The Homeland Investment Law – designed to encourage US companies to return profits to the US – may boost the dollar but it is also likely to act as a brake on FDI outflows in 2005, writes Courtney Fingar.

A string of league table successes in the past month confirm the perception that the UK is riding a wave of investor confidence that puts it well ahead of the rest of continental Europe.

Multinational companies systematically inflated claims about the number of jobs their projects would create to access preferential treatment, according to the results of a study published in November.

Within hours of President George W Bush’s re-election, the Democrats’ analysis ranged along the usual fault lines: the aloofness of Senator John Kerry (the messenger) whose most moving performance was his concession speech; the mistakes in his campaign (the medium), including finishing with about $16m in unspent get-out-the-vote funds; the Democratic ideology (the message), rejected by a newly energised, ‘moral values’ driven electorate.

The world FDI market is very competitive and, if anything, is becoming more so. So how can an investment promotion agency (IPA) get ahead of the competition? IPAs need to stay abreast of the latest FDI trends (see the editorial on offshoring in the August 2004 issue), they have to be careful in targeting and they need to keep an eye on after care services.

Russia’s official acceptance of the Kyoto Protocol on November 18 makes it likely that the treaty will affect not only European companies but also, increasingly, US companies.

• Venezuela has raised royalty rates for multinational enterprises that operate joint ventures in the heavy-oil sector from 1% to 16.67%. The increase will be applied to oil companies operating under joint venture agreements along the Orinoco River basin in the south-east of the country. The 1% level was granted by the previous government in the mid-1990s to attract foreign investment.

In the past year, the recent poor growth in terms of FDI projects in the life sciences sector has been highlighted. However, in commercial terms, the industry is growing strongly and is producing double-digit growth.

Although the financial gains of offshoring to lower-cost environments are known and accepted, the qualitative aspects are not so well documented. In a recent IBM report, a human resources (HR) executive of a global multinational admits: “The cost savings are hard to pass up, but reality sets in with ongoing management of a centre – kind of like buying a puppy.”

Automotive headlines in Europe in past months were dominated by GM’s announcement that it would cut up to 12,000 jobs, nearly one-fifth of its European workforce, by 2006. Workers at GM’s German Opel division, where most of the job cuts are expected to occur, reacted to the US parent’s announcement with a series of protests and work stoppages.

Ernst & Young’s Real Estate Advisory Services’ annual review of the hospitality industry has found that the worst of the recent hospitality down cycle is probably over.

Driven by a tightening of margins in the more mature markets, auto producers are taking on more risk and venturing further afield where costs are low and demand is high. Karen E Thuermer reports.

But the competition for the auto industry is not over in western Europe, where the well-entrenched and increasingly sophisticated network of suppliers, manufacturers and centres for R&D excellence reside.

In the US, the automotive industry remains the largest in the world. According to the Original Equipment Suppliers Association (OESA), the industry represents nearly 10% of the $10,000bn US economy. The Center for Automotive Research reports that in 2002, 12.3 million vehicles were produced in the US, compared with 10.2 million vehicles in Japan and 5.5 million in Germany. About 6.6 million US jobs are connected to automotive manufacturing, and new vehicle sales generate more than $240bn in annual private sector revenue. Consequently, site selection for a new plant is huge business.

The US slowdown has pushed Californian companies into looking for new business in Europe. Prospects are good but caution is advisable, as delegates at a recent forum in London heard. Courtney Fingar reports.

Speaking in November at the Cal-IT Europe Forum in London, Barry Sedlik, undersecretary and senior adviser for California’s Economic Development, Business, Transport and Housing Agency, told delegates: “In the long term, the outlook for California is very bright. The governor’s message is simple: California is open for business.”

Advent International learned important lessons when it bought into Bulgaria’s state telecoms company, as MD Joanna James explains to fDi.

In countries like Bulgaria, says Joanna James, managing director of global private equity firm Advent International, “life is not made terribly easy for the foreign direct investor”. And she should know.

In early 2002, Advent set about buying a 65% stake in Bulgaria’s fixed-line telecoms operator Bulgarian Telecommunications Company (BTC). It turned out to be a high-profile and controversial transaction.

France is not naturally regarded as a location for outsourcing, which is why it has begun to make efforts to change perceptions. At an fDi roundtable, business experts discussed the pros and cons of doing business in the country.

