Motives and drivers for companies to invest abroad

Some invest abroad for financial motives.

Asian corporations have led the field in investing abroad.

Right now, companies get tax breaks for moving jobs and profits overseas.

Regional and global players What drives companies to invest abroad?

Some SMEs follow TNCs as their supplier firms in going abroad.

The late 1990s saw a surge in overseas acquisitions by Indian enterprises.

Push factors relate to economic environments in the home country as well as corporate strategies that encourage firms to go abroad.

Indian enterprises have been investing abroad for a long time, but it is only in recent years that Indian OFDI has become more notable.

Other supportive measures include streamlining OFDI approval procedures and the conditions governing equity ownership of affiliates abroad.

While American economists, politicians, and business leaders have for years sought to sell their model of management abroad, many companies elsewhere have not been buying it.

In particular, the Thai Exim Bank and the Board of Investment have been providing facilities (e.g. information, outward investment missions) to help Thai firms venture abroad.

The Government of Thailand has been encouraging and supporting OFDI by Thai companies.

It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.

It also indicated the increasing preference of leading SINTNCs to grow through acquisitions rather than new subsidiaries abroad.

Panellists debated the impact of incentives on the decision by transnational corporations to move services abroad.

Some studies have shown that the offshoring firms gained more than the recipient countries.

First, the country's limited domestic market is a very significant push factor in propelling Singapore enterprises to expand their markets abroad.

Table 2. Cumulative OFDI approvals by Indian enterprises, 1975 2000

Some two thirds of SINTNCs in the survey agreed that OFDI had increased their companies' competitive advantages.

The relaxation of exchange controls and the significant liberalization of OFDI policies in the 1990s played an important role in encouraging Indian enterprises to invest abroad.

In addition to participating directly in financing investments, IDC helps companies identify investment opportunities abroad.

Many Chinese, Indian and Russian companies are investing abroad to access strategic assets and natural resources.

The Singapore Government and Singaporean companies, both large and SMEs, have a keen interest investing abroad.

Table 3. Overseas M As by Indian enterprises, 2000 2003

Table 6. OFDI stock, by firm sizes, as at 31 March 2001

Outward foreign direct investment (OFDI) by Singaporean companies has a long history.

To describe the nature and trends of OFDI by indigenous Singaporean enterprises

Indian firms, including SMEs, also faced competition from abroad as a result of globalization.

There are several reasons for the difference between SMEs' OFDI behaviour and that of large enterprises.

These instruments include tax exemption on income remitted into the country by Malaysian companies investing overseas, the provision of investment guarantees and investment promotion missions abroad.

What are the main obstacles to internationalization through OFDI, and how can they be removed? Are there any differences between OFDI by large companies and SMEs?

Corporate employers are even complaining about not being able to attract overseas talent.

On the other hand, companies might face domestic opposition when they decided to move certain services abroad.

And the Indian government played a large part in fueling rupee appreciation by easing companies ability to borrow abroad.

Firms that reach that point, and that know themselves, then return more of their cash hoard to their investors, who invest it elsewhere.

Some Brazilian firms invest abroad to enhance their capabilities and reach, such as Odebrecht (construction), Gerdau (steel) and Ambev (beverages).

This encourages local companies to explore overseas investment opportunities that will enable them to enhance their competitiveness expand and grow.

Reasons for OFDI by SINTNCs, by host regions

OFDI allows many services SINTNCs to build stronger relationships with their existing customers and to develop new markets in the host countries.

The need to secure natural resources abroad, such as oil, gas and minerals, to support the rapid growth of industrial development at home has led the Government to actively encourage both public and private enterprises to venture abroad.

For overseas branches, the net amount due to the local parent companies is taken as an approximation of the magnitude of direct investment.

OFDI from India has not been entirely led by larger enterprises.

This pattern was followed by Scandinavian TNCs expanding abroad in the late nineteenth century and early twentieth centuries (Johanson and Vahlne 1977).

These clients view foreign presence as an indication of the competitiveness of SINTNCs.