A report by the OECD describes the short and long-term measures that the institutions are taking to minimize the pandemic’s impact on foreign investment. It highlights the report on the health crisis prepared by InvestChile.
The Organisation for Economic Co-operation and Development (OECD) has published a report on the measures being taken by investment promotion agencies (IPAs) in different economies in response to COVID-19. The speed of economic recovery, changes in global foreign direct investment (FDI) flows and government policies are among the key factors that will influence IPAs’ strategies in the future.
- Reorganization and innovation. The crisis has had an immediate impact on the way many IPAs “do business”. Like many other organizations, they have had to change from one day to the next and adapt to remote work whilst also addressing organizational, IT and administrative challenges.
IPAs have had to cancel visits, events, fairs and in-person missions, all of which are normally a critical component of their work in generating contacts and business opportunities. Instead, they are focusing on providing regular information about COVID-19 through their websites and on offering digital tools and solutions, among other changes.
In France, for example, the agency had made interactive tools available to its clients in order to allow companies to monitor COVID-19 developments in different markets while, in Japan and Germany, they have conducted online surveys to better assess the impact on companies. In general, the change has been more fluid in those IPAs with well-designed websites, fully operational customer relationship management (CRM) systems and good access to digital tools and services.
- Focus on existing clients and provision of information. The nature of the services provided by IPAs has changed radically, from marketing and promotion to an emphasis on “aftercare”. Agencies are significantly reducing their marketing campaigns and activities in order to focus on investors already installed in their country, informing them about government programs, helping them address the crisis and supporting their investments or ongoing operations.
Business continuity and a problem-solving approach are becoming central to the work of IPAs. Businesses are often deeply affected by the crisis and IPAs are a key source of information about stimulus packages, fiscal measures, compensation schemes and other policies that affect businesses.
As new regulations are adopted to mitigate the impact of the crisis, IPAs are helping investors to navigate a rapidly evolving legal framework.
In this context, the OECD highlights the comprehensive report that InvestChile prepared about the impact of COVID-19 on the economy and FDI, providing information about the probable economic effects of the crisis as well as an overview of government measures in Chile and other selected countries around the world.
- Refocus and activate commercial networks. In the current context, IPAs have activated their existing commercial networks, particularly in the health sector, to help their governments fight the crisis. In Canada and Denmark, for example, they are using their networks and making their business contacts available to the authorities to help ensure medical supplies and healthcare attention. Similarly, IDA Ireland is guaranteeing companies the inputs they need to produce medical equipment, especially the mechanical ventilators required by the Irish healthcare system, as well as to supply European and global markets.
Beyond the health sector, IPAs in OECD countries are also focusing on the hardest-hit sectors. Germany’s agency has reduced its consulting services to five industries, which are the most affected by the crisis and where the agency can maximize its impact.
Medium and long-term measures
- The response to COVID-19 has dramatically accelerated the trend towards greater digitization of IPAs. In the medium to long term, many services normally provided in person may need to be provided digitally. Moreover, digital technology will allow IPAs to continue providing services and identifying future clients. The options include scouting digitally for clients and virtual reality solutions for IPAs’ websites.
- New approach and prioritization. The health crisis may prompt agencies to reconsider their medium and long-term prioritization strategies. Similarly, changes in economic dynamics may lead them to review their lists of priority sectors, tightening their focus and modifying the mix of sectors.
- Rethinking strategies and reforms. IPAs’ ability to adapt to new situations positions them as key players in governments’ response to the COVID-19 crisis. Because they work closely with the private sector and in different policy areas, IPAs tend to be flexible and able to adapt to new situations.
Aftercare services will naturally play a prominent role in the short term as IPAs opt to place greater emphasis on the retention and expansion of existing investors in their medium and long-term investment promotion strategies.
InvestChile, the country’s foreign investment promotion agency, has also announced a strategy that is in line with the trend in OECD countries. It will focus mainly on promoting reinvestment and the retention of companies already established in the country, as well as on diversifying its digital channels for the attraction of investment through the creation of new products.
Currently, the agency is reinforcing its online contact with clients, providing overseas companies with the tools they need to be informed about government policies and assistance in the context of the crisis and supporting them so they are in a position to resume their investments or implement new projects in the country, once the health emergency passes.
InvestChile has already held three successful webinars to answer companies’ questions about the government’s Emergency Economic Plan, changes in the Labor Law in response to COVID-19 and the country’s new Tax Law. It will continue to hold webinars throughout the year, complemented by permanent online attention. The agency has also set up a direct telephone line for companies already installed in Chile and - in the context of its #DoingBusinessfromHome campaign - is reinforcing its communications through newsletters, reports and e-books, targeting decision-makers in overseas companies. The agency also plans to carry out virtual missions in key countries.
To find out more about investment opportunities in Chile, see this article.