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Facilitating Investment in the Sustainable Development Goals

GS Paper 2

 Syllabus: Government Policies and Investment

 

Source: UNCTAD

Context: The UNCTAD released a new publication – “Facilitating Investment in the Sustainable Development Goals”.

About the publication: It is part of UNCTAD’s investment advisory series, which provides practical advice and case studies of best policy practices for attracting FDI that contribute to sustainable development.

 

Highlights of the publication:

  • To shore up funding for the UN SDGs, countries need more proactive and tailored services for investors.
  • An estimated $4 trillion is required in developing countries annually to achieve the SDGs. This can be made possible through foreign investment.
  • The role of the investment promotion agencies (IPAs) can be significant, as they are the focal point for government-wide efforts to facilitate foreign investment.

 

Investment promotion vs facilitation:

  • Investment promotion is meant to attract potential investors that have not yet selected an investment destination.
  • Whereas facilitation starts at the pre-establishment phase when an investor shows interest in a location.

 

Why does investment facilitation matter?

  • Investment facilitation aims at making it easier for investors to establish and expand their investments, as well as conduct their day-to-day business in host countries.
  • This can happen by providing relevant information, making rules and regulations more transparent and streamlining administrative procedures for investors.

  

How can IPAs bolster SDG implementation through investment facilitation?

  • By ensuring that investment facilitation services are inclusive. This will address the specific needs and opportunities of SDG-related sectors, and specific investor groups.
  • When establishing a project, IPAs can assist in filling in the information gap by pointing investors to potential partners and incentive programmes.
  • They can forge new partnerships with local governments and national ministries dealing with SDG-related investment opportunities.
  • To stay competitive in a digitalised economy post-COVID-19, IPAs have increasingly turned to digital platforms to conduct many of their promotional and facilitation services.

 

Challenges:

  • While sustainable investment continues to grow, such financing remains heavily concentrated in the world’s richest economies.
  • Most of it goes to sectors related to climate change adaptation (renewable energy), and far less towards sectors such as health, education, water and sanitation.

 

Way ahead:

 

  • Developing SDG project pipelines by prioritising sectors where funding is needed the most.
  • Defining related targets and preparing relevant investment project profiles.
  • There is a need for stronger knowledge management of insights and lessons learned on SDG investment.

 

Best practice – Invest India:

  • The IPA has an online Industrial Land Bank that showcases all available land in several subregions that can be used for development.
  • The agency is in the process of aggregating the tool at the national level.

  

Conclusion: Investment is particularly important for SDGs-related investment, which often requires more proactive and more tailored services for investors than traditional investment.

 

Insta Links:

India, its SDG pledge goal, and the strategy to apply