Reasons Why Greenfield Investment Fund Should Be Considered
Any multinational company or investor contemplating on the type of foreign direct investment (FDI) to go for should consider greenfield investment. Greenfield investment involves setting up entirely new facilities in a foreign land. Setting up new facilities has more advantages than buying an existing one, and that’s what greenfield investment fund is all about. Aside from giving investors a robust and direct control over their investment, it also offers the following advantages:
If offers great flexibility on how the facilities can be made to suit investors wants. This is unlike a kind of forced adaptation offered by existing facilities.
Less maintenance is needed when new facilities are used.
New facilities tend to be more attractive to potential customers.
It also creates an easier platform for easier adaptation and penetration into the foreign market.
Using a greenfield investment fund gives investor total control over the quality of product or service being produced or rendered respectively.
These are the advantages of greenfield investment. Then, there are processes or steps to take towards the actualization of effective Greenfield project. These steps are discussed below:
A good location should be searched and used for the investment. This location can be acquired through buying from private or public owners and through public auction.
To avoid going against the law, a proof of urban planning compliance for the acquired location should be demanded.
All the necessary materials and infrastructure needed for developing the location should be gotten at this point. And if there’s a fee to be paid to any agency for land development, that should be done as well.
The next step is to obtain the construction permit.
Then the development and construction of the project are to follow. It is recommended that a construction supervisor native to the country should be employed to work in partnership with the company’s representative. Also, the construction work should be greatly monitored to get the desired results.
After construction completion, permit for technical approval and building usage should be gotten.
Before the operation can start in the new venture, registration with public authority of the country should be done to avoid harassment of any kind.
From what had been stated so far, it is evident that a greenfield investment project is the best kind of foreign direct investment any investor can get into. Most notable companies around the world use this kind of investment. This is because it makes their marketing and advertising more efficient with little effort. The price of products or services of such venture can be easily adapted to suit the local market. In the United Kingdom where the investment is taking place, this new venture can bring more profit through tax incentives.
For more information on Greenfield investment fund contact Highgrove Consulting at [email protected]