The Facilitation of Foreign Direct Investment in Portugal

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THE FACILITATION OF FOREIGN DIRECT INVESTMENT IN

PORTUGAL

Daniela Marina Gonçalves Vicente

Internship report

Master in International Business

Supervised by

Ana Teresa Lehmann

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Acknowledgements

I want to express my deepest gratitude to Professor Ana Teresa Lehmann for the support and guidance given throughout the process of elaboration of this report.

Secondly, I would like to manifest my appreciation to the internship supervisor, Dr. Marta Pinheiro, for her contribution, and to all the personnel at aicep Portugal Global with whom I have learned a lot.

I am especially thankful to my family and closest friends (particularly Aditya), for all the support and encouragement.

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Abstract

The objective of this report is threefold. Firstly, to analyse Investment Facilitation as a policy tool for attracting Foreign Direct Investment. Second, to attempt to study recent Investment Facilitation policies implemented in Portugal to attract inward FDI. This topic is particularly relevant to the institution where the internship was held – aicep Portugal Global. Thirdly, to provide a systematized example of a practical guide for foreign investors ("A Guide to Foreign Direct Investment in Portugal") aimed at simplifying the process of establishing an international company (either a branch or a representative office) in the country. The internship underlying this report was primarily focused on the process of planning and executing such practical Guide.

Bearing in mind that this report is a direct result of an internship at aicep Portugal Global, its content draws some conclusions from the learnings gathered during that period. It thus hopes to provide a relevant contribution to enhancing the understanding of the various procedures that foreign investors are required to comply with when considering investing in Portugal and providing a useful tool for a new investor interested in investing in the country.

This report is composed of the following parts: On a first (I) chapter it is presented a literature review on the topic of investment facilitation aiming to shed light on the key concepts explored by both academia and relevant international institutions. On a second (II) chapter examines the policy measures employed in Portugal and clarifies on the role of investment promotion agencies in achieving those objectives. A third (III) part aims to give detail on the methodology implemented throughout the creation of the annexed guide.

Keywords: foreign direct investment, investment facilitation policies, investment promotion agencies, internship

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Resumo

Este relatório de estágio tem três objetivos principais. Em primeiro lugar, pretende analisar o papel das políticas de facilitação de investimento enquanto ferramenta para atrair investimento direto estrangeiro. Em segundo lugar, pretende estudar as políticas públicas implementadas recentemente em Portugal para atrair IDE. Este tópico é particularmente relevante para a instituição onde o estágio foi realizado – aicep Portugal Global. Em terceiro lugar, pretende fornecer um exemplo de um guia prático e metódico para investidores estrangeiros (“A Guide to Foreign Direct Investment in Portugal”), este visa simplificar o processo de estabelecimento de uma empresa estrangeira (filial ou escritório de representação) no país. O estágio inerente a este relatório focou-se fundamentalmente no planeamento e execução do referido guia prático.

O presente relatório de estágio resulta diretamente de um estágio que teve lugar na aicep Portugal Global e, com efeito, o seu conteúdo refletirá invariavelmente as conclusões dali retiradas. Desta forma, espera contribuir para melhorar o entendimento dos vários procedimentos que os investidores estrangeiros devem cumprir quando consideram investir em Portugal e, simultaneamente, fornecer uma ferramenta útil para investores estrangeiros potencialmente interessados em investir no país.

Este relatório é composto pelas seguintes partes: num primeiro (I) Capítulo é apresentada uma revisão da literatura sobre o tema, com o objetivo de esclarecer os conceitos de facilitação de investimento, explorados pelos académicos e instituições internacionais relevantes. Num segundo (II) Capítulo esclarecem-se as políticas adotadas em Portugal neste âmbito, bem como, o papel das agências de promoção de investimento na consecução desse objetivo. Uma terceira parte (III) tem como objetivo principal fornecer detalhes sobre a metodologia adotada ao longo da criação do guia que se remete em anexo.

Palavras-chave: investimento direto estrangeiro, políticas de facilitação de investimento, agências de promoção de investimento, estágio

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Index of Tables

Table I. Obstacles to FDI 9

Table II. UNCTAD´s Global Action Menu for Investment Facilitation 17 Table III. The Key Components of Investment Facilitation 19 Table IV. Ease of Doing Business in Portugal (2011-2019) 31

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Introduction

Over the years a large body of literature has praised the positive externalities emanating from foreign direct investment (FDI), notably its impacts on the enhancement of the host economy's productive capacity, creation of employment opportunities, boosting of external competitiveness of the economy (spurring economic growth) and technological spillovers (Rodríguez-Clare, 1996; Markusen and Venables, 1999; Blalock and Gertler, 2008; Alfaro, 2017). Recognizing the scale and impact of its positive spillovers, policymakers from around the world, from both developed and developing countries design and implement policies that seek to increase the country's appeal as an ideal destination for foreign investment (Blomstrom and Kokko, 2003; and Kusek and Silva, 2017). To improve economic competitiveness and better being able to win the fierce "race" concerning FDI attraction (Myltelka, 1999), governments are committed to implementing FDI facilitation policy measures aimed at minimizing the bottlenecks in the investment processes (Monteiro and Assunção, 2012; Branstetter et al, 2014).

In a globalized and ever more competitive world, governments more and more often choose to play a strategic role as business facilitators. The relevant literature recognizes that intending to attract FDI, governments have been increasingly focusing their policy efforts to reduce administrative and legislative opacities (Klapper et al., 2006). Those efforts are critical towards the creation of a business-friendly environment for investors. In that context, facilitation policy measures are crucial in tackling the impediments to FDI and hence delivering increased levels of welfare (OECD, 2018; Mistura et al, 2019). Being that so, an array of facilitation policies measures has been deployed by the Portuguese Government to combat the perception of a weighty regulatory climate and attract inward FDI (Branstetter et al, 2014). These efforts by the government are showing its results, in the past few years, Portugal has achieved significant gains in the ‘Ease of Doing Business’ indicators conducted by the World Bank (Martins and Veiga, 2018; World Bank, 2019).

This internship report is devoted to the topic of investment facilitation and attributes particular importance to the role of Investment Promotion Agencies (IPAs) as key enablers of a more predictable and efficient investment environment. The structure of this report comprises of three main parts; the first chapter appraises the recent academic research in the field of 'Investment Facilitation' and clarifies key definitions and conceptual differences between investment facilitation and investment promotion while it contextualizes IF in the broader context of FDI attraction policies, and outlines the recent developments in bilateral

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and plurilateral dialogues and the debate surrounding it. It also sought to review IF the main components and the role of IPAs in facilitating FDI.

