Investment Policy Monitor: Special Issue - Investment Policy Responses to the COVID-19 Pandemic
This special issue of UNCTAD's Investment Policy Monitor presents the latest developments in national and international investment policies in response to the coronavirus pandemic.
How investment policies are responding to COVID-19
- Investment policies make an important contribution in tackling the devastating economic and social effects of the COVID-19 pandemic. Numerous countries around the globe have taken measures in support of investment or for protecting critical domestic industries in the crisis.
- Support measures include, in particular, the speeding up of investment approval procedures, the accelerated use of online tools and e-platforms, COVID-19-related services of investment promotion agencies (IPAs), incentive schemes for health-related R&D, medical supplies, the acquisition by states of equity in struggling domestic key companies as well as state loans and guarantees for domestic suppliers in value chains.
- To protect their health sector and industries in other sectors considered as particularly important in the crisis, several countries have tightened foreign investment screening mechanisms, introduced new regulations or are planning such steps. Other State interventions in the health industry include mandatory production and export bans for medical equipment, as well as reduction of import duties for medical devices.
- IIAs can come into play in relation to policy responses taken by governments to address the economic impact of the COVID-19 pandemic. Some of the policy measures could potentially be challenged by foreign investors through arbitration proceedings under IIAs. This highlights the need to safeguard sufficient regulatory space in IIAs to protect public health and to minimize the risk of investor–State dispute settlement (ISDS) proceedings.
- Looking ahead, the pandemic is likely to have lasting effects on investment policy making. It may strengthen and solidify the ongoing trend towards more restrictive admission policies for foreign investment in industries considered as being of critical importance for host countries. At the same time, the pandemic may trigger increased competition for attracting investment in other industries as economies seek to recover from the downturn and disrupted supply chains need to be rebuilt. Concerning investment facilitation, the crisis may boost the use of online administrative approval procedures for investors and personnel.