Closing remarks by
Minister for International Development Heidi Hautala
Helsinki Investment Regime Seminar
11 April 2013
1. Honourable Ministers, Excellencies, distinguished experts.
2. The topic of this Helsinki Investment Regime Seminar has truly been challenging and important. The question ‘how we could promote the role of private sector investment, not only to boost competition, trade and employment, but particularly in sustainable and inclusive development’ is the key to poverty eradication and increase in welfare.
- Ladies and gentlemen,
- We all know that private investment is the biggest flow of resources in the world that could potentially benefit the developing countries. The volume of private investment is manifold compared to the official development assistance, and yet much bigger than what the world’s migrants send money back to their countries of origin.
- All these financial resources, together with the mobilization of developing countries’ own resources and trade, could easily make huge changes in any country’s living conditions and welfare if allocated in a way that the resources benefit all the people in the country in an equal manner.
- Private investment is therefore a key to achieving sustainable development. It plays a crucial role in generating potential for economic growth, job creation, income generation and poverty reduction. The role of the private sector in job creation in poor countries is really crucial; in many countries as much as 90 % of new jobs are created in the private sector.
- Foreign Direct Investment (FDI) can play a very important role, especially in developing countries where domestic resources are scarce. In addition to providing much needed capital, FDI is a source of advanced technologies, management skills, know-how and can provide access to new markets and local and global value chains. As a matter of fact, these spillover effects can be much more important for a developing country’s prosperity than the mere contribution to the capital stock.
- However, there are no quick and easy solutions to increase the level of domestic private investment or FDI flows. The only way is to create a legal, regulatory and institutional environment that is conducive for both domestic and foreign investors. Part of that equation is also the set of treaties that specify how investments are safeguarded and that there is a level playing field for all types of investment and for all investors.
- The Ministry has actually had dialogue many times with entrepreneurs and investors both in developing countries and in Finland. What we hear is that investors and business people value good governance, rule of law, protection of human rights and macroeconomic stability. They also appreciate the predictability of the legal system, enforceability of contracts and the general openness of the economy. People must have the needed skills and they must be healthy. Investment doesn’t come to a country where these basic fundamentals are not right.
10. This is where the development policy and development cooperation can make the best contribution. Finland’s human-rights-based development policy is, hence, of crucial importance also for investors. We have emphasized good governance, rule of law and people’s participation as key themes of our cooperation. We have also made efforts to improve business environment and investment climate in the framework of Aid for Trade. All in all, I believe that we have been doing the right things in our partner countries, also from investors’ perspective.
11. Distinguished guests,
12. We all know − and you as the leading experts in investment issues in particular – that the current situation with several thousand bilateral investment treaties is far from satisfactory. You can imagine that if it’s a headache for the world’s leading experts and politicians in rich countries, it must be a nightmare for the governments and business people in developing countries.
13. We need open and inclusive dialogue with all stakeholders, including governments, private sector and civil society, both in rich and poor countries. I can’t underline openness and inclusiveness too much if we are to avoid unnecessary confrontation and somebody feeling that his or her voice is not heard. My advice is to start small, and see what flies, then scale it up.
14. Sustainable development needs to be mainstreamed in investment policy discussions in general. Sustainable development must also be factored in in the “next generation” investment treaties. This is imperative since investments have such a huge impact on the potential for sustainable development but can also harm sustainability if not properly managed.
15. I also want to emphasize the importance of corporate accountability in investment. The social and environmental impacts are enormous and can also be detrimental if investors fail to meet the corporate accountability requirements. Finland welcomes all the valuable work that the OECD, UNCTAD and ILO have done to contribute to international agreements and guidance in the field of corporate accountability.
16. As a final word, I’d like to put some conclusions on the table as well as some recommendations for the future.
17. The Helsinki Investment Regime Seminar is based on the tradition and experiences of the Helsinki Process on Globalization and Democracy jointly launched by the Governments of Finland and Tanzania in 2002.
18. This Helsinki Seminar was convened with the objectives of 1) identifying the strengths and weaknesses of the current investment regime, 2) assessing whether there is a favorable atmosphere among stakeholders to continue the process in one form or another, and 3) identifying possible ways forward. The participation covered stakeholders from the governments of the rich countries, developing countries and emerging economies as well as from international organizations, private sector, civil society and academic community.
► In conclusion, it was generally underlined that foreign investment can play a very important role in the economic and social development of all countries;
► The international investment regime is composed of several thousands of bilateral investment agreements and other trade agreements covering investment issues. The regime is far too intricate with different and often contradicting rules and regulations. The investor−state disputes are on the increase. Most of the stakeholder groups seem to suffer from the situation and agree that some improvements are necessary also taking into account the recent changes in the international investment law and landscape;
► The arbitration has grown costly and also suffers from many procedural and legal weaknesses. It requires special attention and improvements for which there are already a number of suggestions;
► There was a general will to continue an open and inclusive dialogue for the improvement of the regime between the stakeholders in an informal manner. A proposal was made to establish an informal International Investment Expert Group / Dialogue Forum based on a multi-stakeholder approach and composed of the stakeholder groups present at the Helsinki Seminar. The Group would start with stock-taking from the present regime, move forward in confidence building and towards ideas and proposals for the improvement of the international investment regime. In establishing such a group, any potential overlaps with the existing and functioning options should be avoided.
► Many of the experts of this Seminar could offer valuable insights into the work of the Expert Group.
19. With these words, I thank you all for most informed and interesting exchange of ideas and enthusiasm to continue this work in other circles.
20. I also want to express our sincere thanks to Dr. Karl Sauvant and Dr. Federico Ortino for their excellent background paper to this seminar. Finally, I’d like to extend our gratitude from all of us to Ambassador Pertti Majanen and the steering group that organized this event. Thank you and let the good momentum continue.