RI one of the cheapest business locations

RI one of the cheapest business locations

LONDON (AFP): Thailand, Malaysia and Indonesia, three economies that have been ravaged by the financial turmoil, are among the world's most inexpensive business locations, the Economist Intelligence Unit (EIU) said.

Its findings came before devaluation of the currencies in these three countries, which will have made them even more competitive, researchers said.

The EIU said Germany is the most expensive country in the world in which to run a company, while South Africa is the cheapest.

Wages, employers' costs, rents, business taxes, telecommunications, transport and corruption costs were assessed in 27 countries selected by the EIU because they already attract, or are expected to attract, considerable inward investment.

Wages were highest in Germany, where high taxes sealed the country's lead as the most expensive business location, behind the United States and Belgium.

"A key finding of the report is the competitiveness of countries in southeast Asia and, in particular, of three countries among those worst affected by the current financial crisis: Indonesia, Malaysia and Thailand," the EIU said in a statement.

The study found that in fourth place, Britain was more expensive than its closest European trading partner, France, because of high rents and fuel costs.

The strength of the pound in 1997 has made Britain relatively more expensive, the EIU said.

Singapore has overtaken Hong Kong as Asia's top business center amid fears that China may not honor its pledges to preserve Hong Kong's unique system, the EIU said.

A study on business operating costs as well as political, economic and investment environments from 1997-2001 bumped Hong Kong down to third place after Singapore and New Zealand, said the London-based research organization.

Hong Kong reverted to Chinese sovereignty on July 1 this year after more than 150 years of British rule. China has pledged to maintain Hong Kong's political and economic systems for the next 50 years.

"Hong Kong's fall in rank is not the result of any dramatic change in 1997. Strong growth, low taxes, property rights and free trade will remain in place," EIU spokesman Adam Aston said in a statement.

"The risk is that China may not honor its promise to maintain Hong Kong's freedoms and government intervention is likely to become more widespread," he said.

"In contrast, Singapore is predicted to retain its standing for the next five years with further improvements pushing up its absolute score on the index," he added.

Australia was ranked fourth, followed in descending order by Malaysia, Japan, Taiwan, South Korea, Thailand, the Philippines, Indonesia, India, Sri Lanka, China, Vietnam and Pakistan.

The variables covered in the EIU study included political, macroeconomic and foreign investment environments, market opportunities, policies towards private enterprise and competition, foreign trade and exchange regimes, taxes, financing, labor markets and infrastructure.