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REPORT ON WAIPA STUDY TOUR ORGANISED BY INVEST IN SWEDEN (ISA) IN

COLLABORATION WITH UNCTAD

FROM 28TH SEPTEMBER, 2008 – 4TH OCTOBER, 2008.

SUBMITTED BY:

BIHINDI N. KHATIB

ZIPA-ZANZIBAR

OCTOBER, 2008

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1.0 INTRODUCTION.

The tour started by the Director General of ISA presented the overview of
investment promotion outlining progress of Sweden inward investment
promotion activities which started back in 1995 (i.e. some 13 years ago) when
ISA was established. At the beginning, the activities were more of information
gathering then information and marketing and now selling Sweden with the
hard and real facts of doing business in the country. Then, WAIPA and UNCTAD
being organisations that wish for other countries to learn from the country like
Sweden on the investment promotion. Sweden before 1995, it was investing
abroad and some countries were showing interest to invest in Sweden. The
country has been successful for a short time. They wish for the participating
member countries to improve their investment strategies using ISA example.

The WAIPA member countries attended the study tour were Afghanistan,
Bulgaria, Colombia, Gambia, Italy, Jamaica, Latvia, Maldives, Mexico, New
Zealand, Nigeria, Pakistan, Sierra Leone, Slovenia, Spain, Tanzania, and
Uganda. The officers attended ranging from Directors, Senior Investment and
Investment Officers of different IPAs, Regional IPAs, and advisors in investment
matters to Researchers and Consultants.

The sessions were so interesting and learning process with many questions
raised by the participants. The sessions covered ISA as a one stop shop for
information, followed by ISA as a sales organisation, the role of policy advocacy
as research actions under ISA. Then related institutions that work hand in hand
with ISA, these include Swedfund International, Seagull and the Swedish
Institute. Thereafter, the link between investment promotion and economic
development, Showcase of regional cluster at Kista Science City. Then Study
tour to different industries promoted by ISA and lastly wrap up discussions from
different participants.

2.1 Introduction to Invest in Sweden Agency-ISA-The One Stop Shop for


Information

Invest in Sweden Agency was established in 1995 where Sweden realise the
need to promote inward investments where there were many enquiries on the
subject. The main mission is to attract FDI in Sweden to enhance
competitiveness and promote growth. The key to the success of this Agency is
professionalism and business oriented.

ISA another missions since its establishment is to increase awareness of


business opportunities in Sweden and the image of Sweden as an attractive
country for investment, link with local partners and policy advocacy. ISA

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started as information gathering agency (provide facts for business and
investment opportunities available), followed by package information and
marketing (where identifies type and kind investments Sweden wants) and now
it is sales oriented (where now involved in product development and new
sector development to maintain competitiveness of Sweden SMEs).

2.1.1 Mission and Organisation

First mission – ISA as Government Agency and Sales Corporation

- Majority of staff are experienced business officials, i.e. 80% are


experienced in the promoted sectors of investments
- Prioritise the sectors for investments
- Know the needs of investors and be service oriented

Second mission – Market Communications

- Establish investment network from decision makers, opinion leaders etc


- PR & Media, website, Publications, fact sheets, case studies, promotion
forums

Third mission

- Regional services enhance cooperation and networking


- Skills and expert development
- Aftercare
Forth mission
- Research analysis provide annual publications and studies

ISA enhance cooperation from a regional perspective and regional development


clusters. No incentives are offered for all companies (domestic and foreign).
ISA has about 60 employees in Sweden and four countries around the world
(these countries are India emerging in life science, Japan, China and North
America.

Market communication involves website and email, direct selling by contacting


the targeted sectors of attracting investments in Sweden. Investors contacting
ISA are sent questions on which areas is the investors’ interest. ISA responds to
the investor immediately after receiving an email and basically inform the
investor that in two to three days time, they will inform the investor what is
required to invest in the sectors that are promoted.

