies: | |
| 1.08 | Sign or establish (or, as appropriate, sign or establish additional) bilateral, regional, and/or multilateral agreements or arrangements for the protection of investment that provide commitments to the current level of protection and openness for investors/ investment. |
| 1.09 | Sign or establish (or, as appropriate, sign or establish additional) bilateral, regional and/or multilateral agreements or arrangements for the protection of investment with enhanced protection and openness for investors/ investments (e.g. fewer restricted sectors of an economy, fewer restrictions within sectors, stronger mechanisms for resolving disputes). |
| TRANSPARENCY | |
| 2.01 | Make available to investors timely updates of changes to investment regimes, including via the APEC Secretariat (who will use it for the APEC investment guidebook). |
| 2.02 | Publish and/or make widely available through other means, on a timely basis, information on an economy’s investment code, investment laws and regulations, and procurement procedures, with an eye to ensuring transparency in the administration of investment laws, regulations and procedures at federal/central, provincial/state and local authority levels. |
| 2.03 | If screening is used, publish and/or make widely available through other means the guidelines for evaluating and scoring projects for their approval. |
| 2.04 | Conduct briefings (in appropriate fora) on the current investment policies and future directions to be undertaken by the government. |
| 2.05 | Give advance notice of proposed regulations and laws, and provide an opportunity for public comment. |
| 2.06 | Clarify procedures and practices regarding application, registration, government licensing and procurement by: -- Publishing (and widely disseminating) clear and simple instructions, and an explanation of the process (the steps) involved in applying/bidding/registering; -- Publishing (and widely disseminating) definitions of criteria for assessment of investment proposals; -- Publishing (and widely disseminating) contact points for inquiries on standards, technical regulations, and conformity requirements; -- Conduct periodic reviews of prior authorization requirement procedures to ensure they are simplified and transparent; -- Make available to investors all rules and information relating to investment promotion schemes. |
NON-DISCRIMINATION | |
| 3.01 | Commit to MFN treatment economy-wide, except in a few limited cases as may be specified by individual member economies, immediately or over a publicly announced period of time. |
| 3.02 | For economies that have already committed to MFN treatment, review where MFN exceptions to it taken in the past can be eliminated or reduced (in other words, review whether the "few limited cases" of exceptions to MFN can be narrowed even further). |
| Related to National Treatment or both MFN and National Treatment Sectors | |
| 3.03 | Extend national treatment now (or starting on a particular date) in one or more sectors. |
| 3.04 | Extend national treatment economy-wide except in a few limited cases now, or starting on a certain date; or |
| 3.05 | Progressively extend national treatment to one more sectors. |
| 3.06 | Open additional sectors to participation by foreign investors, or permit foreign investment economy-wide with only limited exceptions. In other words, reduce the size of the list of sectors that are closed or partially restricted to foreign investment. |
| 3.07 | Eliminate or phase out sectoral restrictions on a foreign investment. |
| 3.08 | Review existing agreements, treaties, and laws to see if any exceptions to national treatment can be eliminated. |
| Ownership | |
| 3.09 | Allow all investors to choose their form of establishment within legislative and legal frameworks. |
| 3.10 | Update regulations to eliminate joint venture requirements for establishment. |
| 3.11 | Permit greater foreign equity ownership in sectors partially opened to foreign investment, or permit greater foreign equity ownership economy-wide. -- Prepare a schedule now for future increases in foreign equity ownership. -- Accelerate implementation of dates for liberalizing sectors where possible. |
| 3.12 | Eliminate or phase out conditions for foreign ownership in relation with export ratios or domestic sales. |
| 3.13 | Reduce areas with joint-venture criteria under investment promotion schemes to allow greater foreign participation. |
| 3.14 | Implement (and announce) a policy of not requiring the divestiture or dilution of the ownership of investments on the basis of nationality. Eliminate or phase out requirements to transfer ownership to local firms over a period of time. |
| 3.15 | Eliminate or phase out restrictions for foreign investors on the establishment of local branches. |
| 3.16 | Eliminate or phase out restrictions for foreign investors to diversity operations. |
| 3.17 | Eliminate or phase out restrictions on foreigners with respect to operational permits and licenses. |
| 3.18 | Where a time period for foreign investors to find local partners is specified, extend the period of time. |
| Finance and Capitalization | |
| 3.19 | Update regulations to reduce or eliminate restrictions on foreign borrowing by corporations. |
| 3.20 | Liberalize foreigners’ access to domestic financial instruments (e.g. money market instruments, corporate bond markets). |
| 3.21 | With respect to the entry of foreign investment, eliminate or phase out requirements to deposit certain guarantees for foreign investors. |
| 3.22 | Reduce, reduce progressively, or eliminate minimum capitalization requirements in sectors where such capitalization requirements are not needed for prudential reasons. |
| 3.23 | Eliminate or phase out subsequent additional investment or reinvestment requirements for foreign investors. |
