Private Sector Investment programme (PSI) Frequently Asked Questions

Transcription

1 Private Sector Investment programme (PSI) Frequently Asked Questions 2014

2 In this document, answers to frequently asked questions can be found. The questions have been divided into the following categories: 1. Questions related to finance 2. Questions related to eligible costs 3. Questions related to the selection procedure 4. Questions related to project implementation 5. Other questions Annex 1 Country list These questions and answers are only intended to provide general information on the PSI programme. No rights can be derived from this document. In the event of any discrepancy between this information and the PSI Guidelines ('Besluit Private Sector Investeringsprogramma'), PSI List of Terms, PSI Application Form or the administrative decision ('beschikking'), this document has lower precedence. 1. Questions related to finance Is co-financing from other non-commercial parties allowed? Co-financing by any other government fund or subsidy is not accepted (neither Dutch, nor any other government). Co-financing by other non-commercial parties is accepted up to a maximum of 80 percent of the total project's budget (including PSI's contribution). Once the subsidy has been awarded, will I receive advance-payments? Applicants will receive payments but in most cases the payments will trail behind the actual expenditure. Therefore the consortium must be able to pre-finance the project cost. Advance payments will be turned into definite payments only after completion and approval of the full project. Page 2 of 9

3 2. Questions related to eligible costs What is understood by hardware? The machines, the equipment, buildings and all costs related to installation of these items (including computer software), that are necessary for the realisation of the project. What is understood by technical assistance? The costs for services, such as training, transfer of knowledge, certification and project management, which are supplied within the framework of the project and are needed to successfully implement the project. Can second-hand goods be bought in a PSI project? Yes, provided that reasonable warranty terms are provided and the price can be checked on market conformity. Market conformity will be assessed by an independent validation bureau, paid for by the Netherlands Enterprise Agency. All second-hand goods must at least comply with SGS quality standard SHA-4. That is, they must be complete, in good working order and free of excessive wear. What is a market conformity check? A check on market conformity is a tool to determine whether goods are bought at a reasonable price. Whenever the value of hardware and services acquired under a PSI subsidy exceeds a certain amount, the market conformity of the price must be verified by an independent validation organisation (such as SGS). After the project has been approved and result one has been completed, the applicant can send a request to check market conformity to the validation organisation. The Netherlands Enterprise Agency will bear the cost of this process. The market conformity report must state that the price is fair and reasonable as compared to prices on the local or global market. Does the hardware acquired in the PSI project have to come from the Netherlands? No. The hardware can be bought wherever the companies involved get most value for money, provided that the machines and equipment comply with the international quality standards with regard to health, environment and safety. Are all project costs eligible for PSI finance? No, some costs are not eligible for PSI reimbursement. For example, operational costs, the cost of purchasing land or existing buildings are not covered. Costs made before the issue of the official subsidy decision cannot be covered either. The PSI Application Form provides a detailed overview of which costs can be reimbursed and which costs cannot. Is there a maximum amount for project management cost? Yes, project management should be in proportion to the project size and should not exceed 80,000. Project management entails travel and accommodation cost and such activities as organising meetings, drafting business plans, reporting to the Netherlands Enterprise Agency etc. The applicant must specify the number of days spent on project management per result. Page 3 of 9

4 Can security cost be financed through the PSI Plus programme? Yes, part of the security cost can be included in the project budget. In addition to the project budget, the Netherlands Enterprise Agency can reimburse costs for MIGA SIP insurance of foreign investments, against physical damage or losses due to war or civil disturbance, expropriation and restrictions in transferring foreign currency out of the country or a similar insurance by other providers. The Netherlands Enterprise Agency can provide support in the application process at MIGA SIP. In case of a similar insurance form another provider, please contact the PSI Plus project officer for more information. This insurance covers up to 90% of 'equity investments' (including PSI grant) and up to 95% of 'debt investments'. Investments made by the local partner are not eligible. See also Page 4 of 9