ISA also is benefiting from multiplier network, these include Regional partners
(who are responsible to identify the investment they need in the region),
consultants (legal, tax, accounts and so on). ISA share advices from consultants

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and researchers (from different innovation universities and institutes) and
regional co operations.

ISA as a Sales Organisation


ISA used to be information gathering unit, then information and marketing unit
and now it is a selling organisation, it job is to follow on the right investors and
convince them to invest in Sweden in the identified sectors.

The Key Sectors for ISA to attract investors are:-


1. Automobile
2. ICT
3. Packaging
4. Life science

In these sectors, there are specialisation staffs. They are project managers and
they are expert in the field and know the investors what they are looking
forward to invest.

The sales process started by providing information on Sweden on the identified


investors, then the investor present an interest, then if qualifies from
answering on the set of questions, then discussion follows. ISA also inquire the
region partners on the identified investors. If the region manages to attract
investment on their own, they have to inform the ISA as it is the national
organisation for attracting inward investments to Sweden. Regional Partners
are promoting investments on their own and they are competitive.

ISA at the end negotiate and present a solution to investor and regional
partners. The negotiation and evaluation are the continued processes as if ISA
identified that this investor can be approached and negotiated to invest more.
Regional partners have mandates to aftercare so as to identify whether the
investors in their regions need to expand business. Regional Partners and ISA
have parts to play in order to maintain investors not to shut down or move out
of Sweden and expand their business. ISA aims at competetitivess of Sweden as
a small country in Europe with 9 million people.

The Role of Policy advocacy

The role of the policy advocacy takes long time and patience to change the
policies for suiting competitive business environment. To convince politicians is
a difficult deal to make. This section has only one researcher, responsible to
find out what impinging legislations that hinder inward investments in Sweden.

The findings resulted from Audit Committee report that draw report on the
impinging issues to be addressed to the cabinet. For example: ISA proposed 8-

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10 years ago to the cabinet to reduce corporate tax rate from 28% to 25%, the
cabinet has only approved now and soon will operate at 26.%.

Transnational cooperation in investment Promotion

Swedfund is a new thinking for new markets, is a risk capital company owned
by the Swedish Government for investment in emerging markets, now it is in
and looking for partnership with different companies in Africa, Asia, Eastern
Europe and Latin America.

Swedfund is financed by 100 % Swedish state fund. It has competence and


capital. Typical investment by Swedfund is a contribution of 30% of the total
financing of the partnership project. It is always a minority shareholder.
Swedfund looks for a partner who has experience of business sector, has
commercial and viable product/service, and has financial resource and
management capacity, with environmental and ethical aspects.

Examples of the successful projects in Africa are MTN Uganda 1999, Addis
Cardiac Hospital 2006, Dahaco in 1985 sold in 2000- Swissport and so on.

Internationalisation of Swedish Companies-Cooperation with other


government agencies.

1. Baltic Sea Region Investment Promotion Agencies (BIPA)

BIPA include 6 countries (i.e. started in 1998 to bring together the


colleagues and competitors towards regional investment promotion. BIPA
decided in 1999 to use Baltic Sea Region to collect information and
statistics, put them in joint website. Then recently from 2005, BIPA
decided to take new activities including joint marketing activities,
define joint investment areas and organise promotional joint trips for
the Baltic Sea Region.

BIPA targets business community, opinion leaders and media in


identified new emerging market of India on ICT, Life science/pharma
and automotive. BIPA produces printed materials. This involved with
Indian Organisation, business and media in Delhi, Mumbai and Bangalore.
There are some assessments and challenges when working with the
region.

2. Seagull - The North Sea Connection.


Seagull is an international cooperation between Swedish Growth
agencies including ISA, Nutek, Vinnova and regional development agency
for North East England for one North East. The goal is to generate
business that will give effects on companies and society through

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increased renewal, growth and employment in each respective
country/region.