| 3.24 | Open existing investment incentive programs to participation by foreign investors, so they are equally available to domestic as well as foreign investors. |
| Other Measures | |
| 3.25 | Eliminate or ease discriminatory restrictions on imports needed to support foreign investment. |
| 3.26 | Change policies, guidance, regulations, or laws to eliminate pricing by state-designated monopolies that is discriminatory on the basis of nationality. |
| 3.27 | Change policies, guidance, regulations or laws to eliminate discriminatory access to local raw materials and inputs. |
| EXPROPRIATION AND COMPENSATION | |
| 4.01 | Consistent with international law standards/principles, limit permissible expropriation to cases involving a public purpose where expropriation is undertaken in a non-discriminatory manner, under due process of law, and accompanied by payment of prompt, adequate and effective compensation. -- Take steps to amend expropriation laws and regulations based on the above-mentioned standards/principles of international law with respect to expropriation. |
| 4.02 | Included in bilateral, regional or multilateral investment treaties, agreements, and/or arrangements a commitment on compensation in cases of expropriation. |
| 4.03 | To improve transparency, define, publish and disseminate to investors the relevant investment treaties and arrangements. |
| PROTECTION FROM STRIFE AND SIMILAR EVENTS | |
| 5.01 | Decide - and, as possible, commit in investment agreements/arrangements between governments and private investors and in bilateral/multilateral government-to-government treaties, agreements, and/or arrangements - that the government will accord treatment that is non-discriminatory on the basis of nationality to investments with respect to losses that investments may suffer in the government’s territory that are due to war, other armed conflict, revolution, national emergency, insurrection, civil disturbance, or other similar events. |
| TRANSFERS OF CAPITAL RELATED TO INVESTMENTS | |
| 6.01 | Remove or reduce restrictions on the transfer of funds related to foreign investment, such as profits, dividends, royalties, loan payments, interest, infusions of additional financial resources after the initial investment has been made, and proceeds from liquidations - all in a freely convertible or a freely usable currency. -- Eliminate or phase out restrictions that impede recovery of profit, such as ceilings on royalties, technical assistance fees or special taxes, restrictions on access to foreign exchange, and control over the allocation of foreign currencies. |
| 6.02 | Make a binding commitment, in treaties, agreements or arrangements, to eliminate or progressively reduce restrictions on the transfers of funds related to foreign investment, such as profits, dividends, royalties, loan payments, interest, infusions of additional financial resources after the initial investment has been made, and proceeds from liquidation - all in freely convertible or freely usable currencies. |
| 6.03 | Guarantee the right to transfer capital related to an investment in and out of an economy, without delay and at market rates of exchange, with only limited exceptions. |
| PERFORMANCE REQUIREMENTS | |
| 7.01 | Publish and implement a phase-out plan for WTO TRIMs-inconsistent programs identified on TRIMs illustrative list. |
| 7.02 | Reach consistency with WTO TRIMs’ illustrative list by 2000. Take steps to accelerate implementation of phase-out plans where possible. |
| 7.03 | Eliminate, phase out, or relax unilaterally and/or through government-to-government agreements and treaties, on an economy-wide or sectoral basis, requirements such as: -- local hiring requirements, -- local training requirements, -- requirements to manufacture locally, -- local sales requirements, -- required technology transfer, -- required local research and development, -- export requirements (e.g. those expressed as requirements to generate foreign exchange or achieve a particular export target). |
| ENTRY AND STAY OF PERSONNEL | |
| 8.01 | Consistent with an economy’s visa laws regarding the entry and stay of personnel, allow the temporary entry and stay of personnel needed to establish, develop, administer or advise on the operation of an investment of theirs (i.e. investor and key managerial or technical personnel and advisers). |
| 8.02 | Offer visas for investors that facilitate entry and reentry (or identify other ways, consistent with domestic laws and policy, to facilitate investors’ ability to enter and reenter for investment purposes). |
| 8.03 | Take steps to permit investors/project sponsors to hire the top managerial advisory talent of their choice, regardless of nationality. |
| 8.04 | Take steps to permit investors/project sponsors to hire the top technical. and/or advisory talent of their choice, regardless of nationality. |
| SETTLEMENT OF DISPUTES | |
| 9.01 | Develop effective mechanisms for resolving disputes and mechanisms for enforcing the solutions found to those disputes. |
| 9.02 | Take steps to become a member of the International Convention on the Settlement of Investment Disputes (ICSID) and/or other widely recognized international arbitration bodies. |
| Note: We defer to the APEC Dispute Mediation Experts Group for specific menu options for IAPs related to improvements in dispute mediation. | |
| INTELLECTUAL PROPERTY | |
| 10.01 | Develop adequate protection for intellectual property. |
| 10.02 | Provide protection for intellectual property that at least meets the standards established in the WTO Agreement on Trade Related Aspects of Intellectual Property (TRIPS). |
