FOR IMMEDIATE RELEASE
Wednesday, May 15, 2002

Statement of 

ROSS J. CONNELLY
EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
OVERSEAS PRIVATE INVESTMENT CORPORATION 

Before the 

COMMITTEE ON INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES

May 15, 2002

Chairman Hyde, Mr. Lantos, and Members of the Committee, it is a special privilege for me to appear before this Committee today to review the work of the Trade Promotion Coordinating Committee (TPCC) in support of President Bush’s National Export Strategy.  We deeply appreciate your past interest and support of OPIC activities, and look forward to continuing to work with you, your Committee and your staff.   

I am here on behalf of Dr. Peter Watson, OPIC’s President and CEO.  Dr. Watson deeply regrets he could not be here in person due to previously scheduled travel to Africa as part of OPIC’s special initiative to spur development and promote investment in sub-Saharan Africa.  

Because this is our first opportunity to come before the Committee, in addition to speaking about the important work of the Trade Promotion Coordinating Committee, I want to briefly take this opportunity to report on OPIC generally and the improvements and refocus Dr. Watson has brought to OPIC since joining the agency last year. 

Overview on OPIC 

No other American public or private organization invests in developing countries with the scope and focus that OPIC does. OPIC currently operates in 150 countries – financing economic development projects large and small, and mitigating economic and political risk. Through its work, OPIC plays an uncommon and indispensable leadership role in developing emerging markets, expanding global commerce and fostering rule of law worldwide. The unprecedented events of 2001 have brought fresh relevance to our work. 

Over the agency’s 31-year history, OPIC has supported $138 billion worth of investments in 3,000 projects from Algeria to Zimbabwe.  These same projects have generated $64 billion in US exports and created nearly 250,000 U.S. jobs.  The activities of these projects are as diverse as the countries that host them, and have played a key role in the development of host country economies. 

Through the use of user fees and prudent risk management, OPIC has achieved these results at no net cost to the American taxpayers. Over its history, OPIC has built up reserves of over $4 billion. 

Mission 

The world has changed significantly since OPIC was founded more than three decades ago, but our mission has not: “To mobilize and facilitate the participation of the United States private capital and skills in the economic and social development of less developed countries and areas…thereby complementing the development assistance objectives of the United States.”  

Our objective since coming to OPIC has been to re-focus on our statutorily mandated mission, by aligning our products and services in a manner that supports the mission, while also recognizing a robust and growing private market that has developed since OPIC’s founding.  

As such, we have concentrated on, among other areas: refocusing OPIC on its core, developmental mission; rededicating our commitment to small business; and ensuring that OPIC’s products are complementary, not competitive, with the private sector. Each of these reforms will also contribute importantly to meeting the goals of the TPCC report. 

Development & Additionality  

We are working actively to strengthen OPIC’s consciousness of its historical developmental mission. In the process, we look to assess the investments that OPIC ultimately supports by more than simple dollar flows; that is, to critically examine and benchmark the added value of a particular investment to the host country, or as we say, to assess the additionality the project represents. 

Our goal is to ensure that OPIC’s participation “adds value” by measuring the extent to which there is a market failure, the degree to which OPIC can leverage its resources for a broader economic impact, and the extent to which the project in question contributes to the overall economic development of the host country.

A practical result of this new policy has been a sustained OPIC focus in sub-Saharan Africa where the development challenges are great and the opportunities for OPIC to act as a catalyst for private sector investment are promising. 

Small Business 

Recognizing that both overseas development and US economic growth are increasingly dependent on the vital role of small and medium sized enterprises, OPIC has been committed to improving and expanding the access of small businesses to OPIC programs. 

Given its small staff, OPIC has done well in reaching out to small and medium-sized (SME) businesses.  Of the 37 new insurance and finance projects that OPIC supported in FY 2001, approximately 57 percent involved American small businesses.  In addition, thousands of SME’s participate as suppliers to OPIC supported projects. 

But more needs to be done, and in this regard, I am pleased to report that one of OPIC’s key priorities under the presidency of Peter Watson is to establish an innovative framework agreement between OPIC and the Small Business Administration (SBA).  This important cooperative relationship will provide a new dimension for American small businesses currently working with the SBA by providing a vehicle to seamlessly connect interested companies with the tools and products that OPIC offers to invest internationally. We hope to formalize this relationship in the near future. 

