Seminar on FDI
promotion in Africancountries“ Strategic Action Initiatives
for Economic Development :Strategies for Investment
Promotion in Developing
Nations

Venue: GRIPS Roppongi Camp
November 9th 2006

Dato’ J. Jegathesan
Senior Investment Adviser :Consultant to JICA and theGovernment of Zambia and theformer Deputy Director
General of the Malaysian
Industrial Development
Authority (MIDA)
CEO - J J International
Consultants

1How is Africa (your country) perceived
by others in respect of Investment
Potential?
What is the world global scenario of
FDI flows on which Africa must depend
upon?
What are the lessons (in summary) that
African Nations can learn from the
Asian Experience?

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ONE Lesson: LEADERSHIP is
the KEY.
 As CEOs of Companies forge Corporate Visions,

Leaders of Nations must forge National Visions.
 Leader must be sensitive enough to feel thepulse and heartthrob of the nation and forge
Visions that capture the imagination of all
sectors.
 Leader must empower the people with the
Vision so all feel that this is part of their Vision
and all want to be part of the MISSION to realize
VISION.

 MORE LESSONS…
 COMPARATIVE ADVANTAGE NOT THE

KEY!
 Comparative Advantage of Raw Materials(Malaysia, Indonesia, Thailand) OR
Location (Singapore, Hong Kong etc) arenot enough.

Key is Competitive Advantage …e.g. Rubber
1970s Malaysia – world largest producer /exporter yet world’s largest exporter of•Rubber shoes – Viking Askim in Scandinavia•Rubber swimming caps -- Skellrup in New Zealand3

Yet within 1000 miles of NZ and
Scandinavia – not a single rubber tree.
1970 – 1980 Malaysia focused not on RBI
but labour and competitive advantage
After 1980 – Malaysia had bothcomparative and competitive advantage :–Viking Askim & Skellrup moved to
Malaysia

All developing nations- to succeed- must
focus on competitive advantage

In simple terms:is conferred by God (i.e. Natural
Resources / Location etc)

Must be manifested by man tomake full use of Comparative
Advantage.

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For

To manifest –need for maximum cooperation,
efficiency and incorruptibility
among certain forces that
initially make up a In all Nations – the people, thecitizen, the poor – look hopefully
to a– to deliver jobs, opportunities, adecent life (wealth is a bonus).

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Hope

Political Will &Integrity

Private Sector
Dynamism &Integrity

Civil Service Efficiency & Integrity

1)

Government leaders / Cabinet /Politicians/ Parliamentarians: – whoare selflessly dedicated to National
development, are incorruptible. Havea vision for the future of their nationand see themselves as “gifted byGod” to serve the Nation and its
people selflessly.
Political Will is the key word.

62) Civil servants – who understand thatthey are “servants” of the people andnot “Civil Masters”. They should be
dedicated, incorruptible and totallyapolitical, serving the Government in
power and the people without fear or
favour. Civil service efficiency is
the key word.

3) Corporate / Private Sector – who are
dynamic, are aware of the problems of thenations, do not just wait for handouts, who
realize that only if the common people are
happy and prosperous that they too can
succeed. Are also incorruptible and areprepared to work with the Government in
power to achieve National Prosperity.
Private Sector Dynamism is the key word.

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Private Sector
Dynamism &Integrity
Political
Will &
Integrity
Civil Service Efficiency Integrity
Good news is: This may be OK initially.
Bad News is: This will not be enough for Long
Term Prosperity & Economic Stability!
For this we need:

INVESTMENT PROMOTION
THE QUADRANT STRATEGY
Export Orientation
Country
OrientatedSpecific Promotion

PROJECTS PROMOTIONImage
BuildingIndustries
ENVIRONMENT
GeneralEnvironment
Specific Sectors

IMPLEMENTATION

GeneralAspectSpecific8

Another MAJOR Lesson.
Impact of GLOBALISATION.
 You either become a CENTRE OF

EXCELLENCE for Manufacturing &Business…a super efficient “CBE”… “CENTRE
for BUSINESS EXCELLENCE”. Than even if
small you can excel. (e.g. Switzerland, Belgium,
Luxembourg, Hong Kong & Singapore.)OR You provide a Big Market by yourself OR by
Regional Economic Groupings & a relatively
efficient Business/Investment Environment e.g.
Japan, S.Korea, China, Malaysia, Thailand,
Indonesia and now ASEAN etc.

