Indonesia third most attractive investment site
Indonesia third most attractive investment site
JAKARTA (JP): Indonesia is the third most attractive
investment spot for multinational companies after China and
India, according to a study.
The survey conducted by Erns & Young International, a U.S.
consulting firm which has offices in various countries, said that
those three nations rank at the top of 10 emerging markets,
including Mexico, Thailand, Brazil, Malaysia, Argentine, Hong
Kong and Taiwan.
According to the survey, the report of which was made
available here over the weekend, the primary reason why
multinational firms invest in emerging markets is their large
market potential, rather than low-cost labor.
Other primary reasons were the possibility of obtaining
potential high rates of return, establishing strategic business
locations and preempting competitors.
Nine of the 10 surveyed companies rate political stability as
the most significant deterrent to overseas investments. Problems
related to legal infrastructure and currency exchange controls
are the next most often mentioned barriers.
"Access to large markets and expectations of higher rate of
return is now the prime motivator of global expansion decisions,"
commented Jerry G. McClain, Ernst & Young's coordinator in
Indonesia.
He said the survey clearly demonstrated that countries wanting
to attract foreign investments need to provide a stable political
climate, to improve currency stability and commercial
infrastructure, and simplify regulatory requirements.
Tax
Regarding tax implications, the survey indicated that the tax
regimes in emerging markets are seen as one of the top seven
barriers to investments by all multinationals.
Most companies surveyed, including 89 percent of Japanese and
83 percent of European respondents, stated that they assess tax
implications as part of their feasibility studies for global
investments.
Around 64 percent of U.S. companies include tax considerations
in the important first step of the investment decision process,
according to the survey which was based on interviews with chief
executive officers, corporate planning directors and
international operators of 230 of the world's 1000 largest
multinational corporations.
The study, entitled Global 1000 Investment in Emerging
Markets, showed that over two-thirds of all multinationals expect
to be investing more in emerging markets over the next five
years, led by 48 percent from the United States, as compared to
15 percent from Japan and 38 percent from Europe.
In the shorter term, 41 percent of U.S., nine percent of
Japanese and 36 percent of European multinationals plan
substantial increases in investments within two years.
European and Japanese multinationals have been traditionally
more active in investing in less developed countries than their
U.S. counterparts, which are now planning to earmark a higher
level of their foreign investments to these emerging markets, the
study indicated. (hen)