Complementarity 

OPIC’s ability to refocus on the developmental nature of its projects is made possible in part by the growth and success of private market financing and insurance mechanisms. This growth allows OPIC, with its unique strengths as a government agency to complement the private markets by working in countries that the private sector would otherwise not participate but for OPIC’s involvement. 

The President’s FY 2003 budget to Congress recognized this fact when it noted that, “OPIC also will implement new procedures to direct its activities toward filling important gaps in the private market and not undercut private finance or insurance.” 

OPIC recognizes that the private sector is in the best position to recognize and respond to business opportunities and risks in developing and emerging markets. OPIC therefore needs to work in tandem with private business to leverage private sources of financing and insurance to the maximum extent possible, while functioning as a “market of last resort” for projects that private investors and insurers would not or could not support on their own. We will continue our work in this important area.

OPIC and the TPCC 

Mr. Chairman, in his introductory letter to the TPCC report, President Bush makes clear the central goal of his unified U.S. trade policy: providing American companies the information, expertise and financing they need to take full advantage of the opportunities which exist in international markets. The President expects that the TPCC agencies and departments will achieve this goal by providing customer service that is responsive, streamlined and results-oriented. While the report contains many specific recommendations, they are all in service of a single objective: providing investors and exporters “with the tools they need to compete”.  OPIC is committed to working with our sister agencies to meet this worthy objective. 

What is so promising with many of the recommendations of the TPCC report is how far agencies have already gone in implementing them. Taken as a whole, these actions represent demonstrable progress toward better coordination between OPIC and its sister agencies; improved customer service; and more aggressive outreach to the American business community, particularly small and medium sized enterprises. 

Agency Coordination 

The TPCC report calls for a strategic approach in early project development as well as better coordination for crisis regions.  I am pleased to report that many of the agencies are already putting together a track record. 

In September 2001, OPIC, the Export Import Agency of the United States (EX-IM) and the US Trade and Development Agency (TDA) joined together to support a joint trade and finance initiative to promote US investment in Indonesia, a key US foreign policy priority. 

In October 2001, OPIC announced a $300 million special line of credit for Pakistan to support US investment.  This was followed in February 2002, by a joint OPIC, EX-IM, TDA investment mission to Pakistan to promote economic development with this key ally. 

And finally, in January 2002, OPIC announced a $50 million line of credit for Afghanistan. Since that time, OPIC has been working closely with TDA to promote investment opportunities in Afghanistan in the telecom and construction sectors. We have made significant progress thus far, and expect that within a reasonable period of time, we can fulfill our promised line of credit. 

Better Customer Service for US Companies 

The TPCC report calls for better customer service for US companies, with a strong cross-promotional effort across all agencies. OPIC strongly supports this recommendation. No better example of this recommendation can be found than our ongoing efforts to cooperate with the SBA, referenced above. 

 In the same spirit as our SBA cooperation, OPIC looks forward to creating a new relationship with the Commercial Service (CS) that will similarly leverage the products and services OPIC promotes with the global reach of CS officers. 

OPIC has an excellent working relationship with the EX-IM Bank and as the TPCC reports recommends, will initiate discussions to ascertain whether there are process improvements that we can jointly administer that can provide meaningful savings and time reductions for clients of both organizations.  

 These efforts will compliment ongoing, internal OPIC activities aimed at increasing responsiveness to clients and streamlining business processes to minimize red tape and reducing cycle time from application to contract signing. 

Conclusion 

In conclusion Mr. Chairman, the recommendations of the TPCC report represent a course that will significantly enhance progress toward better coordination among our agencies, improved customers service and a more seamless and strategic approach to a national export strategy; all in support of US business, especially small business. 

I would be remiss in closing without noting that the recommendations in the report were based on a survey of US exporters, which identified their expectations and needs.  It is vital for our agencies to always keep in mind the investors understanding of the global marketplace, its vagaries and opportunities, in formulating our unified trade program. In that context, we at OPIC have more to accomplish before we have made our full contribution to this process, but we are confident that our attention to investors’ needs has placed us on the right path.  

Thank you, Mr. Chairman.