Can African Nations aspire to become CENTERS
FOR BUSINESS EXCELLENCE?
z Many years ago (1970), Malaysia

was in the same position in termsof Economic Backwardness.
Malaysia took the Challenge to
become such a CENTER FOR
BUSINESS EXCELLENCE.
I PRESENT HERE NOW A GLIMPSE OF THE
MALAYSIAN STORY.

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…in Summary:z Independence in 1957 from British Colonial

Rule.
z Multi racial/ Religious Nation.
z Malays ( Muslims 50%), Chinese ( Christians,
Buddhists etc 40% ) Indians & others (Hindus,
Buddhists etc 10%)z By 1965 Worlds largest exporter of Rubber,
Hardwood Timber, Palm Oil, Tin, Pepper.
z ( Rubber from Brazil. Oil Palm from Africa)
z 1969…May 13th…RACE RIOTS devastatedthe nation.

z Rampant Unemploymentz Identification of Race with Economic Function.
z Imbalance in Wealth Distribution.
z FOREIGNERS : owned 60% of Corporate wealth.
z Malaysian CHINESE: 40% Pop….35%
z Mal. INDIANS & OTHERS: 10%....3%z MALAYS: 50%...2% OF Corporate wealth.

THE Government LAUNCHED A 20 YEARSOVERALL PERSPECTIVE PLAN (OPP) (1970
TO 1990) & NEW ECONOMIC POLICY (NEP)

10Key Objectives of OPP & NEP:
*Create Jobs & Wealth* Redistribute Income and opportunities
within context of a rapidly Expanding Economy.
RESULTS?
When we started our Big Push in 1970 Malaysia
was a Raw Material Producer & did not have even
ONE export Oriented Manufacturing Company.
But 10 years later…in 1980 Malaysia had become:
The Worlds Largest Producer of Electronic
Semiconductors ( employing more than 150,000
people) &The 3rd Largest country in the world exporting
Room Air conditioners.

► Certain elemental laws of nature

guide natural forces on this earth
and once Man recognizes theselaws, he can tap these forces forbenefit…
► Likewise Malaysia recognized thethat certain elemental laws equally
guide forces of Economics.
► We Recognized these laws andused them for our advantage.

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•Centrifugal(Push)
Factor•Centripetal(Pull)
FactorPUSH FACTOR
At times in world economic history there are certain forces ‘pushingcompanies’ in capital and technology exporting nations to invest
abroad – i.e become F.D.I.

Negative Forces

Positive Forces•Increasing Costs of producing
locally•Increasing costs of electricity,water etc.
•Increasing costs ofenvironmental protection•Labour shortage and cost

•Expansion to new markets•Company’s drive to diversify•Company wants to be close to raw
material source•Company wants to be closer to theoverseas market or supplier•Drive to take advantage of Regional
markets e.g. ASEAN•Company divides the world into
strategic geographic areas

The PULL Factors can be put into a

Strategic Action Initiative FormulaOr
FAR EASTERN EXPERIENCEFORMULA FOR SUCCESS
IN
Economic Development

E + C4 + O = P

Not Problems

Profits for Enterprises
Prosperity for the Nation

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E + C4 + O = P

Environment – THE 10 COMMANDMENTS
Or Check Points that every investor MUST observe

1. Political Stability
2. Economic Strength / Fundamentals
3. Attitude of Welcome – from highest Minister tomost junior civil servant and public
4. Government policiesa.
Equityb.
Employment of Expatriatesc.
Exchange controld.
Rule of Law (Ownership of Assets etc)

E + C4 + O = P

Environment – THE 10 COMMANDMENTS
Or Check Points that every investor MUST observe
5. Infrastructure- land, Electricity, water etc..;
Availability, Costs, Quality, etc,.
6. Labour (Trainability, Education, Work Ethics,
Harmony…all these spell one word
PRODUCTIVITY)
7. Banking & Finance
8. Government Bureaucracy – friend & ally or
hostile obstacles
9. Local Business Environment
10. Quality of Life13

In the 10 Checkpoints–

No Mention of Incentives
But are the
Icing on the Cake!!
The 10 Checkpoints constitute theSolid Fruit Cake i.e. the company

must make profits.

In a bakery– which would most people choose?
The Cake without icing or the Cake with the icing…

E + C4 + O = P•Cost of Doing Business•Convenience provided at all stages•Capability of the Infrastructure andGovernment Machinery•Concessions (carrots) – Incentives, etc,.

