The least developed countries should strive to attract domestic investors and the diaspora, develop capital market and formulate public private partnership initiative instead of looking to the declining foreign direct investments, economists said yesterday.
They made the observations at the second working session styled 'Promoting Investment-- domestic and foreign' of the three-day international dialogue on exploring new global partnership for the LDCs at Dhaka Sheraton Hotel.
Centre for Policy Dialogue (CPD), an independent think tank, organised the discussion in partnership with the OECD Deve-lopment Centre.
The three-day dialogue seeks to contribute to the articulation of a new programme of actions for the LDCs to be adopted at the Fourth UN Conference on LDCs in Istanbul in May next year.
Matthias Meyer, executive director of Praximondo in Geneva, said FDIs are key but may have negative externalities, which need to be screened.
"LDCs have to create capacity to analyse the quality of important investments in mineral, agriculture, infrastructure and trade projects."
"We have to see whether the investments are profitable for local stakeholders and are environmentally and socially sound. LDCs should be consulted during project design and given access in monitoring," he said.
FDIs are effective if learning and skilled employees and managers are available, he added. "Education is fundamental here."
The economist also said LDCs have a better mobilisation of domestic financial resources. "They should enhance tax collection, fight against tax evasion and fraud, use bargaining power through competitive selection of investments and fight mispricing and smuggling of traded goods."
Antonio Tujan, research director of IBON Foundation, a Philippines-based research-education-information and advocacy organisation, said the LDCs should first promote domestic investment to attract FDIs.
They should aggressively promote local entrepreneurs with loans at low interest rates, he said.
Saman Kelegama, executive director of Institute of Policy Studies in Sri Lanka, said sometimes the incentives in the forms of tax holidays and cuts offered to attract FDIs equal or become higher than the foreign investments.
"So, LDCs should firmly look at what they are getting in exchange of what," said Kelegama.
Farooq Sobhan, president of Bangladesh Enterprise Institute, said there should be sectoral analysis before inviting FDIs.
He also suggested that the 49-state LDC bloc use their diaspora to attract FDIs, develop capital markets and formulate public-private partnership (PPP) framework.
He said political will also plays an important role behind the FDI issue.
Love Mtesa, Zambia's former ambassador to the United Nations and World Trade Organisation (WTO), said there should be a standard mechanism for attracting FDIs. "Most LDCs have a very poor negotiation capacity and they do not know much when they sign any agreements."
Former finance minister M Syeduzzaman said the FDIs could not grow without the growth in the domestic investments.
He urged the LDCs to improve technical education, social and physical infrastructure to attract more FDIs.
Toufiq Ali, former ambassador of Bangladesh in Geneva, said time has come to question how much FDIs are good for the LDCs.
Debapriya Bhattacharya, distinguished fellow of CPD, said the diasporas should be targeted to bring foreign investments.
Mehmet Arda, professor of International Relations and Economics at Galatasaray University in Turkey, said there is a tendency among the LDCs to give better treatment to the foreign investors compared to the locals. "This needs to be corrected."
The FDI flow into the telecom sector in the LDCs last decade has surprised everybody, Arda said, adding that the trend should be same in other sectors.
Mustafizur Rahman, executive director of CPD, proposed creating a global FDI fund for supporting the LDCs.
Vicente Pinto de Andrade, an Economics professor at Catholic University of Angola, suggested the LDC governments should lead initial construction with public expenditures and seek private investment in management and operations to impart commercial discipline.
He said double tax treaties should be pursued to support inward and outward investment in the LDCs.
Abdul Alim, economic affairs officer of UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, and Christian Kingombe of Overseas Develop-ment Institute in London also spoke.
FOCUS ON TECHNOLOGY
In the third working session on Access to Technology, speakers called for supports for the LDCs to help them build capacities and adopt available technology.
Brac University Vice Chancellor Jamilur Reza Choudhury said technological innovation and technology transfer would be crucial in helping the LDCs graduate from the group.
Choudhury said Bangladesh has achi-eved substantial improvement in ICT, particularly in the telecom sector, which nobody had envisaged a decade ago.
"Other LDCs can learn from Bangladesh."
He said the Article 66.2 of TRIPS (Trade Related Aspects of Intellectual Property Rights) is not working at all in helping transfer technology to the LDCs.
Choudhury also proposed redrafting the domestic prefe-rences rules of the procurement guidelines endorsed by different global agencies.
Christophe Bellman, prog-rammes director of International Centre for Trade and Sustainable Development in Geneva, said
weak capabilities in LDCs imply higher costs and call for additional incentives.
"Transfer of technology provides higher opportunities, but it becomes costly when the recipient has weak capabilities and only generates small or no commercial return for tech-holder," he said.
He called for promoting efficient organisational designs to enhance LDC capabilities at the national and regional levels for creating technology platforms.
Apollinaire Ndorukwigira, manager of African Capacity Building Foundation, suggested that the LDCs should be supported to transform their economies through faster penetration of ICT and quality workforce to accelerate economic diversification and trade.
Luciana Mermet, policy specialist of United Nations Development Programme in New York, said developed partners will have to encourage transfer of technologies to the LDCs to increase share of technology in official development assistance and other trade aids.
The partners should also promote development-friendly intellectual property rights regime, she said.
Debapriya Bhattacharya said the flexibilities for the LDCs under the WTO should be extended until 2025, instead of sticking to 2016.
Climatologist Ainun Nishat said the LDCs should be clear about what technology they need for what purpose.