140 l REGIONAL INVESTMENT PIONEERS IN SOUTH ASIA
Notes 1. Because “Southern” is not explicitly defined, this report does not use this term further. 2. The United Nations classifies “Asia-Pacific” as including South Asia and East Asia and the Pacific. 3. An appreciation of a wider range of policies—including trade, investment climate, and macroeconomic policies—is vital, but it is beyond the scope of this study. For trade policy in South Asia, see Kathuria (2018). 4. The implication is that a capital account restriction on foreign investors repatriating capital is an IFDI policy restriction, whereas a capital account restriction on home firms investing abroad is an OFDI policy. 5. According to Foreign Exchange Circular No. 5, May 2015, from the Bangladesh Bank, exporters are allowed to retain 15 percent of earnings in foreign exchange or 60 percent if the exports are goods exports with high domestic content or are services exports. 6. A gradual shift in favor of FDI in India is noted in the Industrial Policy of 1980 and 1982 and the Technology Policy Statement of 1983. 7. The investment freedom subindex starts at the perfect score of 100 and deducts points (5–25 points) for restrictions on the investment arrangements based on national treatment of FDI, transparency of the foreign investment code, restrictions on land ownership, sectoral restrictions, expropriation with fair compensation, foreign exchange controls, capital controls, security issues, and lack of basic infrastructure. The 2021 index covered 184 countries (www.heritage.org/index/investment-freedom). 8. The OECD’s restrictiveness index shows a total figure and nine component sectors, taking values between 0 for open and 1 for closed. Other factors, such as implementation issues, are not addressed. 9. See https://dipp.gov.in/sites/default/files/NEIDS_2017_16April2018.pdf. Incentives were previously provided under the North East Industrial Policy, 1997, and the North East Industrial and Investment Promotion Policy, 2007. 10. The straight-line depreciation method spreads the cost evenly over the life of an asset, whereas an accelerated depreciation method allows the deduction of higher expenses in the first years after purchase and lower expenses as the depreciated item ages. 11. The case was brought by White Industries of Australia using the Australia-India BIT of 1999. In a dispute with Coal India on the development of a coal mine in Bihar, White Industries received an award of A$4.08 million through proceedings of the Indian Arbitration and Conciliation Act in 2002. Coal India commenced “set-aside” proceedings and White Industries commenced “enforcement” proceedings through the Indian courts, and it was this judicial delay that provided the justification for proceedings under the BIT. White Industries was awarded the amount of its original award plus interest. The tribunal found that the “effective means” standard (incorporated in the most-favored-nation provision) was violated (UNCTAD 2010). 12. Reserve Bank of India (https://rbi.org.in; see FAQs on “Overseas Direct Investments”). Note that India also prohibits OFDI to the OECD’s Financial Action Task Force list of countries considered noncooperative in anti–money laundering and countering the financing of terrorism, under the “call for action” or blacklist category. In early 2020, the Democratic Republic of Korea and the Islamic Republic of Iran were on this list.
