EU Business Forum Provided Input on Consultation of the Draft Investment Law
On Saturday, July 6, 2019, following an invitation from the Ethiopian Investment Commission (EIC), a consultative workshop was held on the draf of the Ethiopian Investment law. Some 200 companies, embassies and other development partners were invited to this meeting.
Representatives of the task force of 17 professionals set up to oversee the drafting of the law presented their findings followed by a question and answer session chaired by HE Abebe Abebayehu, commissioner of the EIC.
The presentation started with an outline of the method the task force applied in its review of the investment code.
Following this the working group presented some seven key policy implications for "Investment Policy White Paper". These are rethinking of long held assumptions on investments; revising goals for investment promotion in line with changing context; holistic approach to investment (both attraction and retention thereof); consider both foreign direct investment and domestic investment as one policy area; comparing a sector-specific approach to the general promotion of (foreign) investments; incentive schemes for investments and investment administration. This white paper has been prepared based on an analysis of current laws, a comparison with relevant other markets and based on various consultations. The white paper serves as the basis for the committee's final advice.
The subsequent presentation included the history of investment legislation and the international comparison about openness vs closedness of the market. Ethiopia currently has investment legislation in which some sectors are open to foreign investors, which often causes confusion regarding definition and definition. The committee's recommendation was that Ethiopia would benefit restrictive listing approach, where negative list would be outlined. Any sector that is not enumerated in the negative list is considered open for FDI, clarifying any potential confusion. In this connection, the committee recommended three components to sector specific listing; .
1. areas of investment for Joint Ventures with the government (such as weapons manufacturing, the entire electricity sector, postal services);
2. areas of investment reserved for domestic investors (such as banking and insurance, retail, import trade (excl. LPG and bitumen), wholesale, export trade (of raw coffee, chat oil seeds), bakeries.....,) and
3. areas of investment reserved for joint venture with domestic investors with equity cap (such as forwarding and shipping agency services, advertising, market research, audio-visual services, domestic transport services, accounting, mass media service, land public transport, making indigenous medicine..).
All sectors not mentioned in the list, which would become public shorty according to the presenters, will be fully open to foreign investors.
The third presentation dealt with the proposals on the legal and organizational duties of the Ethiopian Investment Commission. Several recommendations were made, some of which are; coordination between the Ethiopian Aviation Authority, the Ethiopian Energy Authority and the EIC in developing sector specific studies with a view to attracting foreign investors; setting clear and minimal grounds for revoking or suspending the investment licenses; expand one-stop-shop (OSS) service provided by the EIC to include post-investment full scope service as well as the creation of comprehensive grievance management system.
Moreover, a nine member Ethiopian Investment Board is also recommended to be established under the leadership of the PM and representatives of all relevant Ministries and one none-voting seat reserved for the private sector.
A question and answer session chaired by the Commissioner of the EIC followed, in which several questions and comments were raised by participants. The commissioner acknowledged the suggestions as important input into the draft law. The draft law will be publicly available once such comments have been incorporated, he also added.
Board members of EUBFE in collaboration with AmCham counterparts lodged a brief reflection on the consultative session to the management of the EIC. The brief recommendation is believed to be enriched once the draft investment law becomes public.
Representatives of the task force of 17 professionals set up to oversee the drafting of the law presented their findings followed by a question and answer session chaired by HE Abebe Abebayehu, commissioner of the EIC.
The presentation started with an outline of the method the task force applied in its review of the investment code.
Following this the working group presented some seven key policy implications for "Investment Policy White Paper". These are rethinking of long held assumptions on investments; revising goals for investment promotion in line with changing context; holistic approach to investment (both attraction and retention thereof); consider both foreign direct investment and domestic investment as one policy area; comparing a sector-specific approach to the general promotion of (foreign) investments; incentive schemes for investments and investment administration. This white paper has been prepared based on an analysis of current laws, a comparison with relevant other markets and based on various consultations. The white paper serves as the basis for the committee's final advice.
The subsequent presentation included the history of investment legislation and the international comparison about openness vs closedness of the market. Ethiopia currently has investment legislation in which some sectors are open to foreign investors, which often causes confusion regarding definition and definition. The committee's recommendation was that Ethiopia would benefit restrictive listing approach, where negative list would be outlined. Any sector that is not enumerated in the negative list is considered open for FDI, clarifying any potential confusion. In this connection, the committee recommended three components to sector specific listing; .
1. areas of investment for Joint Ventures with the government (such as weapons manufacturing, the entire electricity sector, postal services);
2. areas of investment reserved for domestic investors (such as banking and insurance, retail, import trade (excl. LPG and bitumen), wholesale, export trade (of raw coffee, chat oil seeds), bakeries.....,) and
3. areas of investment reserved for joint venture with domestic investors with equity cap (such as forwarding and shipping agency services, advertising, market research, audio-visual services, domestic transport services, accounting, mass media service, land public transport, making indigenous medicine..).
All sectors not mentioned in the list, which would become public shorty according to the presenters, will be fully open to foreign investors.
The third presentation dealt with the proposals on the legal and organizational duties of the Ethiopian Investment Commission. Several recommendations were made, some of which are; coordination between the Ethiopian Aviation Authority, the Ethiopian Energy Authority and the EIC in developing sector specific studies with a view to attracting foreign investors; setting clear and minimal grounds for revoking or suspending the investment licenses; expand one-stop-shop (OSS) service provided by the EIC to include post-investment full scope service as well as the creation of comprehensive grievance management system.
Moreover, a nine member Ethiopian Investment Board is also recommended to be established under the leadership of the PM and representatives of all relevant Ministries and one none-voting seat reserved for the private sector.
A question and answer session chaired by the Commissioner of the EIC followed, in which several questions and comments were raised by participants. The commissioner acknowledged the suggestions as important input into the draft law. The draft law will be publicly available once such comments have been incorporated, he also added.
Board members of EUBFE in collaboration with AmCham counterparts lodged a brief reflection on the consultative session to the management of the EIC. The brief recommendation is believed to be enriched once the draft investment law becomes public.
