Foreign ownership
Foreign ownership refers to the ownership of a portion of a country's assets (businesses, natural resources, property, bonds, equity, etc.) by individuals who are not citizens of that country or by companies whose headquarters are not in that country.
Overview
Foreign ownership refers to the ownership of a portion of a country's assets (businesses, natural resources, property, bonds, equity, etc.) by individuals who are not citizens of that country or by companies whose headquarters are not in that country. Foreign ownership of assets is widespread in a modern, globally integrated economy, at both the corporate and individual levels. An example of the former is when a corporation acquires part, or all, of another company headquartered overseas, or when it purchases property, infrastructure, access rights or other assets in countries abroad. If a multinational corporation acquires at least half of a foreign company, the multinational corporation becomes a holding company, and the company receiving the foreign investment becomes a subsidiary. At the individual level, foreign ownership occurs whenever a domestic asset is acquired by a foreign individual, such as an Indian businessman buying a house in Hong Kong, or a Russian citizen purchasing United States Treasury bonds.
Benefits
The transfer of technology and organisational knowledge can lead to higher productivity, and the company in the host country can learn from multinational corporations. It increases employment and wages, as inward foreign direct investment has an overall positive effect in employment, given that companies have more capital to expand. It lowers prices and improves the quality of products as a result of higher productivity, which is beneficial for consumers and the company's competitiveness for exports.
Drawbacks
Foreign ownership can increase the demand of products, leading to price increases. The increase in productivity in the firms in foreign ownership can cause other domestic companies to become relatively less competitive, which reduces profits. Multinational corporations may use their power to influence government policies, especially in underdeveloped countries, which may have an adverse impact on economic development. Lowering of employment because of operational optimization or an increase by a planned expansion can occur. Wages can be reduced for new employees by new corporate policies, and an optimized employee benefits package can reduce benefits for all. The demise of local economies can be caused by siphoning money from communities to global elites.
Maldives
Foreigners are not allowed to own freehold land in the Maldives. The land can only be leased to foreigners for 99 years.
United States
Some countries such as the United States may state that a foreign transfer of ownership will be challenged or prohibited based on the assumption that a deal may pose a challenge to the country's national security.
Cambodia
Under Article 44 of the Cambodian Constitution, “only natural persons or legal entities of Khmer nationality shall have the right to land ownership.” Foreigners are prohibited to own or possess land in Cambodia.
China
Land in China is state-owned or collectively owned. Enterprises, farmers, and householders lease land from the state using long-term leases of 20 to 70 years. Foreign investors are not allowed to buy or own land in China.
Indonesia
Foreigners are not allowed to own freehold land in Indonesia. Foreign investors can legally hold leasehold titles under Right-To-Use (Hak Pakai) or building rights (Hak Guna Bangunan). This is based on Part 5 Article 36 Paragraph 1b of the Agrarian Law No 5 of 1960. The House of Representatives of Indonesia passed the plantation bill to set stricter rules on foreign ownership in the plantation sector to prioritise smaller local plantation firms. There is no specific percentage value on the limit on foreign ownership, but a 30% foreign ownership ceiling had been demanded by the House's Commission IV. Plantation business groups as well as the Ministry of Agriculture had previously voiced criticism of the bill, expressing concern that it would negatively impact plantation firms and growers, as foreign investment might be reduced. Even though the bill was passed to limit foreign ownership, the law encourages cooperation in research and development between domestic and foreign businesses, universities, and individuals. A reduction in foreign ownership limit may reduce foreign investment, but it can help boost revenue for domestic firms and economic development. Government Regulation No. 14 of 2018 limited foreign ownership in insurance companies to 80%. However, this rule is not applied retroactively for insurance companies with foreign ownership higher than 80% at the time of its implementation date of 20 January 2020.
Iran
Article 81 of the Constitution places restrictions on the foreign ownership of Iranian businesses.
Kazakhstan
In 2021, President Kassym-Jomart Tokayev signed into law a bill that bans the selling and leasing of agricultural land to foreigners.
Kuwait
Foreigners in Kuwait except GCC nationals are prohibited from land ownership.
Laos
Foreigners are prohibited from permanent ownership of land. Foreigners can only lease land for a period of up to 30 years.
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