Concerning the first part of this report, the literature on investment facilitation has been subject to recent contributions both from academia and relevant international organizations such as UNCTAD and OECD. This chapter also focuses on the debate for a ‘Multilateral Investment Facilitation Agreement’ at the World Trade Organisation. IPAs are instrumental in the investment attraction process; the final section of this chapter outlines the roles, functions and organizational structures of IPAs.

The second chapter focuses on Investment Facilitation (IF) from a Portuguese context and examines policy measures employed in Portugal while evaluating the role of the Investment Promotion Agencies (IPAs) in accomplishing those goals.

The third chapter aims to explain the methodology and structure of the annexed guide “A Guide to Foreign Direct Investment in Portugal”. This document was a direct outcome of the internship at aicep Portugal Global and it intends to offer a proposal for a comprehensive and streamlined guide to foreign investment in Portugal.

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Chapter I – Literature Review

In this section we shall appraise the relevant literature related to Investment Facilitation. The first part of this chapter focuses on key definitions of FDI & Investment facilitation, it would also discuss how concepts of Investment Facilitation and Investment promotion are interrelated. The second section draws inferences from relevant literature on benefits of FDI, it subsequently discusses FDI attraction policies and ‘obstacles to inward FDI’. The third part of this chapter discusses the international debate surrounding the topic of ‘Multilateral Investment Facilitation Agreement’; it outlines a broader understanding of recent developments in bilateral and plurilateral dialogues and the discussion surrounding it, mainly at the relevant international fora. The fourth part focuses on critical components of investment Facilitation (i.e. tools and services, policies and processes) while the last subsection of this chapter elaborates on the role, functions and organisational structure of Investment Promotion Agencies.

1.1. Key definitions

1.1.1 Definition of Foreign Direct Investment

There are several definitions of FDI that can be found in the literature. One of such definitions that is a reference is that provided by the OECD. The OECD (2008, p.17) defines Foreign Direct Investment (FDI) as follows:

"Foreign Direct investment is a category of cross-border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise the direct investment enterprise) that is resident in an economy other than that of the direct investor. The motivation of the direct investor is a long-term strategic relationship with the direct investment enterprise to ensure a significant degree of influence by the direct investor in the management of the direct investment enterprise. The lasting interest is evidenced when the direct investor owns at least 10% of the voting power of the direct investment enterprise. Direct investment may also allow the direct investor to gain access to the economy of the direct investment enterprise, which it might otherwise be unable to do. The objectives of direct investment are different from those of portfolio investment whereby investors do not generally expect to influence the management of the enterprise”.

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Despite the lack of theoretical scrutiny over the years, the topic of investment facilitation has gained particular attention on recent discussions and international fora (OECD, 2018).

UNCTAD (2017:3) defines FDI facilitation as

"…the set of policies and actions aimed at making it easier for investors to establish and expand their

investments, as well as to conduct their day-to-day business in host countries. It focuses on alleviating ground-level obstacles to investment, for example through improvements in transparency and information available to investors, more efficient and effective administrative procedures for investors, or enhanced predictability and stability of the policy environment for investors."

According to the relevant literature, the UNCTAD's approach for Investment Facilitation relates to the ‘policy and the practicality' of the investment process ["actions" and "information"] (Polanco, 2018), and emphasizes the means of reducing regulatory opacities, costs of doing business and potential information asymmetries between the host country and the foreign investor (Dressler, 2018). According to Polanco (2018) UNCTAD’s approach towards Investment Facilitation implies a ‘normative approach' where “the focus is on the

legislation, regulation and policy building that enable foreign investors to establish and operate in a specific location.”.Alternatively, the OECD's approach emphasizes the ‘activities, tools, policies, and

processes' conducted by the competent governmental bodies (i.e., investment promotion agencies) to guide an investor through the investment process. The author also points out that OECD’s approach implies a ‘functional approach' wherein “the focus is on assisting the investor with

practical and operational matters.” (Polanco, 2018).

According to Berger, Gsell and Olekseyuk (2019), there is no exact definition of Investment Facilitation, however there is consensus on the objective of Investment Facilitation that its main objective is to provide investors with transparent, predictable and efficient administrative and regulatory framework. According to Novick and Crombrugghe (2018), understanding of Investment Facilitation derives its understanding from trade facilitation, according to the authors there is little to no confusion about the nature of trade facilitation, however investment facilitation has a broader notion, and it is not clearly defined. The authors have attempted to define investment facilitation with a broader policy context as “a combination of tools, policies and processes that foster a transparent, predictable and efficient regulatory and administrative framework for investment that maximises the benefits to the host economy” (Novick and Crombrugghe, 2018:1).

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OECD (2015) has attempted to distinguish investment promotion and facilitation activities. Investment promotion is "the act of promoting a country or region as an investment destination" whereas investment facilitation refers to the "measures [that] facilitate the establishment of foreign enterprises in a given country or region.”

The World Bank takes a slightly different view in contrast to the OECD and regards investment facilitation as a sub-function of the promotion activity while the former [OECD] perceives facilitation as "an activity that serves as support" to the correlated promotion efforts (e.g., include activities developed during the prospective phase). The last associated with the work conducted by investment promotion agencies (Dresser, 2018).

According to Polanco (2018), UNCTAD’s definition on investment facilitation covers a set of policies and actions which are aimed at making it easier for foreign investors to establish or expand their investments, and conducting their usual business in the host countries. These set of policies can be carried out by both home as well as host countries. On the other hand, investment promotion activities are generally implemented by host countries only, these policies are undertaken to promote a location to be an ideal investment destination, investment promotion activities are very country specific and are very competitive in nature.

There are interaction effects between investment promotion and facilitation activities as investment promotion activities may lead and reinforce facilitation efforts (e.g., “promotion activities leading to enhanced ease of doing business through a successful one-stop IPA”). Similarly, majority of investment facilitation proposals may be used as a impactful promotional as well as attraction tools (Polanco, 2018).

In promotion, there is an emphasis on the use of proactive policies (e.g., incentives) to attract inward FDI. While facilitation concerns with different set of policy instruments (e.g., “streamlining procedures for investing—applications, and so forth”), and for investment retention, the focus is mostly on aftercare instruments (Novik and de Crombrugghe, 2018).

While formulating investment facilitation and investment promotion policies, policymakers should take a holistic point of view, focus on just facilitation policies in isolation, disregarding promotion policies, and vice-versa, which can lead to unsuccessful outcomes. According to Polanco (2018), the lines between attracting investment promotion and investment facilitation are often blurred because these are a continuum and not to be seen as discrete phases.

