Towards More Sustainable Investment Frameworks

Evaluating the Feasibility of Sustainable Investment Facilitation Agreements with Southern Neighbourhood Countries

Report

31 July 2024

2. The incorporation of key investment facilitation standards in Southern Neighbourhood countries

Abstract

Investment facilitation is key to creating favourable conditions for mutually beneficial investments. While the EU’s Southern Neighbourhood countries have shown significant strides in recent years to improve their overall investment climates, their respective approaches to investment facilitation have varied significantly and yielded uneven results. This Chapter provides an overview of these approaches, benchmarked against the standards enshrined in the EU-Angola SIFA, specifically with regards to the transparency and predictability of investment frameworks, the streamlining of authorisation procedures, and principles to encourage and promote mutually beneficial sustainable investments.

Transparency and predictability

A fair, transparent, clear and predictable regulatory framework for investment is a critical determinant of investment decisions and a cornerstone to a stable investment climate. Principles of transparency and predictability are central to effective regulation, to enhancing investor confidence in a country’s legal and regulatory environment by allowing for informed decision-making at investor level, and to ensure regulatory compliance. Evidence suggests that investors are more likely to invest in a country which provides a stable regulatory environment (World Bank Group, 2017[1]),1 i.e., where investment-related laws and regulations are readily available through public online sources, and where investment policies are developed in a participatory manner, including based on stakeholder comments and consultations. A predictable and transparent legal framework is critical to enable smooth business operations and is thus as important at the post-investment operational phase as at the pre-investment establishment phase.

Transparency and predictability of legal frameworks for investment may be achieved or enhanced through several ways (OECD, 2015[2]), e.g.:

Making investment-related laws and regulations clear and readily available and accessible, and arranging for advance publication of draft texts prior to their adoption.
Developing registers of existing and proposed regulations; expanding the use of electronic dissemination of regulatory material; publishing and reviewing administrative decisions.
Simplifying and streamlining legislation and drafting in plain language; translating these into English and other languages relevant to investors.
Developing and maintaining a proactive investment policymaking strategy and making publicly available expected regulatory changes and their underpinning rationales.
Consulting systematically with interested stakeholders, for instance through institutionalised consultation mechanisms that enable investors and other stakeholders to participate in the design and monitoring of business-related laws and regulations (OECD, 2021[3]).
Assessing and communicating the potential impact – environmental, social and economic – of new regulations before their adoption; periodically reviewing regulations to assess their effectiveness in facilitating investment.

The focus of the EU-Angola SIFA’s Chapter 2 relates to regulatory transparency and predictability. The Agreement founds transparency and predictability requirements on three core pillars or principles which govern the administration of investment-related measures: reasonableness, objectivity, and impartiality.2 These are also enshrined in the Article VI:1 WTO General Agreement on Trade in Services, which appears to have inspired the wording of the EU-Angola SIFA’s Article 6:

EU-Angola SIFA, Article 6:

Each Party shall ensure that all measures of general application falling within the scope of this Agreement are administered in a reasonable, objective and impartial manner.

The scope of these three core principles, as reflected in Article 6 of the EU-Angola SIFA, is rather broad and can be understood as applying to all phases of the investment policy life cycle, starting with its strategic elaboration, to its drafting, adoption, implementation, application, maintenance, and even its phasing-out.3 The Agreement does not define what these principles encompass specifically in terms of procedural or substantive requirements, which leaves ample room for interpretation. As such, all three core principles may be understood as addressing distinct aspects of regulatory transparency and predictability – albeit with potential overlaps:

Reasonableness can relate to both procedural and substantive requirements of regulatory transparency and predictability. Administering investment-related measures with reason can entail, for instance, outlining the rationale underpinning existing business-related measures or proposed regulatory changes and publishing sufficient information on the investment framework to avoid informal or excessively discretionary processes that could lead to arbitrary or discriminatory outcomes.4 Reasonableness can also entail more practical aspects of policymaking, e.g., publishing proposed regulatory changes in advance to provide stakeholders with an opportunity to comment to ensure that they are not disproportionately affected by the proposed measures and ensure overall regulatory stability.
Objectivity requirements may overlap in part with a number of substantive aspects of the reasonableness principle, as well as the procedural contours of the principle of impartiality, outlined below. Objectivity could for example entail developing clear policy objectives to existing or proposed investment-related measures. An objective administration of investment-related measures implies that Parties review their existing investment frameworks to ensure that measures adequately serve their intended purpose, and to align those that do not with their policy priorities and strategies.
Impartiality requires inter alia that investment-related measures are not developed or applied in a way that would unfairly favour or restrict an investor or a category of investors. It entails that measures should be administered in such a manner that benefits all investors in like circumstances indiscriminately.5 An objective administration of investment-related measures would ensure that this administration is aligned not on discretionary factors or considerations, but rather, on clear, reasonable and objective criteria, and thus administered impartially, e.g., with respect to investors’ access to investment incentives.

The unspecified nature of these principles together with their broad scope of application to all phases of the investment policy life cycle translates into a wide range of possible implementing solutions. While some of these practical solutions may be specifically tailored to achieve particular principles, others may serve several of these core principles synchronously. Regulatory transparency and predictability of investment policy can also be the result of a broader effort to improve a country’s regulatory governance in the context of a “whole-of-government” approach. As such, overarching shortcomings relating to transparency and predictability of a regulatory framework would shed some light onto the transparency and predictability of investment-related regulations specifically. Separately, disparities in practical solutions to enhance regulatory transparency and predictability may be observed between countries, but also sometimes at the sub-national level itself, given the variety of approaches to governance and local idiosyncrasies. Despite these variations, international good practices have emerged to effectively foster transparency and predictability in policymaking and policy administration.

Chapter 2 of the EU-Angola SIFA outlines a list of practical measures or solutions which Parties should implement to achieve and enhance regulatory predictability and transparency of investment-related measures of general application. These practical applications of the principles of reasonableness, objectivity, and impartiality concern specifically the publication of investment-related measures of general application (Article 7), the advance publication of draft laws and regulations and the provision of a reasonable opportunity to comment on such drafts (Article 8), enhancing access to information on the investment framework (Article 9), as well as the incentives regime (Article 10). The Agreement also encourages parties to provide information on domestic suppliers to encourage linkages with the host economy (Article 11).

Such practical solutions to enhance regulatory transparency and predictability are at the time of writing in September 2023 implemented through various measures, and to varying degrees, throughout the five selected countries of the Southern Neighbourhood. Comparative surveys highlight significant differences in the perceptions of regulatory transparency and predictability in all five countries of the EU’s Southern Neighbourhood. Figure 2.1 features their scores in the World Justice Project (WJP) Rule of Law Index (2022), specifically in respect of factors relating to regulatory governance that are closely related to matters addressed in Chapter 2 of the EU-Angola SIFA.6 These concern inter alia undue influence over government officials in the executive and legislative branches and in the application of government regulations, publication of laws and government data, right to information, civic participation in the law making processes.

Figure 2.1. Selected Southern Neighbourhood countries’ scores in the WJP Rule of Law Index (2022): regulatory governance

Although the WJP Rule of Law Index as well as other comparative surveys cover broad governance issues, they may nevertheless give a strong indication as to the state of regulatory governance of business and investment-related measures in the countries. As such, the assessment of the Tunisian and Jordanian regulatory environments highlight the significant strides taken by the two countries in addressing undue influence over law-making processes and the enforcement of regulations, as well as over access to information. Overall, while sensible differences may be observed in the selected Southern Neighbourhood countries’ scores on the different factors, important shortcomings appear to affect all their domestic regulatory environments.

The following sections provide an overview of the practical solutions recommended by the EU-Angola SIFA Chapter 2 with regards to regulatory predictability and transparency of investment-related measures, and to what extent such solutions have been implemented in practice in the selected Southern Neighbourhood countries.

Publication requirements

Official publication of laws and regulations is the first basic – albeit critical – element of a transparent and predictable legal framework. Publication of investment-related measures of general application creates predictability for investors as it is a precondition of regulatory compliance: through published regulatory material, investors understand what regulations apply to them and what requirements they must comply with to establish or operate in the country. The opacity of domestic regulatory environments could also disproportionately affect smaller firms – which are less likely to enjoy the resources necessary to afford services to help them navigate the frameworks of foreign markets, including in respect of access conditions and requirements – who in turn are likely to bear the costs of poor regulatory governance (OECD, 2021[4]). The publication of regulatory material also holds the potential of limiting regulatory agencies’ discretion in applying such measures, thus fostering administrative accountability.

Publication requirements of measures of general application are a quasi-universal feature of agreements with investment and/or trade facilitation provisions,7 including some early-generation investment treaties.8 They have become increasingly common in recent investment treaty designs.9 Such transparency requirements also featured in the General Agreement on Tariffs and Trade (GATT) (1947), Article X, which provides that trade-related measures “shall be published promptly in such a manner as to enable governments and traders to become acquainted with them”. Transparency requirements in the GATT extended beyond domestic regulatory material, to include the publication of international agreements affecting the contracting parties’ international trade policy.

EU-Angola SIFA, Article 7:

Each Party shall publish promptly or otherwise make publicly available in writing and, except in emergency situations, at the latest by the time of their entry into force, all relevant measures of general application falling within the scope of this Agreement in such a manner as to enable investors to be informed of them.

Publication of investment-related measures is the first practical solution addressed by Chapter 2 of the EU-Angola SIFA to achieve regulatory transparency, and ultimately, regulatory predictability. Article 7 rests on two alternative solutions to ensure that publication requirements are met by parties: they “shall publish promptly or otherwise make publicly available in writing” (emphasis added) all investment-related measures of general application falling within the scope of the Agreement. Although the Agreement does not specify the medium for publication requirements (in an Official Journal, online, on through a single portal), such publication shall aim at “enabl[ing] investors to be informed of” the investment-related measures. Publication of measures in a medium with restricted access would thus not appear to meet the standard laid out under Article 7 of the EU-Angola SIFA – the purpose of such publication being to enhance access to regulatory information by all investors and relevant stakeholders.10

Article 7 of the EU-Angola SIFA does not fall short of including recently implemented regulations within its requirements, in addition to setting a framework for the publication in advance of draft laws and regulations. The Agreement time-bars the publication requirements of recent regulatory changes, at the latest, by the time of their entry into force, except in emergency situations. Such requirements are further supported by the recommended provision of a latency period between the publication of a measure and its entry into force to enhance predictability and allow investors to comply with recently implemented regulations (EU-Angola SIFA, Article 8(6)).

The availability of published regulatory material via official channels – including investment-related regulatory material – is uneven across the five countries of the selected Southern Neighbourhood. While all five countries appear to require their authorities to publish regulatory material in the national official journals, access to these publications can be hampered in practice, including in respect of availability of translations of original Arabic-language legislation. More particularly, while Algeria, Morocco and Tunisia publish, via official channels, French translations of their laws, regulations, decrees and other instruments, Egypt does not appear to do so. Selected Jordanian laws and regulations are available through ministry websites rather than via a centralised platform (e.g., official journal) and often provides English translations of main instruments. Further, official journals are readily available online and free-of-charge in the five countries of the Southern Neighbourhood, except in Egypt where access to the Official Journal is hindered by paywalls. The user-friendliness of websites publishing material from official journals can also vary from one country to another, potentially hindering access to regulatory information. Some countries have resorted to publication of investment-specific measures through their national IPAs’ websites, when available. While this approach is more targeted towards investment-related measures and can be more cost-efficient than the implementation and maintenance of a centralised legal repository, measures published by IPAs can often be outdated and may not have sufficient coverage due to the variety of laws and regulations having potential bearing on investments. This is explored further in the context of this section’s assessment of Article 9 of the EU-Angola SIFA.

Publication in advance and opportunity to comment

Building on the practical solutions enshrined in the previous Article 7, Article 8 of the EU-Angola SIFA outlines the requirement for the advance publication of proposed regulatory measures, “whether in the form of a law, regulation, rule, procedure, decision, administrative action or other”. The rationale of the provision lays in enhancing the predictability of a country’s investment framework, and ensuring that proposed changes serve the public interest, do not disproportionately affect some stakeholders, and are informed by their legitimate needs (OECD, 2012[5]).

The design and scope of Article 8 is similar to provisions featured in recent trade agreements.11 The scope and ambition of such provisions vary when featured in IIAs. Reference is often made to publication in advance and opportunity to comment requirements, but less so to requirements pertaining to providing explanations as to the purpose and rationale of a proposed measure, or affording reasonable time between the publication of a measure and its application and entry into force.12

The practical solutions provided by Article 8 are limited to what Parties may “to the extent practicable” achieve in a manner that is “consistent with [their] legal system”. They pertain to the advance publication of proposed measures (i.e., that they be made publicly available in advance of their adoption); that stakeholders be provided with a reasonable opportunity to comment on such measures before their adoption, and their comments be considered; that the rationale and purposes of these measures be explained; and that investors be provided with a reasonable time between the publication and entry into force of such measures. While some of the countries’ selected framework do feature formal requirements aligned with those of Article 8, these are not systematically implemented in practice.

Advance publication of proposed measures

EU-Angola SIFA, Articles 8(1) and (2):

1. To the extent practicable and in a manner consistent with its legal system for adopting measures, each Party shall publish in advance:

(a) the proposals for laws and regulations of general application to be adopted in relation to matters falling within the scope of this Agreement; or

(b) documents that provide sufficient details about the proposals referred to in point (a) to allow investors and other interested persons to assess whether and how their interests might be significantly affected.

2. To the extent practicable and in a manner consistent with its legal system for adopting measures, each Party is encouraged to apply paragraph 1 to procedures and administrative rulings of general application it proposes to adopt in relation to matters falling within the scope of this Agreement.”