| 10.03 | Provide adequate and effective enforcement measures, including as appropriate, administrative, civil, and criminal, against infringement of intellectual property rights. -- Increase cooperation among agencies responsible for the administration and enforcement of intellectual property matters and between IPR agencies and those responsible for regulatory issues. -- Provide and streamline, as appropriate, judicial and administrative procedures to ensure timely processing of enforcement actions. -- Increase public education about the importance of intellectual property and its role in the economy as well as the need for effective and efficient enforcement of intellectual property rights. -- Enhance cooperative relationship between different law enforcement agencies. -- Ensure close and efficient cooperation between enforcement agencies and the right holders. |
| 10.04 | Develop and implement programs that require official agencies in member economies to respect intellectual rights in their operations, such as by using only legitimate software in an authorized manner. -- To the extent possible, provide an adequate budget for purchase of legitimate software. |
| 10.05 | Develop/further improve intellectual property regimes: -- Where possible, give effect to international norms for intellectual property protections. -- To the extent possible, cooperate with other nations in international for a. |
| Note: We defer to the APEC Intellectual Property Rights( IPR) Group for specific menu options for IAPs related to IPR improvements. | |
| AVOIDANCE OF DOUBLE TAXATION | |
| 11.01 | Sign, where appropriate, bilateral avoidance of double taxation agreements that are in conformity with international norms. Expand coverage of such agreements as appropriate. |
| COMPETITION POLICY AND REGULATORY REFORM | |
| 12.01 | Ensure consistency between investment policies and competition and regulatory reform policy. |
| Note: We defer to the APEC Competition Policy Group for specific menu options for IAPs related to improving competition. | |
| BUSINESS FACILITATING MEASURES TO IMPROVE THE DOMESTIC BUSINESS ENVIRONMENT | |
| 13.01 | Reduce discriminatory use of bureaucratic discretion, by means such as: -- preparing and distributing written in-house guidelines for administrative practices related to the handling of applications, registrations, licensing, etc. -- establishing in-house decision appeal mechanisms, as well as appeal mechanisms available to the public. |
| 13.02 | Streamline application, registration, government licensing and government procurement procedures by: -- simplifying forms; -- simplifying the submission (e.g. permitting electronic submission, or centralizing approval offices in a "one-stop shop"); -- shortening processing time of such applications/registrations, and -- reducing unnecessary steps. |
| 13.03 | Take positive steps to assist investors by measures such as: -- establishing an office to serve as a clearinghouse (one-stop agency/unit) for interested investors to learn market opportunities and |
| potential investment partners; -- providing a network of all the government agencies that the investors or businesspersons have contact with in doing investments; -- establishing/designating one government agency to handle investors’ complaints (e.g. investment ombudsman). | |
| 13.04 | Examine the role and effects of investment incentives at all levels of government: federal/central, state/provincial and local. |
| 13.05 | Offer incentives which are voluntary, non-discriminatory, and limited in duration, such as: -- tax breaks, -- loans guarantees, -- grants, subsidies and industrial development bonds, -- employment training programs, -- programs aimed at helping companies achieve greater efficiency, -- WTO-consistent export promotion programs, -- small business development, -- high technology development programs, -- measures to support development of new industries, -- industrial linkage programs, -- mobilization of domestic resources. |
| 13.06 | Introduce measures to assist companies seeking to achieve greater efficiency such as: -- zero inventory -- just in time program -- other related programs |
| 13.07 | Establish legal and taxation systems in areas such as stock exchanges, corporate division and mergers and acquisitions to enable flexible corporate reorganization. |
| 13.08 | Introduce accounting and financial reporting systems that follow internationally accepted accounting standards. |
| 13.09 | Develop and streamline bankruptcy law systems that facilitate corporate reorganization. |
| 13.10 | Establish a financial system that enables a variety of financing and capital raising methods. |
| 13.11 | Strengthen and promote improved standards of corporate governance. |
| 13.12 | Develop a labor market that facilitates domestic labor mobility, taking into account national labor market conditions and policies. |
| 13.13 | Improve standards of professional services, such as legal and accounting services. |
| TECHNOLOGY TRANSFER | |
| 14.01 | Improve the transparency of related laws and regulations. |
| 14.02 | Reduce the restrictions on the transfer of technology consistent with the protection of essential security interests (for example by modifying as appropriate existing laws and regulations) to facilitate the flow of technology for the economic development of member economies. |
| 14.03 | Develop legislation, regulations and measures for the adequate and effective protection of technology and related interests arising from technology transfer. |
| VENTURE CAPITAL AND START-UP COMPANIES | |
| 15.01 | Introduce measures to assist businesses in different stages including start-up companies seeking equity funding, such as: -- establishment of a legal and taxation systemto assist the development of the venture capital industry and investment banking; and -- establishment of sound and transparent initial public offering (IPO) markets for small and medium enterprises (SMEs). |
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