How Foreign Film Commissions Can Lower Production Costs

By Kevin Garrett Monroe

PRODUCTION companies are often hesitant to film in other countries because of the perception that there may be a lack of qualified technical and professional services, and the anticipated increase in funds required to set up production. In recent years, however, to bolster their local film industries, many countries have attempted to help foreign producers overcome these obstacles by establishing a local film. commission affiliated with the Association of Film Commissioners International (AFCI) and by offering grants, interest-free loans and other financial assistance. Historically, Canada has been a leading provider of local assistance and attractive financial programs to foreign producers. But a growing number of other countries are training their entertainment professionals and offering financial packages to foreign filmmakers, in order to foster local film production business.

Typically, a film commission serves as an entertainment data center that provides information to film producers about local production facilities, talent, producers and technical services. These commissions are often government-funded organizations that do not charge a producer for services. In 1998, Ireland, Italy, Hong Kong and Austria each formed film commissions, and efforts are being made to create a film office in Johannesburg, South Africa.
On the other hand, if a country does not have a film commission, a foreign filmmaker will most likely have to seek out a local production company to supply the services that would otherwise be provided by the film commission. The local producer will typically charge a fee for these services. Thus, countries with government-funded commissions are of financial benefit to the foreign filmmaker.

The foreign filmmaker can be almost certain to receive quality service from a film commission that is a member of the AFCI. The AFCI is an organization that educates and trains its members on how to better serve the foreign or domestic filmmaker. Once a year, the AFCI sponsors a seminar called the Film Industry Section, Department of Communications,
"Cinesposium” to train film commissioners all over the world. (For more information about the organization or a directory of its members, contact the AFCI at 323-462-6092.)

In addition, some foreign governments have allocated funds for training film professionals locally. For example, the government of Hong Kong has a fund with a budget of \$100 million for seminars and programs to train film and television professionals, and the government of Italy is considering a similar program for its film industry professionals. (Note all financial figures cited in this article are in U.S. dollars.)

Governments are also providing various financial incentives for the foreign filmmaker, to build local film industries.

Australia

Foreign filmmakers planning to produce a movie in Australia may receive a development loan or a production grant from the national government in Australia (also known as the "Film Bank"), through the International CoProduction Program (ICPP). The Film Bank has approximately \$80 million in reserve to foster the local film industry. ICPP is a program created by the various co-production treaties that Australia has entered into with Canada, France, Israel, Northern Ireland and the United Kingdom. (Australia is currently working on a treaty with Germany.) If American film producers, or producers from countries not party to these treaties, wish to benefit from this source of funding, they must partner with a producer from a country that is party to the co-production treaty.

The Australian Film Commission (AFC) prescreens the co-production applications and submits qualified co-production teams to the Film Bank for consideration. In determining whether a production partnership qualifies as a coproduction, the AFC evaluates the following:
• The creative team,
• The underlying script,
• The potential career development of the
principals in the movie,
• The talent and skill of the principals,
• The likelihood the work will be completed,
• The likelihood the project will obtain other
production financing, and
• The availability-of the funds.

Preference will be shown to projects with significant indigenous creative control. Productions granted official co-production status by the AFC must then apply to the Film Industry Section, Department of Communications, Information Technology and the Arts (FIS), in order to access the funds from the Film Bank. The AFC merely prescreens the applications; the FIS makes the final funding decisions. Each development loan issued by the Film Bank is due on or before the first day of principal photography, including a premium of 5 percent interest on the principal. In addition, the Film Bank is entitled to a percentage of the net profits from the movie, and a credit on the finished. film..

Various states in Australia also provide grant funds for movie projects filmed in their respective state. The qualification requirements vary but are typically similar to the national grant eligibility requirements. Some state funds have budgets of as much as \$3 million-\$4 million, while others are substantially less; for example, South Australia awarded only \$600,000 last year.

Austria

Austria has established two film financing opportunities for the foreign producer which include the Vienna Fund -for projects completed in association with an Austrian producer - and the Cine Tirol Film Fund - for projects completed in the Cine Tirol region.

The Vienna Fund has a yearly budget of \$20 million and requires a foreign producer to develop films with a local Austrian film producer. This requirement is known as a .co-production arrangement." The Austrian Film Commission maintains a list of local producers in Austria with international co-production experience who are qualified to enter into co-production arrangements with foreign filmmakers under the Vienna Fund. Also, each film project funded by the Vienna Fund must spend at least 300 percent of the funded amount in the Vienna community (e.g., filming costs, talent, hotel and travel expenses, etc.).