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In order to get a better understanding of inward FDI policies specifically, facilitation policy measures), it is crucial to understand why policymakers believe it is important to attract FDI to their jurisdictions. That is justified, first and foremost, by an expectation of the positive impact FDI may bring to the host territory – i.e. by the fact that FDI may bring relevant benefits. That being so, the first part of this subsection sheds light on inferences drawn from relevant literature on the spillover benefits of FDI, and the subsequent part focuses on the different types of FDI attraction policies implemented by governments. The last part of this chapter discusses the impediments to inward investment.

1.2.1 “Spillover benefits”

Over the years a large body of literature has praised the positive externalities emanating from FDI, such as its impacts on the enhancement of the host 'economy's productive capacity, creation of employment opportunities, boosting of external competitiveness of the economy (spurring economic growth) and technological spillovers (Rodríguez-Clare, 1996; Markusen and Venables, 1999; Blalock and Gertler, 2008; Alfaro, 2017; Bak and Moon, 2019).

The literature on the benefits of FDI is extensive and have been documented since the 1960s. MacDougall (1960) was the first author to analyse the spill-overs among the possible consequences of FDI and subsequently Corden (1967), who analysed the effects of foreign direct investment on optimum tariff policy;industrial pattern and welfare effects of FDI were examined by Caves (1971). Magnus Blomström (1991) reviewed the empirical evidence surrounding productivity spillovers of FDI and concluded that the possibility of accessing modern technology is perhaps the most crucial reason why countries wish to attract FDI.

Employment creation (Iamsiraroj and Ulubasoglu, 2015) and capital flows are among the main direct effects of FDI. Indirect effects or externalities may also include its impact on the balance of payments (Júlio et al. 2013), technological knowledge transfer (Gorg & Greenaway, 2004; Smeets, 2008), the enhancement of domestic firm’s productivity (Markusen and Venables, 1998, Javorcik, 2004) and the promotion of crowding-in effects on domestic investment (Borensztein et al. 1998; Farla et al. 2016).

Competition from foreign firms also improves allocative efficiency of resources (Caves, 1974). Magnus Blomström (1991) reviewed the empirical evidence surrounding productivity

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2008). Recognizing the scale and impact of its positive spillovers, policymakers from around the world, from both developed and developing countries, draw policies that seek to increase the country's appeal as an ideal destination for foreign investment (Blomstrom and Kokko, 2003; Alam and Shah, 2013; Kusek and Silva, 2017).

And several other aspects have been extensively object of specific literature. Hence, countries nowadays, recognizing their expectation of positive impacts of FDI, choose to use an array of policies and policy tools, including investment facilitation, to make their territories more attractive to prospective foreign investors.

1.2.2 Inward FDI Incentives

Competition among governments to attract FDI intensified in recent years. In this regard, researchers have a consensus in admitting that investment facilitation policies along with other efficient attraction policies tend to be decisive as to guaranteeing to their economies the ability to compete in global markets (Bellak et al, 2008; Mistura et al, 2019).

UNCTAD (1996:3) defines an investment incentive as "measurable advantages provided by

the government to particular companies or group of companies to force them to behave some way."

Inward FDI incentive policies often take the form of Financial, Fiscal or Regulatory Incentives (Dunning and Lundan, 2008; Tavares-Lehmann, 2016). According to OECD (2000):

● Financial incentives take the form of grants, subsidies, loans, support for expatriation costs and loan-guarantees, these incentives have specific objectives, such as grants for labour training, wage subsidies, donations of land and site facilities, and rebates on the cost of electricity and water, and loan guarantees for international lines of credit (OECD, 2000). Since they involve the use of government funds, they are less popular amongst developing economies (Tavares-Lehmann, 2016).

● Fiscal incentives refer to the curtailing of base income tax rate, for a given category or categories of investors must pay (e.g. foreign investors, investors in certain types of activity); tax holidays; exemptions from import duties; investment and reinvestment allowances as well as specific deductions from gross earnings and from social security contributions (OECD, 2000; Wells et al, 2001; Morisset 2003; Tavares-Lehmann, 2016). Fiscal incentives are often the most commonly used type of investment incentive (Columbia Center on Sustainable Investment, 2015).

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● Regulatory Incentives comprise a heterogeneous group of government actions as a means to attract FDI (OECD, 2003; Columbia Center on Sustainable Investment, 2015). These are commonly implemented by Governments to attract FDI and are usually associated with the enactment of laws and judicial systems (OECD, 2000). Examples of such include waivers of environmental regulations, social and labour market-related requirements placed on investors (Tavares Lehmann, 2016). Nunn (2007) found that countries that enforce contracts through an effective legal system have a comparative advantage in contract-intensive production (e.g. textile, mining) activities. There are certain crucial facets of the regulatory framework, such as the strength of ‘property law protections' and ‘corporate law principles', these are

considered to be key decision factors for investors' location and behavioural decisions (Tavares Lehmann, 2016).

Provision of incentives has a significant opportunity cost, which in some cases be higher than the actual earnings from FDI to the economy (Caspers and Dreyhaupt 2007). According to Kusek and Silva (2018); host countries are placed with a sizeable cost on account of incentives through fiscal shortfalls due to “non-collection of taxes, rent-seeking behaviour of firms, and associated tax evasion". In authors’ opinion, host countries have a juggling act to perform, on one hand they have to stay competitive by offering incentives on the other hand they have to ensure that benefits outweigh their costs.

The potentially high costs of incentives are not limited to the jurisdiction offering them when these jurisdictions compete through granting of incentives, there is a creation of market distortion, resulting in allocative inefficiency, and generate inter-jurisdictional competition and tensions (Tavares-Lehmann et al, 2016).

According to the literature (Morriset, 2003; Ecorys, 2013) the key factors that may act as an incentive for foreign investors while having a very limited fiscal burden to host government are “better policy environment, reduced entry barriers and enhanced administrative

efficiency”(including greater access to information, guidance to investors and aftercare servicing),

resulting from effective investment facilitation. 1.2.3 Obstacles to Inward FDI

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and outward, although this report will focus on the first type) and tend to interfere with the predictability, transparency and stability of the macroeconomic environment (Berger, Gsell and Olekseyuk, 2019).

