Two port cities with free zones are not only taking on the challenges of their country’s EU membership, but turning it to their advantage.

Malta will be one of 10 states joining the EU next year. Michael Imeson reports on preparation in the financial sector, and the consequences that membership will bring.
Malta suffered a resounding defeat in the Eurovision song contest in May, coming second from bottom. Only the UK did worse, with “nil points”. The two nations, which have ties stretching back centuries, took it on the chin and treated the international humiliation as a joke. The voting that really mattered to Malta took place earlier in the year.
In February, 54% of Maltese voted in a referendum to join the European Union (EU) next year. In April, the vote was endorsed at a general election in which the pro-EU centre-right Nationalist Party polled 52% of the vote to beat the anti-EU centre-left Labour Party with 48%. Having won independence from the UK in 1964, it is about to hand over a large part of its economic and political sovereignty to Brussels.

As the first Medtech Perspectives Symposium prepares to kick off in Paris, fDi charts the industry’s progress and looks forward to upcoming events.

Understanding the local political dynamics of different countries is critically important to the success of international business and foreign policy in an era of globalisation, say Marvin Zonis, Dan Lefkovitz and Sam Wilkin in their book The Kimchi Matters.

The UK’s capital is an investment magnet. Ashleigh Lezard wonders why firms are so entranced with one of the world’s most expensive cities.

Mauritius has used the global slowdown to prepare its entrance into new sectors and now the country is poised for action. Ashleigh Lezard speaks to Sushil Khushiram about the island’s growing sense of optimism.

Arizona is hoping to grow its position as a high tech leader. Karen E Thuermer talks to investing companies and finds academic excellence is the key to success.

Despite the liberalisation of China’s banking system, in line with WTO guidelines, foreign banks still face major hurdles in operating profitably, says Louise do Rosario.

Egypt needs to pull in foreign investment to cope with its burgeoning population. Ashleigh Lezard reports on the new determination to make sure the country fulfils its potential.

Top quality infrastructure will only get IPAs so far. As FDI competition heats up, agencies need to make a more emotional play for a country’s cash, says Martin Roche.

Investing in unstable countries or trying to sell to them? Countertrade may be the answer, writes Frank Gray.

Kala Rao examines the bureaucracy, investment limitations and poor infrastructure that is blocking foreign investors’ path in India.

A memorandum of understanding between the government and BAT Nigeria has revitalised the tobacco industry and slashed illicit sales.

Nigerian Breweries’ new plant, with its cutting-edge technology, demonstrates management and shareholder confidence in the company and in the country.

In a country lacking in infrastructure and with low teledensity, the government can point to the successful launch of mobile telephony and the injection of serious finance by foreign network operators as reasons to be hopeful.

Nigeria’s reputation has suffered from corruption and instability but the president insists economic reform is a policy priority. fDi asks chief economic adviser, Professor Charles Soludo, how Nigeria can win hearts and minds.

If the Nigerian government’s reform programme is successful, it could unlock rich resources and bring prosperity to its citizens and to investors who are up for the challenge. James Eedes reports. Nigeria is brimming with opportunity but investors need to go in with their eyes wide open. It is acknowledged by the United Nations Conference on Trade and Development (UNCTAD) as offering among the highest emerging market returns on investment but at the same time it is ranked the second most corrupt country in the world by watchdog Transparency International.

The business opportunities for foreign investment in Iraq are numerous but companies may need a little help in order to successfully tender for contracts, says Sophie Roell.

Port of Tanjung Pelepas’ CEO, Datuk Mohd Sidik Shaik Osman, talks about the emphasis being placed on the needs of the automotive sector and how the port is to become part of a major logistics hub.

Chatchai Bunnag, president of Ford Operations Thailand, explains why the auto maker has good reason to continue investing in the country.

