Foreign Direct Investment
Foreign Direct Investment (FDI) is a foreign investment which earns interest in the enterprise. The invested company is controlled by foreign corporation and functions outside its domestic territory. The investment is direct because the investor (foreign person, entity or a group) makes significant influence over the foreign enterprise and seeks to manage or control the enterprise.
In case of developing countries that have limited capital, FDI is a boon and a major source of external finance through wealthier countries. FDI and Export is the greatest key for China’s rapid economic growth.
FDI and United States:
Since United States is the world’s largest economy, it is a target for foreign investment. US investors invest all over the world in numerous projects. Even being hit by recession, US market is still the safest place for investment. According to the Department of Commerce, in 2008, $260.4 billion dollars were invested in America from enterprises all over the world.
American Government encourages companies to invest overseas and create jobs so that jobs would be again created in America. US investors are welcomed in foreign countries as jobs are created and country seeks foreign capital. FDI became major issue during the 2004 to 2008 Presidential Elections, when the American jobs were outsourced internationally.
How to do Foreign Direct Investment (FDI): FDI is an integral part of world’s economy and it has tapped new market. Initially, the investor might lose some money but many countries lifts restrictions and offer tax break in order to transact in to the foreign market. Here are few steps while investing:
Step 1: Determine the desired country and region; and research on its political, social and economic state.
Step 2: Contact the Government of that country and explain them the investment plans so that they can show the right path.
Step 3: Complete the paperwork the provided by the Government that includes business licenses, disclosure statements and tax forms.
Step 4: Identify the location so as to build the facility in good location.
Step 5: Purchase the premises in a socially and politically secure location.
Step 6: Gain permission to build the premises, through related Government body or Provincial facility.
Step 7: Fill up the corporate disclosure form for the Government to prove that the company is legitimate.
Step 8: Hire a construction firm and get the project built accordingly.
Step 9: Once the structure is built, have it inspected by a private party and ensure its safety.
Step 10: Begin the process of recruiting part time and full time employees.