Article 8(1) and (2) require that proposed measures or alternatively, documents “that provide sufficient details about the proposals referred to [in the above sub-paragraph (a)] to allow investors and other interested persons to assess whether and how their interests might be significantly affected”, be published prior to their adoption and entry into force. A footnote to the provision notes that Parties may have different systems in place to consult on certain regulatory and other measures before they are adopted, and the two alternative requirements are designed to accommodate this diversity.

Advance publication of drafts or proposals – or documents that provide sufficient details on – measures is principally carried out by the selected Southern Neighbourhood countries via the websites of the countries’ regulatory authorities: Jordan, Morocco and Tunisia’s frameworks feature arrangements – both formal and informal – for the advance publication of proposed measures via government and/or legislative websites. These websites are however not always regularly updated and/or comprehensive: in effect, while drafts of the Jordanian Investment Environment Law were published prior to its adoption, this is not entirely clear in respect of drafts of the Moroccan and Tunisian investment laws.13 It thus remains unclear as to whether and when drafts have been made available prior to their adoption, and indeed whether these arrangements are given effect in practice. Tunisian local press has recently reported that a new investment law is currently under elaboration (African Manager, 2023[6]). This had not at the time of writing in September 2023 been reported via official government channels, nor had any drafts of measures have been shared with the public.

Such formal arrangement is not a feature of the Algerian framework; however, in practice, the websites of the Algerian People’s National Assembly and Council of the Nation both have dedicated web pages where draft legal texts prior to their adoption are published. Draft(s) of Algeria’s 2022 Investment Law and implementing decrees could however not at the time of writing in September 2023 be located thereon. Similarly, no formal requirement exists under the Egyptian framework, and drafts of its 2017 Investment Law could not be located on any official government portal.

Finally, and except in the case of Jordan, no documents that outline either the rationale and/or sufficient detail about the drafts of measures to be adopted could be located.

Reasonable opportunity to comment

EU-Angola SIFA, Articles 8(3) and (4):

3. To the extent practicable and in a manner consistent with its legal system for adopting measures, each Party shall provide investors and other interested persons, on a non-discriminatory basis, a reasonable opportunity to comment on proposed measures or documents published under paragraph 1 or 2.

4. To the extent practicable and in a manner consistent with its legal system for adopting measures, each Party shall consider comments received pursuant to paragraph 3.

Article 8 of the EU-Angola SIFA also requires that Parties provide relevant stakeholders – “investors and other interested persons” – with a “reasonable opportunity to comment” on proposed measures and/or documents as defined in Article 8, and that Parties consider such comments.14 The provision does not outline any practical ways by which such opportunities are to be provided or how a “reasonable” opportunity to comment is to be ensured, i.e., if comments are to be actively encouraged or promoted by the parties, if consultations are to be carried out within a brief timeframe prior to the adoption of measures so as to allow parties to consider the comments received, or if consultations are to extend over a sufficiently long period of time to allow for extensive consultations with relevant stakeholders. While flexibility in SIFA language is pivotal for Parties to implement this practical solution in a variety of ways and in accordance with their domestic frameworks, Article 8 could lay out non-prescriptive examples of how a reasonable opportunity to comment may be afforded to investors and other stakeholders, e.g., government-led consultations via public websites or platforms (such as government websites, newspapers, official gazettes), government-led consultations via public meetings, and/or targeted outreach to select stakeholders.

Some of the selected Southern Neighbourhood countries have put in place a variety of different arrangements to afford the public and relevant stakeholders a reasonable opportunity to comment on draft bills before their adoption. The frameworks of Algeria and Egypt do not feature any formal requirement to provide a reasonable opportunity to comment and/or conduct consultations during the elaboration of a measure and prior to its adoption. Publicly available information confirms however that some limited consultations may have been carried out with respect of each of the countries’ investment laws although detailed information on these is not readily available.

In contrast, the frameworks of Jordan, Morocco and Tunisia do feature these requirements – these are either institutional (in the case of Jordan) or formalised into the regulations of the legislative body (in the case of Morocco and Tunisia). It is unclear however how this opportunity was provided, and how these consultations were carried out. In that regard, all three countries are currently engaged in programs that seek to develop public participation and engagement in the regulatory and legislative fields.15

Except in the case of Jordan, where the consultative processes which led to the adoption of its 2022 Investment Law were considered by some stakeholders to have been particularly rich, it is unclear on the face of publicly available information how extensive and/or inclusive these processes were in other Southern Neighbourhood countries, including whether an opportunity to comment was equally provided to all relevant stakeholders and interested persons, whether this opportunity was deemed “reasonable”, and whether comments received were effectively reflected into the elaboration process of these laws.

Explaining the purpose and rationale of proposed measures

EU-Angola SIFA, Article 8(5):

5. In publishing a law or regulation of general application referred to in paragraph 1, or in advance of such publication, to the extent practicable and in a manner consistent with its legal system for adopting measures, each Party shall endeavour to explain the purposes and rationale of that law or regulation.

Under Article 8(5) of the Agreement, Parties shall also “endeavour” to explain the purpose and rationale of laws and/or regulations of general application adopted in relation to matters falling within the scope of the SIFA, either at the time of their publication or in advance of that time. The wording of the provision again provides flexibility to the Parties as to arrangements framing this requirement, and does not set out a minimum of information required to be shared with the public.

No overarching legal requirement to explain the purpose or rationale of a proposed measures, prior to or at the time of its adoption, appears to exist in the legal frameworks of any of the selected Southern Neighbourhood countries. Nevertheless, Algeria, Jordan and Morocco have through various channels and within different timeframes – either before or after the adoption of their investment laws – sought to provide background and explanations regarding the purpose and rationale of laws and regulations making up their respective investment frameworks, e.g., by way of Cabinet communiqué in Algeria, accompanying explanatory notes in Jordan, and a full-fledged report and explanatory statement in Morocco.

Reasonable time between the publication of a text and the date of its application to investors

EU-Angola SIFA, Article 8(6):

6. Each Party, to the extent practicable, shall endeavour to allow a reasonable time between the publication of a law or regulation referred to in paragraph 1 and the date of its application to investors.

The text of Article 8 also provides that Parties shall “endeavour” to allow for a “reasonable time” between the publication of proposed measures, and the date upon which investors are to comply with them.16 While the provision seeks to enhance regulatory predictability by ensuring that investors are sufficiently familiarised with obligations and requirements applicable to them before these become effective, it does not define the limits of such a “reasonable” period of time, and instead leaves its assessment to the Parties’ discretion – e.g., a “reasonable” period of time could correspond to the combined timeframes between the advance publication of a draft measure, stakeholder consultations and the adoption and subsequent entry into force of a measure; alternatively, it could also correspond to a defined transitional period following the entry into force of a measure to allow time for investors to acquaint themselves with new requirements and obligations thereunder prior to compliance requirements.

Across the selected Southern Neighbourhood countries, the timeframe between publication of investment-related measures and their entry into force varied significantly.

Further, Algeria’s, Egypt’s and Jordan’s current investment frameworks provide that investments made under the previous legislation continue doing so for their entire lifecycle. While such mechanisms seek to address predictability objectives, such “stabilisation” clauses are not necessarily required if extensive arrangements are maintained by countries to enhance regulatory predictability, including those recommended under Article 8 of the EU-Angola SIFA. Such clauses could fragment the legal landscape, where investments in the countries would fall under different legal frameworks and be subject to potentially contradicting requirements, and also carry the potential of impeding the implementation of meaningful regulatory changes, especially where regulatory changes aim at strengthening labour or environmental standards and responsible business conduct principles. As such, reforms seeking to permeate law-making practices with enhanced transparency – in line with the requirements set out in Article 8 of the EU-Angola SIFA – may be more appropriate in tackling concerns of regulatory unpredictability.

In contrast, the Moroccan, Tunisian and Jordan investment frameworks in theory repeal and replace most if not all of the provisions of the previous investment instruments, while some feature a transitional period to investment benefiting from incentives under the previous regime – see e.g., Tunisia.

Transparency of the investment framework

Beyond general requirements pertaining to the publication of both investment-specific laws and general measures of relevance – as well as the requirement to publish proposed bills in advance, together with the provision of a reasonable opportunity to comment while developing such instruments – the investment framework itself must be readily accessible to investors and other relevant stakeholders. While publication requirements generally relate to the publication via official government gazettes – such as Official Journals or Official Bulletins – of public and legal instruments (including laws, regulations, decrees, rules and other instruments that may carry either direct or general relevance to investors, among others), the transparency of the investment framework specifically concerns making available to investors information directly relevant to them and their investment projects, thereby further enhancing an investment framework’s transparency. Indeed, the overall transparency of an investment framework also hinges on the availability such specific information relevant to investors interested in establishing and/or operating into a country. The availability of such information further enhances predictability for investors who seek to understand which regulations, restrictions and conditions are relevant to establishing their investment, and which authorisations they would require to operate in a given jurisdiction.

IIAs featuring facilitation – and more specifically, transparency – chapters or provisions have often included general transparency requirements. In most instances, these have generally specifically called for the publication of laws and regulations. IIAs geared towards investment facilitation specifically have introduced investment framework transparency requirements also in the context of “single digital platform” provisions, for example.17

EU-Angola SIFA, Article 9:

1. Each Party shall make available via electronic means such as a website and, where practicable, accessible through a single portal, and update to the extent possible and as appropriate, the following:

a) laws and regulations specifically concerning investment

b) restrictions and conditions applying to investment

c) contact information of relevant competent authorities for the authorisation of investment.

2. Each Party shall make available, where practicable via electronic means such as a website and accessible through the single portal referred to in paragraph 1, and update to the extent possible and as appropriate, a description that informs investors and other interested persons of the practical steps needed to invest in its territory including the requirements and procedures related to:

a) company establishment and business registration

b) connecting to essential infrastructure such as electricity and water supply

c) the acquisition and registering of property such as land ownership rights

d) construction permits

e) resolving insolvency

f) capital transfers and payments

g) convertibility of currency

h) the payment of taxes

i) access to finance, especially for MSMEs.

3. No fee shall be imposed on any investor in a Party’s territory for access to the information provided under this Article or under Article 7.

In that regard, Article 9 of the EU-Angola SIFA requires that Parties make available – via electronic means, and “where practicable” through a single portal – up-to-date information concerning the laws and regulations specifically concerning investment, the restrictions and conditions applying to investment, and the contact information of relevant competent authorities responsible for authorising investments. It also prescribes that Parties make available – “where practicable”, electronically and via a single portal – information relevant to the practical steps required to invest in a jurisdictions, including requirements and procedures relevant to company establishment, connecting to essential infrastructure, the acquisition and registration of property rights, construction permits, resolving resolution, capital transfers and payments, currency convertibility, tax payments, and access to finance (including for MSMEs). In that regard, the provision could also consider requiring that Parties also provide information relating to the temporary entry and sojourn requirements for investors and key personnel.

While Article 9 addresses practical considerations that seek to achieve transparency objectives, it does not consider matters that relate to substantive policy coherence which Parties could also consider when developing their respective legal and regulatory investment frameworks. Further, the matters covered by Article 20 of the EU-Angola SIFA could also have been considered in the scope of this Article 9, as indeed ensuring that information necessary for investors among others in the context of application procedures – such as licensing and qualification requirements and procedures, authorisation fees, contact information of the relevant competent authorities, and information on appeal procedures, among others – also enhances the transparency and predictability of the investment framework.

All five selected Southern Neighbourhood countries operate single portals which meet to varying degrees the requirements set out in Article 9. Algeria publishes only its new Law on Investment (2022) via its IPA’s website (AAPI) in English, French and Arabic; the government’s Secretariat General’s website however outlines legislation alongside all of its relevant implementing and other instruments, in a comprehensive and easy-to-access manner. Jordan’s Ministry of Investment (MoI) publishes the Investment Environment Law (2022) and the Public-Private Partnership Law (2020) along with their relevant implementing decrees, in Arabic and in English.18 Tunisia’s Investment Agency (TIA) also publishes selected instruments through its website and its OSS portal, in both French and Arabic; these include the 2016 Investment Law and its Public-Private Partnership (PPP) Law, accompanied by some, but not all relevant regulations. Egypt’s GAFI publishes the most regulatory material among its regional peers, including investment, trade and customs, financial services, companies, environmental, fiscal, labour, finance, and protection of intellectual property rights instruments; these are generally available both in Arabic and in English. However, the investment legislation which it makes available does not reflect all its latest regulatory amendments. Finally, and due to the country’s decentralised approach to investment facilitation, the dissemination of investment-related regulatory material in Morocco is not centralised through a unique website. Rather, its regional CRIs disseminate regulatory material on their websites although with little consistency between CRIs operating in the country. These websites also feature contact information either directly relevant to the competent authorities for the authorisation of investment (Morocco, Tunisia), or the contact details of their IPA’s OSS that plays a role in facilitating authorisation procedures (Algeria, Egypt, Jordan).

With respect to restrictions, Algeria provides information on applying to foreign investors specifically in commercial activities via the website of its Ministry of Commerce. Information on restrictions applying in non-commercial activities, however, does not seem to be readily available on Algerian official websites. In Jordan, legislation enacted pursuant to the country’s new Investment Law in 2022 sets out two negative lists of restricted sectors – a list of activities in which foreign investments are prohibited; and a list of activities in which a foreign ownership cap of 50% applies; while these are not available electronically and/or through a single portal, the lists significantly enhance transparency and predictability in respect of restrictions and conditions applying to foreign investment. Egypt, Morocco and Tunisia on the other hand do not make available – via electronic means, a single portal or otherwise, including in a negative list – any consolidated information on the restrictions and conditions applying to foreign investment.

