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Understanding Foreign Direct Investment for Economic Growth – Companies open a new branch or factory in a new place, even country or continent. They invest capital, money, technology, human resources, and support to ensure a business will work as it supposed to be. Investing in a different country is not an easy task because they must follow regulation and law. In simple terms, this type of investment is commonly called as FDI or foreign direct investment. This is no longer a small transaction or purchase between one company and another. On the contrary, this investment will make country, government, and companies to be in similar interest.

Foreign direct investment is the form of investment that a company or business entity does in a country that different from its origin. For example, a company is based on Germany and invests in France. This type of investment is not just sending money because the company also involves in direct business. New stores and braches are the simplest examples of FDI. In a real situation, FDI has many forms not just selling products at the store. On the contrary, merger and acquisition are other methods that most companies consider when deciding to invest without much problem. Opening a new business in a different country takes time with high risk and spending unnecessary capital.

Instead of similar business entities, companies choose a merger or just buying stock from the partner. A joint venture is another of FDI because two companies do business together as one entity. Both have the same goals and purposes regardless of background because an agreement for a joint venture must be valid. One company is from foreign and the rest is local. Therefore, both have control and resource to do business.

Foreign direct investment is different from an investment that only happens in the stock market and exchange. When investors or companies from foreign countries buy stocks, they only have a portion of capital but not part of management. This type of investment is mostly called foreign portfolio investment. Buying stocks does not mean they have control over the company because the market has a limitation. On the contrary, direct investment makes the company has a high level of control including voting. Each country has different regulations regarding how much percentage that foreign company and business entity can have. As long as investors have voting and involve in business operations, this investment is definitely FDI.

From this point, a simple way to identify FDI is from how much control investors have and the level of support regarding business operation. More control means the company must support with resources and technology. People must know that information part before go further exploring foreign direct investment.

The Advantages of Foreign Direct Investment – People get interested in foreign direct investment or usually called as FDI. In this type of investment, the investor or company can invest in other companies in a foreign country, although the investor not living in that country. Some experts said that foreign direct investment brings some advantages for both parties. What are the advantages of foreign direct investment?

– Give Local Economic Advantages

The investment can boost the economic growth of the local society. The profits can be reinvested to the community to open the new working field, so that it will give significant advantages to the society, and together can open new opportunities to create a new path of foreign direct investment in another sector company. This will give fresh air for the local community to have a better life by having a better job with a great wage in which can also spend some of the money for fun by betting online in .

– Give Good Business for Recipients and Investor As well

When the investor is doing foreign direct investment, he should abandon the race and color issues just. Therefore it will lower the risk of chaos that might happen because of the racism issue. By doing so, the company will grow into great business because it focuses more on the manufacturing process and receiving advice from another party which is an investor that can give certain benefit to the company’s development.

By investing in the other country, the investor can have a second business outside his local company and get profits from his/ her investment. Having a business in a foreign country can give more inspiration to the investor on how to have such a stable and big company. This will be a great lesson for the investor to grow his/her own business.

– Easy Trading

Through foreign direct investment, the import and export traffic can go smoothly without excessive taxes. This will help the local vendors to develop because they have more power to control the market and keep the price stable. Of course, it will give easy trading for any products in the import and export business. The direct investment can be a huge success for the local company to grow and develop at a higher level.

Foreign Direct Investment or FDI has changed the way people do and grow their business. FDI gives great advantages for the investor and the recipient since there are two parties in this foreign direct investment. The advantages are giving the local stable economic growth, giving good business for both parties and easy trading.

If you are thinking about doing the Foreign Direct Investment, you really have to think about the health of the country where your investment is placed. This thing is becoming something very important because if you failed to choose the right country to place your investment, you can be sure that you will not get the profit that you are looking for. Because of that reason, even though you are investing in a company with a lot of branches all over the world, it is better for you to invest in one of their branch located on the safe and healthy country.

There are some people who are asking about the possibility that might happen if you are investing your money in a country that is not healthy. If you are also one of those people who have the same question, then you will need to know these things first. For the start, if you are investing your money in country that has a conflict with some other countries, you can be sure that your investment will not grow as much as you want it to be. As a matter of fact, there is a chance that the company that you invested might go bankrupt and you will lose all of your investment. This is the kind of thing that you will not want to experience.

