عوامل مؤثر بر سرمایه گذاری مستقیم خارجی در بخش معدن در آسیا: مقایسه چین و هند

The aim of this paper is to assess the conditions that influence foreign direct investment in the mineral industries of China and India. The paper first surveys literature on the determinants of foreign direct investment to identify key conditions, under which host countries attract mining FDI. It then builds an evaluative framework which allows for comparative analysis. The paper then comparatively evaluates the performance of foreign investment regimes that govern mineral industries in China and India. Its findings show that the overall conditions for foreign mining investment in China and India are not favourable and that substantial policy, regulatory and other changes in both countries need to be made if more investment is to flow.

In the early 1990s, China and India opened up their non-fuel mineral industries to foreign investment. Since, both countries have made changes to their regulatory regimes, intending to improve the investment climate for foreign mining companies. In the case of India, this has led to a complete redrafting of the existing mining laws, making India comparable to any liberal mineral producing regime. Meanwhile, China undertook more piecemeal changes to its mining legislation, promoting foreign investment in its highly prospective western provinces (Table 1). Yet, despite favourable regulatory reforms, both China and India have struggled to attract the desired levels of FDI into their non-fuel mineral industries. For example, in India, there is only a small presence of foreign mining firms and foreign mining investment represents less than 1% of foreign direct capital stock in India (Athreye and Kapur, 2001). The country did not reach the US$22.37 billion investment target for 2007–2009 (Business Monitor International, 2008 and O’Callaghan and Vivoda, 2010). Most mining majors have also steered clear of China, where the lack of transparency and uncertainty plague the investment environment (Suxun and Chenjunnan, 2008). In 2007, the sector attracted 1% of total FDI across all sectors in China (NBS, 2008). Although China improved foreign investment conditions between 2004 and 2006, resulting in a surge of foreign investment into the sector, many of these investments have not been realised, with some being stalled or stopped altogether. This has led to a feeling of uncertainty by some foreign enterprises towards China as a destination for exploration, mining and metals investment (CIMG, 2009). Only 10–15% of metal mining production in China and India was produced by foreign mining companies in 2005 (UNCTAD, 2007). Consequently, the aim of this paper is to assess the conditions that impact on the level of foreign direct investment in the mineral industries of China and India. The focus is on China and India because they have been the two fastest growing economies in the region and the largest FDI recipients among developing Asian states. The paper is organised as follows. “Introduction” surveys literature on the determinants of foreign direct investment to identify key conditions, under which host countries attract FDI in the mining sector. “Conditions that facilitate foreign direct investment in mineral industries” comparatively evaluates the performance of foreign investment regimes that govern mineral industries in China and India based on the evaluative criteria set up in “Introduction”. This includes a discussion of key political, regulatory, fiscal, monetary, environmental, social and many other issues that impact on the levels of foreign investment in the mineral sectors of China and India. Finally, “Assessing the performance of China and India” summarises the main findings. The existing literature on foreign mining investment in China and India has some limitations. Region-wide and/or other comparative studies are either dated (Naito et al., 1998, Naito et al., 1999, Naito et al., 2001 and Naito and Remy, 2001) or focus on a single country (China—Andrews-Speed et al., 2003, Tse, 2003, Penney et al., 2007 and Suxun and Chenjunnan, 2008; India—Jhingran, 1997, Chatterjee, 2002, Singh and Kalirajan, 2003, Sames, 2006 and Jain, 2008). This paper builds on previous theoretical work on determinants of FDI in the mineral sector to develop an evaluative framework, which allows for comparative analysis. The paper also has broader relevance, as the same evaluative framework developed here can be applied to a region-wide study, or comparatively to evaluate the attractiveness of any number of foreign investment destinations in the mining sector.

The existence and extractability of minerals is the most important determinant of where mining companies invest in exploration and extraction. While the presence of mineral deposits is a necessary requirement to attract mining investment, it is not a sufficient condition. Many countries that are endowed with minerals have traditionally been unable to attract an FDI. In the past two decades, many governments have become increasingly aware that mining companies are selective in their choices and that, in order to attract investors, they need to implement regulatory and legal reforms, and establish effective regulatory structures. Countries can improve the likelihood of mineral sector investment by taking steps to satisfy investor decision criteria through informed policies and regulations. Over the past two decades, more than 110 countries have revised their mining and related rules and regulations or made major amendments to them (Otto, 2006). While China and India are among those countries, as the previous section has shown, policy and regulatory changes did not lead to a lowering of most risks for foreign mining investors. Improved regulation per se does not automatically attract more foreign investment. Despite the high geological potential, the combination of various issues places China and India in an unfavourable position in the global market for foreign mining investment. The low level of foreign investment in China and India’s mining industry is a direct result of inadequate and ineffective fiscal and regulatory regimes governing foreign mining investment, inconsistent and unclear policy towards foreign investment, the lack of geological information, unfavourable political environment, a host of environmental and social issues, the low quality of infrastructure, and several other issues concerning profitability, geography and socio-economic development. It is also a direct result of strong and competitive domestic mining industry that is largely protected from foreign competition. While the overall conditions for foreign mining investment are slightly more positive in China than in India, they are far from attractive for foreign mining companies and the two countries, by and large, show a high degree of resemblance. Although China and India have introduced regulatory and legislative changes that promote foreign investment, some policy makers in both nations view foreign involvement in their mining sectors with suspicion, viewing them as exploiting the national heritage or patrimony. Both nations also perceive it to be a national duty to have direct control of the sector. China has a very strong domestic mining industry, and the country has managed to become one of the leading non-fuel mineral economies in the world without much foreign mining investment. In fact, its state-owned mining companies have recently also moved to become a major engine of FDI in mining. In the case of China, and India to a lesser extent, the policy to maintain and grow domestic mining companies clearly affects the policy direction towards an FDI in the sector. While it is beyond the scope of this paper to offer policy recommendations to the Chinese and Indian governments, some minor points are in order. If their policy is aimed at increasing inflows of foreign capital into the sector, the performance of regulatory regimes governing foreign mining investment must be improved, along with a host of other factors. Attracting foreign mining investment not only requires favourable and consistent government policies and effective regulatory and fiscal systems, but needs to be supplemented with active marketing programs, designed to attract investors. For mining companies to be willing to engage in exploration and extraction, they need to assess whether the volume and quality of the minerals are likely to be sufficient to make an investment profitable. This requires, among other things, access to basic geological data. Regulatory and other required changes in China and India’s mineral industry foreign investment conditions do not have to imply that they should embrace a system that is in effect a “race to the bottom,” where all benefits flow to the company and risks are minimised. The bottom-line is that many systemic and geological risks remain that are beyond the control of government. Rather, they can improve the likelihood of mineral sector investment by taking steps to satisfy investor decision criteria through regulatory structures that are clearly established and that guarantee ‘security of tenure’ (Otto, 2006). At the same time, the challenge for developing countries such as China and India is to regulate multinational companies’ activities in line with national development priorities, while making it attractive for these companies to invest. For an instance, an effective fiscal regime for mining should seek to satisfy the requirements of both the government and the companies.