Before categorizing existing obstacles to investment, it is imperative to define what constitutes an obstacle. The idea that barriers to investment are "policy measures [that] are used to

control or influence FDI" is widely accepted in the literature (Graham, 2000; Robertson, 2002 and

Sauvé et al. 2000). Such policy measures may differ depending on the phase with which they interfere with (e.g. “market entry, ownership and control or operations.”) or yet on the mode they are applied (e.g. restrictions on foreign ownership or tailor-made assessments).

In an attempt to review the obstacles to FDI, the following table (I) offers an overview of the most common investment barriers that an investor may face during the various phases of its investment including at some stage of establishment, ownership and control and on operations. The last decades have encompassed a progressive elimination of barriers and obstacles to FDI (Morisset, 2003, OECD, 2008; OECD, 2018).

Table I. Obstacles to FDI

Restrictions on market entry

Bans on foreign investment in specific sectors Quantitative restrictions

Screening and approval

Restrictions to business ownership (and its legal form) Minimum capital requirements

Requirements on subsequent investment Conditions on location

Charges and Fees Ownership

and control restrictions

Compulsory JV with domestic investors Limits on the number of foreign shareholders Government-appointed board members

Government approval required for certain decisions Restrictions on foreign shareholders ́ rights

Mandatory transfer of some ownership to locals within a specified time Operational

restrictions

Performance requirements (e.g. exports) Local content restrictions

Restrictions on imports Operational permits or licences Ceilings on royalties

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Source – Adapted from UNCTAD (1996)”

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1.3 International debate on Investment Facilitation

Historically, developed countries have attempted to initiate negotiations for a formal multilateral agreement on investment issues at the World Trade Organisations. Despite the efforts, developing nations blocked those attempts under the argument that investment (supposedly) is not under the mandate of the World Trade Organisation and that the relationship between trade and investment is unclear (Joseph, 2018). However, recently, certain developing countries (e.g., China, Brazil) have changed their stance on this issue; they are in favour of an ‘International Facilitation Agreement' at the WTO. In this section, we develop a closer examination on the debate on a multilateral Investment Facilitation Agreement, its history, the rationale of developed as well as developing nations for their stance on this issue, as well as the role of International Organisations on multilateral Investment Facilitation Agreements (IFA).

1.3.1 Historical perspective on Investment Governance at WTO

Before focusing on this issue of Investment Facilitation from a modern perspective, it would be prudent to understand the development of global investment governance from a historical perspective, commencing from the post-World War II era, when the world economic order, was being rebuilt from scratch.

● 1947: A group of 25 nations signed the “General Agreement on Tariffs and Trade (GATT)”. This agreement was meant to be a steppingstone for the objective of establishing of International Trade Organisation (ITO). ITO was envisaged to be an international regulatory body to oversee trade, foreign direct investment, and other areas involving economic development.

● 1948: The Havana Charter negotiations concluded —the instrument of the constitution for the ITO. The final form of this charter had a non-liberal approach to investment matters due to the fierce opposition from the developing countries (Drache, 2000). The Havana Charter never went into effect - and an ITO has never established. In the subsequent 40 years that followed, GATT was the only multilateral instrument governing global economic order - and, this instrument did not cover investment (Zhang, 2018).

● 1987-1995, a series of negotiations started in 1987, commonly known as the Uruguay Round of GATT. In the year 1995, the first and only multilateral regulatory body on international economic governance was set up - the World Trade Organization (WTO) as a direct result of the Uruguay Round (GATT) negotiations. During the negotiation process, the United States

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commitments and its coverage in ISDS in the WTO. That would eventually face strong objections from developing countries since they were troubled by the possibility of losing political autonomy.

Eventually, the pact at WTO had a very marginal coverage on investment issues,

● GATS covered investment measures relating to the establishment of commercial presence, as recognized by GATS as Mode 3 of trade in services.

● TRIMs also includes specific investment measures but only to the extent that they affect trade in goods.

On the conclusion of the Uruguay Round negotiations, some economies suggested the inclusion of broader aspects of investment, namely on market access, into a binding multilateral agreement.

● 1996, At the Singapore Ministerial Conference, a work-task group was created looking into trade and investment (Zhang, 2018). Stiff opposition from developing countries prevented the adoption of a resolution. Nevertheless, multiple attempts to revise the issue were carried out in subsequent years; all fended off by developing countries.

● 2003, at the Cancun Ministerial, did not make any progress because of the stalemate on the trade-investment debate.

● 2004, In the context of the General Council of WTO the "July Package" was published; it confirmed the non-negotiation of the investment principles until the end of the current round. 1.3.2 The Need for Multilateral Trade Facilitation Agreement to Replace the Traditional Model

Zhang (2018) highlights that there is a current network of over 3,000 bilateral investment-treaties (BITs) and investment chapters in Regional trade agreements (RTAs) alongside the major international institutions to become the primary source of law governing cross-border investments. According to the author, these bilateral and regional agreements are highly fragmented and incoherent, offering broad and unpredictable interpretations that ultimately resulted in over 850 arbitration cases in the last two decades.

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issue to be brought in on a non-judicial arbitration panel instead of a local court. The author also adds the presence of ISDS has permitted corporations to challenge public policies related to the environment, health and human rights. There is a concern that international trade agreements have led to disproportionate gains for large multinational entities (Brower, 2002).

According to Martins (2017), protection clauses in conventional investment agreements which allow foreign investors to initiate arbitration against host state without recourse to local judiciary often leads to adverse effect on host countries. The author criticizes provisions which are excessively burdensome for capital importing states, these states are often developing countries and these provisions detrimentally affect their developmental needs. The author also points to the fact that investor-state arbitration cases may lead to unfavourable political repercussions. In the author’s opinion, the Investment tribunals have prioritized business and trade interests over social and public considerations of the host state, which has created an adversarial business climate and unfavourable investor-state relationship.

According to Yackee (2008), BITs have little or no impact on Investment behaviour of Multinational Corporations in host countries. Most of the BITs do not have a promotion concern but and protectionist one (UNCTAD, 2017), the effectiveness is that investment promotion has not been confirmed (Slacuse and Sullivan, 2015).

1.3.2.2 How countries are moving away from the problematic issues of traditional Investment Agreements

According to Martins (2017), there is a broad rethink amongst developed and developing countries regarding IIAs as countries have started reforming their IIA regime and begun promoting changes in investment treaty models. These included clauses aimed at clarifying and delimiting states' obligations toward investors and limiting the possibilities of initiating arbitration. The further adds that, different countries have envisaged different strategies. Some countries terminated many of their BITs (e.g. Bolivia and Ecuador) or renegotiated or withdrawn from its BIT (e.g. India) and avoid the "investor-state arbitration" (e.g. Australia) or yet, for the settlement of investor-state disputes some countries have resorted to domestic mediation (e.g. South Africa) At the same time, the US has altered its model of BIT.