Let us take another example. If you are investing your money in a country with the slow growth, that will also give you the slow profit from the investment. Even though you will not need to worry about the internal conflict inside the country, you will not be able to get the profit as soon as you want it to be. Or else, the number of profit that you get regularly will not be as much as you can get if you are investing your money in one of those healthy country. Those are some of the things that might happen if you are investing your money in one of those problematic countries. After learning all of those things above, you will need to make sure that you are choosing the right country for your Foreign Direct Investment. Or else, you can be sure that your investment will be a useless thing to do. The same thing is applied in choosing the company where you want to put your investment. Keep all of those things in your mind.

Foreign Direct Investment (FDI) is such an excellent thing that many countries from all over the world need. The same thing happen in Indonesia as it really wants to attract lots of investments from the foreign countries such as South Korea, Japan, China, Russia, and so many more still. Basically, all of the Foreign Investments in Indonesia will definitely bring its own benefits that can support the economic growth of the country so nicely. So then, it is no wonder that the economy of Indonesia can grow up to 4% to 5% each year in this recent time.

Then, there are actually numerous other benefits that Indonesia can gain when it has received the Foreign Direct Investment. Some of them are like:
• Reducing the unemployment rates
One of the various benefits that Indonesia can get from the Foreign Direct Investment is that it can reduce the unemployment rates of the country. It is all because the foreign investment will open the easier access for the companies to expand their business in Indonesia. It means that there will be more companies that require huge amounts of employees. So, in the end, you will find that the amount of the jobless people in Indonesia will get more and more decreased. In addition, the more companies will make the people more aware that they have to be ready to compete if they want to get a nice job. Then, they will try to do their best in order to improve their quality in the best way for sure.

• Growing the economy activity in Indonesia
Moreover, the other benefit of the Foreign Direct Investment that you cannot ignore at all is that it can make the economy activities in Indonesia grow significantly. There are so many projects, which are almost 100, that can be done as the country has got the investment. These projects will definitely cover the numerous different sectors which can be ranging from tourism to communication. This particular condition can really assist Indonesia to increase its economy activity optimally.

After putting it all together, those are some notable benefits of the Foreign Direct Investment for Indonesia. All of them are the great things that will make the country have the better chances to upgrade its economy growth as nicely as possible. So then, in the end of the day, Indonesia will be able to create and keep the stronger economic condition even if there are so many challenges to face.

Indonesia has been known so well as one of the most potential country for the Foreign Direct Investment. It is because this country can offer you lots of raw material resources which can be like gold, oil, gas, coal, and so many more still. So then, it is actually not surprising that there are so many foreign companies that are so interested in locating their investment in this particular country. Then, there are also so many options of promising sector for the foreign investors to choose. Well, in case you really want to know what Indonesia’s best sectors to invest on, you better continue reading below.

Here are some of the best sectors that you have to really consider when you want to do a direct invest in Indonesia, such as:
• Tourism
The first sector that can be a great option for the foreign investors is the tourism sector. It will definitely fit the program of the government of Indonesia where they really want to create 10 new tourism destinations in the country which are called the New Bali. So, in order to make the goal come true, the government will always try to do the best to attract the foreign investors as many as possible. Besides, there are so many things that the investors can explore in this particular sector, which can be like bars, cafes, restaurant, sport and art facilities, and so many more still. So, it is clear that the foreign investors will never feel disappointed once you have support the tourism sector in Indonesia.
• E-commerce and marketplace
Furthermore, the second sector that you cannot miss when you want to do the Foreign Direct Investment in e-commerce and marketplace which is more than $7.3 million in value. It is all because there are so many shopping platforms that develop well as there are so many people who have the consumptive lifestyle in the country. Moreover, the amount of the online shoppers in Indonesia always gets increase time after time. This specific fact can be a very amazing opportunity that you have to take as an investor.

So, those are some of the best potential sectors that you better support by doing a Foreign Direct Investment. Actually, all of them will never make you regret having a partnership in the country. Even better, it will advantage you wonderfully as the country is creating all the possible development in every aspect for sure.

On this modern times, investment can be considered as something quite important to have. That might be one of those reasons why there are a lot of people who are investing their money on the business or company outside their own country. This is something called. Yes, there are more and more people who are into the Foreign Direct Investment. If you are asking why there are a lot of people who are interested on this kind of investment, here are some of the reasons.

