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FOREIGN
DIRECT
INVESTMENT
FDI IN BRUNEI DARUSSALAM
PRESENTED BY:
SYAFIQAH
LINA
HIDAYAH
HNDBM/11/02(G1)
CONTENTS:
 Introduction to FDI
 Types & Method of FDI
 Importance & Barriers to FDI
 Advantages & Disadvantages FDI
 How Brunei attract FDI
 World’s FDI incentives that Brunei can adopt
 Latest news of Brunei attracting FDI
It is a direct investment into production/ business by
company of country A into country B either by:
Buying a company
Expanding operations in exiting business
operations
Simply defines as an investment made by a
company in one country, into a company of the
another country.
Usually involves participation in
management, joint-
venture, transfer of technology
and expertise.
International Business 5e
Growth of World FDI vs. GDP
International Business 5e
Reasons for FDI Growth
Increasing
globalization
International mergers
and acquisitions
Entrepreneurship
and small firms
STRATEGIC
ASSETS
SEEKING
Inward (inflow) is when the foreign
capital are invested in local
resources.
The inflow of foreign capital into
Brunei
For example : General Motors decides
to open a factory in Brunei. They are
going to need some human capital.
That human capital is inward FDI for
Brunei.
Inward FDI is encouraged by Tax
breaks, subsidies, low interest
loans, grants.
Inward FDI is restricted by
Ownership restraints or
limits, differential performance
requirements
 Outward (outflow) is when the local resources are
invested to another country
 The outflow of Brunei capital to other country
 For example: Brunei invest in Dorchester Hotel
 Outward FDI is encouraged by Government-backed
insurance to cover risk
 Outward FDI is restricted by Tax incentives or
disincentives on firms that invest outside of the
domestic country.
 An investment involve the flow of FDI by building
up
 New production capacities
 Expansion of the existing production
 Greenfield Investing is offered as an alternative
to another types of investment, for example as
mergers and acquisitions, joint ventures, or
licensing agreements.
 An investment made by a
multinational company in
different nations.
 It is the investment made for
conducting similar business
operations.
 For example: Apple Inc. factory
in Brunei
 Horizontal FDI results in expansion
of the parent company and
brings FDI in the other economy
 Backward Vertical = It is when an
industry abroad provides inputs for
a firm's domestic production
process
 For example: Brunei Shell
Petroleum with Royal Dutch Shell
 Forward Vertical = industry abroad
sells the outputs of a firm's
domestic production process.
 For example: when Volkswagen
entered the United States market it
acquired a large number of
dealers rather than distribute
its cars through independent
United States dealers
Resource Seeking
This investment aimed
to get production factor
supplies at low cost.
The investment is
seeking access to
existing resources
For e.g. : China low
labour cost
The most important
among these are:
1. Raw materials,
2. Labour,
3. Public incentives
4. The chance to
restrain logistic costs
MARKET SEEKING
Its aim is to realize a direct presence in the
foreign market to quickly develop sales revenue
and control the marketing mix policy.
It allows firms to pursue strategic goals such as
threatening competitors by entering their home
market.
An example is General Motors’
investment in China which is
market seeking because the cars
built in China are sold in China.
Strategic asset seeking
 It is an investment led to increase self-
competitiveness through the acquisition of strategic
assets such as technologies not available in the home
market, or rather links with global value-chains.
 This kind of investment typically regards firms located
in emerging or developing countries (particularly
China), and are often undertaken for various reasons
such as to lower costs of production or the will to
expand on overseas markets. Similarly to the
efficiency seeking firms, the strategic asset seekers
aim to capitalise on the advantages of the common
ownership of a network of activities and capabilities
in diverse environments.
 For example: China low labour cost so the Apple Inc.
built its factory there.