Finally, and with respect to information relevant to practical steps needed to invest in a given territory, the online portals of the IPAs and/or OSS of each of the five countries provide information as well as facilitation and support services relating to company incorporation and business registration. Information on other practical steps crucial to the investor experience – e.g., connection to essential infrastructure, acquisition and registration of property, construction permits, among others – is difficult to identify and access, and so investors must consider each of these with the relevant competent authorities directly instead. In that regard, Tunisia is currently working towards developing a range of online administrative services at sectoral level, including services specifically intended for investors; these would include among others the filing and processing of administrative permits, social security affiliation, customs, and tax formalities.19

Transparency of investment incentives

Building upon transparency requirements for parties’ investment framework, Article 10 of the EU-Angola SIFA relates to the transparency of the investment promotion framework, specifically of incentives available to investors. The benefits of transparency are recognised among tax and investment policy communities (IMF-OECD-UN-World Bank, 2015[7]). The OECD Declaration on International Investment and Multinational Enterprises adopted in 1976 had at the time stressed the need to strengthen international cooperation in this policy area and thereby encouraged adhering governments to make information on incentives as transparent as possible.20 The OECD’s Task Force on Tax and Development has also identified the need for a more effective global transparency framework for tax incentives for investment (OECD, 2013[8]).

While investment incentives – e.g., favourable tax treatment, grants and/or other benefits – are widely relied on by economies to attract private investment and direct it into certain sectors, activities and locations, these should be carefully designed and administered so as to avoid their costs outweighing their benefits. Tax incentives can potentially create redundancies by subsidising firms that would have invested without favourable treatment, and can as such constitute a significant cost for governments in terms of revenue forgone. Carefully designed and targeted incentives may help correct market failures and advance certain development goals, such as supporting renewable energy or skills and technology upgrades, enhancing the positive impact of investment (OECD, 2022[9]).

Despite their widespread use, there is often a lack of public information on the provision, administration, and governance of investment incentives. Many governments do not make readily available, or regularly update, lists of all available incentives and practical information for investors. Transparency of incentives allows governments to promote such good practices for the administration of their incentives by ensuring coordination across agencies to avoid potential overlaps or inefficiencies, and reducing implementing authorities’ discretion in awarding incentives and opportunities for rent-seeking and corruption. Transparency of incentives can also allow for a better assessment of their effectiveness, to ensure that they adequately serve their intended policy purposes (OECD, 2023[10]).

EU-Angola SIFA, Article 10:

2. The information referred to in paragraph 1 shall cover all the incentives available to investors, including financial incentives, fiscal incentives as well as in-kind transfers, including non-financial incentives.

3. The information referred to in paragraph 1 shall include the following elements:

a) The legal basis of the incentive

b) The form of the incentive

c) The eligibility requirements of the incentive

d) The application process for the incentive, including the required forms and documents

e) Contact information of the competent authority.

The scope of the EU-Angola SIFA Article 10 is relatively broad, as it covers all types of incentives available to investors, including financial, fiscal as well as “non-financial” incentives. The scope of information on incentives which Parties are required to make available is clearly set out. Such information should include the legal basis of incentives – i.e., the regulatory measures in which they are outlined should also be published or made available per the publication requirements of Article 7 – the form of the incentives, eligibility requirements, application process with forms and documents, and contact information of competent authorities. 21 The Article also sets a requirement to render information accessible through electronic means, and, if practicable, through a “single portal”, such as on a national IPA’s website or an investor platform.

All but one of the five selected Southern Neighbourhood offer financial support for investment costs in activities related to sustainable development, environmental protection or renewable energy (Algeria, Egypt, Morocco, Tunisia), as well as other incentives based on a variety of eligibility criteria (Ampntel Chafiz, 2023[11]). However, approaches to enhancing the transparency of incentives is not consistent throughout the countries. Most selected Southern Neighbourhood countries provide a general overview of the different financial and fiscal incentives offered to investors, either through their IPAs’ websites (Algeria, Egypt), or on their nation-wide investor platforms (Algeria, Morocco, Tunisia). Nevertheless, the granularity of information featured on these portals varies significantly, especially when benchmarked against Article 10 of the EU-Angola SIFA. Tunisia and Morocco appear to provide the most comprehensive information on incentives out of the five countries, including a contact information of a competent agent for Tunisia. In contrast, information on application procedures, documents, and institutional settings for incentives are not provided by Algeria and Egypt.

At the time of writing in September 2023, Jordan was the only country that did not maintain such a portal, even though its previous IPA had successfully implemented an ‘incentives inventory’ with the support of the World Bank in 2016.22 The country’s current priorities include addressing such shortcomings through a dedicated online investor portal, as reflected by the MoI’s Investment Promotion Strategy (2023-2026) published in June 2023.23

Linkages with the host economy

Anchoring investors through deep linkages with the local economy, especially with domestic MSMEs and suppliers, can be an effective investment retention strategy. It can also strengthen a country’s investment ecosystem: linkages allow for technology transfers, knowledge and managerial and technical skills, which in turn boosts the local private sector. Business surveys have in that regard highlighted the value which investors have found in the existing capacity and skills of local suppliers, as well as government support in that area, e.g., availability of information on relevant local suppliers (World Bank Group, 2017[1]). By way of context, Morocco and Egypt for example source more than 60% of their inputs domestically, whereas Jordan’s and Tunisia’s rates hover significantly lower, at around 30-40% (OECD, 2023[12]).

Public policies seeking to enhance spillovers run across a range of policy areas, including investment promotion and facilitation. In that regard, the OECD (2023) Policy Toolkit for Strengthening FDI and SME Linkages was developed to provide policy advice to governments as to how to increase knowledge and technology benefits from FDI on domestic small-and-medium enterprises and their local economy more generally. This facilitation requirement has been featured in a number of multilateral investment agreements; in some instances, such a requirement has been introduced in a development goals and sustainability context. 24

EU-Angola SIFA, Article 11:

Each Party is encouraged to make available to investors and persons seeking to invest information on domestic suppliers with a view to strengthening linkages with the local economy, increasing the competitiveness of domestic suppliers and enhancing the contribution of investment to sustainable development.

Article 11 of the EU-Angola SIFA “encourages” Parties to make available to investors information on domestic suppliers, thereby enhancing transparency for information relevant to investors. The stated objective of the provision is to strengthen local economy linkages, increase the competitiveness of domestic suppliers and further, enhance the contribution of investment to sustainable development. Nevertheless, Article 11 falls short of outlining or providing specific examples of the means by which such “information” should be made available, or further define specifically what “information” is envisaged under the provision – e.g., matchmaking services, platforms and events, local supplier databases, among others.

Egypt’s investment law does not explicitly address this particular policy area, and on the face of publicly available information, neither its IPA nor its OSS make available to potential or existing investors any information on domestic suppliers with a view to strengthening local economy linkages. Jordan’s investment law does, but in passing only. However, the Jordan Enterprise Development Corporation (JEDCO), in collaboration with local chambers of commerce and business associations, implements the National Linkages Programme, which connects large manufacturers with local SME suppliers, facilitates their interaction and provides technical and financial support to ensure that locally sourced inputs meet the needs of MNEs operating in Jordan (OECD, 2023[12]). Based on its mandate, Algeria’s IPA must make available to investors information relevant to the realisation of their investment projects, including databases on domestic business opportunities and resources, as well as setting up a business matchmaking service and promote business and partnership opportunities. These services were however at the time of writing in September 2023 not yet available through the AAPI website. Morocco’s regions have undertaken regional efforts to provide information on domestic suppliers relevant to investors.25 These efforts are aligned with the mandate country’s regional CRIs, which are missioned among others with making available data and information on regional investment and cooperation opportunities. Tunisia has also undertaken similar – but centralised – efforts, namely via two of its IPAs, the TIA and the APII. Further, Tunisia’s 2016 Law re-organising the country’s Ministry of Development, Investment and International Cooperation established a general investment framework committee (comité d’encadrement général de l’investissement) that is among others responsible for developing investment promotion policies and partnerships with domestic and foreign investment promotion actors and entities. How this objective has been implemented in practice is not clear on the face of publicly available information.

Streamlining of investment authorisation procedures

Effective regulation does not necessarily entail less regulation but rather, the streamlining of administrative processes with a view to simplify and improve the efficiency of procedures that may be required throughout an investment project’s life cycle (OECD, 2015[2]). Heavy administrative and bureaucratic procedures may render business establishment and operation cumbersome for investors and could even represent practical impediments that ultimately deter investors from pursuing their projects. As such, the streamlining of administrative applications and procedures is another cornerstone of investment facilitation, as it guarantees the efficiency and predictability of a country’s legal and regulatory framework by reducing bureaucratic “red tape”, and enhances investors’ confidence by requiring that authorisation procedures are administered objectively, impartially and with independence by the host state’s administrative authorities.

Given the sheer variety of administrative procedures that apply to all steps of an investment life cycle, and which can sensibly differ from one investment to another depending on the economic sector, activity, or location of a project, the streamlining of administrative processes is critical to both business establishment (i.e., admission requirements and formalities, company establishment, etc.) as well as business operation or expansion (e.g., licencing requirements, the granting of permits and other authorisations), and would thus require a “whole-of-government” approach.

Streamlining is a common feature of trade and investment facilitation, and both policy areas are complementary to the extent that businesses wishing to carry out exporting activities could also face significant obstacles in obtaining trade licenses. But where streamlining efforts in the context of trade facilitation focus primarily on export or import licenses and customs procedures, investment facilitation efforts are broader by nature, and relate to the general administrative efficiency of a country, starting from the establishment and company incorporation phase, all the way to the obtaining a wide range of general and investment-specific licences, permits and other authorisations. Investment facilitation provisions featured in IIAs concluded in recent years have generally related specifically to transparency and publication requirements. In more recent years however, a number of IIAs have also featured general calls for efforts to streamline applications and authorisations procedures;26 some have also outlined more technical requirements that seek to achieve the objective of streamlining, comparable to the EU-Angola SIFA’s Chapter 3.27

Two complementary types of practical solutions for streamlining administrative authorisations are observed in practice: an underlying – and necessary – “whole-of-government” approach to administrative streamlining that seeks to achieve overall administrative efficiency; and a complementary investment-specific approach which seeks to facilitate specific investment-related procedures. Investment-specific streamlining solutions can for example include:

The establishment of a dedicated agency developed to guide and provide aftercare services to investors, e.g., via a unified IPA with an OSS for investors, via which information on required establishment and operation authorisations can be identified.
Bestowing IPAs and OSS with the mandate to directly process – some or all – administrative authorisation requests and grant such authorisations (e.g., the OSS is either provided with the mandate to issue such authorisations directly, or alternatively, hosts administrations’ and public authorities’ representatives that carry such mandate); or alternatively, facilitate the obtention of authorisations (i.e., liaising on behalf of investors with relevant competent authorities, assisting investors in meeting requirements for the granting of necessary authorisations, etc.).
Clarifying eligibility criteria underlying authorisation applications with a view to enhance legal, regulatory, and administrative predictability and reduce administrative agencies’ discretion in the granting of authorisations. This can be achieved, e.g., by clearly defining and making publicly available eligibility conditions, timeframes and fees relevant to authorisation applications, as well as the authorities competent to process such applications; by providing clarity throughout application processes and allowing applicants to complete their applications further to initial submission, if and when relevant; by clearly outlining appeal and/or resubmission mechanisms where applications are rejected; and by institutionalising ‘tacit approval’ principle (if and when relevant) whereby authorisations for complete applications are deemed granted beyond a specific timeframe, with a view to lighten the administrative burden.
Clarifying authorisation application processes for investors with a view to enhancing the efficiency of application processes. This can be done through a variety of means, e.g., via the creation of an online, unified investor platform allowing for online applications and their follow-up; enhanced communication between authorities and investors; and enhanced communication and coordination between competent authorities when authorisations fall within several authorities’ jurisdictions.
Ensuring that officials responsible for applying regulations and processing applications have the adequate credentials, are well-trained, shielded from undue influence of interested groups, provided with fair salaries, and have sufficient resources for carrying out their tasks (OECD, 2015[2]).

Chapter 3 of the EU-Angola SIFA (Articles 13 to 21) outlines a number of measures and recommendations for Parties to streamline “investment authorisation” procedures. Authorisations are defined under the Agreement as the “permission[s] to pursue any economic activity related to an investment, resulting from a procedure an investor must adhere to in order to demonstrate compliance with the necessary requirements”. The scope Chapter 3 would thus pertain to authorisation procedures at the establishment and operation phases of investments.28

Authorisation procedures could arguably fall within the scope of Article 6 of the EU-Angola SIFA, which calls for a reasonable, objective and impartial administration of investment-related measures of general application. Chapter 3 of the Agreement however provides for separate – but not unrelated – principles that govern the adoption, maintenance and application of authorisation-related measures. Article 19 of the EU-Angola calls for objective, impartial and independent decision-making processes on investment authorisation applications by administrative authorities; and Article 21 provides for some disciplines on the design as well as the administration of authorisation processes to ensure good practice by relevant authorities.29

EU-Angola SIFA, Article 19:

If a Party adopts or maintains a measure relating to authorisation, it shall ensure that the competent authority concerned processes an application, reaches and administers its decisions objectively, impartially and in a manner independent from the undue influence of any person carrying out the economic activity for which authorisation is required.

EU-Angola SIFA, Article 21:

If a Party adopts or maintains measures relating to authorisations, it shall ensure that:

a) those measures are based on clear, objective and transparent criteria, which may include the competence and ability to carry out the economic activity, including in compliance with a Party’s regulatory requirements such as health and environmental requirements, it being understood that competent authorities may assess the weight to be given to each criterion;

b) the procedures are impartial, easily accessible to all applicants, and adequate to allow applicants to demonstrate whether they meet the requirements; and

c) the procedures do not in themselves unjustifiably prevent fulfilment of the requirements.

