Many people assume that foreign investment is for the developing countries. This is wrong; every country requires foreign investment. Even the most developed countries will partner with other for foreign investment. Normally the kind of foreign investment is what that differs. Developed countries will partner with other countries for majorly security reasons.
They will make security investment in foreign developed countries. For a developing country, it will look to see that a developed country make investments in her country in terms of infrastructure, medical care, and education. Foreign investment helps the country balance its economy in terms of concentrating on improving people living conditions instead of making huge infrastructural investments. What is the way to go about encouraging business investors in a country?
Establish a good political environment
In any country, politics is the national affair that connects the people all people. Politics is the exercise that affects all the citizens of any country. A small political instability is going to affect a lot of citizens who contribute substantially to the economic growth and development of the country. During election period a lot of money is used by both the government in preparation for good elections and by the aspirants in funding their campaigns. This leads to a lot of money circulation in the economy. This further affects both the stock exchange and the inflation status of a country.
No single investor would want to invest in a country whose political status is unstable. There is always the fear of inflation. Inflation affects the value of an investor by reducing the monetary value of money. Establish a good political environment and investors will follow you.
Favorable tax policies
Investors will flood in a country that offers favorable tax policies. Tax policies are classified into two: tax before the operation of investment and tax after the operation of the investment. The tax policy that attracts investors is one that does not discriminate. It has reasonable tax rates. Rates should not be equal in all countries. Countries that have a higher GDP should tax a high tax than countries with a lower GDP.
The tax rate for the foreign investor should never exceed the normal tax rate by 5%. In most countries, they don’t tax the operation of an investment for the first six months. These will enable an investor to establish himself before starting to pay taxes. If the investment has other operation in other countries, it should not be double taxed.
Improve education standards in a country
The success of any countries lies in its ability to produce competent and motivated workforce through the education system. If the education system of a country is poor, investors will shun away from investing in the countries. Poor educational programs add to the cost of opening the investment.
The investor has to retrain staffs that should have been trained in the education setup. A little foreign input can easily supplement a good education system.