The areas of cooperation are moving images, ageing and health, biotech
and clean tech. Target groups are Top researchers, managing directors
of SMEs, investors, business developers, politicians and policy makers.
Collaboration opportunities are in the form of direct investments,
research and development, joint ventures, strategic alliances and so on.
The collaboration strategy can be through agencies to agencies, cluster,
and companies.

The Swedish Institute

The Swedish Institute is a public agency established to increase knowledge of


and interest in Sweden worldwide. Its main task is sharing Sweden with the
World through active and the promotion of broad cultural, educational and
scientific exchanges. The Swedish Institute work is carried out in collaboration
with Swedish embassies and consulates Around the World.

The Swedish Institute has 63 years of public diplomacy, putting Sweden in the
world map and promotes intercultural relations. Its functions are:-

1. Promotion of Sweden.
This includes increase awareness of Sweden worldwide; inform general
public including journalists, shapers of public opinion and decision
makers abroad. Set strategic communication activities to brand Sweden.
The Sweden Brand platform promotes the aim of tourism, investments,
export, politics, talent/exchanges and culture. This encompasses Visit
Sweden Agency, Invest in Sweden Agency (ISA), Trade Council, Foreign
Ministry and The Swedish Institute. These institutes are working together
to Brand Sweden that is: focuses on the road to an updated image of
Sweden abroad and formulate thematic priorities to Progressive Sweden.
These priorities for 2007-2010 include the sustainable society, the new
progressive Sweden, the open, inclusive and non-hierarchical society.

2. Development cooperation.
This includes development without borders. Building long-lasting
relationships through scholarship and grants designed to support
exchanges between culture, science and technological progress and by
creating intercultural relations through meetings, exchanges and the
building of networks around the world.

The link between investment promotion and economic development


a) ISA Regional Cooperation
ISA believe on regional cooperation which enhance aggressivesness of
the regions in attracting investments for the development withing the

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regions. Regional cooperation enhances cooperation with players in
municipalities, counties and regions. ISA must therefore spend time on;
competence development together with the regions, assisting the
regions and get assistance from the regions.

ISA Regional services ranging from regional cooperation and networking,


Skills and expertise development, After-care, National cooperation from
a regional perspective, Regional cluster development (in priority
sectors). A successful investment promotion claims professional FDI
organizations on a national and a regional level. ISA has 17 regional
partners and they share projects and assist regions in competence
development.

In global competition for FDI, IPA need coordinate professional aftercare


program. In Sweden, After Care is a municipal and regional responsibility
and ISA has a role to stimulate and coordinate activities. The goal of
aftercare is to increase the possibility for investments to expand,
decrease the risk for companies to shut down ore move out, contribute
to generating leads. Regional focus on economic development is the
same as national focus. National program for development of innovation
systems and clusters is carried out by ISA, Nutek (Sweden Agency for
economic and regional growth) and Vinnova ( Swedish Agency for
Innovation System)

b) Swedish growth and economic development


Nutek contributes to the sustainable economic growth and prosperity
throughout Sweden. Nutek deals with new and growing enterprises and
strong regions.
Nutek assist new enterprises on the guidance for entrepreneurs,
improving regulations, attitudes to entrepreneurship, while growing
Enterprises seek business development program, supply of capital,
tourist industry, environment-driven business-sector development. Nutek
deal with strong region for regional growth Programmes, Regional
support,and the EU Regional Structural Funds programmes.

c) The Swedish Innovation System -Vinnova

Vinnova promotes increased collaboration between the research


community, business, and policy/public sector (Triple Helix). It has 80
employees and annual budget of about Euro 200 million.