The French are reputed to have a lifestyle that is the envy of the world but what do they know about work? Sir Francis MacKay, chairman of the Compass Group, and other foreign investors in France have discovered that this and other perceptions about the country are misconceptions. However, because of France’s reputation, deserved or not, as an expensive and difficult place to do business, it is not often thought of as an obvious location for outsourcing.

The Italian government is pouring money into Lazio’s infrastructure, with plans to increase intermodal transport through the region fourfold.

Careful consideration of site infrastructure results in high quality products and satisfied customers.

As part of South Korea’s plans to outshine its regional rivals, it is building a supercity in Incheon Free Economic Zone.

Daedeok Valley has a gravitational pull on global firms seeking technological excellence.

The Manisa Organised Industry Zone is already home to a number of high-profile companies and it is making efforts to pull in more foreign investors.

The Aegean Free Zone in Turkey offers unique enhancements and supplementary services to companies locating there.

The states of the central African sub-region need an institution like the Central African States Development Bank to raise finance for large projects. After a dormant period, the bank is focusing its strategy on private enterprise. Fabien Buliard reports.

The Central African States Development Bank (La Banque de Développement des Etats de l’Afrique Centrale – BDEAC) is sparing no effort to restore its credibility, following a period of dormancy throughout the 1990s in which it ceased all lending activities to focus on reimbursing its debt and recovering a staggering amount of outstanding payments.

The Canadian province of Ontario is building on its successful history of auto manufacturing with a C$500m investment programme. Minister of economic development and trade Joseph Cordiano talks to Courtney Fingar about the priorities.

Can the World Trade Organization’s new framework on agricultural subsidies resolve some important disputes? Carol George reports.

Deciding to migrate operations offshore can be controversial. Companies that want to succeed should look not only at their immediate bottom line, but also at the long-term implications. Wendy Atkins reports from the Offshore Customer Management International Conference.

The popularity of outsourcing is expected to continue growing, with a rise in business process outsourcing and in near-shore contract destinations, according to a recent report by Trestle Group Research.

fDi’s awards ceremony for the magazine’s first ever European Cities and Regions of the Future competition was held in Hong Kong in November. Representatives from both Barcelona and Scotland were on hand to pick up the key awards while other prize winners came from as far away as Vilnius and the Canary Islands. The awards were held at the Investors of the Future Forum organised by Red Hot Locations and sponsored by Invest Hong Kong. For full details see www.fdimagazine.com

As the world’s top real estate investors, lenders, owners and developers – along with the architects and designers that make it all happen – convened for Cityscape, a casual glance around was enough to see why host city Dubai receives so much international attention. The growth and dynamism are palpable; there are cranes parked along every major road; and stunning buildings rise confidently out of the sand.

By paying attention to sports, culture and education facilities, Qatar is giving its international image an overhaul. Moreover, the country’s real estate industry is blooming – but not to the exclusion of the local population.

Bahrain may be a relatively small country but that won’t hold it back, says Will McSheehy. Ambitious projects offer property investors a luxury lifestyle.

fDi scans the global project financing landscape in 2004 for the most important deals in each region.

Dazzlingly ambitious building projects, adding up to some $30bn worth of construction, are currently under way in Dubai. Meanwhile the other six emirates are also slowly but surely opening up to the advantages of attracting foreign real estate buyers. Will McSheehy reports.

With an eye on WTO membership, Saudi Arabia has been liberalising its markets and pushing its FDI proposition. Amr al-Dabbagh, head of Saudi’s investment authority, talks to Kate Luxford about future plans.

Saudi Arabia is getting serious about seeking investment, says Amr al-Dabbagh, head of the Saudi Arabian General Investment Authority (SAGIA).

Appointed to the authority in March 2004, the prominent businessman was also appointed chairman of the board of directors, with a rank of minister. Prior to his selection as SAGIA governor, Mr Dabbagh served as president and CEO of the Dabbagh Group, a portfolio-driven enterprise with interests in the telecoms, media, energy, food, real estate development, and financial services sectors.

Pakistan’s latest moves towards stabilising relations with India, together with an economic performance that has been rewarded with a rating upgrade, can only be beneficial in attracting investors. Jules Stewart reports.