Further streamlining of investment authorisation processes is directly relevant to Southern Neighbourhood countries. The outsized role of privileged firms – e.g., state-owned enterprises or politically-connected private-sector firms benefitting from special regulatory treatment and selective enforcement of rules – has often been pointed out as a key challenge hampering competitive markets in these countries (OECD, 2021[13]). In parallel, business operators have reported facing important challenges in obtaining investment-related authorisations, whether it be for operating licences, trade licences or construction permits; although perceptions of the effects of these administrative inefficiencies over day-to-day operations vary significantly across the selected countries. The respective shares of Moroccan and Tunisian firms surveyed by the World Bank in 2019 and 2020 that identified business licensing and permits as a “major” constraint are among the highest of the MENA region. By contrast, almost no foreign-invested enterprises in Jordan, and only a few in Egypt, had identified it as a major constraint hampering their operations (Figure 2.2).

Figure 2.2. Percent of firms identifying business licensing and permits as a major constraint in the selected Southern Neighbourhood countries (by firm type)

Survey responses also show a notable contrast between the perceptions of domestic firms and foreign-invested ones conducting business in the countries. A higher proportion of domestic firms surveyed compared to foreign-invested ones identify business licensing and permits as a major constraint in the selected countries. While such difference is insignificant on a global scale, such trend can be observed across the MENA region, where some contrasts appear striking, e.g., in Egypt and Jordan (Figure 2.2). Similarly, differences in perceptions may be observed following the location of investors, potentially signalling uneven facilitation efforts across the territories. The issue is most notable in Morocco where practically no firms operating in the regions of Marrakech-Safi, Rabat-Salé-Kénitra or Tanger-Tétouan-Al Hoceïma reported having issues with business licensing, whereas nearly half of firms surveyed in the regions of Fès-Meknès, Souss-Massa or in the Oriental identified it as a major constraint.

Overall, delays in obtaining investment-related authorisations in Southern Neighbourhood countries are generally shorter than those observed on average in the MENA region, especially for operating licences and construction permits. They are the highest in Egypt among all the countries covered by this Report, and across all types of authorisations; followed by Tunisia. Authorisation procedures in Morocco, and in Jordan especially, appear to be swift in contrast (Figure 2.3).

Figure 2.3. Days to obtain authorisations in the selected Southern Neighbourhood countries: (by authorisation type)

With the exception of Jordan, where it appears to be rare, investors have occasionally reported facing some corruption in carrying out their authorisation procedures in the Southern Neighbourhood countries. In recent years, procedures relating for construction permits appear to be the most affected, for which a significantly higher proportion of surveyed firms – domestic and foreign – reported being expected to give gifts to obtain them compared to the average proportion in the region (Figure 2.4).

Figure 2.4. Percent of firms expected to give gifts to obtain authorisations in the selected Southern Neighbourhood countries (by authorisation type)

The practical solutions provided under Chapter 3 and which seek to streamline authorisation procedures concern modalities pertaining to the submission of applications (Article 14), including the possibility for electronic applications (Article 16), application timeframes (Article 15), and authorisation fees (Article 18). It also outlines the specific arrangements to be considered and implemented in the context of the processing of applications, including indicative timeframes, updates on applications and available arrangements in the case of incomplete applications, among others (Article 17). Such practical solutions to streamline authorisation procedures are implemented to varying degrees throughout the five selected countries of the Southern Neighbourhood. The following sections provide an overview of these practical solutions.

Submission of applications, timeframes, electronic applications and acceptance of copies

The principles embodied in Articles 14 to 16 of the EU-Angola SIFA establish a general structure for the authorisation of investments and upon which procedures for such authorisations rest. These overarching principles seek to promote predictability and efficiency, by avoiding duplicate and/or overlapping applications for single authorisations, by providing certainty to investors as to the timeframes of their applications, and by allowing investors to use their resources more efficiently by allowing for electronic authorisation applications. Indeed, in addition to being transparent and predictable, practical solutions centred around streamlining seek to simplify and render efficient these procedures and requirements, for both investors and competent authorities.30 As noted above, to date, only a few IIA have set out specific streamlining requirements analogous to Articles 14-16 of the EU-Angola SIFA which address technical requirements of how authorisation applications should be processed.31

The handling of multiple applications for single authorisations, the timeframes envisaged for applications, and the acceptance of electronic applications and copies, are the first three practical solutions addressed by Chapter 3 of the Agreement to achieve the objective of streamlining authorisation procedures. These practical solutions are intentionally broad by nature, allowing for flexibility as to how Parties should consider implementing them; indeed, the language of these provisions encourages Parties to implement such practical solutions with a view to enhancing the streamlining of their respective authorisation procedures, “to the extent practicable” or “to the extent possible”. The former would seem to afford a broader degree of discretion to Parties in implementing a given practical measure, i.e., by taking into account considerations that go beyond feasibility and that could also factor in practical considerations including technical, institutional and human resources related considerations.

EU-Angola SIFA, Article 14:

Each Party shall, to the extent practicable, avoid requiring an applicant to approach more than one competent authority for each application for authorisation. If an activity for which authorisation is requested is within the jurisdiction of multiple competent authorities, multiple applications for authorisation may be required.

EU-Angola SIFA, Article 15:

If a Party requires authorization, it shall ensure that its competent authorities, to the extent practicable, permit the submission of an application at any time throughout the year. If a specific time period for applying for authorization exists, the Party shall ensure that the competent authorities allow a reasonable period of time for the submission of an application.

EU-Angola SIFA, Article 16:

If a Party requires authorisation, it shall ensure that its competent authorities:

a) to the extent possible, accept applications in electronic format; and

b) accept copies of documents, that are authenticated in accordance with the Party’s laws, in place of original documents, unless the competent authorities require original documents to protect the integrity of the authorisation process.

Under Article 14, the Agreement encourages that Parties avoid requiring that applicants approach more than one competent authority for each authorisation application “to the extent practicable”, but also provides for instances where a single authorisation may require multiple applications from different competent authorities. The provision however falls short of suggesting that in such instances, and to the extent practicable, Parties may consider setting up a single window or OSS to coordinate multiple applications for single authorisations, among others, so as to further ensure the streamlining of authorisation procedures.32 Rather, the Agreement envisages – in a provision featured under a separate Chapter – an “investment facilitation focal point”, whose role is limited to an information-only portal, serving as “first points of contact for investors regarding measures affecting investment”, responsible for “respond[ing] to inquiries from investors” and redirecting investors in the event they are unable to respond to queries from investors, among others (EU-Angola SIFA, Article 22). In practice, the selected Southern Neighbourhood countries’ respective IPAs go further than the measure suggested by the Agreement, as highlighted below.33 Articles 15 and 16 encourage Parties’ competent authorities to allow for the submission of applications free of time-bars, “at any time throughout the year”, but also considers the possibility that specific time periods may apply and recommends in such instances that Parties ensure that their competent authorities “allow a reasonable period of time for the submission of an application”. Separately, it requires that competent authorities, “to the extent possible”, accept applications in electronic format and copies of documents authenticated in accordance with domestic requirements, “unless the competent authorities require original documents to protect the integrity of the authorisation process”.

The selected Southern Neighbourhood countries deploy a variety of different measures to address the submission and handling of applications for authorisation, whether these authorisations involve single or multiple applications. In that regard, the mandates of their respective OSS vary, as well as the services offered under their banner. Broadly speaking, the OSS act as focal points, providing information to investors requiring guidance on authorisation applications. They may also – depending on the types of investment projects and economic activities contemplated, and the capital value of projected investments – operate as single windows, either directly issuing authorisations required by investors or ensuring the coordination between investors and relevant competent authorities with a view to ease investors’ administrative burden.

The respective mandates of the OSS of four out of the five selected Southern Neighbourhood countries – i.e., all but for Tunisia – are defined by reference to their very membership, which includes representatives of relevant competent authorities that are either entrusted with processing and issuing authorisations that fall within their jurisdiction, or act as points of contact between investors and their relevant authorities for the granting of required authorisations. In Algeria and Egypt, the exact composition of the two countries’ OSS is not publicly available, which blurs the effective mandate of the countries’ respective OSS.34 As such, while some authorisations can be issued directly by the countries’ respective OSS – electronic applications are not available under these frameworks, and applications but therefore presumably be submitted in person at the physical OSS offices – others may fall within the jurisdictions of several competent authorities and could thus entail that investors contemplate multiple applications to obtain an authorisation for a single activity. In practice, it is likely that the countries’ OSS coordinate any liaising between investors and different authorities.

In Jordan, the MoI’s OSS – the CIS – processes applications and issues authorisations for some economic activities only, and as such only caters to investors operating in those economic sectors which fall within the scope of Jordan’s 2022 Investment Environment Law. The Jordanian MoI recently announced in that regard that it had digitalised 95% of the services offered by it through its CIS portal. Outside of these, investors must address the relevant competent authorities to obtain authorisations that do not fall within the competence of the CIS. In parallel to authorisation applications, the Jordanian framework also requires pre-admission approvals in respect of a set number of economic activities; streamlining and centralisation of applications for these authorisations is also uneven.

Morocco’s CRIs operate as OSS across the country’s 12 regions and assist investors navigate through establishment and operation requirements and formalities, and its regional CRUIs are mandated with issuing certain investment-related administrative acts, identified by way of Decree.35 Applications for such authorisations may be submitted via the country’s centralised CRI-Platform. Investors must obtain other authorisations which they require for the realisation of their investment projects with the relevant competent authorities. Finally, in Tunisia, investment-related licences, authorisations and other administrative permits are processed and issued by a special commission attached to one of the country’s main IPA – the TIA’s Commission for licences and approvals, whose membership includes relevant ministries and other competent authorities. The Commission operates within the TIA and is directly responsible for reviewing, deciding upon and ultimately issuing investor applications for licences and authorisations necessary to carry out investment projects exceeding TND 15 million, in coordination with the relevant authorities. As such, the country’s institutional arrangement features a streamlined, single portal mechanism to effectively address the question of multiple applications, but only in respect of a limited category of investments. Online services and electronic applications for these projects are envisaged but were at the time of writing in September 2023 not yet operational. Investors seeking to realise investment projects whose value falls under this threshold must submit applications to the relevant competent authorities, which could in practice entail multiple applications for single authorisations. Indeed, other IPAs and their OSS – such as the Tunisian APII – only operate as information focal points with respect to operation-related authorisations and procedures.

No specific provisions in the investment frameworks of any of the selected Southern Neighbourhood countries specifically define or otherwise limits the timeframes for the submission of authorisation applications. It can be presumed generally speaking that, unless provided otherwise for specific authorisations, applications may be submitted at any time throughout the year. Further, and save for Morocco’s legislation adopted with a view to improve the efficiency of all administrative procedures and formalities (which stipulates that administrations may not require from the applicant to legalise documents nor to provide certified copies except in exceptional circumstances), none of the other countries’ respective investment frameworks explicitly address matters related to the admissibility of authenticated copies in lieu of originals.

The somewhat fragmented single application services which are featured in the frameworks of each of the five selected Southern Neighbourhood countries, which vary depending on the investment projects and economic activities contemplated – e.g., in Jordan –, the types of authorisations and licences needed – e.g., in Morocco – and the breadth of projects envisaged – e.g., in Tunisia – may bring about burdensome authorisation – and multiple-application – procedures, and could thus ultimately result in delays in the implementation of investment projects. The selected countries have nevertheless introduced measures which seek to address these concerns. In Morocco and Tunisia, public administrations may only request from users documents required by laws and regulations in force and formally identified via the national portal for the simplification of administrative procedures and in Morocco, unless otherwise required by laws and regulations, public administrations are not to ask users for more than one copy of an application for an administrative document. Authorities in Morocco, Jordan and Tunisia must also refrain requesting from investors documents they may already have in their possession or which can be provided by other public administrations and/or coordinate and share among themselves documents relevant to processing investor applications. Measures that seek to cap procedural timelines may similarly palliate these concerns.

Processing of applications

Heavy administrative and bureaucratic procedures may result in cumbersome and time-intensive authorisation processes for investors. Investment projects call for a wide range of different types of authorisations for their realisation. These can significantly differ from one investment to another depending among others on the economic sector, activity and/or location of a project. As such, measures seeking to streamline authorisation processes have often been encouraged – as is witnessed in a number of the selected Southern Neighbourhood countries, such as Morocco and Tunisia for example – through a “whole-of-government” approach. These are complemented in practice by parallel measures that seek to simplify investment-specific procedures. The manner in which authorisation applications are processed, and the principles upon which these processes rest, directly impact the degree to which such processes are streamlined and their efficiency enhanced, and more generally, the overall predictability of an investment framework. Commitments to reduce and simplify administrative procedures have been recognised as “contributing significantly to the objective of facilitating investment” in the context of the WTO structured discussions on an investment facilitation for development agreement.36 Earlier IIAs including investment facilitation provisions have at times featured general and broad-brushed requirements calling for the streamlining of application processes.37 More recent international agreements – both IIAs as well as trade agreements – have featured similarly drafted and as ambitious streamlining provisions.38

EU-Angola SIFA, Article 17:

1. If a Party requires authorisation, it shall ensure that its competent authorities:

a. to the extent practicable, provide an indicative timeframe for the processing of the application;

b. upon request of the applicant, provide, without undue delay, information concerning the status of the application

c. to the extent practicable, ascertain, without undue delay, the completeness of the application for processing under the Party’s laws and regulations

d. if they consider an application complete for the purposes of processing under the Party’s laws and regulations1, within a reasonable period of time after the submission of the application ensure that:

i. the processing of the application is completed;

ii. the applicant is informed of the decision concerning the application, to the extent possible, in writing2;

e. if they consider an application incomplete for the purposes of processing under the Parties’ laws and regulations, within a reasonable period of time, to the extent practicable:

i. inform the applicant that the application is incomplete

ii. upon request of the applicant, identify the additional information required to complete the application, or otherwise provide guidance as to why the application is considered incomplete

iii. provide the applicant with the opportunity to provide the additional information that is required to complete the application^3;

if none of the actions referred to in points (i), (ii) and (iii) is practicable, and the application is rejected due to incompleteness, the competent authorities shall ensure that they inform the applicant within a reasonable period of time; and

f. if an application is rejected, inform the applicant, either upon their own initiative or upon request of the applicant, of the reasons for rejection and of the timeframe for an appeal, and, if applicable, the procedures for resubmission of an application; an applicant shall not be prevented from resubmitting another application solely on the basis of a previously rejected application.

