By signing a Ministerial « Declaration on Common Principles and Best Practices on Attracting Investment to SEE» today in Vienna, SEE Economics and Trade Ministers were signing up to a series of measures, which have to be implemented in order to attract more investment to the region. This high level political declaration gives a clear signal to investors worldwide that SEE is open and serious about competing for international investment. It is on track to closer political, economic and social integration with Europe and is adopting internationally accepted common investment principles. The Declaration was signed in the framework of the Stability Pact’s Investment Compact initiative, which is co-chaired by Austria and the OECD.

Private sector development, and especially Foreign Direct Investment (FDI), is essential for sustainable economic development in South East Europe. The region in recent years has improved as an investment destination and had FDI inflows of approx. 3 billion Euro in 2001, according to a recent EBRD report. However, compared with Central and Eastern Europe, the countries of SEE have been less successful in attracting FDI and the investment climate remains challenging.

According to the EBRD, FDI flows to SEE for 2002 will remain virtually unchanged from that of 2001. Therefore, it is vital that the investment climate improves as this will mobilize much needed green field investment, to complement investment secured mainly through privatisation.

The declaration signed today addresses these challenges. Ministers agreed to improve the overall investment climate and particular attention will be given to clear regulations, a level playing field, good governance and application of the rule of law. Ministers recognized that there is an on-going need for institutional reform at all levels and committed themselves to improvements. It is equally important that investment opportunities in the region are promoted on an on-going basis, as the active participation of potential investors in the region will expedite reforms. "Investors clearly look at the region as a whole," Busek said in commenting the signing. "By joining forces, SEE Governments are recognizing this fact. Experience shows that one bad story can spoil 10 good ones. The Declaration is living proof, that the Governments are starting to develop a responsibility for their countries and for the region as a whole." This notion will become even more important, when by the end of 2002 SEE will become a free trade area with 55 million consumers. In order to benefit fully from this increased market size, a harmonized approach to improve the investment climate is mandatory.

The Investment Compact (IC) was adopted in February 2000 and is co-chaired by the OECD and Austria. So far, South Eastern European countries have completed its first two phases: assessment of current investment climate and identification of policy priorities. Its implementation is based on 4 pillars: the monitoring process, the implementation of reform through selected Regional Flagship Initiatives, private sector involvement and political support for Investment Compact activities. The next edition of the Monitoring Instruments will be published in July 2002 and will include the specific priorities of the countries to improve the investment climate until the end of this year.