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E + C4 + O = P
Opportunities – What opportunities does thecountry offer? Mining, Trading, Manufacturing,
agriculture, etc,. Is this available in
Government or private sector publications? In
short how will the investor know theopportunities for import substitution or Exportorientation that the country offers.

HOT AIR BALLOON Theory for achieving
TARGETS / OBJECTIVESMETHODOLOGY
Other e.g.
Manpower

Destination/
Targets/
Objectives

INPUTS

Difficulties

Motivation
Lack of Understanding

CONSTRAINTSSTRATEGY
Incentives
Policies
Obstacles
Difficulties(Red Tape)
Policies

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THE DEVELOPING COUNTRY SYNDROM
Are you giving your investors a fighting chance?!!

► Need for a strategic Plan of

Action…based on a VISION of what
you want your country to be.
► This Vision must come from Top
leaders and the Civil Service andPrivate Sector (Business & Workers)
must join forces to realize Vision.
► Not emotional nationalism but
Strategic Action Initiatives designed
for Short, Medium and Long Term
Results.

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1) Why must foreigners come and make profits inmy country?
2) Local people must own everything , Banks,
Insurance etc. let foreigners take minority
share?
The lesson Malaysia learnt was this:Do we want to own 100% of 100OR
40% of 1000.
The key is a dynamically expanding economy…
So that Wealth & not Poverty is distributed.

RECOGNIZE THAT CURRENTLY
3 Great Waves drive Economies of
Nations
1St Wave. – Agriculture – slow moving- longterm - continue this initiative!
KEY: Cost efficiency & Productivity.
2nd Wave – Industrial Development: must
establish competitive advantage.
Who are your competitors?

3rd Wave – Service / Knowledge based
drive….! Knowledge workers are driving
World Economy.

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TECHNOLOGIES FOR SOUTH NATIONS FORECONOMIC SUCCESS

Everybody is looking at ICT…BUT…
In looking at ICT (Information &Communication Technology) –African Nations should have a multi pronged
strategy!

 MCT – Manufacturing & Creative Technology
 ACT – Agriculture & Commodity Technology
 BCT – Building & Construction Technology
 FCT – Finance & Currency Technology
ALL these Technologies will lead to
EMPOWERMENT of South Nations!

This is what Asia did!

ONE KEY ELEMENT IN THE
STRATEGIC ACTION INITIATIVE(S.A.I.) FORMULA IS….

The role of the National
Investment Promotion Agencies
(IPA)

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And the Archer is thePrivate Sector Leader of the NATION…
The Cabinet

Economic
Success

Investment
Promotion
Agencies (IPA)
Policiesand Laws

All Government
Departments involved
in “Economic Development

The IPA is only the arrowhead – by itself itcannot hit any target …

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What can AFRICAN Nations learn
from the Asian experience?
z

Let us examine a possible Action
Agenda through the spectrum ofthe:1) POLITICAL WILL: Briefing Sessions can be held
for all Members of Parliament/Ministers(including Opposition members), on subjects
relating to:
STRATEGIC ACTION INITIATIVES FOR ECONOMIC
DEVELOPMENT AND THE ASIAN EXPERIENCE(one example: Malaysia).
(Malaysia, a multi racial Islamic nation, whichbecame independent in 1957…about the same time
as many African Nations, which in 1969, after the
May 13th Race riots was written of as another “basketcase” economy & what it is today, would make anideal case study.)

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The objective of this ONE FULL DAY
SESSION WITH Q&A, will be :To help leaders who are making
decisions about the future of
their nation in a rapidly changing
and competitive world tounderstand the Economic
Process that drives Nation
Building and the challenges of
Globalization.

The session will help in some degree
to make all Members of Parliamentand Political Leaders realize:# The critical role that FDIs can play in the processof Jobs and Wealth creation.
# That PROFITS should not be a bad word.
# What must be done to attract the FDI that can help
achieve economic success?
# And that every Ministry, every Dept. is part of theeconomic process of nation building.

212) The 2nd side of the Triangle of Hope relates to“Civil Service efficiency and integrity”!
 For Civil Servants, which will include all

officers in the Investment Promotion Centerand two or three TOP OFFICIALS from every
Govt. Dept. involved in the Economic Process( Customs, Immigration, Road Transport,
Central Bank, Ministry of Finance etc)…a full 2½ to 3 day Capacity Building/Training session
can be held.
 The title of the topic can be same as that for

the MPs, but this Training session will go into
depth on issues of coordination, streamlining
etc.