While in Europe, the opposition to ISDS from the European Parliament and civil has led the European Commission to propose a radically reformed system of establishing a ‘permanent multilateral investment court ’ in place of international arbitration tribunal, this court

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would have an appeal mechanism and full-time adjudicators (Stothard, McDougall, & Long, 2017)

1.3.3. Recent Developments: Investment Facilitation Debate at WTO

A multilateral Investment Facilitation Agreements doesn't involve controversial issues which arise in traditional International Investment Agreements (BITs and RTAs). Instead of implementing substantial wholesale changes in domestic laws and regulations, IFAs constitute a set of practical measure to enable smooth flow of FDI in to the country(Berger, Gsell, & Olekseyuk, 2019). Since the WTO has limited coverage on investment issues, numerous countries have pushed for a multilateral agreement for investment facilitation to overcome the shortcomings of the traditional model of bilateral and regional agreements.

● 2013; the adoption of multilateral Trade Facilitation Framework [TFA] this has placed an important impetus on the issue of multilateral Investment Facilitation Agreement.

● 2015; the E15 Framework by Sauvant and Hamdani (2015) proposed the launch of a campaign for discussion on sustainable Investment Facilitation Framework.

● 2017; Fifteen member countries of the WTO have submitted proposals to initiate negotiations on an IFA during the 11th WTO Ministerial Conference, December 2017 in Buenos Aires, Argentina. Five submissions were made: (i) "Friends of Investment Facilitation for Development" (FIFD); (ii) "MIKTA"[4]; (iii) Russia; (iv) China; and (v) a joint submission by Argentina and Brazil (Joseph,2017).

According to Berger et al (2019), past discussions at WTO regarding investment issues ended in a stalemate, since industrialized countries pushed contentious issues like investment liberalization and ISDS, there was a severe backlash from the developing nations. According to the authors, recent discussions on IFA have a sole focus on Investment Facilitation issues only, it excludes the debate on investment liberalization and ISDS. The authors make important observations on the 70 members who signed a joint statement calling for commencing structured discussions to build a multilateral Investment Facilitation Framework (IFF) at the 11th_{WTO Ministerial conference held in Buenos Aires, they bring to our attention that the} signatories belong to both developed and developing nations, out of the 70 signatories, 42 are high-income economies, 13 belong to upper middle income, 10 to lower middle income and

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indeed reluctance towards a multilateral investment facilitation framework from the United States of America is the largest non-participating country, it accounts for 24% of the global inward as well as outward FDI stock. Among the developing countries, India, South Africa, and some southeast Asian economies such as Indonesia, the Philippines, Thailand, and Vietnam constitute the list of most notable non-signatories. In the case of the United States, there is a perception that the administration seems to have a problem with the WTO. According to Joseph (2017), India and South Africa disagree with the multilateral binding rules on Investment Facilitation at WTO. According to Chakraborty (2017), the reluctance for a multilateral IFA at WTO doesn't mean these countries are opposed to Investment Facilitation per se, both India and South Africa have very active Investment Promotion Agencies (IPAs). According to Joseph (2017), India and South Africa consider IF to be a bilateral issue, the Indian Government feels allowing discussion at WTO would amount to handing over policy space to decide on Investment Issues. South Africa is of the opinion that such an initiative could undermine its "policy space" and "right to regulate investment" in strategic sectors (Kanth, 2017). According to Singh (2018), a ‘bottom-up’ approach is a better approach as compared to a ‘top-down’ framework, since investors face majority of their obstacles at a subnational level, especially in the implementation of projects; the ‘top-down' framework is detached from ground realities in contrast to a ‘bottom-up' approach which address administrative issues at local levels.

1.3.4 The Debate on Investment Facilitation Agreement at other international fora OECD and UNCTAD

The 1960s witnessed the establishment of two global organizations with mandates covering global investment and economic development: the OECD and UNCTAD. None of the organizations is a regulatory body (Walter, 2001).

While the debate continues at the WTO for a new IFF, other institutions, like the UNCTAD, are expected to further their mandate as research analysis and technical assistance as their primary responsibilities on investment cooperation and facilitation (Zhang, 2018). In 2016, UNCTAD released its ‘Global Action Menu on Investment Facilitation’.

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The Global Action Menu for Investment Facilitation

UNCTAD published the “Global Action Menu for Investment Facilitation” in 2016. The framework proposed has a ‘prescriptive' rather than a ‘binding character' (OECD, 2018) and suggests 10 action lines from which an array of policies and measures can be drawn to advance unilateral public policy endeavours (UNCTAD, 2017). It comprises of "actions that countries can choose to implement unilaterally, and options that can guide international collaboration incorporated in international investment agreements" (UNCTAD, 2016).

An attempt to synthesize the 10 action lines proposed by UNCTAD is shown below in Table II. “

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Table II. UNCTAD´s Global Action Menu for Investment Facilitation UNCTAD’s Global Action Menu for Investment Facilitation

Action Line 1

Promote accessibility and transparency in investment policies and regulations

and procedures relevant to investors

Action

Line 6 mechanisms for investment facilitation Establish monitoring and review Action

Line 2 in the application of investment policies Enhance predictability and consistency Action Line 7 Enhance international cooperation on investment facilitation Action

Line 3 Improve the efficiency of investment administrative procedures Action Line 8

Strengthen investment facilitation efforts in developing country partners,

through support and technical assistance

Action Line 4

Build constructive stakeholder relationships in investment policy

practice

Action Line 9

Enhance investment policy and proactive investment attraction in

developing country partners Action

Line 5 Designate a lead agency, focal point or investment facilitator Line 10 Action

Complement investment facilitation by enhancing international cooperation for

investment promotion for development, including through

provisions in IIAs Source – UNCTAD (2016, p. 5). ”

The Global Action Menu proposes defining investment facilitation as policy measures meant to "make it easier for investors to establish, expand and operate in host countries" (UNCTAD, 2017, p. 4). Improvements in the investment environment (action lines 1&2) do not necessarily imply changes in laws or regulations that are being put into place (UNCTAD, 2017) but instead encourages the enhancement of transparency and predictability of the regulatory investment framework. Other suggested improvements include the streamlining and speeding-up of the administrative procedures (action line 3) and the enhancement of monitoring and cooperation efforts (action lines 6 & 7).