Vinnova use three concepts tolead to the country’s goal of reaching to


sustainable economic growth, they are sustainable growth, innovation
system and Triple helix(which is public private partnership

Sustainable growth:

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Long-term economic growth which is also socially and ecologically
sustainable
Innovation systems:
Actors in business, research and politics who generate
and use new technology and new knowledge in collaboration, for
sustainable growth
Triple Helix:
Collaboration and coordination between
business, research and politicians/society

Swedish National Innovation System Characterises as follows:-


1) The economy strongly internationally linked.
2) The big international companies dominates the R&D-system
3) SME invest very little in R&D
4) Universities dominates the public R&D-system and they have a third
task, to cooperate with companies and society
5) Small sector of Research-institutes
6) Government invests very little R&D-money in companies outside the
military sector

Swedish National innovation systems with Vinnova is looking for three


areas to reach their goal, that is
1) Existence of a regional partnership and strong leadership with a shared
vision and with an ability to prioritise resources/activities/efforts.
2) Universities, which profile their education and research, and the
existence of researchers who are prepared to, exploit their knowledge.
3) An industry with an ability to identify future growth areas and markets.

Examples where Swedish applies for maintaining the above are:


1) Robotdalen –Robot Valley
This is a world region of robotics, aims at growth target in many
industries around the world, used to invent robots for car
automation, packing robots, medical equipments and so on. The total
financing of Robotdalen is about Euro 3.4 where Vinnova (Federal
Government) accounts for Euro1.1, companies/businesses accounts
for Euro 0.7, Regional/counties accounts for Euro 0.7 and European
regional fund accounts for Euro 0.9. The management team is led by
general manager, followed by three county managers. The Board is
chaired by County Governor, and other members are City Mayor as
politician, Vice President of the University as academician and R&D
Director of Global Corporate as a business and researcher. ABB is
using Robotdalen to design new kind of robots for different
industries, ranging from factories automation, assistance and sensible
robots for the special customers and so on.

The Robotdalen way of ensuring success

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1) Always focus R&D on new business
2) Deliver and communicate early results
3) Innovation support: pragmatic & hands-on
4) Strong and fully empowered Management team
5) High level “no-nonsense” Board
6) Easy-to-understand & well defined targets
7) You can never have too much publicity
8) Ensure the common vision by story telling

2) Automation Region
Automation Region envolve Industry, universities and society in
cooperation, it is a cluster of companies with the following tasks:
• Put the region on the worldmap
• Improve profitability of members
• Contribute to new businesses and innovations
• Work with issues concerning competence
• Cooperate with research, academy and society
• Indicate the importance of automation business
Automation region is a World leading in Process automation,Power
automation,Steering and monitoring of power grids,Robotics,
Transport automation. There is a lot of competence within the field
of automation and envolved with World leading research units.

Automation form an industrial cluster focusing on meeting places,


visibility, competence development, innovations for productivity and
environmental protection, business for new products,
competitiveness to achieve growth and so on.
The members are ABB, Tritech, Bombadier, flintech, CONTAD,ICA,
Netcontrol, Westermo etc.

CONCLUSION

Lessons learned from the WAIPA Study Tour organised by Invest in Sweden
Agency (ISA) sponsored by UNCTAD are:-

1. IPA needs to be professional and specialized/ experienced in the field of


promoted sectors of investments for the country. It should advance from
information collector, to marketing proceed be sales organisation that is
identifying investors’ need then find a solution towards the demand.
Regions offer more or less the same products for investors; hence IPAs
are competing towards the same investors. Therefore, ZIPA needs to
identify its unique products for kind of investors that it needs to develop
its economy and reduce poverty in the society.

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2. Triple Helix assists ISA to work closely to the politicians, private sector and
academicians. ISA is more organised and committed to facilitate investors. This
resulted in setting the priority sectors to promote, establishing right products
for the customers they serve. Most important to improve policies, regulations
and laws for the business to prosper in a country. ZIPA should learn from this
concept as it will be able to identify right products, improve business friendly
environment and committed to develop the regions and country in general.
ZIPA should work closely with Regional, academics and business community to
work on new sectors of investments to be promoted.