2. Each Party shall ensure that its competent authorities grant an authorisation as soon as it is established, in light of an appropriate examination, that the applicant meets the conditions for obtaining it.

3. Each Party shall ensure that authorisation, once granted, enters into effect without undue delay, subject to the applicable terms and conditions.⁹

Notes

1. Competent authorities may require that all information is submitted in a specified format to consider it “complete for the purposes of processing”.

2. Competent authorities may meet the requirement set out in point (i) by informing an applicant in advance in writing, including through a published measure, that a lack of response after a specified period of time from the date of submission of the application indicates acceptance of the application. The reference to “in writing” shall be understood as including electronic format.

3. Such “opportunity” does not require a competent authority to provide extensions of deadline.

Article 17 builds upon the overarching principles outlined at Articles 14 to 16. It outlines general administrative streamlining requirements relevant to the processing of applications for authorisations, from start – i.e., once an application is submitted – to finish – i.e., the granting of an authorisation, its refusal, and possible recourse against such refusal. By simplifying and rendering efficient, and ultimately speeding up authorisation application formalities and procedures, it seeks to promote transparency, and therefore legal certainty and predictability. Requirements related to informing investors of the status of their application – whether complete or incomplete – and allowing investors to provide additional information if competent authorities deem applications incomplete, and the introduction of a ‘tacit approval’ mechanism, are central tenets of investment facilitation, but also of good governance part of a broader, “whole-of-government” approach to administrative simplification and efficiency. The wording of the Article 17 leaves room for flexibility in how Parties should consider implementing these practical solutions, by underlining that several – but not all – requirements should be implemented “to the extent practicable”, thereby accommodating Parties’ respective domestic regimes and legal systems, as well as their ability – practical and resource-based, among others – to implement some of the Agreement’s requirements.

Comprehensive information on application processes is scarce in Algeria. While the country’s OSS is mandated to play a role in facilitating the obtention of authorisations, no information is available as to the manner in which authorisation applications should be submitted, how they are processed, or the principles upon which these processes rest, neither via the country’s framework for investment nor its Algeria’s OSS. The remaining four countries features standardised streamlining principles which seek to establish a clear framework defining how authorisation applications are processed by their respective OSS and relevant competent authorities.

Morocco’s legal framework requires that all investment-related authorisations be issued within a capped timeframe. Similarly, in Jordan, authorisation applications for those economic activities which fall within the scope of the country’s 2022 Investment Environment law – and thus within the purview of its OSS, the CIS – also benefit from clearly set out and standardised processing timeframes. In Egypt and Tunisia, competent authorities have also established clear timeframes within which they are to issue authorisations further to receiving complete applications. Specific streamlining rules featured in the two countries’ frameworks limit these timeframes in specific instances (e.g., in Tunisia, timeframes are capped by way of Decree when these are not defined by the competent authorities; in the case of Egypt, GAFI is entrusted with the power to expedite pending authorisation applications if these are not granted within the established timeframes).

Further, investors in Morocco are able to follow-up on the status of their applications – and determine whether they have been deemed complete or incomplete by the OSS – via the online CRI-Invest Platform, for those applications that fall within the mandate of CRUIs; it is unclear whether this right is guaranteed for applications which fall within the purview of the competent authorities rather than the CRUIs. A formalised requirement to update investors as to the status of their applications is not featured in the Egyptian, Jordan, and Tunisia frameworks, but this may be observed in practice with the countries’ respective OSS. In Egypt, in contrast to the other frameworks, competent authorities are nevertheless formally required to notify investors of the outcome of their application, in writing and within clear timeframes. All four frameworks also feature ‘tacit approval’ mechanisms, whereby complete authorisation applications that have not been explicitly denied by the competent authorities within a specified timeframe are deemed approved.

Each of the four countries have also introduced measures addressing incomplete authorisation applications. In Egypt, competent authorities – or competent authorities’ representatives within the ISC –must request from investors any missing documents within a prescribed timeframe, beyond which application files are automatically deemed complete. Decisions which they render must be reasoned, justified and transparent, and investors may appeal negative decisions before GAFI’s Grievance Committee, the procedures for which are set out in the 2017 Investment Law. The latter also prevents competent authorities from revoking or suspending authorisations without first providing users with prior notice and a prescribed “grace period” to rectify any notified breaches. In this scenario, it is GAFI that is entrusted with the authority to authorise revocations, where appropriate. Similar measures are available in Morocco, both in respect of applications for authorisations submitted to the CRUIs and those submitted directly to the relevant competent authorities. Rules on addressing incomplete applications have not been formalised in Jordan or Tunisia; while competent authorities must motivate any negative decisions they render and notify the outcome of the application process in writing, no recourse or appeal mechanisms are available to applicants. In that regard, Jordan’s 2022 Investment Environment Law explicitly prohibits some grounds for refusal to grant licences; further, it sets out that decisions to withdraw licences must follow a specific procedural framework: authorities need to notify the licence holder of the alleged violation of the licence terms and provide them with a timeframe for rectification or for providing evidence that no violation has occurred.

Fees

Administrative fees are another important feature of investment-related authorisation procedures. Along with delays, fees can become important impediments to business operations especially when administered in an untransparent, unpredictable or unreasonable way. At the same time, fees are often incumbent upon the authorisations requested and the administrative authorities under the jurisdictions of which they fall. As such, the fee-related governance differs significantly across competent authorities, and resultingly, the methods by which fees are devised and applicable rates, among others, vary considerably accordingly. The EU-Angola SIFA features several overarching principles that seek to enhance the transparency of administrative fees, to be considered and implemented by the Parties’ competent authorities, with a view to mitigate discretionary concerns which the administration of fees could raise.

EU-Angola SIFA, Article 18:

1. For all economic activities other than financial services, each Party shall ensure that the authorisation fees charged by its competent authorities are reasonable and transparent and do not in themselves restrict the investment.

2. With regard to financial services, each Party shall ensure that its competent authorities, with respect to the authorisation fees they charge, provide applicants with a schedule of fees or information on how fee amounts are determined, and do not use the fees as a means of avoiding the Party’s commitments or obligations.

3. Authorisation fees do not include fees for the use of natural resources, payments for auction, tendering or other non-discriminatory means of awarding concessions or mandated contributions to universal service provision.

4. Except in urgent circumstances, each Party shall allow adequate time between the publication and the entry into force of new or amended fees and charges related to authorisation procedures for investment, or information enabling investors to understand the calculation of those fees and charges. Those fees and charges shall not be applied until that information has been published.

5. Each Party shall, to the extent practicable, adopt or maintain procedures allowing the option of electronic payment for fees and charges collected by relevant competent authorities for the authorisation of investments.

Article 18 of the EU-Angola SIFA provides for general principles applicable to all administrative fees and special provisions concerning financial services fees:

General administrative fees – excluding in respect of financial services – shall be reasonable and transparent so as to not restrict investments. Fees for financial services specifically shall either be set out in a schedule of fees or applicants should be provided information on how fee amounts are determined by administrative authorities.
On the administration of all types of fees by licensing authorities, the EU-Angola SIFA reiterates some of the guiding regulatory predictability principles enshrined in its Article 8, including the requirement to allow for adequate time between the publication and entry into force of amended fees, or provide sufficient information to investors on how authorities calculate fees to enhance the transparency and predictability of authorisation procedures. Parties are also encouraged to provide for the electronic payment of fees.

As fees may vary significantly from one administrative authority to another, it is difficult to assess in practice the extent to which such fees are transparent and reasonable and whether they are administered in a way that does not restrict investment projects. Investment laws can nevertheless introduce overarching frameworks designed to rationalise administrative fees throughout government agencies, especially in respect of licensing authorities. Such practice is only featured – to some degree – in the Tunisian framework, which adopted an overarching framework to streamline all administrative processes in the country (beyond business and investment-related administrations). Under the 2019-47, authorities are required to make available and regularly update information on authorisation processes – which could include administrative fees – and to provide online electronic payment options for administrative fees.

Publication and information available

Information pertaining to authorisations and their procedures are central to enhancing the transparency and overall predictability of an investment framework. A requirement to make available such information is also the first building block to ensuring that authorisation procedures are streamlined and efficient. Regional IIAs with a facilitation focus have featured requirements to make available information relating to authorisations, and often so in the context of provisions requiring the establishment of single windows, for example.39 The level of detail featured in Article 20 of the EU-Angola SIFA stands out, however.

In that regard, its bears noting that the matters covered by Article 20 of the EU-Angola SIFA could also have been considered in the scope of this Article 9, as indeed ensuring that information necessary for investors among others in the context of application procedures – such as licensing and qualification requirements and procedures, authorisation fees, contact information of the relevant competent authorities, and information on appeal procedures, among others – also enhances the transparency and predictability of the investment framework.

Lack of or absence of information necessary to investors – or persons seeking to invest – in a given economy are perceived as a considerable obstacle to business operations and can result in significant delays in the realisation of an investment project. In this regard, business surveys have highlighted concerns by investors in respect of obtaining business and investment-related authorisations – although it transpires that a higher proportion of domestic firms surveyed compared to foreign-invested ones identify business licensing and permits as a major constraint in the selected countries of the Southern Neighbourhood. Further, overall, delays in obtaining investment-related authorisations in Southern Neighbourhood countries are generally shorter than those observed on average in the MENA region, especially for operating licences and construction permits.

Indeed, in recent years, most of the selected countries of the Southern Neighbourhood introduced a series of measures seeking to enhance the transparency of their frameworks with respect to information relevant to authorisations and authorisation procedures, which has in turn contributed to significantly streamline such procedures in their respective frameworks. Algeria stands out as against the other four countries, however. While its AAPI plays a role in facilitating the obtention of approvals, licences and permits through its two OSS, the AAPI website does not provide comprehensive information on licensing and authorisation procedures applicable in Algeria.

Egypt’s 2017 Investment Law – and its implementing decrees and other related legislation – does not specify or clarify specifically which investor “approvals, permits and licences” procedures the ISC facilitates and ultimately issues via the competent authorities representatives. However, competent authorities, together with the GAFI, have prepared and published in Arabic via a GAFI portal a number of sectoral licensing guides. These guides are not standardised and the information which each provides varies significantly in depth of detail; nevertheless, most broadly outline the relevant procedures for obtaining operation – and in some instances, establishment – authorisations, as well as their relevant eligibility conditions and requirements, the competent authorities to which applications must be submitted, and estimate timeframes for these procedures. These guides are reviewed and if and when necessary, updated, periodically every six months, and are legal binding.40 It is unclear on the face of these guides whether the information provided therein is exhaustive or merely indicative. Appeal procedures, available under the Egyptian framework if authorisation applications are refused, are not outlined by way of these guides but rather in the Law itself and its 2017 Executive Regulations. A similar Arabic-language licensing guide was prepared and published by the Jordanian MoI with a view to enhance the transparency of the licensing framework. It provides detailed information on the conditions, procedures, documents, requirements, and timeframes for obtaining permits and licences, and features hyperlinks for e-services (when available).

In Morocco, the two sets of authorisations which investors require for the realisation of their investment projects are also identified by way of legislation. Information pertaining to CRUI-related authorisations – i.e., land authorisations, planning permissions and other permits – is set out via the CRI-Invest Platform, which provides comprehensive information on application requirements and procedures, competent authorities, fees and estimate timeframes. The portal also features online appeal services and connects investors with a relevant OSS officer to assist them throughout the application process. Other investment-related authorisations, which investor must directly submit to the relevant competent authorities, are outlined via the Idarati national platform, which provides standardised information on all formalities and requirements relevant to administrative acts issued by competent authorities, at national and regional level (procedural steps, relevant authorities, documents required, estimate timeframes, fees). A significant number of these authorisations have been identified by way of decree, adopted in May 2023.41

Finally, Tunisia stands out in its approach to make available information pertaining to authorisations and their procedures. It adopted Decree 2018-417, which comprehensively lists out in significant detail the administrative procedures relevant to obtaining all authorisations across all economic sectors. Activities within these controlled economic sectors which are not specifically cited in the instrument are in principle considered open to private investment activity. Each of these lists is organised on the basis of economic sectors. The lists set out in each of the Annexes define the pre-conditions and supporting documentation, competent authorities, indicative timeframes and legal frameworks relevant the authorisations. Recourse or appeal mechanisms are however not available to applicants on the face of this legislation; mechanisms may be available on a case-by-case basis with the relevant competent authorities.

Investment projects whose capital value exceeds TND 15 million are facilitated by the TIA, via its Commission for licences and approvals. Contact details of dedicated TIA liaison officers specifically mandated to assist this category of investors with authorisation procedures are available via the TIA Investor Guide portal. The portal also provides a general overview of the licensing requirements and their procedures. Procedural and institutional arrangements for authorisations for projects whose capital value falls below the TND 15 million threshold and outside of the TIA’s mandate is limited, and investors are expected to submit their authorisation applications directly to the relevant competent authorities.

Investment and sustainable development

Investment facilitation allows host economies to create favourable conditions for businesses to operate and expand, increasing FDI flows. However, beyond its quantity, the quality of FDI matters. FDI can be an important contributor to enhance economic growth and innovation, create quality jobs and develop human capital, including for women, and raise living standards and environmental sustainability in host economies. By linking domestic firms to MNEs, it can also be a conduit for domestic firms to access international markets and integrate global value chains.

