(Geneva, 26 April 2010)

Mr. Chairman, H.E. Maurice Peter Kagimu-Kiwanuka,
Permanente Representative of the Republic of Uganda
Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD,
Distinguished Colleagues,

I make this statement on behalf of the Group of 77 and China.

At the outset I wish to congratulate Ambassador Kagimu-Kiwanuka for assuming the chairmanship at this second session of the Investment, Enterprise and Development Commission, and express the confidence that, under his leadership, this meeting will achieve a successful outcome.

Mr. Chairman.

Today, the international community is facing many challenges with most affecting developing countries.

1. The timely realization of the Internationally Agreed Development Goals cannot be over-emphasized. Recent events and developments have shown clearly that a holistic and integrated approach is urgently needed, as is the nature of the actions to be taken towards the realization of these goals. A major reflection on the global economic architecture and how it impacts on development is therefore required, and we expect that this session of the commission will be one such opportunity to do so.

2. This commission meets at an interesting time. Yet we note that while it is important to continue to examine the impact of the economic crisis on developing countries, we must also recall that many of the problems which the crisis has exacerbated have persisted for decades including inadequate financial capacity to meet the challenges of economic and social development; lack of investment; low productive capacity; low competitiveness; high unemployment and informal jobs; poor infrastructure; insufficient levels of innovation; extensive and increasingly complex barriers to exports; among others.

3. I would therefore like to voice a few of our more pressing concerns, which we believe bear special consideration:

(a) The largest recipient countries of FDI are major economies. The most needed economies are the one which host less FDI.

(b) During 2009, half of the top 20 recipients were emerging economies; while this could be symbolic of the changing FDI landscape of 2008, it does not change the reality that the developing countries most in need only receive a very small part of international flows.

(c) It is disappointing that the FDI flows in agriculture constitute less than 1% of global FDI, as more than one billion people suffer from hunger, especially in developing countries.

(d) Crowding out of local capacities as an effect of FDI in developing countries is unacceptable.

(e) FDI inflows into developing countries are concentrated in the extraction of natural resources, a practice that only marginally benefits the recipient countries.

Mr. Chairman

5. With regard to FDI flows, the financial and economic crisis has had an important impact on the global FDI landscape. Indeed, we note that UNCTAD estimates show that global FDI inflows declined by 39% in 2009 with respect to 2008, and in the case of developing countries, those flows declined by over one-third.

6. On the important discussion regarding an enabling environment for attracting investment, the Group recognizes the importance of national-level measures, and emphasizes that efforts at the national level must be complemented by an enabling international environment which can only be fully concretized if reforms of the international economic architecture take into account the lessons of the past, the causes of the economic and financial crisis, and the need to afford developing countries sufficient policy space to implement measures according to their unique circumstances, needs, and priorities.

7. The increasingly competitive global market for investment and the rapid proliferation of international investment agreements (IIAs) creates additional obligations for developing countries. In this context, a basic concern for our countries is to retain sufficient policy space and regulatory flexibility to ensure a correct balance between national development efforts and foreign investor interests. Current flexibility mechanisms provided for in IIAs are in many cases insufficient to enable developing countries to steer FDI in sectors that will most likely promote and have an impact on long term economic development.

8. Because of the lack of own capital, developing countries depend on external resources to invest, to increase capacity building, to develop infrastructure, or to assist agriculture. It would be interesting if further work on how public-private partnerships (PPPs), involving foreign and domestic entities, could arrive at very concrete recommendations for the consideration of member states. Special consideration could be put on the potential of remittances for the creation of productive capacities in developing countries. The Group would welcome the development of capacity building programs, featuring the organization of entrepreneurship training programmes that would, inter alia, use Empretec methodologies.

9. Developing countries need more than technical assistance, financial aid or market access. Development needs investments in knowledge and technology; it needs technology transfer to make short the long way to a higher level of economic and social achievement. While technology and innovation have had a massive impact on the global economy in the past two decades, the barriers to technology transfer and the need for active policies to overcome these stay in place and are unchanged for many developing countries.