3. ISA attracts investors without tax incentives, although this depends on the
development level of the country, but well organized system attracts
investments without generosity of providing tax incentives. ZIPA and Zanzibar
can be organised and committed to provide better environment. Facts sheets
are most important for smooth business/investment procedure and it can be
freely available. Zanzibar should own one information, and government official
have to be helpful, responsible and service minded.

4. ISA CRM-Follow up System is a system for measuring the results, it consists


with five parts include Registration of all customers/potential investments and
made investments, Questionnaire – for investors to fill in which constitutes
two parts: a confirmation of the investment facts and a short evaluation of
ISA’s services and involvement. Audit Committee for evaluation of investment,
Annual Follow-up – a follow-up on how the past three year investments have
developed regarding number of jobs. The establishment in Sweden are
contacted once a year by telephone, and Scorecards - Special summaries –
scorecards – are produced once a year for the Markets and the Staff. The goal is
to provide a summary of the connection between resources used and results
gained and therewith by calculating ROI, draw useful conclusions for future
considerations.

5. ISA has One Stop concept for information which is of not keeping different
officials in one office but of collecting and provide right information from
different Swedish Government Institute then direct/guide investors for ease
establishments in Sweden. ZIPA should apply this concept as it is more
convenient then the officers under one roof without their department’s
decision/mandate. ZIPA can compile information and link websites so that they
are easily accessible to investors.

6. From ISA views investment decisions takes time (from 3 months to 3 years
depending on the nationality of the investor). Therefore, building of interest to
the investor to settle in a country need targets and follow up on investments,
this resulted to the right choice of investments for the country. Seriousness of
the investors can be followed by the way investors are responding to email and

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website. ISA is responding to any inquiry via email and website within the same
day and inform them that they get back to the investor within 2-7 days
depending on the specialized sector. IPA should target/identify investors that
are willing to expand their investments and follow them to settle. ZIPA should
improve the website and email correspondences and be able to determine the
seriousness of the investor through correspondences. Regions should know
exactly products and priority sectors to be promoted for their economic growth
and developments.

7. ISA involved with and concentrates on promotion and facilitation of


investments in Sweden, hence Export/Trade Promotion and Zone
Administration and Management are dealt with separate units and functions
independently, as they are separate businesses. Although now some IPAs are
incorporating all the functions in one unit, ZIPA should vigilantly examine these
functions and address them separately to be effective and efficient in
delivering the services as they are different aspects of businesses.

7. ISA assesses professional consultants (such as legal, tax, accounts, labour


agencies, etc) links with confederation of different industries
commission and uses them as agencies to contact and deliver
professional services to investors. Investors can register through
assessed consultants and be able to handle enquiries for available local
labour force, taxes, legal advisors, accounts, office/property rentals and
so on. ISA uses professional/specialised consultants to contact investors
in an identified country. This eases the burden of many investors
contacting ISA at once and they are dealt professionally. ZIPA should try
to identify consultants in different countries of different industries that
ZIPA is attracting investments of the specialised sector of the identified
country.

8. Linking Investors, Research Institutes, and Regional office to identify


potentials hence make IPA’s work easier. Competition between Regions
can enhance identifying new investments within the regions due to envy
on each other.

ZIPA should concentrate in promotion and delivering the services to investors


so that they start their business in Zanzibar on time, know where to get all
information concerning investing in Zanzibar. Be more transparent on what to
expect in business. It should be a real one stop centre for investors. Every
system for investor is transparent and straight forward.

Lastly, ZIPA should learn Analyses for Planning by identifying the


impinging problem that ZIPA need to solve, then draw objective that

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ZIPA need to achieve then design action plan. This can be presented by
problem tree, then draw objective tree which will lead to the selection
of actions that the organization requires to take. Hence overall goal will
have project purpose that will lead to outputs then activities. For ZIPA
to adapt to Management of Trade and Investment Insurance, attached
herewith is the Action Plan.

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