CONTRIBUTIONS OF MIGA IN THE ASIA AND THE PACIFIC REGION

Presented to: Dr.Yogesh C. Joshi

Presented by: Anand N. Agrawal (09M03) Manthan Patel (09M22) Sanjay Damor (09M37) Shilpi Agarwal (09F39)
G.H.Patel P.G Institute of Business Management 14th March 2011

Asia Pacific Region

INTRODUCTION
MIGA's mission is to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people's lives. It does this by providing political risk insurance (guarantees) to the private sector.

OBJECTIVES OF STUDY
To identify the sectors that received FDI in the Asia and the Pacific Region To identify the various projects that received guarantee through MIGA To identify the projects wherein MIGA had to pay compensation

LITERATURE REVIEW
Sugar Plant in KENYA: In 2007, MIGA issued $7 million in guarantees to the Industrial Development Corporation of South Africa Ltd. (IDC) for a sugar factory in Kenya. The guarantee covered the investments against the risks of expropriation, transfer restriction, and war and civil disturbance for a period of up to eight years. Natural Gas in MOZAMBIQUE (2003): This project represented the first cross-border initiative in sub-Saharan Africa in developing regional natural gas markets and generated many benefits for the local economy, including government revenues estimated to be in excess of $2 billion over the projects 25year lifetime. Steel Manufacturing in NIGERIA: This investment supported the construction and operation of a metal processing plant to expand production into three new product lines: galvanized corrugated steel sheets, aluminum sheets, and aluminum alloy ingots. The project was expected to generate about $3 million in corporate tax revenue a year and employ 118 locals.

Contd..
Telecoms in MALI (2003): The project provided various telecommunications services in one of the worlds poorest and lowest teledensity countries. It also established the countrys first fully digital GSM cellular network. Agribusiness in BURKINA FASO, MADAGASCAR (2005): Acquiring and expanding cotton ginning facilities in the east of the country, in line with a government program, on which the World Bank advised, to liberalize the cotton sector. The project also involved the promotion of local entrepreneurship through the financing of the acquisition of shares in the project enterprise by local cotton growers. Energy in UGANDA (2007): The project consisted of the construction and operation of a 250 megawatt, run-of-the-river hydropower plant on the Victoria Nile. The plant was expected to increase supply to the national power grid at the lowest cost compared to other power generation expansion options under Ugandas energy strategy, thereby reducing outages and costs.

Contd..
Banking in CAMEROON (2007): The project involved the creation of a newly licensed commercial bank to provide micro credit and other financial services to clients, including SMEs. The new bank would infuse critically needed funds into the local financial market, and transfer skills and services from the investor to the local institution. MIGAs Support for Green Infrastructure Development: MIGA's contribution to reducing the adverse impact of climate change focused on supporting green infrastructure investments in developing countries which build renewable energy capacity, encourage resource conservation and distribution efficiency, improve sanitation, and off-set greenhouse gas emissions.

DISTRIBUTION OF MIGAS GUARANTEE- COUNTRY-WISE

Thailand, 1 Sri Lanka, 2 Philippines, 5 Papua New Guinea, 1

Vietnam, 6

Afghanistan, 6 Bangladesh, 6

Pakistan, 23

China, 38

Indonesia, 8 Nepal, 2 Mongolia, 1 Lao People's Democratic Malaysia, 1 Republic, 1

India, 1

DISTRIBUTION OF MIGAS GUARANTEE- SECTOR-WISE

Transportation, 2 Water and Wastewater, 8 Telecommunications, 8 Banking, 20 Solid Waste Management, 2 Services, 3 Agribusiness, 3

Financial Services, 3 Infrastructure, 1

Power, 21
Manufacturing, 28

Mining, 3

CHINA

Two Major SectorsWater and Wastewater Manufacturing

Chongqing Water Project

Project Name Guarantee Holder Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number Environmental Category Date SPG Disclosed Project Board Date Chongqing Water Project SUEZ ENVIRONNEMENT S.A. France China Water and Wastewater 72.2 2009 Active 7555 B December 19, 2008 February 05, 2009

Against the risks of transfer restriction and expropriation. To attract FDI to this underdeveloped region and sector and to restructure and improve the water and wastewater sector

Darco Environmental Pte. Ltd.

Project Name Deqing Darco Second Darco Producing Water Water (Qianyuan Co., Ltd Water) Project Guarantee Darco Environmental Pte. Ltd. Holder Investor Singapore Country Host Country China Sector Gross Exposure ($mn) Fiscal Year Status Project Number 7.56 Water and Wastewater 3.12

2007

2009 Active 5085

Construction of a water treatment plant, on a buildoperate-transfer (BOT) basis, that will supply 100,000 cubic meters per day of potable water to residents and industries. The project would address the water supply shortage and was expected to contribute to local economic development, urbanization, and public health.

Mahindra (China) Tractors Company Ltd.

