What makes a country attractive for investment? This is a question that politicians, businessmen, and analysts have asked themselves countless times over a long time. There are countries that are successful in attracting capital, and others that are not, but there are definitely certain factors that can make that flow of money more or less.
Foreign direct investment (FDI) implies that companies buy assets or invest in a foreign country through factories, such as a multinational, or through companies that make available to a larger company, human capital or other assets.
In the tradition of questioning how to generate investment in a region, Mohammad Yusuf Amdani, president of Grupo Karim’s and a Honduran businessman of Pakistani origin based in Honduras since the 1990s, is successfully included, from where he proposed very soon diversify and expand your business throughout the Central American region.
Factors affecting foreign direct investment
Foreign direct investment consists of the purchase of a share in a company by another larger company, or an investment of various kinds by a company located outside the borders of the host country. In general, the term is used to describe a business decision to expand operations to a new region.
FDI is relevant mainly because it creates new jobs and more opportunities as investments flow to new companies in foreign countries. This can lead to increased income and increased purchasing power for the local workforce, which in turn creates an overall boost in target economies.
The factors that determine the degree of that investment are:
The job skills of the local force
Multinationals are going to invest in those countries with a combination of comfortable wages, but high labor productivity and good skills. For example, in recent years Honduras has attracted significant investment in the BPO industry, thanks to the fact that a high percentage of the young population speaks English. This makes it an attractive place for outsourcing, and therefore attracts investment.
Better salary rates
An important incentive for a multinational to invest abroad is to outsource labor-intensive production to countries with lower wages. If the average wage in the investing countries is higher than in the receiving countries, costs can be reduced by outsourcing that production. This is the reason why many Western companies have invested in countries in the Latin American region such as Honduras.
Good infrastructure and installed capacity
A key factor in the suitability of an investment is usually the costs and levels of installed infrastructure. A country may have low labor costs, but if there are then high costs to operate the spaces or buildings in which the work must be carried out, the investment becomes less profitable.
More smart cities and better infrastructure, the vision of Mohammad Yusuf Amdani
FDI increased an impressive 60% in Honduras during the first half of 2021, compared to the same period the previous year. This fact is a clear sign of the growing economic impact of the Central American country on the world scene, as more foreigners seek to invest in Honduras.
Taking into account this growth potential, and the factors that attract investment, but focusing particularly on developing infrastructure, the Chairman of the Board of Directors of Grupo Karim’s, Mohammad Yusuf Amdani, puts a devastating argument on the table:
“Neither Honduras nor other countries in the region are on the radar of international investors. If we want to make an impact, we have to give more than what other nations offer in infrastructure, because we do not have the image or the business platform of Mexico or Brazil. That is the meaning of creating first world environments”.
Based on that vision, the businessman devised the pioneering concepts of industrial parks and smart cities for a region where they were thought impossible. Given the evidence that Canada and the United States stand out in the infrastructure indices of the American continent, Amdani was the only one to see in Central America a fertile field for real estate developments that require labor at a competitive cost, the possibility of 24/7 services , and technological and energy self-sufficiency.
To this end, Amdani conceived and promoted the Altia Smart City and Green Valley Advanced Manufacturing Hub projects, which have involved a substantial investment in the region in terms of the flow of foreign money and jobs. These spaces have allowed automotive companies, BPO’s, ITO’s, and call centers, to generate annual income with significant growth in Honduras.
In this sense, Grupo Karim’s has become a pioneer and reference in the development of intelligent real estate projects, and for that reason it has placed Honduras on the radar, thanks to innovative spaces where offices can coexist with shopping centers, hotels, gyms, apartments, recreation areas, universities, and restaurants.