5 3. Questions related to the selection procedure How is the selection of project proposals carried out? The selection procedure comprises several steps, and takes up to 22 weeks. Firstly, the application will only be considered when the formal requirements have been met. The second step consists of a check on the admission criteria. If a proposal does not meet one or more of the admission criteria, the application will be rejected. Once the formal requirements and the admission criteria have been met, the application will be assessed on content and financial feasibility, based on the evaluation criteria. If one or more components are judged unsatisfactory, the application will be rejected. The fourth step is to compile a ranking of all positively evaluated proposals. In the fifth step the PSI Advisory Commission (APSI) issues a positive or negative recommendation for each proposal, based on the detailed evaluation and ranking of the Netherlands Enterprise Agency. In principle, the Netherlands Enterprise Agency will follow the committee's recommendations. During the selection procedure, verification of the information provided in the proposal may be carried out by the Netherlands Enterprise Agency by means of consulting external experts, the Dutch embassy in the country concerned, or other expert bureaus, and by means of actual visits to the applicant and/or the local partner(s). If contradictory information is found, the Netherlands Enterprise Agency will give the applicant the opportunity to provide an explanation for this disparity. For more detailed information on the selection procedure, see the PSI guidelines. How do applications compete with each other? The Netherlands Enterprise Agency will compile ranking lists of positively evaluated proposals. There are two ranking lists: one for the Arab region and one for the rest of the world. The score will be based on all PSI criteria. For the Arab region, the best assed qualifying project for each individual country will be selected prior to ranking the rest of the positively evaluated proposals. What happens when my project plan is selected for PSI finance? When a subsidy has been awarded, the Netherlands Enterprise Agency will invite the applicant to discuss the detailed implementation of the project, including the results to be met. After this meeting the Netherlands Enterprise Agency will send you the administrative decision ('beschikking'), based on the original application and the outcome of the discussion. This administrative decision will state the obligations associated with the subsidy. The project results will be an important part of the decision, as final payment will only occur upon achievement of the results. How often is a tender opened and where can I find information on the tender procedure? The tender of 2014 is the very last call for proposals for PSI. More information on the PSI Guidelines can be found on our website Can I start with any of the project activities before the PSI subsidy decision has been received? No, project activities coming under the PSI project may not be started before the PSI subsidy decision has been issued. Page 5 of 9

6 4. Questions related to project implementation What is the duration of a PSI project? The duration of a PSI-project should be either 30 or 36 months. Project duration of 36 months is allowed for projects in the agricultural, horticultural, forestry or fisheries sectors. All other projects should be completed within 30 months. Who becomes the owner of all PSI hardware? If a joint venture is set up for the project, the new joint venture company naturally becomes the owner of this hardware. In other cases, the local partner in the PSI country becomes the owner of all assets bought within the PSI project. Does my company have to provide the initial funding for all project equipment and technical assistance or will PSI provide advance payments? Partial pre-financing of project cost is required. After completion of result one (which comprises the setting up of the Joint Venture and completion of the paper work related to the project) advance payments will be made every three months (for projects which started before 2012 advance payments are made based on Results achieved and Hardware invoices). The amounts of advance payments will be given in the grant award letter. Advance payments are made official after the project has been finished and after the project results have been approved by the Netherlands Enterprise Agency. Page 6 of 9

