MIGA Spreads the Word in East Asia: Investment equals growth equals poverty reduction
MIGA Spreads the Word in East Asia: Investment equals growth equals poverty reduction
Washington, DC, November 20, 2000 — The Multilateral Investment Guarantee Agency of the World Bank Group is taking its message on the road, with staff experts traveling throughout East Asia from November 13-24, 2000, to talk about the value of political risk insurance for investments in the region and elsewhere.
In addition to formal seminars, staff will be meeting with representatives of financial institutions, potential investors, and those involved in promoting investment opportunities. Agency representatives will travel to seven Asian countries, including Japan, China, Cambodia, Thailand, the Philippines, Korea, and Australia.
"MIGA's guarantee program allays investor concerns about the safety of their investments and facilitates foreign direct investment into countries—to reduce poverty and improve people's lives," says Motomichi Ikawa, MIGA's executive vice president. "We do this by offering political risk insurance to investors and lenders. We want to make sure investors know about these services, which is why we're conducting these mobile offices."
The Asia trip is particularly timely, given that investor concerns persist in the wake of the financial crisis, and new business opportunities in the region go untapped, as in Thailand, MIGA's newest member country. Thailand recently joined the agency's 153 other member countries and is now eligible for MIGA's political risk coverage for Thai investments going overseas. Investors from other member countries stand to benefit as well, now that their investments going into Thailand may receive guarantee coverage.
"Indeed, one of the trip's focal points is so-called 'south-south' investments, those between developing countries such as China, Thailand, Korea, and Malaysia," says Ikawa.
MIGA's guarantees provide investors a high level of comfort in the security of their investments. This is particularly evident in that in its 13-year history, the agency has successfully resolved a number of disputes and had to pay just one claim. In June of this year, MIGA paid $15 million to Enron Java Power Co. for its investment in P.T. East Java Power Corporation in Indonesia. The venture was one of many suspended by the presidential decree of September 20, 1997, issued in response to the country's economic crisis.
This was just one of the nearly 100 contracts underwritten by MIGA since 1988 in the Asia and Pacific region, ranging in size from $540,000 in coverage for a Chinese copper production facility, to $68 million for a banking project in the Philippines. MIGA-assisted projects in the region cover a broad range of sectors, including banking, manufacturing, infrastructure, mining, oil and gas, and financial services. The region accounted for 14 percent of the agency's portfolio as of June 30, 2000.
"At a time when many projects are becoming increasingly complex in terms of their financial structuring, MIGA is well positioned to work with sponsors on their overall project financing and risk mitigation strategies," says Ikawa. "The agency is also interested in doing more work with small- and medium-sized enterprises in the region."
Over the past year, MIGA has played an active role in providing capacity building and investment marketing services to Asian member countries. This work has been made possible through a grant under the Miyazawa Initiative, a Japanese-sponsored program to revitalize private sector growth in Asia. The grant allows MIGA to provide hands-on technical assistance to investment promotion agencies in Indonesia, Korea, Malaysia, the Philippines, and Thailand, to help them design and implement effective strategies for attracting new foreign direct investment.
MIGA has taken a number of other steps to promote its activities in Asia. In addition to placing a representative in Tokyo, the agency has entered into cooperation agreements with organizations such as ECICS Credit Insurance Ltd. of Singapore and Malaysia Export Credit Insurance Berhad, to help market its activities and promote initiatives of joint interest.
"We've made some good progress but look forward to expanding on our partnerships in the region," says Ikawa. "Collaboration with national insurance agencies is another important part of our strategy."
For information
Alpona Banerji,
abanerji1@worldbank.org, t. 202-473-7153 (in USA)
Gang Wang,
gwang@ifc.org, t. 8610-6554-4191 (in China)
Angela Gentile,
agentile@worldbank.org, t. 202-473-3509 (in USA)