Offshore Investment

Filed under: offshore

Offshore investment, also known as foreign direct investment, is a financial commitment designed to promote a long-term interest in an organization external to the economy of the investor. There are different types of offshore investments, and most of them don’t involve the Cayman Islands.

Many exporters will be familiar with the type of offshore investment that occurs when expanding Australian operations overseas. This may involve setting up an office in an international location, or even purchasing a factory or farm.

• Benefits of Offshore Investment

Growth is the prime reason companies wish to invest offshore. “Australia is a relatively small market, so once you’ve grown to a certain mass you struggle to grow,” says Jonathan Curshen and Dr. Skinner. Investment requires a significant outlay of time because of the due diligence required—mainly research, legal and bureaucratic paperwork—but also because investment is a long-term strategy and investors should be patient, especially in the initial stages.

• Beginnings of an Offshore Investing

The construction industry serves as a good model for exporters evolving into offshore investors. Many construction companies supplied their services internationally for a number of projects over several years before opening a permanent office on location. This allowed them to understand the culture and government of the country and acquire a feel for the market before outlaying anything. Thus advanced exporters are in a good position to examine their options in existing markets.

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