Editor's Note: Kusi Hornberger is an Investment Policy Officer with the Investment Climate Advisory Services of the World Bank Group.
Imagine you’re an investor interested in starting a mobile telecommunications company in the Philippines. You know that the Philippines places restrictions on foreign direct investment (FDI), but you have no idea how these might apply to your particular situation. Where can you turn to find out? A new World Bank Group report and database called Investing Across Borders has the answer. It turns out that the Philippines only allows a maximum of 40% foreign equity ownership in wireless services and infrastructure -- meaning you will be stuck as a minority shareholder.
Investing Across Borders 2010 has plenty of other data on FDI regulations that will prove useful to business people and policy makers alike. It is the first World Bank Group report to offer objective data on laws and regulations affecting FDI that can be compared across countries. As one might expect, the report finds that overly restrictive and obsolete laws are an impediment to FDI.
The report is supported by a database of indicators that examine sector-specific restrictions on foreign equity ownership, the process of starting a foreign business, access to industrial land, and commercial arbitration regimes in 87 countries. As with any cross-country comparison, it does not measure all aspects of the business environment that matter to investors, e.g. macroeconomic stability or market size. But the indicators do provide a starting point for governments wanting to improve their global investment competitiveness.
A sample of some of the report’s interesting findings include:
- Restrictions on foreign ownership are strictest in media, transportation, electricity, and telecommunications industries. For example the report finds that many economies restrict investment in mobile telecommunications, e.g. Ethiopia, the Philippines, and Korea.
- In most countries measured by the indicators, starting a foreign company takes longer and requires more steps than starting a domestic company as measured by the Doing Business project.
- Across the 87 countries surveyed the average time it takes to lease land from the government is more than twice that required to lease land from a private holder.