Project Name Mahindra (China) Tractors Company Ltd. Guarantee Holder Mahindra Overseas Investment Company Investor Country Host Country Sector Mauritius China Manufacturing

Gross Exposure 7.2 ($million) Fiscal Year Status Project Number 2007 Not Active 6217

The plants initial capacity was for 6,000 tractor units per year. Production was expected to reach 11,000 in 2008, and 18,000 at full capacity in year 2012. This project would cater to the domestic market with modern, fuel-efficient tractors of the 18 to 33 and 60 horse-power variety.

Harris Semiconductor (Suzhou) Company Limited

Project Name Harris Semiconductor (Suzhou) Company Limited Harris Advanced Technology (Malaysia) Sdn. Bhd. Malaysia China Manufacturing Guarantee Holder Investor Country Host Country Sector

Gross Exposure 30.6 ($million) Fiscal Year Status 1998 Not Active

Against the risks of transfer restriction, expropriation, and war and civil disturbance. The project was expected to reduce the production costs of semiconductors, while increasing their power efficiency quality, thus facilitating the manufacturing of low-cost electronic components Project would create approximately 1,300 jobs.

Project Number 1251

INDIA

Modicom Network Private Limited

Project Name Guarantee Holder Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number Modicom Network Private Limited Motorola, Inc. United States India Telecommunications 9.6 1998 Not Active 1910
To establish a mobile cellular network in Punjab Province and Karnataka State. MIGA covered the investment against the risks of transfer restriction, expropriation, and war and civil disturbance. The project involved the design, construction, operation, management, and maintenance of a mobile cellular network. The project would significantly improve telecommunications facilities to better serve approximately 235,000 subscribers in the two regions. It would employ more than 650 Indian nationals and would provide extensive, ongoing technical, engineering, and customer service training.

NEPAL

Himal Power Limited

Project Himal Power Limited Name Guarantee Kvaerner Energy Bergenshalvoens Holder A.S. Kommunale Statkraft SF Kraftselskap AS ABB Kraft A.S. Investor Country Host Country Sector Norway Nepal Power 11

Equity investments in the 60megawatt power plant against currency transfer, expropriation, and war risks. The project represented the first foreign-owned and -operated power project of its kind in Nepal. Expected to meet up to 25 percent of Nepal's annual electricity needs, would employ about 3,000 nationals

Gross 32.8 Exposure ($million) Fiscal Year 1996 Status Project Number Active 1297

2002

AFGHANISTAN

Geo Building Technologies LLC, Afghanistan

Project Name Guarantee Holder Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number Environmental Category Geo Building Technologies LLC, Afghanistan International Home Finance & Development, LLC United States Afghanistan Services 1.7 2008 Active 7476 C

Date SPG Disclosed Project Board Date

March 03, 2008 March 18, 2008

The coverage was for a period of up to seven years The project was expected to provide builders in Afghanistan with a lower cost, higher quality, and more energy efficient building material. The countrys lack of infrastructure had been a key factor in hindering private sector activity. It was also expected that the project would create more than 10,000 direct jobs during the first five years of operation. By offsetting carbon emissions, the proposed project was expected to receive carbon credits for every GeoBrick manufactured by the GreenMachine.

Areeba Afghanistan LLC

Project Name Areeba Afghanistan LLC The MTN Group Limited South Africa Afghanistan Telecommunications

Guarantee Holder Investor Country Host Country Sector

Gross Exposure ($million)

Fiscal Year Status Project Number

76.5
2007 Active 6589

The coverage, for a period of up to five years. This project met two of MIGAs priorities: encouraging investments in conflict-affected nations, and promoting South-South investments. The lack of a functioning telecommunications network throughout the country was an important constraint to the development of private sector activity. The project was expected to help develop infrastructure and increase fiscal revenues

Afghanistan Project for Cotton and Oil Development (NAPCOD)

Project Name Afghanistan Project for Cotton and Oil Development (NAPCOD) DAGRIS, S.A. France Afghanistan Agribusiness 0.89 2006 Not Active 6169 A
The guarantee was for a period of up to seven years .The project was the first investment in Afghanistan to be guaranteed by MIGA. The NAPCOD project was expected to create sustainable growth in the cotton sector of the country by providing the technical and financial assistance that would enable cotton growers in northern Afghanistan to increase the production of cotton. The project would produce, collect, and gin cotton, as well as refine the cotton seeds to produce animal feed and high-value oil. It was expected to create around 300 permanent jobs, in addition to stimulating local businesses that supply goods to the cotton industry. All of NAPCODs cotton production was destined for export, which would help improve the countrys balance of payments.

Guarantee Holder Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number Environmental Category

VIETNAM

Phu My 3 BOT Power Company Ltd.

Project Name Guarantee Holder Phu My 3 BOT Power Company Ltd. Crdit S.A. France Vietnam 15 2004 Active 118.2 2003 Lyonnais, SembCorp Utilities Pte. Ltd.