In short whereas the MPs session will focus on WHAT
should be done to achieve Economic Success, the Civil
Servants session will address notjust the WHAT but HOW it can be done.
 The lessons from Asia regarding streamlining &capacity building can be useful.
 The setting up of INTEGRATED APPROVAL SYSTEMS

for every Govt. Dept., the streamlining of the approvalmechanism at every level of the APROVAL PROCESS
from National/Central Govt. to Municipality/City levels
will be critical.
 The process must move from KNOW WHO to get anapproval, to KNOW HOW and the strength of the
project itself.
 There must evolve a Systems Approach in Govt. andone way would be to embrace “e governance” as aconcept to drive efficiency and to reduce Red Tape andcorruption.

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Integrated Approval Systems
1) Who are you serving?
2) Why?
3) Is the service you provide most efficient?
4) How to improve further?
5) Is your internal system fully integrated – (How can further
integration be achieved).
6) Are you integrated with other Department?
7) Do you think that the service your Department provides
has a role in Jobs & Wealth creation and Poverty
Eradication?
8) What is it’s role and how can maximum efficiency &productivity be achieved?

9) Which Government Departments do you think you are
related to(a) Directly(b) Indirectly

10) Do you know that a chain is only as strong as its‘weakest’ link?
11) In the chain of National Economic Development is your
Department – a strong or weak link?
12) How to strengthen that link?
13) Do you know that though the chain is as strong as its‘weakest’ link – that the Department Head is the link maker,
the Minister & the Civil Service Head of Ministry make part ofthe chain and that the Head of State is the ultimate Chain
maker?
14) How can you help the Minister and Head of State to create
an unbreakable chain?

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(3) The 3rd Force in the Triangle of Hope is
PRIVATE SECTOR DYNAMISM and
INTEGRITY: Here it is proposed that a ONE Day briefing

session be held for all the Captains of Industry
on the similar basis as that of the MPs.
 The Topic title can remain: STRATEGIC ACTION INITIATIVES FORECONOMIC DEVELOPMENT AND THE ASIAN
EXPERIENCE In addition the presentation could include
issues relating to GLOBALIZATION, and somesuggestions as to what the private sector can
do to be prepared for these challenges.

In respect of the Quadrant Strategy that encompasses
INVESTMENT ENVIRONMENT, PROJECTS,PROMOTION AND IMPLEMENTATION interested African
Governments can be helped to: 1) Examine & assisted as to how the Investment

Environment can be improved to attract FDI andto stimulate domestic investments.
 2) Identify strategic Industries/Projects that canbe promoted to maximize the competitive
advantage that a country has to offer.
 3) Launch Investment Promotion strategies/
programmes in target Asian CAPTEN Nations.
 4) Ensure that that proper mechanisms are inplace to ensure speedy Implementation of
approved projects.

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In addition to the above in a programmecalled “Agenda of Action”, the following
should be undertaken:
1) To create a “FAMILIARITY THAT WILL BREEDCONFIDENCE” among Asian Businessmen,interested African Governments should
consider the following actions:a) Organize with African private sector, buying andselling missions to target Asian nations.
This will create direct linkages between Asianand African Businessmen, reduce the role ofthe middle man from other nations and reducethe cost of Asian products in Africa.
Such increased business linkages will create
the confidence for longer term Asianinvestments.

b) Offer to Asian businessmen,
opportunities to participate in the“Privatization and Development
Projects (PDPs) the country has tooffer.”
To implement this, the relevant
African Governments should put
together a package of PDPs andorganize missions to target Asian
nations.

25c) Promote Asian Financial
Institutions (Banks & Insurance)
to set up operations, for these
are the most powerful conduits
for flow of Investment funds.

To ensure that the existing domestic & foreign private sector areare
an ally to Government’
Government’s Promotion efforts, African Govts. can behelped to set up “PublicPublic-Private Sector Presidential Committees on
Investments.” ( PPSPPS-PCI)OBJECTIVE: To create a happy , supportive, domestic Private
Sector Group.
1) The President with Key Economic Ministers and Captains
of Industry should meet, initially at least 2 or 3 times a
year, and later as issues are addressed and solved thesecan be reduced to an Annual basis.
2) The issue of meetings is not just to call a meeting andhaving it end as a “complaints session”
session”. The sessions
should have considerable pre planning and preparations
so that the Presidential meeting becomes highly
productive.
The Asian Experience as to how these PPS -PCIs can be set
up to become powerful tools for Investments, can be shared.

