Foreign Direct Investment (FDI) in Land in developing countries

14Madagascar, which has received extensive mediacoverage, is an example of a private sectorinvestment too.• Governments: Governments can act in differentways.(1) FDI in land may be negotiated on thehighest political level between the governmentsof the affected countries. 5 A prominentexample for intergovernmental negotiations isthe case of Malibya Agriculture where theLibyan and the Malian governments agreed ona Libyan investment in the Malian NigerOffice Area to produce food for the Libyanpopulation.(2) Even if the final actors signing an investmentcontract are private, public actors play adominant role in the overall investmentenvironment laid down in investment law. Aswell, very often deficits in the final investmentarise from weak governance structures forenforcing domestic law. Governments cancreate a favourable framework for FDI in landwith the help of Bilateral Investment Treaties(BIT) which provide legal protection toinvestments for citizens or enterprises outsideof the contracting nations.(3) Moreover, governments in target countriescan facilitate FDI in land by adjusting thedomestic legal framework to the needs ofinvestors, by providing informational, technicalsupport or by direct or indirect subsidies.• Sovereign Wealth Funds (SWF): Those fundsare state-owned and serve the political objectivesof the respective country. In the last several yearsthey have been expanding abroad as a result of arapid accumulation of reserves. By now, it is notcommon for SWF to invest directly in foreignland, but SWF are engaged in the agriculturalsector (Cotula et al. (IIED, FAO, IFAD),2009, p. 30). For example, the Qatar InvestmentAuthority (QIA) is reported to have establishedjoint venture funds with the governments ofIndonesia and Vietnam and is negotiatingsimilar deals with the government of Malaysiaand the Philippines. In addition, it is reportedthat the QIA was involved in the land deals inSudan (Cotula et al. (IIED, FAO, IFAD),2009, p. 35; Grain, 2008). The state-ownedSaudi Industrial Development Fund is currentlygranting financing facilities to firms exploringagricultural investments abroad.• State-owned enterprises: These companies arestate-controlled and, therefore, act according tothe political objectives of the government too.Examples for state-owned enterprises are ZadHolding Company from Qatar, China InternationalWater and Electric Corporation inZimbabwe and other companies owned by theChinese state in Tanzania and the DemocraticRepublic of Congo. A huge amount of largescaleinvestments in the context of national foodstrategies can be assigned to state-ownedenterprises.Foreign direct investors in land can be classifiedaccording to their different primary motives basedon the political goals and economic background oftheir domestic frame:• Investors from oil rich countries with poorresources of arable land, water scarcity and harshclimate conditions. They aim at improving foodsecurity and reducing the dependence on highand volatile food prices. These countries are richin capital and able to invest lots of moneyespecially through state funds that serve stateinterests.• Investors from industrialized and emergingcountries with large populations and rapideconomic growth. They face an increasingdemand for feed, fodder, fibre and for renewableresources and try to countervail it by FDI inland. This strategy helps them to grow lessdependent on the world markets.Based on available information, it seems that theinvestors from oil rich and emerging countriesmainly are governments or state enterprises orstate funds respectively. In contrast, investors fromindustrialised countries primarily are privatecompanies investing mainly in agro-fuel projects.When governments try to follow their food orenergy strategies by investing in foreign lands,5 Several points within the land deal can remain unclear and therefore contain social, political and environmental risks as there is little transparency and possibilityfor public control. Even for some government-to-government deals, no official data but only media reports and governmental press releases are available. Very oftenthose reports are the only source on the content of the contract and the status of implementation.