Dutch and local companies active in emerging markets try to bring the (financial) risks to acceptable level. Agriment International’s combines its know how and experience in agriculture- and food with services for obtaining project financing for international investment projects through subsidy programs and commercial financing. A non-exhaustive selection of available Dutch subsidy and financing programs and links to the implementing agency is presented hereafter.
PSI – Private Sector Investment program (formally PSOM)
Pilot projects that encourage (Dutch) investments in emerging markets and trade relations with local companies in emerging markets
PESP – Program for Economic Co-operation ("On - Hold")
Feasibility- and pre-investment studies for international projects leading to Dutch exports
ORET– Development related Export Transactions Programme ("On - Hold)
Dutch hardware exports to less developed countries.
FOM - Fund for Investments in Emerging markets
Financing of investments in subsidiary or joint venture by a Dutch company.
PSI - Private Sector Investment program (formally PSOM)
The well known and effective PSOM program, suddenly stopped during the summer of 2008, was financed by the Dutch Ministry of Economical Affairs (PSOM-EZ) and the Dutch Ministry of Foreign Affairs (PSOM-OS).
PSI will be the substitute for the PSOM-OS program. The available budget for PSI will be increased with € 15 million compared to the PSOM-OS budget, to € 70 million per year.
The first PSI tender is expected to open by the end of 2008.
The PSI programme aims to promote private investments in emerging Markets. The PSI program offers financial support to Dutch entrepreneurs and their local partners in emerging markets in Central- and Eastern Europe, Africa, Asia, Central- and Latin America.. The programme will entail pilot investments that set up a new business venture in one of the selected countries.
The list with eligible countries for PSI-financing is more or less the same as the list for the last PSOM tender as far as OS-countries are concerned. Notable changes are following:
China and Sri Lanka will be excluded for the PSI program starting the first tender;
Equator and El Salvador will participate only in the 1st PSI tender and will be excluded afterwards;
Honduras will participate in the first 2 tenders and will be excluded afterwards;
Brazil (North East) and Namibia will participate in the first 4 tenders (2 years) and will be excluded afterwards;
Another important change might be that, for a number of emerging markets (the Least Developed Countries), the applicant does not need to be a Dutch company . This can be a company from any country.
For the countries for which the former PSOM-EZ applied (Russia, Ukraine, Serbia, Montenegro and Turkey) the situation is not clear at this moment. It is expected that for the short term, a new program with limited financial support (indicative maximum budget € 200.000) will be put in place.
For the long term, the Ministry of Economical Affairs is investigating the possibilities to introduce a new program, that has the same characteristics as the former PSOM-EZ program. In any case, whether this will be possible is not clear and this is not expected to happen during 2008.
Implementing agency:
EVD (www.evd.nl)
Financing:
Assuming that PSI will be comparable with the former PSOM-OS program, the maximum budget of a project submitted for PSI-support is expected to be € 1,5 million. Up to a maximum of € 750,000 of the approved project costs could be a grant. The remaining part (50%) will have to be born by the project partners.
PESP - Programme for Economic Co-operation ("On-Hold")
The PESP - program was designed to stimulate exports from the Netherlands to foreign (emerging) markets. For this purpose, PESP financed feasibility studies and pre-investments studies, as well as business missions of foreign partners to the Netherlands. In the summer of 2008, the PESP - program was stopped. As it looks now, the PESP - program will not be continued in its current form after 2008. There is however a good chance that a new program will be launched that enables individual companies to carry out feasibility studies and pre-investment studies for clients in emerging markets.
Implementing agency:
EVD (www. evd.nl)
Financing:
The former PESP subsidy covered 50% of the approved budget for the feasibility or pre-investment study. The maximum project budget was € 270,000 thus the maximum subsidy amount is limited to € 135,000. The value of the subsidy amount may not exceed 10% of the (expected) export when the project is to be implemented, eventually.
ORET - Development related Export Transactions Program ("On-Hold")
The aim of support via the ORET program is to improve employment, trade, industry and environmental protection in emerging markets through assisting countries in financing the import of necessary capital goods, services, construction works or a combination thereof. The transaction should contain enough technical assistance, spare parts, follow-up support etc. to ensure the sustainability of the project. The Oret program was stopped. Minister Koenders of Development Aid has announced that he is planning to launch a new program in the end of 2008, being operational from the 1st of January 2009.
Implementing consortium:
PricewaterhouseCoopers and Ecorys ( www.oret.nl)
Financing:
The transaction amount did not exceed € 30 million. The grant amounts 35%, for least developed countries the grant is 50%. The grants are offered to the national government of the developing country where the project is to be implemented.
FOM- Fund for investments in Emerging markets
The aim of the fund is to stimulate the Dutch private sector to invest in emerging markets by furnishing capital and experience. The Fund is a joint initiative of FMO and the Ministry of Economic Affairs in the Netherlands.
Implementing agency:
Netherlands Development Finance Company (FMO) (www.fmo.nl)
Financing:
Via FOM, FMO may extend medium and long-terms loans to a local subsidiary or a joint venture in which capital has been invested by a Dutch company. The contribution of FMO in financing in the framework of the FOM-program, can reach a maximum of € 5,0 million. A condition is that the Dutch company has majority in shares and is contributing ass well in financing the new investments.
Maturities reach from three to twelve years and a grace period up to three years is possible. Depending on the specific need for investment, FOM can take the form of a loan, a guarantee, a subordinated loan, equity or a combination. FMO prices its financing based on the market standards and individual risk profile associated with the investment.
Eligible countries for FOM-financing are all those members of the World Bank, with the exception of high income countries and the Netherlands Antilles and Aruba.