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Key Question: Do African Govts. feel that theywant to proceed on sustained, well planned
strategies?

Also are International & National Donor
Agencies prepared for such strategic steps
that are sustained and results not as“Reports on a dust covered shelfves”, but“Jobs and Wealth” on the Ground.
I have worked with many International
Agencies since I retired from MIDA in 1999.
All are sincere, but how many have gone
beyond “Reports that end up on shelves”?

(The TRIDENT STRATEGY)z Despite millions of dollars being poured into

Africa, there is not one Economic Model thatcan be taken as a Success Story that others
can emulate, unlike the multiple successstories in Asia, from Japan to Singapore,from Taiwan and South Korea to Thailand
and Malaysia.

27z I had suggested to many International

Agencies, that whereas all nations be
helped, 3 TESTBED Nations be
selected to launch the full 3 to 5 year
“S.A.I. for Economic Development”
programme and that we work withthese 3 Nations until we see Jobs andWealth on the ground.

The proposal was that 3 “Test Bed Models” beselected:z (a) A Land Locked Nation (e.g. Uganda,

Zimbabwe, Malawi, Rwanda, Zambia
etc)
z (b) A Nation with Coastline and a
relatively large population.
z ( c) An Island Economy.

I am proud to say that the Japanese
Govt. through JICA accepted thischallenge

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The 1st Test Bed Nation is Zambia:
Land Locked.
 1) An MOU was signed between JICA and theGovt. of Zambia in March 2005 to launch what
is now known in Zambia as the “Triangle ofHope” programme.

 2) The Political Will has been tremendous:
The President has formed a Presidential
Steering Committee chaired by the Deputy
Secretary to the Cabinet and where the JICA
Resident Representative is one of the 2 Deputy
Chairmen.

 3) Arrangements were made for the JICA

consultant to brief Parliament and this briefing
was well received by all parliamentarians.
 4) The President has shown personal interestand he and his cabinet has been briefed on 3
occassions on the progress of the TOH
agenda.
5) In keeping with the TOH formula theGovt. arranged a 3 day Briefing cum
Workshop session on the TOH programme
for Senior Civil Servants and also asession with the Private sector.

29 6) After fulfilling the obligations of the TOH the

GoZ proceeded to fulfill the requirments of the
Quadrant Strategy viz: Environment, Projects.
Promotion & Implementation.
 7) 12 Govt. Private sector Task Forces were
set up to look at issues relating to the
Physical and Administrative Infrastructure,(Environment & Implementation), and Sectorsthat will have Competitive Advantage(Projects)
8) The Task Forces were given a TOR and were briefed
on expectations and given 3 months to present theirreports.
This they did very effectively. All TF recommendations
were submitted to Cabinet and have been approved.

 9) The GOZ, with JICAs assistance where

necessary, is now involved in the
Implementation of all Recommendations
approved by Cabinet. A monitoringmechanism has been established and JICA is
helping in this process.
 10) Having fulfilled to an extent the
expectations of the Quadrant strategy we arenow entering the Promotion phase.
11) Project Profiles are being drawn up, initially

focusing on existing companies that wish to expand,diversify or set up new projects. An Investment Booklet
designed with the Potential Investor in mind is being
prepared.

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 12) A very focused Investment Seminar is beingorganized in Malaysia towards the end of Nov. 2006
and in March 2007 we are planning for a Malaysian
Investment Mission to Zambia.
 13) Since this is a Asia – Zambia South South

Initiative, the promotion initiatives to other
Nations in Asia will commence in the 2nd
quarter of 2007.
14) It is the expectation, if all goes as planned

and all recommendations of the TFs are fully
implemented that Zambia should experience
increased FDIs, increased JVs with Foreign
Investors and increased Jobs and Wealth for thepeople of Zambia, in the next 2 to 3 years.

THE END …..

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@ Copyright
JJ International Consultants
Dato’ J. Jegathesan
No 24, Jalan Abdullah,
off Jalan Bungsar,
59000, Kuala Lumpur
Malaysia.
E-mail:- jjegaic@yahoo.com
Website:- www.jjegaic.com

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