Saturday, November 21, 2009

Methods of Foreign Direct Investment

The foreign direct investor may acquire 10% or more of the voting power of an enterprise in an economy through any of the following methods:

  • by incorporating a wholly owned subsidiary or company
  • by acquiring shares in an associated enterprise
  • through a merger or an acquisition of an unrelated enterprise
  • participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:[citation needed]

  • low corporate tax and income tax rates
  • tax holidays
  • other types of tax concessions
  • preferential tariffs
  • special economic zones
  • investment financial subsidies
  • soft loan or loan guararntees
  • free land or land subsidies
  • relocation & expatriation subsidies
  • job training & employment subsidies
  • infrastructure subsidies
  • R&D support
  • derogation from regulations (usually for very large projects)

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