Companies reaches a time when they feel that the local demand is fully saturated therefore opt for foreign investment. This move is being taken by all players in an economy from education institutions such as universities to financial services companies such as banks. 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. What have softened governments is discovering that their country gains to gain from foreign investors through.
Creating of employment to the local residents of the country. Companies when they expand will require personnel with local expertise. Thus the country resident will get employed and earn their wages and salaries from the business.
Improvement of the infrastructure. Foreign companies are known to partner with the country’s authorities to improve on the transportation and communication channels. The foreign company also pays fees and taxes to the government which will be invested in the economic growth and development of the country.
Introduction of innovative products and services. Such as by allowing a foreign school to settle the county get exposed to new curriculum. Hence the people of the country get exposed to the education of different countries.
Some of the laws being passed to encourage foreign investment involves.
Statutes concerning with land and real properties. One mechanism used to discourage foreign investment was policy that they had to acquire land in the country. The problem was that the land owners in the country were afraid of their land being acquired by foreigners. 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.
Reduction of the foreign company business registration requirements. Foreign governments usually ensured that a non-resident company had to go to very many government offices before getting approval to do business in the country. 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.
One aspect that foreign government has maintained and in some cases increased is the fees and taxes that the non-resident company is expected to pay. Foreign governments have raised the minimum capital requirement for the non-resident companies. Non-residents are being advised that the high payment are compensation to the local government efforts of making it easy for them to expand.
With time it will become necessary to revise the capital requirements of a non-resident company.