While more FDI resulting from broad facilitation efforts can de facto contribute to the sustainable development of a host economy, more tailored policy tools are required to specifically harness the positive benefits of FDI for the achievement of SDGs and promote sustainable investments, i.e., investments that have sustainable outcomes – whether it be in terms of boosting innovation, skills, labour market, gender equality or the environment.42 The OECD (2022) Council Recommendation on Foreign Direct Investment Qualities for Sustainable Development is the first multilateral instrument of its kind that provides guidance to governments on how to leverage foreign investment to finance their SDGs, fulfil their commitments made in the Paris Agreement, and optimise the strength and quality of post-crisis recovery. The benefits of FDI to host economies can be assessed in several ways. As part of its ‘FDI Qualities Initiative’, the OECD has recently developed indicators to assess the positive benefits of FDI for host economies (Box 2.1).

Box 2.1. The OECD FDI Qualities Initiative

The Covid-19 pandemic and its devastating human, social and economic consequences have challenged efforts to achieve the Sustainable Development Goals (SDGs) and the commitments made in the 2016 Paris Agreement. This global crisis increased the risk of slowing down, or even reversing progress to make our societies and economies more resilient, inclusive and sustainable. Russia’s war of aggression against Ukraine has thrown the trajectory of recovery into doubt, weakened economic prospects and generated further uncertainty. In this context, a key challenge for the international community is to mobilise significant financial resources to accelerate the implementation of the 2030 Agenda for Sustainable Development and to ensure that plans for a “decade of action” to advance the SDGs are not side-tracked.

The OECD FDI Qualities Initiative is about improving the impact of investment on sustainable development and focuses on four areas of the SDGs: productivity and innovation; employment, job quality and skills; gender equality; and low-carbon transition. The initiative comprises three components:

The FDI Qualities Indicators, originally developed in 2019, seek to measure the sustainable development impacts of FDI in host countries across four SDG areas.
The FDI Qualities Policy Toolkit helps governments identify priorities for policy and institutional reforms to enhance the impact of investment on sustainable development. For each area of sustainable development covered, it describes how to assess the impacts of FDI and policy recommendations related to governance, domestic and international regulation, financial and technical support, and information and facilitation services.
The OECD Council Recommendation on FDI Qualities complements the Policy Toolkit by incorporating a concise set of key policy principles from the Policy Toolkit into a legal instrument. Adopted at the 2022 Meeting of the OECD Council at the Ministerial Level (MCM), it is the first government-backed standard on how to improve the positive contribution of international investment to the SDGs.

Based on the FDI Qualities Indicators, a recent OECD Report on FDI Qualities in the Middle East and North Africa (June 2023) found that while FDI has had generally positive benefits over all Southern Neighbourhood countries in the four SDG areas considered, they are harnessing these benefits unevenly, whether it be in terms of productivity and innovation, creating quality jobs, advancing gender equality principles or advancing decarbonisation goals:

Foreign firms are more productive than domestic firms in nearly all Southern Neighbourhood countries, and the gap between the two is particularly large in Morocco, Jordan and Egypt. They also spend more on R&D activities, particularly in Morocco and Tunisia, and, as a result, are more likely to introduce new products or services. Linkages between local firms and foreign ones are uneven across the countries: while foreign firms are estimated to source more than 60% of their inputs domestically in Egypt and Morocco, that rate is smaller in Jordan and Tunisia and sits around 30%.
FDI can be an important lever to create quality jobs, but such effects can vary significantly depending on the sectors where investments are directed. In the Southern Neighbourhood, the highest intensity of job creation per million of USD in the past ten years was observed in Tunisia and Morocco where around 50% of FDI in the last years has been directed towards manufacturing industries which have a higher job-creating potential. FDI has less job-creating effects in countries where natural resources or other capital-intensive sectors dominate, including in Algeria, Egypt or Jordan for instance.
While foreign firms operating in Egypt and Tunisia performed slightly better than domestic firms in terms of women employees, evidence for the general Southern Neighbourhood region that foreign firms perform better than their domestic peers on measures of gender equality appears to be inconclusive. Women employment may also be prevalent in the manufacturing sector of these countries. Such labour-intensive, low-value added sectors increases the risk of locking them in low-paid, low-skilled positions, perpetuating gender segregation in the labour market.
The share of investment in mining and fuels in the selected Southern Neighbourhood countries increased substantially after the financial crisis of 2008 compared to the period before the last economic crisis, as investments in natural resources have shown to be relatively impervious to political instability (OECD, 2021[13]). However, there has been a positive shift of greenfield FDI towards more renewable energy projects across the MENA region (OECD, 2023[12]). The manufacturing industry has also received a growing share of FDI in recent years, although some countries have been more successful than others in expanding this sector (Algeria, Morocco and Tunisia).

To harness the positive benefits of FDI to SDGs, a comprehensive set of policies and tools is required. The EU-Angola SIFA goes in this direction by formulating policy recommendations for maximising such benefits. Most investment facilitation agreements have principally focused on enhancing regulatory predictability and transparency and streamlining of administrative processes to ease practical burdens faced by investors. Although they may have referenced sustainable development within their stated purpose, their provisions addressing specifically sustainable development were less comprehensive. In contrast, the EU-Angola SIFA’s Chapter 5 demonstrates an ambitious approach to facilitation and sustainable development. It encourages Parties to implement reforms to maximise the positive benefits of all inward FDI to their sustainable development, in all of its ‘dimensions’ (labour and environmental notably);43 but also, to use FDI itself as a lever to advance their SDGs (i.e., to promote and encourage investments with sustainable outcomes). The following sections provide a general outline of the types of provisions addressing investment and sustainable in the EU-Angola SIFA; and a broad overview of FDI policies and approaches in Southern Neighbourhood countries aimed at increasing FDI benefits to their sustainable development.44

Investment and sustainable development in Chapter 5 of the EU-Angola SIFA

EU-Angola SIFA, Article 28:

1. The Parties recognise that sustainable development encompasses economic development, social development and environmental protection, all three being interdependent and mutually reinforcing, and affirm their commitment to facilitate investment in a way that contributes to the objective of sustainable development.

2. The objective of this Chapter is to enhance the integration of sustainable development, notably in its labour and environmental dimensions, in the Parties’ investment relationship in a manner that contributes to the achievement of the SDG’s of the UN2030 Agenda.

Article 28 of the EU-Angola SIFA highlights and reiterates the Agreement’s overarching objectives, in that it aims at “facilitating the attraction, expansion and retention of FDI between the Parties for the purposes of economic diversification and sustainable development” and notes that the contracting Parties reaffirm their commitment to “facilitate investment in a way that contributes to the objective of sustainable development”.45 The Agreement however goes beyond simply formulating recommendations to create favourable conditions for FDI to contribute to SDGs – which are principally the focus of its Chapters 2 to 4. It encourages Parties to implement reforms to align their legal frameworks with international labour and environmental standards and RBC principles to maximise the positive benefits of all inward FDI to their sustainable development, as well as to promote and facilitate specifically investment projects with sustainable outcomes.

The EU-Angola SIFA Chapter 5 on the relationship between investment and sustainable development directly reflects two of the five key high-level policy orientations of the OECD (2022) FDI Qualities Policy Toolkit, which relate specifically to domestic policy and legal frameworks, and information and facilitation services:

On domestic policy and legal frameworks: Chapter 5 of the SIFA features several key recommendations to ensure that contracting Parties align their domestic legal frameworks with international labour and environmental standards. As such, it reaffirms the Parties’ right to regulate, as more recent investment treaty designs have increasingly done.46 It also recommends that they shall maintain and enforce high levels of protection of environmental or labour standards in their domestic legal frameworks, and not weaken, waive or offer to waive them in order to encourage investment (Article 29). The Chapter explicitly identifies several standard-setting international agreements and instruments on labour,47 the environment,48 and RBC,49 and encourages parties to cooperate – whether bilaterally or through intergovernmental fora50 – on such matters.
On information and facilitation services: Article 11 of the EU-Angola SIFA in its Chapter 2 encourages Parties to make information on domestic suppliers available to investors to promote domestic linkages and enhance FDI spillovers. In addition, Article 33 of the EU-Angola SIFA’s Chapter 5 reaffirms the Parties’ commitment to facilitate and encourage investments that contribute to their SDGs, whether it be in sustainable production and consumption, in environmental goods and services or other investment of relevance for climate change mitigation and adaptation (Article 33(1)) and investments for the sustainable use of biological resources and conservation of biodiversity (Article 33(3)), and that facilitation of investments shall not impair their SDGs but rather shall contribute to them (Articles 33(5) and 33(6)). However, the Agreement does not lay out specifically what that such ‘facilitation’ efforts specifically tailored towards sustainable investments should entail in practice.

While Chapter 5 of the EU-Angola SIFA directly reflects these two key high-level policy directions of the recommendations laid out in the OECD FDI Qualities Policy Toolkit (2022) and represents a step in the right direction to encourage countries to attract and facilitate quality investments, the SIFA does not directly formulate measures in other key high-level policy directions of the Toolkit. The further inclusion of these sustainability elements within the Agreement could also be incorporated in Chapters 2 and 3 as they relate specifically to investment policy strategy and administration:

On governance: the EU-Angola SIFA could enshrine sustainability elements within the transparency and predictability requirements of Chapter 2, especially in relation to the recommendation for participative policy-making processes and the carrying out of stakeholder consultations for investment policymaking. Public-private consultations and social dialogue can promote collective and innovative solutions to emerging issues that can be, at least partly, driven by FDI. Stakeholder consultations also allow for feedback and build legitimacy and consensus around policy reforms and programmes at the intersection of investment and sustainable development. More open and inclusive policymaking processes help ensure that policies better match the needs and expectations of citizens, enterprises and sub-national regions and build consensus on policy reforms on investment and sustainable development specifically.
Financial and technical support: Article 10 of the EU-Angola SIFA and other similar international investment facilitation agreements only require that information on incentives offered to investors shall be made available. While such requirement increases the transparency of a Party’s investment incentives’ framework, the Agreement falls short of addressing recommendations relating to the administration and design of their incentives offer, as may be suggested by the FDI Qualities Policy Toolkit. Such recommendations could include prioritising sustainable development objectives or outcomes when providing financial and technical support to stimulate investment (OECD, 2022[9]); having clear eligibility criteria for incentives to reduce room for excessive discretion by implementing authorities or limiting the offer of undefined additional benefits to investors that meet unspecified criteria that is generally discouraged due to the increased risk of aggressive tax planning by firms and of corruption by administering authorities (OECD, 2021[13]). The inclusion of such substantial recommendations is not, on the face of it, inconsistent with the rationale of investment facilitation agreements, considering the practical solutions which they encourage in other investment policymaking areas.51 While incentives are a common policy choice for countries to correct market failures and advance their SDG’s, such as supporting renewable energy or skills and technology spillovers, the use of tax and financial incentives to promote FDI has to be carefully considered to prevent their costs – especially in terms of revenue foregone and potential market distortions – outweighing their benefits.

A new iteration of the SIFA with other key partners of the EU could consider directly reflecting these additional policy priorities within the Agreement’s provisions. These recommendations are also only indicative of potential avenues for reform of the EU model of sustainable investment facilitation agreement, as reflected by the EU-Angola SIFA. Further research would thus be required to comprehensively identify avenues of improvement of the model agreement’s approach to investment and sustainable development specifically.

Investment and sustainable development in the selected Southern Neighbourhood countries

All five selected countries of the Southern Neighbourhood have recently overhauled their legal frameworks for investment, and reaffirmed their commitments to promote investment projects with sustainable development outcomes, especially in their policy or strategy documents:

The new Algerian Law on Investment (2022) aims at encouraging investment to ensure a sustainable and balanced territorial development, promote technology transfer, develop innovation and boost the creation of sustainable jobs, as set out by its Article 2.
Egypt’s Sustainable Development Strategy (“Egypt Vision 2030”) adopted in 2016 also underlines the important role of private investments in the achievement of the country’s SDGs by 2030 and outlines key reforms to improve the country’s investment policy. The strategy specifically mentions additional legislative reforms required to improve the Egyptian business environment to maximise the benefits of FDI for the economy.
FDI is identified as an important lever to achieve the SDG’s set out in Jordan’s Economic Modernisation Vision (2022-2025). The vision rests on two core pillars: enhancing economic growth and improving the quality of life for Jordanians. Both pillars are underpinned by sustainability goals which are expected to be achieved, in part, through investments in greener sectors such as renewable energies, ICT, and infrastructure development.
One of the Moroccan Investment Charter’s main goals is to spur regional investments which would aim at reducing disparities between the Kingdom’s provinces in terms of investment attractiveness. The Charter also sets out priority sectors and activities for investment to contribute to the country’s SDGs, in line with the country’s nationwide Sustainable Development Strategy (the ‘Stratégie Nationale de Développement Durable 2030’ adopted by the Moroccan Council of Ministers in 2017) and the New Development Model (‘Nouveau Modèle de Développement’, April 2021). The strategy also underlines the pivotal role of the private sector in achieving the country’s SDGs by 2030, including it consultative role in policy planning as well as in incorporating ESG principles within corporate practices.
Tunisia plans on leveraging FDI to advance the priorities set out by its ‘National Green Economy Strategy’. The Strategy rests on four strategic directions, including the need to develop strong dynamic, inclusive, innovative and supportive growth, reduce the sensitivity of natural resources and ecosystems which are subject to the effects of climate change, adopt a decentralised and participatory governance approach to encourage local initiatives and promote the quality of life of citizens and resistance to disruption. Orientation guides for investors in the green economy have been developed for four sectors (agroforestry, ecotourism, renewable energies and energy efficiency and waste management) to disseminate the Strategy, underlining support structures and the institutional framework, as well as financial and fiscal incentives for investment in the green economy sectors concerned.