Jan Wagner speaks to Mayor Jian Zhong Jin about how the auto industry has attracted foreign investors to the Shanghai suburb of Jiading.
If there is anyone who best represents the face of the new free enterprise-oriented and outward-looking China, it has to be Jian Zhong Jin, the mayor of Jiading, a suburb of Shanghai. The 49-year-old Mr Jin is presiding over the transformation of his town from an agricultural backwater into a leading place of investment for the global automotive industry.

As the automotive sector experiences a polarisation of investment strategies, research company Oxford Intelligence examines the challenge for economic development agencies worldwide.

The Port of Tanjung Pelepas has already developed at a phenomenal rate and work is pressing ahead to make sure the growth is sustained.

With producers and suppliers in the auto industry constantly checking that their location is providing good value, development agencies are going all out to attract and retain their business. Karen E Thuermer reports.

“Corruption is a big enemy of business. In Kenya, 15 years of high-level corruption left our people impoverished. Investors shied away from the country, and an economy that had seen some good times slowly drifted into negative territory. All this did not happen because our people are lazy or because the return on investment was low. No, it happened because the ruling class had been heavily compromised by a corrupt group of briefcase and fly-by-night businessmen.”

Should business executives pay bribes in China? Hong Kong’s Vincent Lo, the owner of one of the largest foreign property development companies in China, says: “I basically established a reputation: if you want something funny, I don’t do it.”

Italian company law has long needed extensive reform. While new structures, flexibility and transparency are the benefits, what exactly are the ramifications for Italy?
An extensive and long-awaited reform of Italian company law is due to come into force on January 1, 2004. The new corporate rules are intended to provide Italy with a brand new legal framework, characterised by higher flexibility and transparency, new options for investors and, in general, greater similarity with corporate models in more mature Western jurisdictions.

fDi reports on the latest regulatory and trade changes that will affect foreign direct investors.

The International Finance Corporation (IFC), the World Bank’s private sector arm, has approved $310m of funding for the controversial Baku-Tbilisi-Ceyhan (BTC) pipeline. The decision effectively gives the go ahead to development of the world’s longest pipeline, snaking 760km from Baku in Azerbaijan through Georgia to Ceyhan on the coast of Turkey. IFC approval is likely to be followed by a positive decision from the European Bank of Reconstruction and Development in support of the project.

Tempur-Pedic and its parent company, Tempur World, have selected the US city of Albuquerque as the location for a $56m manufacturing plant. Tempur World, a Swedish company based in Lexington, Kentucky, manufactures Tempur-Pedic comfort products, including mattresses and pillows, both of which will be made in Albuquerque.

BAT quits Myanmar

British American Tobacco (BAT) has pulled out of Myanmar. It has sold its 60% stake in the factory it co-owns with the Myanmar military government to Singapore-based Distinction Investment Holdings, which already holds a small stake.

The service sector now accounts for 60% of global FDI stock, compared with 50% a decade ago. New estimates by the United Nations Conference on Trade and Development (UNCTAD) also reveal that a new pattern of FDI in services has emerged, with financial and trading services, the traditional core of services stock, losing ground to emerging industries (see also this month’s Outlook column below).

Today, some 60% of the world FDI stock is in the services sector, in both developed and developing countries. The share of this sector in FDI flows is slightly higher. This is not surprising, as it reflects the sectoral structure of home and host countries: in developed countries, the services sector accounts for about two-thirds of GDP, in developing ones for more than half.

“The overall economic impact of multinational investment on developing economies has been overwhelmingly positive,” according to a new report from the McKinsey Global Institute (MGI), an independent research group within the international consulting firm McKinsey and Company.

Many had expected China to take Hong Kong’s economy to pieces when the colony was handed over. As it turns out, China not only let it be but is now making sure that Hong Kong remains a top destination for FDI.
In the run-up to 1997 when Britain handed over Hong Kong to China, the fear was that the mainland would destroy the city state’s economy either out of ignorance or envy. “Would the last person leaving Kai Tak [the old airport] please turn the lights out,” was an oft-heard rejoinder to anyone fanciful enough to believe that the promised “one country, two systems” set-up could really work.