INVESTMENT: Take the Risk Out Of International Investment
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Business expansion may seem counter-intuitive in the middle of a recession, and yet it provides a unique opportunity for progressive companies to get the jump on their competitors while they hunker down to weather the economic storm. South African businesses looking to stay ahead of the pack should look no further than opening a branch in another country, where their services and/or products can bring additional profits.
Why International Investment Can Be Profitable
In the age of globalisation, international investment makes good business sense. Instead of opening your next branch in Pofadder, why not look at an opportunity that offers a wider market and tax incentives These are the two main reasons businesses look at offshore opportunities, as many countries offer tax incentives to foreign investors. The favorable tax rates are designed to promote a healthy investment environment that attracts outside wealth. For a tiny country with a small population, attracting investors can dramatically increase economic activity.
Companies looking to invest outside of their borders should look for an environment that offers incentives such as favourable tax and customs duties, the absence of restrictions on repatriation of capital and profits, reliable sources of water and electricity, an excellent supply and distribution chain and robust infrastructure, says Dr. Khater Massaad, CEO of the Ras Al Kaimah Investment Authority (RAKIA). If one of these things is not in place, there is more risk to the investment.
Measuring a country's risk can be a tricky endeavour. From tax laws to political upheaval, investors have to take hundreds, if not thousands, of different factors into consideration. For instance, solid moves like a hike in interest rates can dramatically affect a country's businesses and stock market. But even a mere comment from a prominent politician hinting at future plans can have just as large an impact.
The countrys regulatory and political condition must therefore be taken into consideration. As with any other investment, you should learn as much as you can about a country before you invest. Try to learn about the political, economic, and social conditions so you will understand better the factors that can affect your companys financial results and stock price, says Massaad.
There are many options available to South African businesses looking to take the step into new markets, with African countries being the prime targets due to their proximity. However, the Middle East offers far more stability and opportunity. For example, the United Arab Emirates (UAE), which is renowned for having one of the best regulatory environments in the region, offers a highly attractive economic package to foreign investors. An excellent infrastructure and logistic support, competitive energy cost, easy access to neighbouring markets countries, zero corruption and minimum bureaucracy, stable government and investor-friendly policies, have led to a global investment destination.
Foreign Investment in the UAE
South Africa is a key business and foreign investment partner in the UAE, with total bilateral trade reaching almost $2 billion, and South Africa is the 19th largest investor in the country. For this reason, a high-level delegation will be hosting events in Johannesburg and Cape Town on the 7th and the 8th of February respectively to showcase the many opportunities available to South African businesses.
No corporate and income tax
100 per cent foreign ownership in Free Zones
No foreign exchange controls, trade barriers or quotas
No restrictions on capital repatriation
Liberal labour laws
Cost of doing business is 20 to 30 per cent lower than other locations in the region
Ease in establishing and registering companies
Residential, commercial and office rent at competitive rates
Sponsorship from the Government for non-free zone businesses
No discrimination against nationality, religion, culture etc.
Business News Sector Tags: Finance|