All five countries of the Southern Neighbourhood resort to financial and fiscal incentives to encourage investments in certain economic sectors or activities that they consider being instrumental to the achievement of their SDG’s or to projects with sustainable development outcomes:52

To support productivity and innovation: Algeria provides a VAT exemption and duties on equipment for R&D, while Tunisia provides an additional deduction of 50% of R&D expenses under corporate agreements concluded with public research establishments.
To strengthen supplier linkages between foreign and domestic firms: in Jordan, companies can receive a corporate income tax (CIT) reduction when they manufacture products with at least 30% domestic value added and purchase inputs by contracting with local suppliers. Similarly, Egypt applies a tax holiday in private SEZs if local inputs are at least 30%, while Algeria provides an extension of their tax holiday if an investment project uses inputs sourced locally.
Most Southern Neighbourhood countries (except Tunisia and Morocco) have at least one existing tax incentive that aims at attracting FDI to foster job creation (particularly to hire local workers). For example, in Jordan, firms in the industrial sector can benefit from CIT incentives conditional on hiring a minimum number of Jordanian workers. Algeria provides a broad incentives regime across six key sectors, such as a five-to-ten-year CIT exception, for investments over 10 billion DZD that create 500 or more jobs. Some countries also provide direct financial incentives for job creation such as Egypt which offers IT companies an EGP 10,000 to 32,000 grant on each new hire for a period of three years.
Tax incentives for skills development are less often used: only Egypt and Morocco have tax incentives with the objective to promote job quality and skills. Morocco offers a reduced CIT rate of 20% for vocational training, while Egypt offers a tax allowance to certain firms, provided employee wages exceed 30% of operating costs. Similarly, direct subsidies are less often used to improve job quality and skills, while being likelier to address employment, such as in Tunisia, which has several schemes, especially for younger workers and graduates.
Most countries of the Southern Neighbourhood resort to incentives to support green investment. These include mechanisms such as feed-in tariffs, as seen in Algeria, Egypt, Jordan, and Morocco. Fiscal incentive schemes are also implemented in Jordan which provide a ten-year CIT exemption for FDI in renewable energy infrastructure construction, while Tunisia offers a deduction of a portion of taxable profits during the exploitation phase, for up to the fourth year of activity, from 100% in the first year to 25% in the fourth and final year.

While offering financial and fiscal incentives to investments is a widespread policy choice to advance certain SDGs, these incentives should be carefully considered and designed to avoid their costs outweighing their benefits. Fiscal incentives especially could be costly for governments as they can represent important revenue foregone or could even create market distortions. Incentives that target specific investment expenditures (as opposed to profits), or certain, well-defined activities are also more likely to attract investment that would not otherwise have been made, can help achieve specific policy goals, and make it more difficult for firms to conduct aggressive tax planning (IMF-OECD-UN-World Bank, 2015[7]).

The five selected Southern Neighbourhood countries could also undertake additional efforts to promote and enable RBC, as recommended by the EU-Angola SIFA. Four of the five selected Southern Neighbourhood countries – Egypt, Jordan, Morocco, and Tunisia – have adhered to the OECD Declaration on International Investment and Multinational Enterprises, thus committing to promote the OECD Guidelines for Multinational Enterprises and to establish a National Contact Point (NCP) to further their effectiveness. However, except in Morocco where the NCP has taken an active role in the promotion of RBC, the mechanism in other Sothern Neighbourhood countries was often underutilised, especially in Egypt, Jordan and Tunisia (OECD, 2021[13]).

In terms of fundamental labour rights, none of the five selected Southern Neighbourhood countries have ratified all ten “fundamental” International Labour Organization (ILO) conventions – which cover fundamental principles and rights at work, such as the right to collective bargaining and elimination of forced labour – nor the four “governance” (or “priority”) conventions for the exception of Morocco – which cover labour inspections, employment policy, and tripartite consultations (Table 2.1). There have been concerns about the application of these standards in practice in the Southern Mediterranean countries, including complaints raised to the ILO, primarily for alleged violations of Freedom of Association rights. The extent to which such labour standards are thus reflected in the countries individual legal frameworks and are effectively enforced is uncertain and would require a further analysis. However, the partial ratification of ILO conventions may, in part, show the selected Southern Neighbourhood governments’ intent to work towards aligning their legal frameworks with international labour standards.

Country (member since)	Fundamental (10)	Governance (4)	Technical (177)	Total (190)
Algeria (1962)	9	3	48	60
Egypt (1936)	8	3	53	64
Jordan (1956)	7	3	16	26
Morocco (1956)	8	4	53	65
Tunisia (1956)	9	3	52	64

Note: ILO conventions are all legally binding international treaties that may be ratified by ILO member states. If it is ratified, a Convention generally comes into force for that country one year after the date of ratification. The ILO Governing Body has identified ten “fundamental” conventions, covering subjects that are considered to be fundamental principles and rights at work, and has also designated another four conventions as “governance” (or “priority”) instruments, thereby encouraging member states to ratify them because of their importance for the functioning of the international labour standards system. “Technical” conventions are also legally binding once ratified and encompass all of the other international labour standards in the ILO’s scope of work.

Source: ILO (NORMLEX database).

Despite the five selected Neighbourhood countries having taken recent steps to promote the protection of the environment and natural resources, their environmental performance appears to be relatively poor in global comparison, evidenced by some of their low rankings in the latest iteration of the Yale Environmental Performance Index (2022). The Index ranks 180 economies on environmental health and ecosystem vitality and provides a gauge at a national scale of how close countries are to established environmental policy targets. While almost all of the selected Southern Neighbourhood countries have seen an increase in their environmental performance scores over the last ten years – with the exception of Algeria, these improvements have been relatively slow in comparison to what is observed globally.

Overall, while nearly all MENA governments have adopted measures to support sustainable development, more could be done to create an environment that advances human and labour rights, reduces opportunities for corruption, and improves environmental protection in business activities and their supply chains. The impetus to promote RBC among businesses in the region is also critical to ensure their integration in supply chain networks. Multinational companies may be deterred from investing in countries where RBC principles – especially in terms of labour standards – are poorly enforced due to reputational risks but also due to compliance requirements.

References

[6] African Manager (2023), En attendant le nouveau Code des investissements promis pour bientôt, https://africanmanager.com/en-attendant-le-nouveau-code-des-investissements-promis-pour-bientot/ (accessed on 28 July 2023).

[11] Ampntel Chafiz, R. (2023), Investment Tax Incentives in MENA: Design and Policy Goals, https://www.oecd.org/mena/eu-oecd-mediterranean-investment/Investment%20tax%20incentives%20in%20MENA_insights%20from%20OECD%20ITID.pdf.

[7] IMF-OECD-UN-World Bank (2015), Options for Low Income Countries’ Effective and Efficient Use of Tax Incentives for Investment, https://www.oecd.org/tax/options-for-low-income-countries-effective-and-efficient-use-of-tax-incentives-for-investment.pdf.

[14] Jedlicka, H. and Y. Sabha (2017), “Lessons from Five Years of Helping Governments Foster Incentives Transparency”, World Bank Blogs, “Private Sector Development” Blog, https://blogs.worldbank.org/en/psd/lessons-five-years-helping-governments-foster-incentives-transparency.

[12] OECD (2023), FDI Qualities in the Middle East and North Africa: A mapping of policies and institutions that can strengthen sustainable investment, Background document for the regional seminar on sustainable investment in the MENA region, 19 and 20 June 2023, OECD Istanbul Centre, Türkiye, https://www.oecd.org/mena/eu-oecd-mediterranean-investment/FDI-Qualities-MENA.pdf.

[10] OECD (2023), “Improving transparency of incentives for investment facilitation”, OECD Business and Finance Policy Papers, No. 35, https://doi.org/10.1787/ab40a2f1-en.

[9] OECD (2022), FDI Qualities Policy Toolkit, OECD Publishing, Paris, https://doi.org/10.1787/7ba74100-en.

[4] OECD (2021), Improving the Legal Environment for Business and Investment in Central Asia: Policy Insights, OECD Publishing, Paris, https://www.oecd.org/eurasia/Improving-LEB-CA-ENG%2020%20April.pdf.

[13] OECD (2021), Middle East and North Africa Investment Policy Perspectives, OECD Publishing, Paris, https://doi.org/10.1787/6d84ee94-en.

[3] OECD (2021), Regulatory Policy Outlook 2021, OECD Publishing, Paris, https://doi.org/10.1787/38b0fdb1-en.

[2] OECD (2015), Policy Framework for Investment, OECD Publishing, Paris, https://doi.org/10.1787/9789264208667-en.

[8] OECD (2013), Principles to Enhance the Transparency and Governance of Tax Incentives for Investment in Developing Countries, https://web-archive.oecd.org/2015-10-22/221727-transparency-and-governance-principles.pdf.

[5] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, https://doi.org/10.1787/9789264209022-en.

[1] World Bank Group (2017), Global Investment Competitiveness Report 2017/2018: Foreign Investor Perspectives and Policy Implications, https://doi.org/10.1596/978-1-4648-1175-3.

Notes

← 1. The survey was based on interviews with 754 executives of multinational corporations with investments in developing countries. The legal and regulatory framework is the second most cited factor for investment decisions by surveyed investors, after “political stability and security”.

← 2. A fourth principle (‘independence’) governs the administration of measures related to investment authorisations specifically (EU-Angola SIFA, Article 19). See page 21 on how ‘independence’ may relate to these three principles – specifically with ‘impartiality’ – on the administration of investment-related measures of general application.

← 3. The EU-Angola SIFA is silent as to the meaning of “administration of measures”, specifically in the context of its Article 6. The scope of application of GATS Article VI:1, which uses similar wording, was also never clarified. The dispute settlement Panel in the US – Gambling case only specified that the principles of reasonableness, objectivity and impartiality enshrined in GATS VI:1 applied to the administration of measures rather than to the measures themselves – i.e., rather than to their substantive content, and therefore encompassed “disciplines of a procedural nature” (United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285, Panel Report, 10 November 2004 (adopted on 20 April 2005), para. 6.432). The absence of specific language on the meaning of administration of measures in the context of regulatory transparency and predictability commitments within trade or investment facilitation agreements leaves room for interpretation as to their scope of application. The broad interpretation used in this Report is only illustrative as it constitutes one approach among others that could be narrower, and does not necessarily reflect the Parties’ intent as to the meaning of Article 6 of the EU-Angola SIFA, or more generally, of any other agreements with similar wording.

← 4. This interpretation is directly inspired by Article X:3 of the GATT which requires that “Each contracting party shall administer [trade-related measures] in a uniform, impartial and reasonable manner”. The meaning of a reasonable administration of trade-related measures in the context of GATT X:3 was specified by the WTO DSB Appellate Body to include basic fairness and due process requirements – the essential implication being that relevant stakeholders that are affected or that are likely to be affected by governmental measures “should have a reasonable opportunity to acquire authentic information about such measures and accordingly to protect and adjust their activities or alternatively to seek modification of such measures” (United States – Restrictions on Imports of Cotton and Man-Made Fibre Underwear, WT/DS24, Report of the Appellate Body, 10 February 1997 (adopted on 25 February 1997), p. 21; see also, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58, Report of the Appellate Body, 12 October 1998 (adopted on 6 November 1998), para. 181).

← 5. The notions of ‘impartiality’ and ‘independence’ are often used as synonyms in natural language, but they are nevertheless commonly distinguished conceptually as encompassing two distinct aspects of procedural fairness. While the former refers primarily to an individual or an entity’s capacity not to be biased in relation to parties involved in decision making processes so as to not cloud their judgment, the latter ore specifically refers to their ability to resist to ‘external’ pressures and undue influence in the context of decision-making processes. ‘Independence’ is explicitly included in Article 19 of the EU-Angola SIFA relating to the administration of investment authorisation measures specifically.

← 6. See, the WJP Rule of Law Index website for a list and explanation of all factors covered by the WJP Rule of Law Index (2022).

← 7. See e.g., GATS, Article III; WTO Trade Facilitation Agreement (section 1, Article 1) also uses similar wording by encouraging Parties to publish regulatory material in a “non-discriminatory and easily accessible manner in order to enable governments, traders, and other interested parties to become acquainted with them”.

← 8. See e.g., the US Model BIT (1984), Article XII (‘Transparency’).

← 9. See e.g., the United States Model BIT (2012), Article 10; the Australia-Uruguay BIT (2019), Article 6; the Brazil-Morocco BIT (2019), Article 8; and the Canada Model BIT (2021).

← 10. In this vein, Article 9(3) of the EU-Angola SIFA states that “No fee shall be imposed on any investor in a Party’s territory for access to the information provided under this Article or under Article 7.”

← 11. See e.g., the WTO Trade Facilitation Agreement, Article 2; the UK-Moldova Strategic Partnership, Trade and Cooperation Agreement (2021), Article 324; the EU-Vietnam FTA (2019), Article 14.3.

← 12. See e.g., the Burkina Faso-Canada BIT (2015), Article 12.3(1); Brazil-Angola CFIA (2015), Article 13.3; Japan-Jordan BIT (2018), Article 8; Brazil-India CFIA (2020), Article 8.2; Japan-Morocco BIT (2020), Article 2.8. See also, the Canada Model BIT (2021), Article 15.2(a).

← 13. Tunisia has in recent years undertaken a number of commitments via the Open Government Partnership. Notably, Tunisia has undertaken a Right to Information commitment in 2018, which sought to strengthen the right of access to information; the action plan seemingly yielded overall moderate results based on publicly available information. Tunisia had also committed, between 2016 and 2018, to reform its open data legal and regulatory framework at national level (The completion of the legal and regulatory framework of open data at the national level) with the establishment of an online open data portal, as well as a commitment to Modernizing the regulatory framework to enforce the right to access to information. The objectives underlying these two commitments were not fully achieved based on publicly available information.