Several authors have recognized the relevance of this document, broadly understood as a breakthrough that has permitted the emergence of further discussions on global investment governance (OECD, 2018).

Ghouri (2018) suggests that the Action Menu's approach of detaching the agenda of Investment Facilitation from contested issues such as ‘Investment State Arbitration' and ‘international minimum standard' benefit both the countries that have proceeded towards a multilateral IFA and those who are lagging. The author also praises the role of the Action Menu's ‘triangular approach' and ‘whole of government approach' in preventing investor-state dispute. The ‘triangular approach' connects the three stakeholders, the investors with domestic as well as the host-economy under one umbrella policy; this provides a one-stop policy guide for all stakeholders. The ‘whole of government approach' promotes a sense of cohesive

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administration activism and collective responsibility on the part of host States' authorities and agencies.

1.3.5 The way forward

According to Novik and Crombrugghe (2018), if the development of an international framework for investment facilitation goes ahead, it should take a broader perspective and be designed in the interest of all affected countries. According to the authors, the new international investment facilitation framework that focused on ‘principles' is preferable to a rather long list of ‘prescriptive actions'. Hence, the proposed framework should go beyond a simple policy menu and involve some commitments by countries to adopt measures. According to the authors, such a framework based on principles would act as a foundation for establishing a multilateral investment facilitation framework at the WTO.

According to Berger et al (2019), it is necessary to ensure that ‘transparency’ is an essential ingredient of prospective discussions on Multilateral Investment Facilitation Framework. Currently, there are a few members of the WTO who are not involved in the debate about aims and design of a new multilateral IFF, transparency in these discussions would be a crucial factor to draw these participants in future negotiations on multilateral IFF.

Polanco (2018) opines that it is doubtful that a Multilateral Investment Facilitation Agreement would come to fruition and, have a consensus from all countries, in the near future. However, the author believes that it is worthwhile to have a thorough discussion of this matter. These discussions would pave the way for Investment Facilitation policy framework, which is correctly designed and effectively implemented in future.

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1.4 FDI Facilitation: Tools, Policies and Processes

Investment facilitation is a combination of different mechanisms, all of which feature heavily in the OECD's “Policy Framework for Investment (PFI)”. Key components of investment facilitation can be summarised as follows:

Table III. The Key Components of Investment Facilitation Tools and

Services ● one-stop-shop (if appropriate) or single window for incoming investors ● the online business registration system

● information portal on legal and administrative procedures to start and operate a business

● client service charters for all authorities dealing with investors ● systematic aftercare services to existing investors

Policies ● sound and consistent legal framework for investment

● regulatory measures to simplify/streamline administrative procedures

● good governance laws and mechanisms

● strategies to provide an enabling environment for investors to act responsibly and sustainably

Processes ● public-private engagement ● inter-agency coordination

● capacity building for IPAs and other public officials

● monitoring and evaluation of existing tools, mechanisms and policies

Source – Adapted from OECD (2017:6)

1.4.1 Tools

The host economy authorities provide tools and services to assist investors in the process of establishing and expanding their operations. These usually focus on reducing the red tape and hurdles to investment and are commonly geared towards transparency enhancement and the improvement of overall effectiveness and efficiency of the administrative procedures (UNCTAD, 2017).

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They include establishing one-stop-shops or single windows for incoming investors to centralise all administrative procedures under the same roof.

Online business registration systems enable investors to register their business online, e-portals and other digital platforms are aimed at enhancing the availability of information and disclosing relevant procedures and other compliance-related documents, costs, deadlines, and licensing. Information portal on legal and administrative proceedings to start and operate a business, examples of such include initiatives such as eRegulations (UNCTAD, 2017) describes eRegulations as valuable branding tools to promote a particular location as an investment-friendly destination. Client service charters give details about the fees and deadlines of statutory provisions, which enable investors to avoid unpredictability and discretionary decisions.

Facilitation services should not be limited to new investors; supporting existing investors is of prime importance. Systematic aftercare services for existing investors aim to retain established companies and encourage reinvestments. These services assist them in overcoming challenges they face in the existing system.

Aftercare is a core function to IF (as well as IP). It can be defined as "comprising all

potential services offered at the company level by Governments and their agencies, designed to facilitate both the successful start-up and the continuing development of a foreign affiliate in a host country or region with a view towards maximizing its contribution to the local economic development" (Young and Hood, 1994:45).

Aftercare servicing can assume multiple forms which may include consultations for resolution of investment related problems (dispute resolution) or yet the instituting of a focal point or governmental ombudsperson (Novik and de Crombrugghe, 2018).

1.4.2 Policies related to Investment Facilitation

Investment attraction policies aim to improve the “transparency, predictability and efficiency” of the investment regulatory environment and therefore contribute to the creation of a hassle-free investment climate (OECD, 2018). Getting the policy framework right is the foundation on which the new “G20 Guiding Principles for Global Investment Policymaking” and the current “OECD Policy Framework for Investment” are based on (Novik and Crombrugghe, 2018).

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The adoption of sound legislation and regulations form the basis of investment policy framework more transparent and predictable and effectively reduce uncertainty for investors by limiting the scope for discretionary decisions and corrupt practices by public officials

Regulatory measures aimed at simplifying the administrative procedures create an effective environment for investment. An ideal policy framework would ensure that investments are responsible and sustainable (e.g. adequate frameworks for an adequate competitive environment in the domestic business sector). The efficiency of existing investment can be improved through good governance, modern law, codified regulation; and improved institutional framework. (e.g. impartial courts and law enforcement).

Several countries have put in place ambitious ‘regulatory guillotines' and administrative simplification programmes to enhance the business climate & facilitate investment (Novik and de Crombrugghe, 2018).

1.4.3 Processes

Processes are meant to monitoring and evaluating the effectiveness and impact of the tools and policies of investment facilitation.

A close dialogue between public-private agents is an effective process through which the host government can receive feedback from the private sector on unintended barriers to investment and reinvestment. While formulating government policies, there should be adequate emphasis on concerns of private sector regarding distortionary effects of ineffective government intervention, sharing of information between government agencies and businesses on a frequent basis would enable to address the concerns of private sector. (te Velde, 2009).Higher level of trust and effective monitoring of private sector could be achieved through close consultation and better co-ordination between state agencies and business entities, this would also reassure the private sector participants that their concerns and interests are been addressed(Doner and Schneider, 2000).

There should be a focus on increased coordination among government agencies. In the absence of coordination, different agencies end up working in silos, which send conflicting signals to investors and result in duplication on procedures in various agencies.

