Factors affecting the investment decision

Political stability or uncertainty
Attitude of the host government towards private enterprise and, in particular, to foreign private investment
Special inducement for foreign investors, such as tax holidays grants, loans at favourable rates, tariff protection for newly established industries
Membership of a free trade area, or trade agreements with other countries that might offer export opportunities

Cost increases resulting from smaller scale production, product modification to meet market needs, etc.
Wage costs, related to productivity
Availability and cost of local raw materials and components
Availability and cost of transport services
Freight, packing and insurance savings, if product previously exported to the country

Restrictions on remittances to parent company, e.g. Maximum percentage of foreign capital invested
Restrictions on repatriation of capital
Convertibility of local currency

Existence of a double-taxation agreement between the host country and parent-company country
Withholding tax payable on remittances to parent company
Level of company taxation
Method of calculating depreciation allowances, stock valuation, etc.

Availability of labour, e.g. skilled, unskilled and clerical
Availability of local managerial talent
Percentage of employees who must be local nationals
Availability of work permits for expatriates
Living conditions for expatriates. E.g. Housing, education, medical facilities, etc.
Labour laws and regulations, especially regarding the appointment and dismissal of staff
Industrial relations, trade unions, worker participation in management
Existence of compulsory profit-sharing schemes for employees

(Source: L S Walsh. International Marketing)

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