The guarantee covers a period of 15 years. The project represents one of the largest foreign direct investments ever into Vietnam and is expected to help attract additional private capital investment flows for further infrastructure development in the country.

Investor Country Host Country Gross Exposure Fiscal Year Status

Project Number

4387

Vung Tau Energy Company Limited

Project Name Guarantee Holder Investor Country Host Country Gross Exposure Fiscal Year Status Project Number Vung Tau Energy Company Limited Wartsila Vietnam Power Investments, Ltd. Cayman Islands Vietnam 36 1999 Not Active 3116

The project involved the construction and operation of a 120 megawatt fuel-fired power plant. It was the first independent power project to be completed in Vietnam after the establishment of the BOT regulations in 1994. The project would create a much needed increase in southern Vietnam's generating capacity.

PAKISTAN

Most of the projects relate to banking sector only

Different Projects: Kashf Microfinance Bank

Project Name Kashf Microfinance Bank Stichting Triodos-Doen ShoreCap International Ltd. Triodos Custody, B.V.

Guarantee Holder

The project involved the establishment of the Kashf Microfinance Bank in conjunction with the Kashf Foundation, a foundation which uses group lending to provide finance to the countrys poorest people. The project was expected to have a significant impact on the countrys economic development as it would be providing financing and savings instruments to small enterprises, which form the largest underserved, yet productive segment of the local economy.
Greater access to financial services would help reduce poverty and expand economic opportunity for low income populations throughout Pakistan, especially women.

Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number Date SPG Disclosed Project Board Date

Cayman Islands Netherlands

Pakistan Banking 1.74 2009 Active 7470 March 14, 2008 March 29, 2008

Habib Metropolitan Bank Ltd.

Project Name Habib Metropolitan Bank Ltd.

Guarantee Holder
Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number

Habib Bank AG Zurich

Switzerland Pakistan Banking 35.6 2008 Active 6115

The investment aimed to help Habib continue its expansion in Pakistan, bringing the banks number of branches to 25. Habibs presence has a strong demonstration effect on the countrys banking sector, with its emphasis on good corporate governance and its stable capital base, high liquidity, and close cooperation with regulatory bodies.

Habib Bank AG Zurich Pakistan

Project Name Habib Bank AG Zurich Pakistan

Guarantee Holder Habib Bank AG Zurich Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Switzerland Pakistan Banking 2.7 2001

This investment would allow Habib Bank AG Zurich to expand and diversify the services already offered, and to broaden its coverage by opening two new branches.

Status
Project Number

Active
4077

Bank of America NT & SA

Project Name Bank of America NT & SA

Guarantee Holder
Investor Country Host Country Sector Gross Exposure ($million) Fiscal Year Status Project Number

Bank of America
United States Pakistan Banking 4.5 1992 Not Active 4202

The project was to aid the development of Pakistan's financial sector by expanding and diversifying financial services and resources for productive investment. Bank of America's loans to Pakistani trading and manufacturing companies would facilitate increased production of goods for export.

CLAIMS PAID BY MIGA

MIGA has paid three claims since its inception in 1988. The first claim was paid by MIGA in 2000 for an equity investment in P.T. East Java Power Corporation in Indonesia, which was guaranteed by MIGA. The project was one of several power projects suspended by a presidential decree in 1997 in response to the countrys economic crisis in the late 1990s.

The second claim was for war and civil disturbance relating to a power project in Nepal. A Maoist guerrilla attack in 2002 damaged a hydroelectric power plant. MIGA paid compensation for the repair of the damages to the gas turbine, and the project continues to be in operation.
The third claim was for a toll-road project in Argentina at the time of the countrys financial crisis. MIGA paid part of the claim in February 2005 to the investor, who also had a commercial guarantee for the investment.

CONCLUSION
Within this region, MIGA has guaranteed projects in almost all the countries that are politically stable as well as unstable. China has been a major receiver of MIGAs guarantees followed by Pakistan. The rest of the countries include Bangladesh, Afghanistan, India, Nepal, Malaysia, Mongolia, Vietnam, Thailand, Sri Lanka, Indonesia and others. Within these countries, MIGA has attempted to cover all the various sectors for the development. The Manufacturing sector forms a major sector that has received highest number of projects guaranteed through MIGA. Power and Banking are the two other sectors that have been a major guarantee receiver. Other sectors include Agribusiness, Water and wastewater, transportation, infrastructure, mining, services, telecommunications, solid waste management and others. The small number of claims paid by MIGA over the last 28 years attests to the agencys ability to work with investors and host countries to find amicable resolutions to disputes. MIGA focuses on finding solutions to pre-claim situations before they reach the level of full-fledged claim, ultimately keeping the investment and its development benefits on track. MIGAs proactive facilitation efforts have been pivotal in the resolution of more than 50 disputes related to MIGA-guaranteed projects.