 by incorporating a completely owned
subsidiary or company anywhere
 by acquiring shares in an associated
enterprise
 through a merger or an acquisition of an
unrelated enterprise
 participating in an fairness joint venture with
another investor or enterprise
 Resource for economic
growth
 Money inflow from overseas
 Business grows in several
countries
 FDI & Economic
development
 Opportunities
 Competitive requirement
 Corporative Activities
 Branch plant or subsidiary
company operations
 Rise in National Income
 Formal restrictions on FDI include limits on
foreign ownership
 Screening and approval procedures
 Informal barriers may also be important
 Barriers to investment
access, operations, areas, products, ownership
and land use
 Barriers on labour, policy, institutional and
control variables
 Political controversial
 New jobs are created
 New technology are implemented
 Availability of scarce of factory of
productions, products and raw materials
 Improving the balance of payment though import and
export substitution
 Revenue to the government through taxation
 Improved political relations
 To get additional expertise
 Increase in the number of competition
 Expand local business
 Stimulate the local economy and thus increasing in
GDP
 Political changes leads to “Expropriation”
 Cultural and political indifference
 Investing is more expansive than exporting
 FDI always at risk
 Threat to local product
 Takes away employment opportunities
 It brings harm to the environment
 Foreign market recession
 Inequality of income distribution
 Improving its domestic infrastructure
 Improving logistic and transportation
 Stable legal and financial framework
 Providing fiscal incentives
 Increase awareness
 Remove the difficult regulations
 Reduce corruption and encourage transparency
 Enact policies to provide training and skills upgrading to develop
their workforce
 Low corporate tax
 Tax holidays
 Preferential tariffs
 Special economic zones
 EPZ - Export Processing Zones
• Bonded Warehouses
• Loan guarantees
• free land or land subsidies
• job training & employment
subsidies
• infrastructure subsidies
• R&D support
• derogation from regulations
(usually for very large
projects)
Incentives to further attract FDI
Incentives to further attract FDI
Borneo Bulletin – Thursday
22 November 2012
The study has also identified several land
zones along the coastal corridor suitable for
industrial and commercial use –
 Telisai Energy Park for petrochemicals and heavy
industries;
 Panaga for general industries, warehouses and
assembly;
 Anduki for logistics and warehouse uses;
 Keriam for light manufacturing, processing and
distribution; Brunei Creative & Knowledge Industries
Precinct located around the Agrotechnology Park
 Universiti Brunei Darussalam (UBD) for knowledge-
based industries, research and education, high tech
business and creative industries;
 Brunei Aerotech Precinct located around the Brunei
International Airport, for business, retail, leisure and
entertainment services, as well as storage and
'distribution network facilities
 Pulau Muara Besar for petrochemicals and logistics.
The key actions are –
 To ensure the incentives offered by Brunei are competitive
 The process of creating special purpose zones can respond to new investment
proposals;
 To review the mechanisms for investment attraction and facilitation, and ensure
decision-making is expedited within stated timelines;
 To adopt the recommended sustainable urban development areas (SUDAs), ie
Telisai Energy Park, Brunei Creative & Knowledge Industries Precinct and
Brunei Aerotech Precinct, and establish a development authority for each SUDA;
 To give statutory effect to the plans recommended in this study;
 To ensure the private sector can take a lead role in future urban development
including the release of registered title land for purchase, and foreign investors are
offered secure long-term leasehold of required land for economic development and
to prepare a State Land Management Plan where ministries will be required to
prepare a business case to identify future land requirements and the government
to prepare a strategic infrastructure development strategy with funding provided to
enable a continuous rollout of infrastructure to support the local construction
industry.
Borneo Bulletin – Thursday
22 November 2012
THE END

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Foreign Direct Investment

  • 1. FOREIGN DIRECT INVESTMENT FDI IN BRUNEI DARUSSALAM PRESENTED BY: SYAFIQAH LINA HIDAYAH HNDBM/11/02(G1)
  • 2. CONTENTS:  Introduction to FDI  Types & Method of FDI  Importance & Barriers to FDI  Advantages & Disadvantages FDI  How Brunei attract FDI  World’s FDI incentives that Brunei can adopt  Latest news of Brunei attracting FDI
  • 3.
  • 4. It is a direct investment into production/ business by company of country A into country B either by: Buying a company Expanding operations in exiting business operations Simply defines as an investment made by a company in one country, into a company of the another country. Usually involves participation in management, joint- venture, transfer of technology and expertise.
  • 5. International Business 5e Growth of World FDI vs. GDP
  • 6. International Business 5e Reasons for FDI Growth Increasing globalization International mergers and acquisitions Entrepreneurship and small firms
  • 8. Inward (inflow) is when the foreign capital are invested in local resources. The inflow of foreign capital into Brunei For example : General Motors decides to open a factory in Brunei. They are going to need some human capital. That human capital is inward FDI for Brunei. Inward FDI is encouraged by Tax breaks, subsidies, low interest loans, grants. Inward FDI is restricted by Ownership restraints or limits, differential performance requirements
  • 9.  Outward (outflow) is when the local resources are invested to another country  The outflow of Brunei capital to other country  For example: Brunei invest in Dorchester Hotel  Outward FDI is encouraged by Government-backed insurance to cover risk  Outward FDI is restricted by Tax incentives or disincentives on firms that invest outside of the domestic country.
  • 10.  An investment involve the flow of FDI by building up  New production capacities  Expansion of the existing production  Greenfield Investing is offered as an alternative to another types of investment, for example as mergers and acquisitions, joint ventures, or licensing agreements.
