UN body urges Guatemala to improve governance to attract foreign investment

The United Nations body that promotes the integration of developing countries into the world economy today advised Guatemala to strengthen governance and improve the performance of it public institutions to attract more foreign direct investment (FDI).

An investment policy review of Guatemala by the UN Conference on Trade and Development (UNCTAD), released in Geneva, noted that although the country has modern laws relating to its investment regulatory framework, critical policies essential for the proper functioning and management of markets are yet to be implemented.

It cites the lack of a competition policy and the absence of a national agency to regulate competition as a case in point. Important government institutions are often too weak and poorly resourced to effectively fulfil their mandates, according to the review unveiled during the week-long meeting of UNCTAD’s Investment, Enterprise and Development Commission.

Supachai Panitchpakdi, the UNCTAD Secretary-General, said Guatemala’s open policies, protracted political and macroeconomic stability, and sizeable domestic market, in addition to its favourable geographic position and the quality of the labour force, point to a significant potential for attracting FDI.

But he said that poverty and the unequal distribution of income, low levels of education, and high crime rates continue to hamper economic and social development and to prevent the country from fully tapping its investment potential.

The recommendations to the Guatemalan Government are intended to strengthen governance and public institutions, improve the regulatory framework for investment and assist Guatemala in attracting and deriving increased benefits from FDI.

Among its key recommendations, UNCTAD proposes elements of a comprehensive fiscal policy reform that would help Guatemala boost public revenue and offer investors a balanced and competitive fiscal regime.

Mr. Supachai also outlined the recommendations contained in the review relating to economic sectors considered strategic by the Government – energy, mining, and road infrastructure. He stressed the importance that a participatory process can have on the success of investment projects in those three critical areas, and on the well-being of populations affected by them.

Meanwhile, investment agencies from the Dominican Republic, Peru, and Zambia have won this year’s UNCTAD Investment Promotion Awards.

The three awards, presented to the winners in Geneva yesterday by Mr. Supachai and Patricia Francis, Executive Director of the International Trade Centre, focused on the contribution that investment promotion agencies can make to infrastructure development through attracting FDI.

The first award went to the Dominican Republic Export and Investment Centre (CEI-RD) for its role in attracting FDI and servicing investors in infrastructure, particularly a roads project, to improve access to remote areas and to support the development of tourism and other industries.

ProInversión of Peru received the second equal award for promoting and facilitating a public-private partnership (PPP) for the construction, operation, and maintenance of a wastewater treatment plant that is expected to directly benefit millions of people.

The third award went to the Zambia Development Agency for its work with different government entities in the promotion of PPPs and its role in attracting investment for a renewable-energy infrastructure project.