10. The Group of 77 and China maintains that the lack of local technological capacities, infrastructure, institutions, and finance, are key barriers preventing developing countries from accessing knowledge and absorbing technology. The issue of financing knowledge access and technology transfer has grown more acute during the last years, given the incessant strengthening of Intellectual Property Rights, the commercialization of R&D activities and the ever-deepening linkages between industry and academic institutions.

11. The question of new and emerging technologies must be treated with special focus and attention as the social, political, and economic implications of such technologies may be elusive or difficult to predict. These may relate in particular to knowledge and technologies related to food and agriculture, energy and climate change adaptation or mitigation.

12. In view of the importance of the issue of science, technology, and innovation to development, we intend to more fully address these points under the relevant agenda items of this session of the commission. The Group would also like to see a stand-alone agenda item on this issue at the future sessions of the commission.

Mr. Chairman.

13. We underscore the importance of investment in the agricultural sector with a view to strengthening productive capacities, including promoting exports, attaining food security, poverty alleviation, and increasing employment in rural areas.

14. However, the landscape in this regard is very discouraging. FDI into agriculture, including forestry and fisheries, has grown more slowly than in other industries. Figures from UNCTAD raise concerns about the lack of investment in agriculture. In 1989-1991 agriculture accounted for an estimated 1.8 percent of total FDI flows to developing countries; by 2005-2007, the share of agriculture in total inward FDI flows to developing countries had dropped to 0.8 percent.

15. The Group therefore looks with interest at Dr. Supachai's ideas for a concerted effort and partnership between developed and developing countries to create a "stimulus package" for agriculture. We believe that at the national level, the "stimulus package" for agriculture would entail a more proactive role of the State and renewed emphasis on integrated sectoral policies to address supply-side response issues.

16. A great deal of public attention is currently being focused on public and private investment in rural infrastructure channeled through comprehensive land deals. Particularly in Africa, there has been an upsurge in large-scale acquisitions of farmland by foreign investors. Large-scale land acquisitions may result in local people losing access to the resources on which they depend for their food security.

17. In this regard, we believe that UNCTAD should also address in depth the role of the state and investment in agricultural sector. After decades of regrettable prevalence of the Washington Consensus, which advocated a diminished role of the state in the economy, it is time to find practical solutions in this essential field.

Mr. Chairman

18. Infrastructure is important for all economies, since it facilitates the provision of goods and services crucial for competitiveness. However, many developing countries especially the LDCs, lack basic infrastructure to guarantee access to essential services related to minimal standard of life, like electricity or drinking water. While there is a need for considerable investment, there is in many cases a lack of domestic resources to fund them. Investments flow through ODA and FDI, are some means of addressing this shortfall.

19. The Group notes that the recent publication in the context of the series of best practices in investment for development of the case studies on roads and electricity can provide useful ideas for policy makers including in developing countries. It is crucial to identify and develop ways and means of improving investment in transport and infrastructure.

20. We want to highlight the importance of the South-South dimension in the field of investment, as a complement to the North-South relationship, and emphasize the need to fully exploit this potential.

21. The expert group meetings have flagged important issues, and have shown themselves to be very useful forums for the exchange of ideas. The Group looks forward to further strengthening the expert group meeting machinery with a view of developing even more concrete and practical policy options and ideas which member states could further consider and reflect upon.

Mr. Chairman,

22. In light of these elements, it is essential that UNCTAD continue to play an active role in monitoring national and international trends on investment policies, especially from the perspective of development. UNCTAD should also continue its work in undertaking national investment policy reviews as requested by Member States. The deliberations of this commission and the resulting agreed conclusions must address all these systemic concerns of developing countries.

23. It is impossible to mention everything in this statement and all the issues we would like to draw to the attention to UNCTAD, but we expect to have the opportunity to discuss them during the rest of the week.

24. We consider this meeting as an opportunity for member states to discuss key issues that have not only development implications but also are essential to overcome the economic crisis. We therefore expect a fruitful outcome this week.

25. Finally, the Group wishes to commend UNCTAD for the quality and constancy in helping developing countries, through the various meetings, publications, and other work, to better understand the many issues within the purview of this commission.

Thank you very much.