In today’s rapidly changing global economy, foreign direct investment (FDI) has become a critical component of economic growth, development and innovation. According to a report by EY, foreign-owned companies can account for up to 50% of a country’s research and development. However, with competition for investment intensifying, international promotion agencies (IPAs) are increasingly seeking new strategies and approaches to attract and retain foreign investors.
One such strategy is turning to embrace digital. As the digital age continues to transform the business landscape, digitalisation has emerged as a key driver of FDI attraction. Today’s investors are savvier than ever before. The IPAs that can tell a coherent, data-led story and reach more potential investors through the latest digital platforms have a clear advantage. This also involves leveraging company insights, macroeconomic data and digital platforms that use AI-driven tools and dashboards and real-time data about new investors showing an intent to invest.
By adopting this ‘triple D’ approach – dynamic, digital, data-driven – IPAs can unlock more opportunities in new markets proactively.
MEA IPAs need to take action to attract FDI
For many IPAs that I have spoken to across the Middle East and Africa (MEA) region there is no doubt there is an overwhelming thirst for data and knowledge. However, when it comes to putting this into practice, this is far from the reality. Too often, data is treated as an afterthought rather than a core component of FDI strategy.
In today’s data-driven world, IPAs that effectively use (and organise) data as part of their core marketing and business development strategy have a clear advantage in attracting and converting foreign investment – and not just from markets you may suspect are interested but in new markets, with new companies, using an evidence-based scientific approach.
FDI activity is hurtling fast towards MEA. Being a relatively young region has meant that many IPAs try to be everything to everyone with limited resources and time. Prioritisation and an ‘always-on’ digital approach therefore must be adopted.
There needs to be a fundamental shift in the way that IPAs use data to remain nimble and dynamic to changing market forces. As if Covid-19 didn’t teach us anything, many IPAs are still heavily reliant on traditional models of hosting expensive roadshows and producing sales brochures rather than applying thought-leadership.
Digital investor promotion need not be scary – in fact, it is liberating. The right balance involves less selling, more listening and creating demand through ‘pull messages’ targeted at the many, not the few.
According to a FDI survey we ran on Investment Monitor in the first quarter of 2023, 48% of respondents preferred to use a law firm or a trusted intermediary as opposed to going direct to a free zone or IPA. This proves that more work needs to be done to show that IPAs are a trusted source of objective insights that enable a prospective investor to make informed decisions pre-expansion; and not simply a one-stop shop to enable companies to expand once confirmed.
By becoming more dynamic, by embracing digitalisation and by prioritising data-driven insights, IPAs can attract (and retain) foreign investment more effectively than ever before. It is therefore imperative that IPAs quickly adopt a triple D approach to avoid falling behind in an increasingly competitive global marketplace.