As the global investment landscape continues to evolve, APAC governments are facing increasing pressure to attract and manage foreign direct investment effectively. Recent shifts in Europe towards privately-backed Investment Promotion Agencies offer some useful insights into how the private sector approach might play a role in driving FDI success in APAC. Excellent roundtable discussion by the team at FDI Intelligence
In Europe, several major cities have adopted a private-sector-driven approach to foreign direct investment through business-backed Investment Promotion Agencies (IPAs). These agencies, such as those in Berlin, London, Milan, and Barcelona, aim to attract international businesses by combining public support with the agility and insight of private enterprise. They act as economic development organizations, focusing on sectors like life sciences, fintech, and digital technology, while also managing the broader attraction of tourism, talent, and local business expansion.
A key differentiator of these agencies is their close collaboration with the local business community, which provides funding and strategic guidance. This allows the agencies to respond quickly to market changes while maintaining a degree of independence from political influences. Their efforts have led to the successful attraction of global players, such as Tesla in Berlin and Illumina in Milan, by addressing the specific needs of foreign companies and connecting them to local ecosystems.
Despite their advantages, these privately-backed IPAs face challenges like funding limitations and limited ability to influence national policy. However, their ability to rapidly connect investors with key local stakeholders and provide tailored support has proven to be a winning strategy. For cities in APAC, adopting similar models could help streamline the complex landscape of investment promotion and offer a more coordinated approach to attracting and managing FDI.
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