November 15, 2008

THE IMPORTANT ROLE OF FOREIGN DIRECT INVESTMENT RESEARCH PROPOSAL IN BRUNEI: CURRENT STATUS AND FUTURE DIRECTION

 

 

Foreign direct investment (FDI) is an extensive cross-border investment between a direct investor (either an individual or business entity) from a stronger economy and a direct investment enterprise in another country conducted by the previous not for exploratory or provisional purposes only, but to instead acquire a long-term relationship with the latter in order to serve its domestic markets, make the most of its resources, or create a stage that will serve world markets through exports (Capital Markets Consultative Group [CMCG] Working Group, 2003; Jensen, 2003; United Nations, 2003).

In the FDI long-term relationship, the function of the direct investor or the foreign company in an FDI agreement is to manage direct investment enterprise activities, which include the construction of long-term establishments (such as manufacturing facilities, bank premises, warehouses and other long-term organizations) and conducting investments, joint ventures, cross-mergers and / or acquisitions in the less-advanced economy. If the direct investor already gets hold of 10 percent or more of the ordinary shares or voting power of an enterprise abroad, a direct investment is now achieved. In this case, the activities covered include not only the initial transaction that forges the "FDI relationship" between the two parties involved, but extends to all subsequent transactions between them and among affiliated enterprises, reaching beyond the original direct investor and include foreign subsidiaries and affiliates of the direct investor that are part of the "parent group" (CMCG Working Group, 2003). Thus, initial and subsequent transactions both forge FDI relationships between two firms.

RESEARCH PROBLEM

This study will explore the important role of FDI in Brunei. The study will specifically focus on finding out the benefits that foreign firms acquire from their direct investment in the country. As of now, there is still no specific industry or firm chosen to be investigated. The plan is to first conduct a secondary research about companies currently in FDI deals in Brunei. From there, respondents for the study and the specific industry that the study will focus into will be chosen.

AIMS AND OBJECTIVES

            The aim of the study is to know the views of several foreign direct investors in Brunei from a particular industry about the pros and cons of investing in the Brunei economy.

            The objectives of the study are:

  • To inform companies about the pros and cons of investing in Brunei.
  • To contribute in the study of FDI.
  • To promote Brunei as a good place for FDI.
  • To seek improvements and recommendations for the current issue.
  • To find other relevant issues which can be explored in future studies.

 

RESEARCH QUESTIONS

            The study will seek to answer the following research questions:

  • Are foreign direct investors in Brunei satisfied with the economy?
  • What are the advantages of FDI in Brunei, based on the views of the investors?
  • What are the disadvantages of FDI in Brunei based on the views of the investors?
  • Do foreign investors in Brunei recommend the country to other business corporations?

SIGNIFICANCE OF THE STUDY

            The study will be significant to companies who are eying for Brunei as their next move in investment because results might show interesting finds about the advantages and disadvantages of such actions based on the testimonials of the respondents.

            The significance of the study also goes to other researchers and future researchers looking for reference on FDI in Brunei, or those who want to explore more about the issue.

 

 

 

 

 

REFERENCES:

 

Capital Markets Consultative Group (CMCG) Working Group. (2003). Foreign Direct Investment in Emerging Market Countries. Washington, DC: International Monetary Fund (IMF).

Jensen, N.M. (2003). Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment. In International Organization, Vol. 57 (Summer), pp. 587-616.

United Nations. (2003). World Investment Report 2003—FDI Policies for Development: National and International Perspectives. Switzerland: United Nations Publications.

 


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