The Cine Tirol Fund, started in April 1998, provides money for films with any one of the following criteria:
• The project is developed in the Cine Tirol
region,
• The underlying story concerns an event or
the people in the Cine Tirol region; or
• A sufficient number of the people who five
in the region are working on the project.

The Cine Tirol Fund has a yearly budget of approximately \$1.4 million, and the maximum funds awarded under the fund are about 20 percent of a film\'s production budget. Each production company must spend at least 200 percent of the funded amount within the region. Unlike the Vienna Fund, no co-producer arrangement is required. However, the Cine Tirol Fund is not a grant, it is an interest-free loan to the production company The production company is only required to repay the loan if the movie is a "success." Periodically, producers are required to provide the fund administrator with financial records concerning the revenue of the movie. The Cine Tirol Fund has helped develop several films, including "Seven Years in Tibet" starring Brad Pitt.

France


Foreign filmmakers who wish to develop projects in France may receive funds from the national government of France through the "fonds de soutien." This fund provides money on an average of up to 15 percent of a film\'s production budget. The "fonds de soutien" is available pursuant to co-production treaties with Canada and Great Britain. Co-production treaties are government-to-government treaties, or "less-than" treaty status arrangements, whereby each government agrees - based on certain criteria such as a point system - to provide a certain amount of funds to a production company or a producer from a country that is a party to the treaty. Often U.S. producers, or producers from countries not party to these treaties, will team up with a Canadian or British producer, in order to benefit from this source of funding if they plan to produce a movie in France. To qualify for the fund, a producer must also satisfy a point system based on the movie\'s European content (e.g., nationality of the cast, the language spoken in the movie, etc.).

Germany


Foreign producers who wish to develop projects in Germany may receive national and state (regional) government grant funding, as well as private (nongovemment) funding support. To qualify for a grant, a film does not have to be based in Germany; however, the foreign production company must co-partner or co-produce the film with a German-based production company. Unlike the Vienna Fund in Austria, there is no list of qualified local German
producers that a foreign producer must partner with, nor is there a point system similar to the Canadian or French coproduction arrangements. The producer is required to spend at least 130 percent of the grant funds received, in Germany.

Although the private funds are not derived from the German national or state government, they sometimes require a government guarantee. Private funds are often more flexible than the government funds and do not require that a local German co-producer be involved, unless the government backs or guarantees the production or distribution of the movie. Generally, the governmental grant funds discussed above are best suited for the independent production company, while the private funds are best suited for the major production companies in connection with a "blockbuster" film.


Jamaica


This year, Jamaica established a grant fund program for foreign filmmakers interested in developing projects in Jamaica. The National Investment Bank of Jamaica, a government institution, provides this new Jamaica film fund. Each grant will be approximately up to 20 percent of a film\'s production budget for films made in that country. The Jamaican Film Commission (JFC) selects the grant awardees. Currently, no specific guidelines or criteria to qualify for this grant exist, nor is there a co-partner or coproducer requirement. The JFC is seeking projects that will encourage the use of Jamaican technicians and professionals, as well as those projects that portray Jamaica in a good light. The JFC intends to formalize the grant guidelines and application process in the near future.

Other Countries and Benefits


There are other countries that do not offer government grants or loans for foreign filmmakers, but offer financial support in production-cost saving measures. The following are examples of cost-saving measures offered in various countries around the world:
• In the British Virgin Islands, foreign
filmmakers do not have to pay location fees,
taxes on production expenses, or custom
duties.

• In Ireland or Germany (and, of course,
Canada), the foreign film producer can take
advantage of the various tax incentives.

• In Italy, the national government will
reimburse 50 percent to 70 percent of the
foreign producer\'s hotel and travel expenses.

• In the Philippines, a foreign producer can
save up to 90 percent on estimated labor
costs.

• In South Africa, foreign filmmakers can save
production costs, considering that, as of
early May, that country’s rand was worth
just 17 cents against the U.S. dollar.


A Checklist for Producers
Considering Foreign
Productions

PRODUCERS considering filming outside of their country should first contact the foreign country’s film commission. The following are some questions the producers may want to ask the local film commission:

1. Are you a member of the Association of Film Commissioners International? If not, does the government provide funds for training local film industry professionals?

2. What percentage of the project must be filmed in the country to receive regional or national funds?

3. What other financial benefits are offered in your country (i.e., grants, interest-free loans, tax incentives, reduction in expenses, etc.)?

4. Is the funding a grant or a loan?

5. What are the qualifications to receive the grant or the loan?

6. Is a co-production arrangement necessary to receive funds?

7. Is your country a member of a co-production treaty?

8. If a co-production arrangement is necessary, is there a list of required or recommended local producers to choose from?

9. What percentage of the film’s production budget will the fund finance?