For the start, it is because when you are investing your money outside the country, you will not be bothered by the silly governance that you have in your own country. You have to admit that there are some countries that will give you a lot of silly excuses and policies if you are doing an investments in your own country. Because of that reason, there are quite a lot of investors who invested their money through the Foreign Direct Investment. The next one is because you can predict the possible outcome of the investment. Of course, you will not be able to fully predict either your investment will give you a lot of profit or not. However, since you are investing your money in another country, you can easily see if the country is developing on the right track or not. If the country is developing on the right track and you are investing your money on the company, you can be sure that you will get a lot of profit. This is something that you will love to have.

The last but not least is because this kind of investment usually gives you more control over the things related with the company where you give your investment. You need to understand that there are some kinds of investments that will not let you to control the work of the company. This way, you will only have to wait for the result. On the other hand, the Foreign Direct Investment will give you a bit of control over the things that happens on that company where you give your investment. This way, you can have a better understanding if your profit is not as big as you might have expected. On the other hand, if you control it properly, you can get the huge income that you have calculated. So, from all of those reasons above, are you thinking about doing the Foreign Direct Investment right now?

The Foreign Direct Investment can be considered as one kind of amazing business that many wealthy people have. That is because this kind of investment can be quite a fortune that will give them more wealth. That is why they are thinking about doing this kind of investment. For your information, if you are one of those people who are thinking about making the FDI, there are some tips that you might want to consider.

The first one is making sure that you are investing your money on the healthy country. The meaning of healthy country is that the country should be one of those that are developing based on their own target. This one is important because if you are able to invest in a good country, you can have a better and higher chance of getting the better profit from your investment.

That is why you have to invest in a country with a good government condition. The second tip is to avoid countries in war. The meaning of war does not have to be a real war. It can be a conflict or something similar. You surely have known that there are countries quite famous for making conflicts and such things. This is the kind of country that you have to avoid. Even though the persuasions are good, you have to avoid this one. That because investing your money on this kind of country means that you are watering the seed of conflict in that country.

The last but not least, you have to know the details of the business that you want to invest. Of course, this is something that many of you will never forget. However, there are a lot of people who believed about the surface of the business without checking the inside of the business. For example, there is a company that said that they are one of those branch of famous company. Once you heard that, you suddenly invest a lot of money. That is the kind of talk that you should not trust first. You have to check the details of the company to make sure that you are investing your money on the right place. Those are some of the tips that you have to highlight if you want to do the Foreign Direct Investment. With all of those tips, you can be sure that your investment will fruit just like what you want it to be.

If you are thinking about doing the Foreign Direct Investment, you have to make sure that you are choosing the right company for your investment. That is because if you are investing your money to the wrong company, you can be sure that you will not get the profit that you are looking for. As a matter of fact, you might even lose all of those investment money because of the bankruptcy of the company. Because of that reason, you have to consider these things first when you are choosing a company for your Foreign Direct Investment.

The first one is the location of the company. The meaning of location is that the company should be located on the right and proper country. For example, if you are investing in Samsung Company that is located on the conflict area, you might also get the impact if something happen there. However, if you are investing your money on one of their companies in Japan or Korea, that might not be a problem at all. Because of that reason, you have to know the location of the company first.

The second consideration is the condition of the company. There are some companies that need a lot of investment because they are on the verge of bankruptcy. However, there are also some companies who need the investment because they want to grow their company even bigger. The second choice is risk free. However, the first one is a bit different. That is because when you are investing your money in a company in the verge of their bankruptcy, you can be the savior for the company. On the other hand, you can also be dragged down to bankruptcy by the company. Because of that reason, you have to check on the background of the company first.

The last thing that you have to consider is the size of the company. This is the most important of all because if you want to do the Foreign Direct Investment, you will need to prepare your budget. That means if your budget for the investment is a bit limited, you have to try finding another company with the smaller scale. That is because the bigger company needs the bigger investment. If you do not have the money, do not try the Foreign Direct Investment. Keep all of those things in your mind if you want to get the profit from the investment.