7 5. Other questions Is PSI a subsidy? Yes, PSI is a subsidy programme. What is the aim of PSI? The aim of PSI is to promote sustainable economic development by boosting investment in significantly innovative projects in the private sector in developing countries. It aims to make a relevant, positive contribution to self-reliance and poverty reduction by creating economic activity and jobs and raising income levels. How detailed should my description of the project results be? It is not so much important that the project results are described in great detail, but rather as verifiable results. The applicant is required to give a (set of) success indicator(s) for each result. These indicators must be Specific, Measurable, Attainable, Realistic and Time framed (SMART). See 'PSI in Practice' for a detailed description. How does the Netherlands Enterprise Agency handle the different foreign currency exchange rates? The Netherlands Enterprise Agency makes payments exclusively in euros. Possible exchange rate differences are not reimbursed by the Netherlands Enterprise Agency. Exchange rate risks are therefore at the partners' expense. What are the main differences between PSI Plus and PSI Regular? PSI Plus focuses on fragile states/regions; PSI Plus offers extra arrangements for security costs; PSI Plus offers more flexibility in combinations of project partners. What are the main differences between PSI and PSI Arab? The criteria for projects in the Arab region are almost the same as for projects in other countries. The only difference is that for PSI Arab there is a preference for projects that focus on employment of young people and women and projects with a Local Partner owned by young and female entrepreneurs. Therefore, there is a different budget and ranking for the countries in this region. The procedures and documents are the same. Can the Netherlands Enterprise Agency guarantee safety in the PSI Plus region? No, the Netherlands Enterprise Agency cannot guarantee the safety of a project nor the personal safety of workers and employees involved. However, it is allowed to allocate part of the project budget for safety measures, based on the security risk assessment and the operational security plan in the application form. In addition the PSI Plus reimburses costs for MIGA SIP insurance of foreign investments or a similar insurance by other providers (see under 4. Questions related to eligible costs). What is MIGA SIP? MIGA stands for Multilateral Investment Guarantee Agency and is part of the World Bank. Through the Small Investment Program (SIP), it offers a standardised package of risk coverages that includes currency transfer restriction, expropriation, and war and civil disturbance. It can cover the invested capital of the foreign investor. Page 7 of 9

8 My project is approved for PSI Plus, does that make it automatically eligible for MIGA SIP? No, the Netherlands Enterprise Agency and MIGA cooperate in assessing the project proposals, but both organisations have their own criteria. After approval, MIGA will contact you. If you have selected another provider, please contact the PSI Plus project officer for further information. Is the PSI grant liable for tax in the Netherlands? That depends, but based on jurisprudence one may conclude that a PSI grant is not taxable for corporate tax. In the Netherlands grants are only liable for corporate tax in cases where these subsidies directly reduce prices, the recipient does something in return for the grant provider and the grant provider is the user/consumer of these services/goods. Is the hardware purchased for the PSI project liable for tax in the project country? The basic principle is that every country is fully autonomous with respect to local taxation. However, Official Development Assistance (ODA) in the form of cash or hardware is in most cases exempt from taxation as subsidies are generally not considered as income. The local partner of the project could approach the local tax authorities to elucidate the origin of the assets. Please inform the Netherlands Enterprise Agency if the taxation is not cancelled after such a clarification. In that case we will ask our Ministry of Foreign Affairs to raise the situation in regular bi-lateral consultations between the Dutch embassy and the local authorities. Nevertheless, local authorities have full autonomy in this respect. Page 8 of 9

9 Annex 1 Country list PSI Africa Angola Benin Burkina Faso Burundi ** Cape Verde * The Democratic Republic of the Congo ** Djibouti Ethiopia The Gambia Ghana Kenya * Madagascar Malawi Mali Mozambique Nigeria * Rwanda Senegal Sierra Leone ** South Africa Sudan South Sudan ** Tanzania Uganda Zambia Asia Afghanistan ** Bangladesh Cambodia Indonesia * Laos Mongolia * Myanmar Nepal Pakistan ** The Philippines * Sri Lanka * Thailand * Vietnam * Central and Eastern Europe Albania * Armenia * Bosnia and Herzegovina * Georgia * Kosovo * Macedonia * Moldova * Latin America Bolivia Colombia * Guatemala ** Nicaragua Peru * Suriname * PSI Arab Algeria * Egypt * Iraq ** Jordan * Libya * Morocco * The Palestinian Territories ** Tunisia * Yemen ** * So called "tied" countries. Only Dutch companies may submit applications for these countries. For all other countries businesses from around the world may submit applications, except for businesses from the project country itself. ** PSI Plus countries. Plus countries are fragile states with a higher risk for entrepreneurs and are therefore eligible for a higher percentage of subsidy and for coverage of insurance costs. Page 9 of 9