Empowering investors: IPA’s pioneering future growth

Author: Jeroen Nijland , Director of Investor Relations, Investment Promotion Agency Qatar (Invest Qatar)

• Investment Promotion Agencies (IPAs) navigate constant shifts due to market developments and geopolitical factors, demanding adaptability in a rapidly changing landscape
• IPA’s growth is contingent upon embracing emerging trends of sustainability and technology-related greenfield investments
• IPAs need to develop a centre of government approach, change their investor facilitation and update measurement metrics to facilitate growth

In the quest to pioneer future growth, Investment Promotion Agencies (IPAs) find themselves compelled to shift their focus towards emerging investment developments such as technology-related greenfield investments and navigating the unpredictable currents of global economic fluctuations. These changes, while promising, pose challenges to the traditional role of IPAs within governments, demanding a re-evaluation of their methods of working with the government, enhancing investor facilitation and measuring metrics. To navigate these complexities, IPAs must embrace a culture of experimentation, learning and knowledge exchange, with the World Investment Conference (WIC) serving as a crucial platform for these conversations.

Navigating global investment fluctuations

Given the constant fluctuations of short-term and medium-term global investments, IPAs face continuous shifts due to market developments and geopolitical factors. The latest insights from the United Nations Conference on Trade and Development?(UNCTAD) suggest that IPAs must prioritise sustainability and technology investments to attain stability and growth. The UNCTAD publications identified 17 key frontier technologies, which are at the cutting edge of green innovation with a market value of $1.5 trillion in 2020, projected to increase to $9.5 trillion by the year 2030. The technologies include artificial intelligence, electric vehicles, green hydrogen, biofuels, nanotechnology, 5G, gene editing, robotics, wind energy and blockchain. However, unless developing nations promptly implement decisive measures, a significant portion of the value created in those thriving markets will elude them. Considering these challenges and changes, IPAS must adhere to the suggested changes in internal, external policies and methods as highlighted.?

Future investment implications for IPAs

a) Embracing 'Centre of Government' approach: As IPAs strive to attract impactful investments, they are evolving to embrace a "centre of government” approach in a rapidly changing landscape. They are now required to navigate a range of complex challenges, from sustainability-related infrastructure concerns to regulatory shifts driven by emerging technologies. Being successful in attracting these investments requires supporting policies potentially impacting all ministries. Given the scale of many sustainability-related investments, they may impose questions about connectivity to the grid, they may require new types of arrangements in financing, and they significantly impact spatial planning, challenging current frameworks. The volume, profile, and funding principles in the public research infrastructure affect the attractiveness of potential foreign investments. Therefore the need to have a much closer alignment between the core of government and IPA functions becomes increasingly vital, sparking crucial questions about organisational positioning and active participation in policy procedures and impact assessments.

As energy and technology become more connected to global politics, it’s becoming a significant concern for governments. This shift means that governments see them as important for their overall strategy. IPAs used to focus mainly on bringing investments and creating jobs, but now, they play a crucial role in helping governments secure the energy mix or technology they want (known as 'strategic autonomy'). They also help protect their existing positions, as shown by the growing number of countries using investment screening.

For example, Singapore Economic Development Board (EDB Singapore), an inbound investment promotion agency, works toward the Singapore Economy Vision 2030, with a comprehensive goal of fostering innovation, technology and sustainable development. Similarly, other IPAs, such as the Investment Promotion Agency Qatar (Invest Qatar), serve as a vehicle for economic development in alignment with their respective countries’ national goals outlined in the Qatar National Vision 2030. ?

b) Broadening investment facilitation: IPA success hinges on the effective attraction of investments, presenting significant implications for these agencies. To adapt to the shifts in sustainability and technology projects, IPAs need to redefine their approach to investment facilitation. Beyond the usual factors like regulation, taxation and infrastructure, IPAs must be able to provide detailed information about many more factors like talent availability, research programmes, quality of life and opportunities for dual careers, energy and environmental policies etc. This expanded role, however, also poses a substantial challenge, prompting IPAs to reassess their networks, incentives and strategies to align with the evolving nature of projects. This dynamic environment underscores why IPAs need to develop a centre of government approach, as it facilitates their adaptability to the shifting demands of the investment landscape.

In a strategic move, IPAs now emphasise established practices for ongoing talent development, particularly in emerging industries. For instance, IDA Ireland includes talent as a key factor influencing investment decisions, along with its economy, infrastructure and quality of life. Ireland's annual investment of over €1 billion in upskilling and reskilling programmes further strengthens its commitment to developing local talent, including fostering collaborations for industry-focused training programmes. ?

c) Changing investment metrics for success: The shifts in what to attract and how to achieve it require a re-evaluation of the metrics used by IPAs to guide their efforts and demonstrate impact. Traditionally, IPAs focused primarily on metrics such as the total amount of investment attracted, or the number of projects secured. However, the evolving approach recognises the need to move beyond these measures, adding qualitative metrics. Future key metrics may include research partnerships, technology transfer or quality of jobs created; reporting about the impact of IPA will need to go beyond investment sums and job creation and should focus on contributions to the long-term prosperity and sustainability of the society.

In conclusion, the ongoing evolution of IPAs requires proactive exploration of innovative methods, tools and metrics aligned with core government policies. This demands a deep understanding of emerging trends and the flexibility to experiment with novel approaches. The collective efforts of IPAs across the globe are pivotal in shaping the future trajectory of the industry, enabling them to pioneer sustainable and technology-driven investments successfully.