Investment guarantees from the Federal Republic of Germany
In addition to Hermes Cover (export credit guarantees) and guarantees for unbound financial loans (UFK), investment guarantees are an established foreign trade promotion instrument of the federal government. As part of the guarantee, German companies can hedge their direct investments abroad against political risks in the country of investment. The funding instrument supports economic growth as well as securing and creating jobs in Germany and in the country of investment.
Subject of the guarantees
The subject of the guarantee are direct investments abroad in the form of:
- Holdings
- Capital endowments of branches
- Equity-Related Loans
- Other property rights
Income can also be secured.
Covered risks
If the losses were caused by political measures or events in the country of investment, the investment guarantees offer protection against the loss of shareholder / creditor rights, assets or income. The risks covered include:
- expropriation
- Case of war
- Payment bans or moratoriums
- Conversion and transfer risks
- Breach of state commitments
Condition of the guarantees
In order for a direct investment abroad to be the subject of a guarantee, it must meet the following requirements.
Investment character
The federal government assumes that it is a new or expansion investment. This must be done in the long term by a company based in Germany and with a recognizable German interest. In addition, the investment must be an economically viable, entrepreneurial project.
Eligibility
The investment project must have positive effects on the country of investment as well as on the Federal Republic of Germany. From the point of view of the investment country, this includes, for example, job creation, know-how transfer or foreign exchange generation. For Germany, positive repercussions on employment are of particular interest. Environmental, social and human rights aspects are an important part of eligibility for funding. The test procedure is based on the OECD Common Approaches, which also apply to Hermes Cover . In addition, the investment should also contribute to deepening bilateral relations with the investment country.
Legal protection
Sufficient legal protection must be ensured. Currently, legal protection is basically given by a large number of existing bilateral investment promotion and protection agreements (IFV). The European Union (EU) and the EU member states plan to replace the bilateral IIAs that Germany has concluded worldwide with agreements between the EU and the EU member states in the medium term. In exceptional cases, legal protection can also be provided via the domestic legal system of the country of investment. The current economic and political situation and the development of the investment country are also important.
Decision on granting a guarantee
The Interministerial Committee (IMA) is the federal decision-making body for the assumption of investment guarantees. The Federal Ministry for Economic Affairs and Energy (BMWi) decides in the IMA on applications for the assumption of investment guarantees with the consent of the Federal Ministry of Finance and in agreement with the Federal Foreign Office and the Federal Ministry for Economic Cooperation and Development .
The investment guarantees are processed on behalf of the Federal Government by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft as a federal mandate.
Individual evidence
- ↑ Federal Ministry for Economic Affairs and Energy, Public Relations Department: Funding Database - Funding Search. Retrieved January 10, 2018 .
- ↑ Investment guarantees : basic features. Retrieved January 10, 2018 .
- ↑ Investment guarantees: Covered risks. Retrieved January 10, 2018 .
- ↑ Text of the recommendation
- ↑ Investment guarantees : basic features. Retrieved January 10, 2018 .
- ↑ Investment guarantees : application. Retrieved January 10, 2018 .
- ^ PricewaterhouseCoopers: Investment guarantees of the federal government . In: PwC . ( pwc.de [accessed January 10, 2018]).