  • 11.  An investment made by a multinational company in different nations.  It is the investment made for conducting similar business operations.  For example: Apple Inc. factory in Brunei  Horizontal FDI results in expansion of the parent company and brings FDI in the other economy
  • 12.  Backward Vertical = It is when an industry abroad provides inputs for a firm's domestic production process  For example: Brunei Shell Petroleum with Royal Dutch Shell  Forward Vertical = industry abroad sells the outputs of a firm's domestic production process.  For example: when Volkswagen entered the United States market it acquired a large number of dealers rather than distribute its cars through independent United States dealers
  • 13. Resource Seeking This investment aimed to get production factor supplies at low cost. The investment is seeking access to existing resources For e.g. : China low labour cost The most important among these are: 1. Raw materials, 2. Labour, 3. Public incentives 4. The chance to restrain logistic costs
  • 14. MARKET SEEKING Its aim is to realize a direct presence in the foreign market to quickly develop sales revenue and control the marketing mix policy. It allows firms to pursue strategic goals such as threatening competitors by entering their home market. An example is General Motors’ investment in China which is market seeking because the cars built in China are sold in China.
  • 15. Strategic asset seeking  It is an investment led to increase self- competitiveness through the acquisition of strategic assets such as technologies not available in the home market, or rather links with global value-chains.  This kind of investment typically regards firms located in emerging or developing countries (particularly China), and are often undertaken for various reasons such as to lower costs of production or the will to expand on overseas markets. Similarly to the efficiency seeking firms, the strategic asset seekers aim to capitalise on the advantages of the common ownership of a network of activities and capabilities in diverse environments.  For example: China low labour cost so the Apple Inc. built its factory there.
  • 16.  by incorporating a completely owned subsidiary or company anywhere  by acquiring shares in an associated enterprise  through a merger or an acquisition of an unrelated enterprise  participating in an fairness joint venture with another investor or enterprise
  • 17.  Resource for economic growth  Money inflow from overseas  Business grows in several countries  FDI & Economic development  Opportunities  Competitive requirement  Corporative Activities  Branch plant or subsidiary company operations  Rise in National Income
  • 18.  Formal restrictions on FDI include limits on foreign ownership  Screening and approval procedures  Informal barriers may also be important  Barriers to investment access, operations, areas, products, ownership and land use  Barriers on labour, policy, institutional and control variables  Political controversial
  • 19.  New jobs are created  New technology are implemented  Availability of scarce of factory of productions, products and raw materials  Improving the balance of payment though import and export substitution  Revenue to the government through taxation  Improved political relations  To get additional expertise  Increase in the number of competition  Expand local business  Stimulate the local economy and thus increasing in GDP
  • 20.  Political changes leads to “Expropriation”  Cultural and political indifference  Investing is more expansive than exporting  FDI always at risk  Threat to local product  Takes away employment opportunities  It brings harm to the environment  Foreign market recession  Inequality of income distribution
  • 21.
  • 22.  Improving its domestic infrastructure  Improving logistic and transportation  Stable legal and financial framework  Providing fiscal incentives  Increase awareness  Remove the difficult regulations  Reduce corruption and encourage transparency  Enact policies to provide training and skills upgrading to develop their workforce
  • 23.  Low corporate tax  Tax holidays  Preferential tariffs  Special economic zones  EPZ - Export Processing Zones • Bonded Warehouses • Loan guarantees • free land or land subsidies • job training & employment subsidies • infrastructure subsidies • R&D support • derogation from regulations (usually for very large projects)
  • 24. Incentives to further attract FDI
  • 25. Incentives to further attract FDI
  • 26. Borneo Bulletin – Thursday 22 November 2012 The study has also identified several land zones along the coastal corridor suitable for industrial and commercial use –  Telisai Energy Park for petrochemicals and heavy industries;  Panaga for general industries, warehouses and assembly;  Anduki for logistics and warehouse uses;  Keriam for light manufacturing, processing and distribution; Brunei Creative & Knowledge Industries Precinct located around the Agrotechnology Park  Universiti Brunei Darussalam (UBD) for knowledge- based industries, research and education, high tech business and creative industries;  Brunei Aerotech Precinct located around the Brunei International Airport, for business, retail, leisure and entertainment services, as well as storage and 'distribution network facilities  Pulau Muara Besar for petrochemicals and logistics.
  • 27. The key actions are –  To ensure the incentives offered by Brunei are competitive  The process of creating special purpose zones can respond to new investment proposals;  To review the mechanisms for investment attraction and facilitation, and ensure decision-making is expedited within stated timelines;  To adopt the recommended sustainable urban development areas (SUDAs), ie Telisai Energy Park, Brunei Creative & Knowledge Industries Precinct and Brunei Aerotech Precinct, and establish a development authority for each SUDA;  To give statutory effect to the plans recommended in this study;  To ensure the private sector can take a lead role in future urban development including the release of registered title land for purchase, and foreign investors are offered secure long-term leasehold of required land for economic development and to prepare a State Land Management Plan where ministries will be required to prepare a business case to identify future land requirements and the government to prepare a strategic infrastructure development strategy with funding provided to enable a continuous rollout of infrastructure to support the local construction industry. Borneo Bulletin – Thursday 22 November 2012

Notes de l'éditeur

  1. Pioneer
  2. Spur = Branch