According to Novik and de Crombrugghe (2018), a sound legal framework for investment also needs reliable and efficient institutions with competent staff. According to authors, the capacity building of civil service is a crucial process.

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1.5 Interational Promotion Agencies (IPA) and their role in facilitating FDI

The World Bank (2009, p. 12-13) defines an IPA as "(…) the institutionalization of a

country's commitment to attracting FDI to promote growth. Their role is to translate this strategy into results, namely, productive FDI that increases the country's gross domestic product".

The roles played by Investment Promotion Agencies have evolved over time. In the decades of 1980s & 90s, Investment promotion Agencies were predominantly engaged in disseminating information on their country's investment opportunities and business environment. Later, the advent of inter-net has made a considerable amount of information directly available to investors, and IPAs have had to engage in more sophisticated activities to gather business intelligence and attract MNEs (OECD, 2015c).

Thus, IPAs currently offer a wide array of different services – that go far beyond information dissemination – to both potential and existing investors and are also often involved in facilitation endeavours (e.g., reforming the business climate).

According to the WTO, Investment facilitation concerns the creation of a more efficient, predictable and "investment-friendly" business climate allowing for a hassle-free establishment and expansion of their investments.

Attracting FDI is pivotal to economic development policy. With that in mind, to attract and grow influxes of FDI, most economies in the world have established national investment promotion agencies (IPAs) (Loewendahl, 2018).

Considering that FDI investments often correspond to long term investment commitments, an investor would not want to commit valuable resources before assessing the involved risks and rewards. Foreign investments are fraught with economic, political, legal, and technological hazards; a prospective investor would not like to expose itself to such a scenario. Complete and accurate information on current, as well as future business climate and regulatory framework, would enable better decision making.

IPAs act as a crucial intermediary who assists investors in making an investment decision by providing them information on current and prospective business climate, providing assistance in tackling laws and regulation. IPA's also strive to push for reforms that ease FDI initiatives (OECD, 2008).

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Governments recognize the role played by IPAs as a risk-minimizing mechanism needed to attract investment; hence they actively commit to the creation and maintenance of Investment Promotion Agencies (Rodrik, 1999).

1.5.1 Functions of an IPA

The functioning of IPA may differ across regions (countries and cities), an IPA tends to perform a broad range of activities which can ultimately be categorized into five key functions (OECD, 2015a; 2015b):

1. Image building, creating a positive image of the host country/region/city and branding it as a profitable investment destination;

2. Investment generation deals with direct marketing techniques targeting specific industries, activities, companies and markets;

3. Investor servicing aims to provide assistance to future investors to facilitate their establishment;

4. Aftercare aims to retain established companies through assisting them in overcoming impediments they come across after the establishment of the business as well as encouraging committed investors to reinvest;

5. Policy advocacy; identification of bottlenecks in the business climate and affording recommendations to the government to address them.

Amongst the five IPA functions presented above, the first two relate to ‘Investment Promotion' while the latter three relate to ‘Investment Facilitation.' Most of the IPAs generally specialize in Investment Facilitation functions (i.e., functions 3-5), to achieve the goals in Investment promotion activities (i.e., functions 1-2), Country/Region would need strong Government support as well as good coordination between IPAs and Government Agencies.

According to Novick & Crombrugghe (2018), Investment Promotion focuses on attracting potential investors who haven’t yet selected an investment destination, in contrast to this Investment Facilitation starts at the pre establishment phase, when investor indicates their interest in a location.

IPAs are at the front-line when it comes to assessing adverse perceptions or learning about practical difficulties in the investment process, and resultantly IPAs play a role of an advocate for investors, through seeking approvals for licenses/permits or requesting changes to laws and regulation (OECD, 2011).

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The objective of ‘Investment Facilitation' is to encourage new investments and reinvestments by providing investors with a transparent, predictable and efficient regulatory and administrative framework for investment while ensuring the benefits of investment are maximized (OECD, 2018).

According to Novik and de Crombrugghe (2018), the objectives of Investment Facilitation (IF) can be realized by minimizing potential and existing obstacles faced by companies in the host country. These include the reduction of burdensome legislation and administrative procedures, minimizing the cost of doing business (time and resources) and by mitigating the risk of corruption when interacting with government officials.

1.5.2 Organizational structures of IPAs

IPAs can be briefly described based on their organizational structures: ● Governmental (or public)

Although some countries establish and maintain investment promotion agencies that are under the government's strict control, according to Wells and Wint (2000) conventional government organizations typically fail to accommodate flexibility and marketing practices despite their prowess at traditional government functions.

● Private

Due to its consistent interaction with the private sector, IPAs are required not only to liaising with the private sector but also to flexibly and speedily respond to investors' needs. According to Wells and Wint (2000), Private sector IPA structures are more adept in adjusting to evolving and fast changing business environment, and in acquiring valuable management skills; and these IPAs possess the autonomy to implement investment promotion and facilitation strategies.

● Semi-governmental

According to Wells and Wint (1991), the majority of the countries adopt a quasi-governmental governance model of the IPA. In the case of Quasi-government IPA, the government is responsible for the ‘oversight' and ‘finance' function, but the ‘management' function concerns the involvement of a board of directors and private advisory groups. The boards of directors' report to their respective ministry while recruiting personnel outside the

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Examples of such structures include Enterprise Greece, ICEX-Invest in Spain, and Invest in Iceland (OECD, 2018). In 1969, IDA Ireland transitioned from a government agency to a quasi-government agency; this puts IDA on a stronger footing giving it more flexibility in its operations (Wells and Wint, 1991). Additionally, CINDE, which is Costa Rica's national investment promotion agency, has a semi-private organizational structure whose unique mandate is to promote foreign direct investment (Moran, 2014).

1.5.3 IPAs: Observations from Literature

OECD (2011) suggests that funding and performance review are key success factors for a high performing IPA. Accordingly, budget of an IPA is a critical factor, the effectiveness of IPA would be compromised if it operates below a certain level of funding.However, it impossible to ascertain the optimum level of funding. OECD also adds that it is essential to note that different countries are characterized by differing budget constraints; successfully managing an IPA requires signification amount of resources. In addition to funding, there should be a focus on effective monitoring of IPA's four functions to determine whether the execution of these functions is leading to attraction on increased FDI into the country.

According to Kusek and Silva (2018), Investor decision making, sound economic fundamentals are more important before taking into consideration of the services delivered by IPAs. According to them, IPAs act as a compliment for a pleasant investment climate and not a substitute for it. The authors make a notable observation that IPAs dedicate a majority of their resources for Investment promotion and facilitation but don't place such impetus on services once the investment is operational.

