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Opening business branches in other countries.

Businesses nowadays are tapping into the international market by setting up branches worldwide. Expansion of business over borders is a goal of all institutions from banking industry to schools. Some time back countries were very harsh to foreign companies trying to set up branches. Governments this days have considered and agreed to allow foreign companies to expand into their countries. This can be attributed to the numerous advantages of foreign investment such as.

Creating of employment to the local residents of the country. Companies when they expand will require personnel with local expertise. Hence the citizens will enjoy getting revenue from the foreign company.

Development of infrastructure. Foreign companies are known to partner with the country’s authorities to improve on the transportation and communication channels. Also the government will expand its sources of income by having the non-resident company pay fees and taxes.

Introduction of innovative products and services. This is especially the case with education where foreign institutions helps to diversify the education sector of the country. Therefore residents are able to acquire skills which there had to travel abroad to learn locally.

Some of the laws being passed to encourage foreign investment involves.

Legislation involving real estate. 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. Foreign governments have done away with this restriction and have agreed to let the company rent out either land or building to set up its business.

Elimination of the unnecessary long approval procedures. Non-resident companies in the past had to submits very many documents before they could get the registration certificate. Therefore making many companies be discouraged by the lengthy process. Foreign governments have eliminates some procedures so that it takes a short period of time to get approval.

However although countries are doing all the above they have added the financial cost required to trade in the country. Foreign governments have raised the minimum capital requirement for the non-resident companies. The governments of the foreign countries will argue that to make the services delivery better they have to charge more.
With time it will become necessary to revise the capital requirements of a non-resident company.

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