← 14. These considerations are disconnected from the requirement under Chapter IV relating to periodic reviews of measures of general application affecting investment with a view to determine whether specific measure implemented should be modified, streamlined, expanded or repealed for more effectiveness in achieving its policy objectives. In this context, Parties are also required to consider stakeholder feedback, among others (EU-Angola SIFA, Article 26).

← 15. Jordan is currently engaged in a program to develop an electronic portal for public participation, with a view to unify and institutionalise e-participation with government institutions to enhance civic participation, including with respect to government projects and legislative proposals. Separately, Morocco has undertaken a series of commitments together with the Open Government Partnership, with a view to further public participation in the legislative process (“Open Parliament”), as part of the country’s Action Plan Review 2021-2023. These include among others, a Commitment to enhance dialogue with and the participation of societal actors in parliamentary consultations, including in the legislative process, a Commitment to implement a legal framework on public consultation and a Commitment for citizen involvement in parliamentary action, among others. Morocco’s Action Plan Review also refers to a Commitment to develop an e-Parliament platform for participatory democracy, to further enhance participation and legislative transparency. Morocco has already achieved considerable progress in this regard, in the backdrop of the 2011 Constitution which establishes the right of public participation, among others. Finally, Tunisia’s National E-Participation Portal seeks to enhance the involvement of citizen’s in the country’s public affairs via public consultations, public dialogue and forums, among others, remains limited (see, Open Government Partnership, Tunisia Action Plan Review 2021-2023, Promoting the use of national portals for public participation.

← 16. Building upon the initial transparency requirements of the GATT (1947) for trade-related measures, such regulatory predictability requirements were also included in subsequent multilateral trade agreements adopted following the Uruguay Round of negotiations (see for e.g., the Agreement on the Application of Sanitary and Phytosanitary Measures, Annex B, para. 2; Agreement on Technical Barriers to Trade, Article 2.12 on technical regulations and Article 5.9 on conformity assessment procedures).

← 17. See e.g., the ASEAN Investment Facilitation Framework (2021), Article 4, which provides that Member States shall “4.3 Encourage the publication of measures adopted or maintained by Member States related to investments through a single digital platform […] 4.4 Encourage the provision of information on the single digital platform that is sufficiently clear, precise and up-to-date so as to enable an investor to be informed of– 4.4.1. the agencies or regulatory bodies involved in the applications for admission, establishment, acquisition and expansion of any specific investment […]”.

← 18. Jordan’s MoI appears to be planning the publication of ‘instructions’ on its website as well, although no such instrument has been published yet at the time of writing in September 2023.

← 19. See, Open Government Partnership, Tunisia Action Plan Review 2021-2023, Developing a range of online administrative services at the sectoral level (last accessed on 11 September 2023).

← 20. See, the second revised Decision of the Council on International Investment Incentives and Disincentives (the “Instrument on International Investment Incentives and Disincentives”) adopted in 1984 which currently forms part of the Declaration, alongside three other components: the Guidelines for Multinational Enterprises which formulate recommendations on RBC addressed by governments to MNE’s operating in or from adhering countries, the Third Revised Decision of the Council concerning National Treatment (“National Treatment Instrument”) and the Decision of the OECD Council on conflicting requirements. All OECD Members as well as 12 non-OECD countries – including some of the Southern Neighborhood (Egypt, Jordan, Morocco, Tunisia) – have adhered to the Declaration, and further countries are currently undergoing reviews to join this growing group. The Recommendation of the OECD Council on Foreign Direct Investment Qualities for Sustainable Development (2022) also recommends that countries “take steps to ensure that financial and technical support is transparent and subject to regular reviews” in order to prioritise sustainable development objectives when providing financial and technical support to stimulate investment.

← 21. The scope of information to be made available as set out under Article 10 of the EU-Angola SIFA is aligned with international recognised practice in this regard. The World Bank has also recommended similar measures in the context of country programmes. Such recommendations have included mandating by law, and maintaining in practice, a database and inventory of incentives available to investors, listing in the inventory all aspects of key relevance to stakeholders (specific incentive provided, the eligibility criteria, the awarding and administration process, the legal reference and the awarded amounts), and making the inventory public in a user-friendly format (Jedlicka and Sabha, 2017[14]).

← 22. The inventory was available on the Jordan Investment Commission (JIC)’s website and appeared to be updated annually by a dedicated team within the JIC. Due to recent institutional reshufflings and the absorption of the JIC by the newly created MoI in 2021, the inventory is no longer available and a new inventory reflecting incentives offered under the recent Investment Environment Law (2022) hasn’t been developed yet.

← 23. The Investment Promotion Strategy (2023-2026) states that the MoI “will completely revamp its website drawing from multiple examples of good practice IPA websites around the world” and is expected to launch an electronic platform entitled ‘Invest in Jordan’ (Invest.Jo) which shall, among others, highlight the advantages and incentives granted according to the Investment Environment Law, alongside other relevant information on the country’s investment framework (p. 21).

← 24. See e.g., the ASEAN Investment Facilitation Framework (2021), Article 8, Facilitation of Investment Supporting Factors, “Assist investors in identifying investment supporting factors such as labour force, funding sources, domestic suppliers and business matchmaking opportunities”; see also, Protocol on Investment to the Agreement establishing the African Continental Free Trade Area, Zero Draft (November 2021), Article 23, Pursuit of Development Goals, “Notwithstanding the provisions of this Protocol, State Parties may introduce measures to promote domestic development and local content. Measures covered by this paragraph include among others: […] b. measures to support the development of local entrepreneurs and to establish linkages with local firms, industries and institutions towards assisting the development of local capabilities […]”.

← 25. E.g., the CRI Oriental and CRI Marrakech both feature affiliated portal (Intaj Oriental and MarrakechB2B) which meets the requirements of Article 11. Similarly, CRI RSK features a form titled Business matchmaking; it is unclear at the time of writing in September 2023 whether this feature is operational. The CRI Béni Mellal provides a directorate of operating businesses in the region; resources provided are limited and it is unclear at the time of writing in September 2023 whether this feature is operational.

← 26. See e.g., the Regional Comprehensive Economic Partnership (RCEP) (2020).

← 27. See e.g., the Investment Agreement of the China-Hong Kong (China) CEPA (2017); ASEAN Investment Facilitation Framework (2021); Canada Model BIT (2021).

← 28. This section focuses mainly on post-establishment licensing procedures as they are the most common type of authorisations found in the Southern Mediterranean countries. Other investment procedures, such as company registration, are dealt with for each Southern Neighbourhood countries in the individual country fiches of Annex A. Domestic legal frameworks for investment in selected Southern Neighbourhood countries.

← 29. The EU-Angola SIFA covers measures against corruption and other illicit activity in its general provisions (Chapter 1, Article 5) in which the Parties recognise the negative impact of such practices in discouraging investment and confirm their commitments to adopt adequate measures to tackle and fight corruption in accordance with internationally agreed standards. While Chapter 2 does not make explicit reference to corruption or undue influence at the level of policymaking or implementation of policies, Chapter 3 covers such scenarios in cases of investment authorisations specifically (Article 19).

← 30. As defined under the EU-Angola SIFA, Article 3, “a central, regional or local government or authority or non-governmental body exercising powers delegated by central, regional or local governments or authorities, which is entitled to take a decision concerning an authorization”.

← 31. See e.g., the ASEAN Investment Facilitation Framework (2021).

← 32. In that regard, see e.g., the WTO Trade Facilitation Agreement (2017), Article 10(4), as well as the ASEAN Investment Facilitation Framework (2021), Article 4. See also, UNECE Trade Facilitation Recommendations, Recommendation no. 33; and Calamita, N. J. and S. Schacherer (2022), Investment facilitation for sustainable development within the context of the Regional Comprehensive Economic Partnership, the ASEAN Investment Facilitation Framework and the WTO Draft Investment Facilitation Framework for Development, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), Studies in Trade, Investment and Innovation No. 96, p. 25.

← 33. See, paras. 90 et seq. In that regard, see, OECD (2018), Mapping of Investment Promotion Agencies in OECD Countries, OECD Publishing, Paris and OECD (2019), Mapping of Investment Promotion Agencies: Middle East and North Africa, OECD Publishing, Paris which outline the core functions, main objectives and activities of IPAs across OECD countries and the MENA region, respectively. A wide array of activities falls under the umbrella of one of the four core functions of IPAs, investment facilitation and retention, including but not limited to e.g., the provision of information, site visits, MNE-SME linkages programmes, as well as administrative support (such as OSS services).

← 34. The APII in Algeria does not provide a publicly available and exhaustive list of the competent authorities represented within it. That is similarly the case in Egypt. GAFI publishes Guides on permits, approvals and licences procedures and applications to be considered with different authorities, Ministries and public administrations. It is likely that investors consider obtaining such authorities either via the OSS route or via the competent authorities’ route.

← 35. The operation authorisations which CRUIs are mandated to consider, as listed in Law 47-18, fall within three general categories: land-related authorisations, planning permissions and discretionary exemptions, and operating licences and permits. Investors submit their investment file applications directly via the Platform, with the assistance of their allocated CRI advisor, based on the CRI-Invest platform User Guide.

← 36. See, WTO, Structured discussions on investment facilitation for development, meeting of 31 October 2019 – Summary of discussions by the Coordinator, INF/IFD/R/8, 21 November 2019 (last accessed on 13 September 2023). See, WTO, Structured discussions on investment facilitation for development, meeting of 31 October 2019 – Summary of discussions by the Coordinator, INF/IFD/R/8, 21 November 2019 (last accessed on 13 September 2023).

← 37. See e.g., the Agreement on Investment of the ASEAN-China Framework Agreement (2009), Article 21(b) provides that the Parties shall cooperate to facilitate investments among ASEAN and the People’s Republic of China among others through “simplifying procedures for investment applications and approvals”.

← 38. See e.g., Canada-EU Trade Agreement (CETA) (2016), Chapter 12, Article 12.3 pertaining to Licensing and qualification requirements and procedures; see, the ASEAN Investment Facilitation Framework (2021), Article 2 pertaining to Streamlining and speeding up administrative procedures and requirements. The Canada Model BIT (2021) in its Section C dedicated to Investment Promotion and Facilitation, features a provision on the Processing of Applications for an Authorization (Article 21), the scope of which is similar to that of the EU-Angola SIFA’s Article 17.

← 39. See e.g., the ASEAN Investment Facilitation Framework (2021), Article 4; the Regional Comprehensive Economic Partnership (2020) (RCEP), Article 10.17.

← 40. Information provided further to consultations with GAFI, August 2023.

← 41. Launched further to Law 55-19 to streamline administrative procedures and formalities. See also, Guide prepared relative to the streamlining of administrative procedures and formalities (Simplification des procedures et des formalités administratives) prepared by Secretariat de la Commission de la simplification des procedures et des formalités administratives,

← 42. These four clusters are also used in the OECD FDI Qualities Indicators to assess the contribution of FDI to SDGs.

← 43. The tri-dimensional presentation of sustainable development in the EU-Angola SIFA (economic, social and environment) reflects the standard understanding of the concept of ‘sustainable development’ as framed by the United Nations, especially since the Rio Summit in 1992. See, the United Nations Conference on Environment and Development, “Agenda 21” adopted in Rio de Janeiro (1992).

← 44. This section provides a broad overview of the EU-Angola SIFA’s provisions on investment and sustainable development and the implementation of domestic policies within Southern Neighbourhood countries aimed at boosting FDI contribution to their SDGs. An ongoing parallel project carried out by the OECD in collaboration the EU Commission’s DG TRADE aims specifically at mapping out comprehensively the EU-Angola SIFA’s Chapter 5 to support the incorporation of a wider spectrum and more ambitious sustainability considerations into future SIFA iterations as well as to offer guidance to governments for the implementation of domestic reforms and measures to maximise the impact of such treaty provisions on the quality of FDI.

← 45. See e.g., for comparison, the ASEAN Investment Facilitation Framework (2021), which does not reference sustainable investment within its provisions.

← 46. See, for e.g., the EU-Canada CETA (2016), Article 8.9(1); the USMCA (2018), Article 14.16; the EU-Viet Nam Investment Protection Agreement (2019), Article 2.2(1).

← 47. In this regard, Article 30 of the EU-Angola SIFA refers to the ILO Declaration on Social Justice for a Fair Globalization (2008), the ILO Constitution and the ILO Declaration on Fundamental Principles and Rights at Work and its follow-up.

← 48. See e.g., Articles 32(1) which refers to the United Nations Framework Convention on Climate Change (1992), the Paris Agreement (2015) and other multilateral environment agreements and multilateral instruments in the area of climate change; Article 32, which mentions the Montreal Protocol on Substances that Deplete the Ozone Layer (1987); Article 33(2) which refers to the Convention on Biological Diversity (1992) and its protocols; and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973).

← 49. See e.g., Article 34 referring to the United Nations Guiding Principles on business and Human Rights, the United Nations Global Compact; the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy; and the OECD Guidelines for Multinational Enterprises and related due diligence guidance.

← 50. See e.g., EU-Angola SIFA, Article 31(1) which refers to the United Nations Environment Assembly, the United Nations Environment Programme, the United Nations High-level Political Forum for Sustainable Development etc.

← 51. See, for example Article 21 of the EU-Angola SIFA which encourages Parties to adopt “clear, objective and transparent criteria” for investment authorisation procedures and to ensure that such procedures are administered impartially and independently.

← 52. This paragraph offers an overview of financial and tax incentives based on sustainability criteria in Southern Neighbourhood countries. For a more in-depth analysis of different incentives schemes across the MENA region, see OECD (2023[12]), FDI Qualities in the Middle East and North Africa: A mapping of policies and institutions than can strengthen sustainable investment, July 2023.

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