Many companies world are expanding their businesses past their countries bounders to other countries. Expansion of business over borders is a goal of all institutions from banking industry to schools. Some time back countries were very harsh to foreign companies trying to set up branches. Nowadays we have experienced in shift with countries becoming more friendly to foreign investment. This can be attributed to the numerous advantages of foreign investment such as.
Citizens of the country will have wide variety of employment vacancies. Companies when they expand will require personnel with local expertise. Hence the citizens will enjoy getting revenue from the foreign company.
Development of infrastructure. It is usual for companies expanding to other countries to have an agreement with the local government that they will offer assistance in developing the infrastructure. The foreign company also pays fees and taxes to the government which will be invested in the economic growth and development of the country.
Creation of supply of new goods and services. Such as by allowing a foreign school to settle the county get exposed to new curriculum. Therefore residents are able to acquire skills which there had to travel abroad to learn locally.
Some of the laws being passed to encourage foreign investment involves.
Legislation involving real estate. Some countries had very strict conditions that a business had to own a piece of land in order to operate in the Country. This was a major challenges as the locals may be reluctant to sell or lease their land to foreign companies. Also in addition land acquisition is a huge investment that many business will not want to incur especially with the risk it’s a foreign country. This laws was replaced by allowing businesses to have short term occupancy agreement of real estate with the residents.
Elimination of the unnecessary long approval procedures. Non-resident companies in the past had to submits very many documents before they could get the registration certificate. This would take a lot of time and many business would give up midway. This strategy aim to entice more foreign companies into the country.
However although countries are doing all the above they have added the financial cost required to trade in the country. Fees and taxes imposed on foreign companies has been raised at a very high rate by the local governments. The governments of the foreign countries will argue that to make the services delivery better they have to charge more.
Foreign government will at one point in time have to give in to the concerns raised by the high fees and taxes imposed on foreign companies.