In case of countries which have federal structure of governance, IPAs which operate as a centralised agency for investment facilitation, there is a possibility that they might not be able to perform their duties without encroaching on the operational autonomy of regional government authorities (Singh 2018). Therefore, it is essential to delineate the competencies and responsibilities of central, state, regional, sub regional and local authorities.

According to UNCTAD (2017), for IPAs to become a compelling investment facilitator, IPAs should establish a strong partnership with public as well as private stakeholders. The process of Investment facilitation may not entail high costs, but active collaboration with stakeholders is key to a successful investment facilitation strategy. UNCTAD also states that to reinvent it’s Investment Facilitation strategy is the biggest challenge for an IPA, making this process an essential ingredient of its economic development

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efforts, and enable it to work symbiotically with investment promotion. According to UNCTAD if IPAs manage to achieve the above, they will be able to transform themselves into “investment development agencies, driven by two equally powerful wheels: investment promotion and facilitation.”

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Chapter II: Investment Facilitation in Portugal

This chapter covers five topics on investment facilitation in Portugal. The first section aims to give an overview of the policies that have been essential for setting up reforms that contributed to facilitating foreign investment into the country. On a second section, focus is put on selected case studies. On a third section, Doing Business Key metrics will be discussed. On a fourth section, the Portuguese IPAs are briefly described. The chapter ends with final considerations regarding the Portuguese approach towards investment facilitation.

2.1 FDI in Portugal – An Introduction

Over the last few decades Portugal’s economy has been growing at a dismal rate, the level of Public debt is quite high (130% of GDP), the GDP per capita in Portugal is just 80% of the EU average. Attracting Foreign Investment is taken to be a major contributor to help Portugal make improvements in these key economic indicators. Simultaneously, the business climate in Portugal has witnessed appreciable improvements, for instance in terms of curtailing bureaucracy related to business activities (United Nations, 2018). A few of the reform measures include cutting unnecessary red tape, improving the firm restructuring and insolvency framework, fostering collaboration between scientific institutions and businesses, amending labour regulations to reduce duality and promoting digitalization (Júlio et al, 2011; Fernandes and Barbosa, 2016; Martins and Veiga, 2018).

As a result, on the foreign investment side, an increase of the cumulative stock of FDI inflows to Portugal (€119 billion) accounting for 60% of the country's GDP the country has kept up its pace (although with a slight inflexion) in FDI attraction with 74 inward investment projects secured (versus 95 in 2017) in 2018 (EY European Investment Monitor, 2019).

2.1.1 Reducing “behind-the-border” Barriers to FDI

The Portuguese government initiated a national reform programme for the period 2016– 2020 in the Portuguese market, notably in areas that are of paramount importance to productivity growth, the stability of the economy for e.g. trade and investment (OECD, 2018). Among the main priorities of the programme are domestic regulatory reform (e.g., qualification), promotion of innovation and modernisation of the economy, capitalisation of companies and social cohesion and equality (OECD, 2018). Examples include optimization of the transport (network)

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and distribution (e.g., Sines terminal) and digital infrastructure (e.g., the Government partnered with Cisco to overhaul the country's digital infrastructure and accelerate digitalization). Recently, the construction of a railway line (comprising 80 km) between Evora and Elvas intends to contribute to the reduction of transportation timings and enhance connectivity within and outside the country, among other examples.

Moreover, an extensive privatization programme has been successfully implemented mainly in the aviation, electricity, healthcare, and financial sectors. Such changes in the business environment allowed the country to achieve significant improvements on the Ease of Doing Business rankings wherein the country´s overall performance occupies the 34th_{position (in 2019)} as opposed to one occupied (113th position) prior to the reforms prior to the reform (Banco de Portugal, 2019).

2.2 Policies to improve the transparency, predictability, and effectiveness of

the investment environment in Portugal

2.2.1. Simplex

Simplex is an administrative and legislative programme that comprises measures aimed at reducing bureaucracy and improving public administration interconnection with businesses and citizens. According to OECD (2008), “(...) Simplex has become a high-profile initiative – unique

among OECD countries – with strong political support, addressing the need for simplifying the Portuguese public sector and its service delivery.”

2.2.2 “Firm on the spot”/ “Empresa na hora”

Introduced in 2005, Firm on the spot is a one-stop-shop for creating a company; it had radically reduced entry costs for firms in Portugal. Before the establishment of “Empresa na Hora," starting a business implied lengthy bureaucratic procedure, wherein investors were required to fill in several forms and interact with a vast number of institutional actors (Branstetter et al, 2014). The reform has allowed for a drastic reduction of the duration of this process (to less than one hour) enabling for a notable decrease in the costs associated with firm creation (Félix and Maggi, 2019).

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2.2.3 Simplex+

Portugal had updated its administrative simplification programme from the Simplex to the Simplex+ in 2016. The programme focus is on the measures aimed at simplifying the life of citizens and enterprises. The accomplishment of these goals involves the follow-up and monitoring where members of the public can submit suggestions about administrative and regulatory procedures. Portugal could consider introducing "in-depth" reviews in particular sectors or policy areas.

Cutting red tape and eGovernment policies have been key priority areas for the Portuguese Government (OECD, 2008; Rodousakis and Santos (2008), and David and Abreu (2015). These are set by the Prime Minister of Portugal. The Simplex program is the responsibility of the Minister of the Presidency of the Council of Ministers. The Secretary of State for ‘Administrative Modernisation’ is in charge of coordinating and monitoring these programmes. The ‘Agency for Administrative Modernization' (AMA) has the objective of promoting public administration modernization; it aims to achieve this through administrative simplification. The process of administrative simplification involves the thorough evaluation of administrative burdens of Simplex+ projects; the research and the dissemination of information about the best practices in administrative and regulatory simplification; and taking an active role in contributing towards a simplified environment.

2.2.4 Official Journal for investors

At the e-government level, significant developments have been accomplished during the last years; among those a new online platform DRE (Official Journal for investors) for information dissemination was recently launched. The service aimed at providing easy access to the legislation in force offers (among others) valuable information on the procedures of starting and establishing a company, along with the insights for supports to investment, job creation and methods for acquiring real estate. The Official Journal for investors is overall a stellar example of an e-Government initiative. A substantial investment in Information Technology has increased efficiency and suitability of public services on offer to investors, prompting cost reduction. There is even a project aiming to adopt Artificial Intelligence in the screening of prospective FDI projects.

The Facilitation of Foreign Direct Investment in Portugal