There are four agencies that keep track of the statistics of FDI. The UN Conference on Trade and Development summarizes the trends of FDI all around the world and publishes the Global Investment Trends Monitor. The Organization for Economic Cooperation and Development reports on both inflows and outflows of the FDI. It publishes FDI statistics quarterly to the member countries it houses. However, the Organization does not capture the statistics between the emerging markets.

The IMF published the first Worldwide Survey of Foreign Direct Investment Positions in 2010 and continues on doing so in yearly basis. The statistics are presented through an online database. The report contains statistics gathered from 72 countries. Many parties support the IMF to present the data such as the UN Conference on Trade and Development, the Organization for Economic Cooperation and Development, Eurostat, and the European Central Bank. The Bureau of Economic Analysis, meanwhile, reports the activities of foreign affiliates of US-based companies. The Bureau also reports on how much US companies have invested so far overseas.

In many regards, the FDI does indeed provide several advantages that the recipients can enjoy. A recipient business can find FDI an effective tool that can help them get into the international market. Some countries out there are not that accommodative of foreign companies so it would be a little difficult for a business to enter international market without FDI.
The presence of FDI is also an advantageous factor that may help a business to gain access to resources, such as important natural materials like fossil fuels or precious metals. Production cost can also be pressed down with the supports from FDI for a lot of reasons. Clothing and shoes industries are a prime example of this matter, in which many manufacturers relocate their operation to developing countries.

There are two categories of foreign investment of international scope: FPI (foreign portfolio investment) and FDI (foreign direct investment). FDI is a term that refers to an investment of international level where an investor gains a lasting profit from a business located in another country. FDI can take many forms but commonly it pertains to adding improvements to an existing facility (property, equipment, or plants) or either buying or construction a factory in a different country. FDI includes all manners of capital contributions. The UN Conference on Trade and Development claims that the FDI expands rapidly these days, backed by more than 65,000 transnational corporations with over 850,000 foreign affiliates. Investors in FDI earn profits in a variety of forms including royalty, management fees, retained earnings, and dividends.

FPI is an investment tool that can be traded rather easily, less permanent, and does not have a representation of controlling stake in an enterprise. Instruments used in FPI include equity tools (stocks) or debt (bonds), all of which does not represent a long-term profit. FPI returns profit in the forms of dividends or interest payments.

Between the two types of investment, FDI is one that many multinational corporations undertake. However, FPI can originate from a lot of different sources such as individuals’ mutual funds or a pension from small companies. FDI and FPI may not be easily discernible since some of their aspects overlap with one another, especially in terms of investment in stock. The most common line drawn between the two is based on ownership percentage. FDI requires 10% or more ownership while FPI involves less than 10%. The ownership percentage denotes the limit of voting power an investor may possess within the recipient business. FPI may or may not entail voting rights. FDI, on the other hand, does not allow an investor to have control over the recipient but it makes it possible for them to influence certain aspects.

Foreign direct investment is a situation where a company in a country is controlled fully by another company in a different country. A foreign direct investment (FDI) can take an inorganic form (a company buys another company in the target country) or organic form (a company expands a business’ operations in a country). Things that can be counted as an FDI include intra company loans, profit reinvestment, establishing new facilities, acquisitions, and mergers.

An FDI is characterized by a business located in a country that controls ownership of another country’s enterprise. FDI and foreign portfolio investment are different. A foreign portfolio investment is a passive investment whose securities are supplied by another country such as bonds or public stocks. An FDI can be financed through several different methods such as payments in exchange for equity (machinery, technology, patents, etc.) or loans granted by the  host country. An FDI can be determined using some distinct factors.

Said factors are as follows:

1) firm-specific advantages

2) removal of conflicts, and

3) the tendency to come up with a strategy of internalization in order that risk can perhaps be mitigated.

FDI itself can be divided into three types: horizontal, platform, and vertical. An FDI can function by:

1) incorporating a subsidiary or a company that is fully owner anywhere

2) acquiring the shares of an associated enterprise

3) merging with or acquiring an unrelated enterprise, and

4) participating in a joint venture of equity with another enterprise or investor.

An FDI can take a lot of forms such as for example derogation from regulations, energy, R&D support, infrastructure subsidies, relocation & expatriation, free land & land subsidies, investment financial subsidies, maquiladoras, bonded warehouses, export processing zones, special economic zones, preferential tariffs, tax concessions, tax holidays, low corporate tax, and individual income tax rates.